Wednesday, March 14, 2012

The Ever-Growing Greek Bailout

By Matina Stevis and Jenny Paris

Wall Street Journal

March 14, 2012

Those pesky billions in the second Greek bailout, they keep multiplying! The folks over at the Financial Times Brussels blog have already tried to explain what is really going on with the second Greek bailout’s size, length and the contribution division between the euro-zone countries and the International Monetary Fund. We thought we’d give it a crack too.

There are three issues we want to address: one, the actual size of the Greek bailout. Hint: It’s not €130 billion but €138.2 billion. Second, the participation of the IMF in this bailout and how it compares to the previous one. Hint: it’s smaller than you thought. And third, the proportion of the bailout earmarked for Greece’ financing needs rather than the debt restructuring or bank recapitalizing. Hint: it’s not large.

The actual size of new bailout for Greece is not €130 billion but €138.2 billion. Now, we know €130 billion was a nice, round number. But it’s just not the whole figure. Here’s why. Greek finance minister Evangelos Venizelos made a reference Tuesday to €8.2 billion in IMF funding for 2015. That got us digging, because it implied that the IMF would continue financing Greece even after all of the €130 billion aid under the 2012-2014 joint program by the European Union and the IMF has been disbursed.


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