IMF approves $36.8 billion loan for Portugal

WASHINGTON (Reuters) – The International Monetary Fund on Friday approved a 26 billion euro ($36.8 billion) loan for Portugal to help the country recover from a debilitating sovereign debt crisis, saying it would immediately disburse 6.1 billion euros to ease investor concerns over the euro zone member's debts.

The IMF said in a statement that total financing to Portugal in 2011 will include about 12.6 billion euros from the IMF and another 25.2 billion euros from the European Union. The funding is part of a joint IMF/EU 78 billion euro ($110 billion) bailout package.

"The financing package is designed to allow Portugal some breathing space from borrowing in the markets while it demonstrates implementation of the policy steps needed to get the economy back on track," the IMF said in a statement.

The financial package was calibrated to allow Portugal to stay out of the market for medium- to long-term bonds for slightly more than two years, IMF Mission Chief Poul Thomsen said.

Under the agreement, Lisbon will have to carry out steep spending cuts, raise taxes, reform its labor and justice systems, and embark on an ambitious privatization scheme.

"The Portuguese authorities have put forward a program that is economically well-balanced and has growth and job creation at its center," said IMF Acting Managing Director John Lipsky.

"It addresses the fundamental problem in Portugal -- low growth -- with a policy mix based on restoring competitiveness through structural reforms, ensuring a balanced fiscal consolidation path, and stabilizing the financial sector," he added.

The deal follows a 110-billion-euro package for Greece last May and an 85-billion-euro program for Ireland in November.

Portugal's arrangement is the first time a country has asked private investors not to sell down their holdings of bonds on a voluntary basis.

The leader of Portugal's opposition Social Democrats, Pedro Passos Coelho, warned on Thursday the country has no room for failure in meeting the austerity measures of the program.

The conditions included in the bailout are expected to contribute to a contraction in the Portuguese economy of 2 percent both this year and next.

"This is not going to be an easy program. There is going to be a difficult period of adjustment," Thomsen said.

The program addresses a lack of competitiveness among businesses in Portugal, he said. It sets a goal of achieving a deficit that is 3 percent of GDP by 2013.

"Even during the good years, before the crisis, Portugal was hardly growing," Thomsen noted.

Portugal's economy is expected to begin expanding again in two years, he said, adding that many of the initiatives are weighted heavily to the early phases of the reforms.

Poulsen said he believes political consensus behind reforms bodes well for the success of measures to reshape the Portuguese economy.

"It's quite striking how most of the key issues, not least on the structural reform side, have broad political support, which to me is one of the encouraging things," he said.

(Additional reporting by Lesley Wroughton; Editing by Diane Craft, Gary Crosse)

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IMF approves 26 billion euro loan for Portugal

WASHINGTON (Reuters) – The International Monetary Fund on Friday approved a 26 billion euro ($37 billion) loan for Portugal to help the country recover from a debilitating sovereign debt crisis, saying it would immediately disburse 6.1 billion euros to ease investor concerns over the euro zone member's debts.

The IMF said in a statement that total financing to Portugal in 2011 will include about 12.6 billion euros from the IMF and another 25.2 billion euros from the European Union. The funding is part of a joint IMF/EU 78 billion euro ($110 billion) bailout package.

"The financing package is designed to allow Portugal some breathing space from borrowing in the markets while it demonstrates implementation of the policy steps needed to get the economy back on track," the IMF said in a statement.

The financial package was calibrated to allow Portugal to stay out of the market for medium- to long-term bonds for slightly more than two years, IMF Mission Chief Poul Thomsen said.

Under the agreement, Lisbon will have to carry out steep spending cuts, raise taxes, reform its labor and justice systems, and embark on an ambitious privatization scheme.

"The Portuguese authorities have put forward a program that is economically well-balanced and has growth and job creation at its center," said IMF Acting Managing Director John Lipsky.

"It addresses the fundamental problem in Portugal -- low growth -- with a policy mix based on restoring competitiveness through structural reforms, ensuring a balanced fiscal consolidation path, and stabilizing the financial sector," he added.

The deal follows a 110-billion-euro package for Greece last May and an 85-billion-euro program for Ireland in November.

Portugal's arrangement is the first time a country has asked private investors not to sell down their holdings of bonds on a voluntary basis.

The leader of Portugal's opposition Social Democrats, Pedro Passos Coelho, warned on Thursday the country has no room for failure in meeting the austerity measures of the program.

The conditions included in the bailout are expected to contribute to a contraction in the Portuguese economy of 2 percent both this year and next.

"This is not going to be an easy program. There is going to be a difficult period of adjustment," Thomsen said.

The program addresses a lack of competitiveness among businesses in Portugal, he said. It sets a goal of achieving a deficit that is 3 percent of GDP by 2013.

"Even during the good years, before the crisis, Portugal was hardly growing," Thomsen noted.

Portugal's economy is expected to begin expanding again in two years, he said, adding that many of the initiatives are weighted heavily to the early phases of the reforms.

Poulsen said he believes political consensus behind reforms bodes well for the success of measures to reshape the Portuguese economy.

"It's quite striking how most of the key issues, not least on the structural reform side, have broad political support, which to me is one of the encouraging things," he said.

(Additional reporting by Lesley Wroughton; Editing by Diane Craft, Gary Crosse)

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WB approves US$ 25 mln loan for Armenia

PanARMENIAN.Net - The World Bank Board of Executive Directors approved a package designed to help Armenia protect the poor and support greater human capital development, and also strengthen competitiveness and private sector development.

The Second Development Policy Operation (DPO) for Armenia, a loan of US$ 25 million, is the second in a series of three operations designed to support the Government of Armenia in meeting its strategic objectives.

This operation supports the protection of pro-poor spending in the state budget; the targeting of social safety net programs; increased access to pre-school programs in poor communities; and improved efficiency of health services delivery through the introduction of performance-based contracting for treatment of non-communicable diseases.

To enhance Armenia’s competitiveness and raise its growth potential, this Operation helps strengthen the competition framework and implement a new Mining Code adhering to international best practice for fiscal, environmental, social, and licensing standards. It also supports key reforms aiming at improving the business climate and reforming the tax administration.

“The World Bank is committed to support the authorities’ efforts in all these important agendas over the long term and, in this regard, a third DPO under preparation expects to continue the focus on post-crisis competitiveness and growth and on the strengthening of health, education and safety net programs,” commented Jean-Michel Happi, the World Bank Country Manager for Armenia.

The Second DPO includes an IDA credit equivalent of US$ 21 million and an IBRD loan of US$ 4 million. The IDA credit carries a maturity of 20 years including a grace period of 10 years and the IBRD loan has a maturity of 25 years including 10 year grace period.

Since joining the World Bank in 1992 and IDA in 1993, the commitments to Armenia total approximately US$ 1, 433 million.

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IMF approves €22.5bn aid deal

The Irish Times - Friday, December 17, 2010 LARA MARLOWE in Washington

THE EXECUTIVE board of the International Monetary Fund (IMF) yesterday approved a three-year Extended Fund Facility loan for Ireland, totalling €22.5 billion. The vote had been delayed one week in deference to Wednesday’s vote in Dáil Éireann.

The loan was approved under “fast-track emergency financing mechanism procedures”, said a statement from the IMF. Some €5.8 billion will be made available to Ireland immediately.

Dominique Strauss-Kahn, the managing director and chairman of the board of the IMF, said: “The Irish authorities have designed an ambitious policy package to address the economic crisis facing the nation.”

Without such a “multi-year programme targeting vulnerabilities in the banking system” there could be “no enduring solution to the crisis”.

Mr Strauss-Kahn said authorities had “designed a programme with fairness in mind so the burden of economic and financial adjustment is shared across all levels of society, with the most vulnerable groups the most protected”.

The loan from the IMF is part of an overall package totalling €85 billion. The European Union will provide €45 billion from the European Financial Stabilisation Mechanism and the European Financial Stability Facility. Britain, Sweden and Denmark have agreed to bi-lateral loans, and the Irish Government will contribute €17.5 billion from its own cash reserves and liquid assets.

In a separate interview yesterday Mr Strauss-Kahn said he believed Spain would avoid Ireland’s fate and said there is no threat to the euro currency’s existence.

“I don’t see that the risks for Spain will be that big in 2011,” he said. “It doesn’t mean there is no risk . . . but I’m not that pessimistic about the Spanish economy.”

Mr Strauss-Kahn said Europe needs to work swiftly on a co-ordinated response to deal with the debt crisis sweeping through nations on the periphery of the euro zone.

“I am worried and that’s why I am urging the Europeans . . . to provide a comprehensive solution because this piecemeal approach . . . obviously doesn’t work,” he said.

EU leaders yesterday began a two-day summit at which they are expected to approve changes to the EU’s governing treaty to allow the creation of a permanent mechanism for financial crises.

The IMF chief expressed confidence that the euro currency would survive the crisis and he said European institutions would emerge more resilient.

“It’s a strong currency which behaved during the last 10 years better than even the Deutschmark in the previous decade,” he said. “I see many reasons why there may be a problem in the euro zone in terms of growth, unemployment, even, beyond unemployment, social problems . . . but that doesn’t mean at all that I see any threat to the euro.”

“Any solution other than the euro would be worse for the euro zone members.”

He struck a positive note on Ireland’s future, saying the EU/IMF rescue will enable the nation to find its way back to economic health. “It’s going to work but of course it’s difficult,” he said.

Mr Strauss-Kahn said the economic recovery from the 2007-2009 financial crisis is not yet secured, with growth at a sluggish pace in Europe and an uncertain outlook in the US. However, he said he did not see a risk of the US slipping back into a recession.

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WB approves $125 mln loan for two projects in Russia

WB approves $125 mln loan for two projects in Russia

08.12.2010, 07.53

WASHINGTON, December 8 (Itar-Tass) - The World Bank approved on Tuesday two projects in Russia - a loan of 100 million US dollars to implement the second part of the programme to preserve cultural heritage, as well as a 25 million US dollars loan to improve financial literacy and education. WB Russia Executive Director Vadim Grishin told Itar-Tass.

According to him, discussions at the bank?s Board of Directors ?were held in a friendly manner.? ?The projects will be launched early next year,? Grishin said. ?The first covers the Leningrad, Pskov, Novgorod and Tver regions. ?As for the second, the executive director continued, ?the innovation, pilot nature of this programme was stressed ? by the results of its implementation in Russia, it can be extended to other countries.?

Vadim Grishin said this project had been initiated in 2006, when Russia chaired the Group of Eight. ?And then it got the full support from the partners,? the executive director noted. ?At present, in times of crisis, the urgency of improving the financial literacy of the population at large has increased, both in developed and developing countries. It is not accidentally that some developed countries, like the United States, are implementing major national projects on financial education and literacy.?

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