Greece is one of the original members of the International Monetary Fund, joining it on December 27, 1945. It has a quota of 2,428.90 million SDRs and 25,754 votes, 0.51% of the total IMF quota and votes. Greece has been represented on the IMF Board of Governors by Minister of Finance Christos Staikouras since 2019. Greece elects an Executive Director on the fund's Executive Board with Albania, Italy, Malta, Portugal and San Marino. Michail Psalidopoulos is the elected alternate director. Greece has signed two loan agreements with the IMF: a Stand-By Arrangement from 2010 to 2012 and an agreement under the Extended Fund Facility from 2012 to 2016, borrowing a total of 27,766.3 million SDR. Greece owes the IMF 6,735.64 million SDR, and is the fund's third-largest borrower (after Argentina and Ukraine). In 2018, the fund began conducting annual post-program monitoring of Greece in addition to its annual Article IV consultation.
Background
During the early 2000s, after the adoption of the euro, Greece obtained easier access to financial markets and experienced an economic boom. Indeed, Fitch upgraded Greece from BBB+ (March 2000) to A+ (October 2003). It developed an economy based on large deficits and high debt levels which were vulnerable to a halt in private-capital flow. At the beginning of the Great Recession in 2009, Greece had a public debt of 135.4 percent of gross domestic product (GDP) and a public expenditure of 54.08 percent of GDP. That year, new prime minister George Papandreou announced a 15.5-percent revision of the public deficit. Earlier data about public debt and deficit had been masked by former governments with the help of Goldman Sachs. Global markets began selling Greek bonds, and Fitch and S&P Global Ratings downgraded Greece to BBB+ with a negative watch. The country could no longer access the global market, and sought help from European institutions and the International Monetary Fund.
Loan agreements
Stand-By Arrangement (2010-2012) On May 3, 2010, the Greek government asked the IMF for a Stand-By Arrangement. The SBA was approved six days later by the Executive Board of the IMF using its Emergency Financing Mechanism. The SBA totaled 26.4 billion SDR, with 4.8 billion immediately available. The arrangement aimed to improve competitiveness and investment (making Greece an export-led growth model) and suppress domestic demand with wage and benefit cuts. The state would have a minor role in the economy, and a Financial Stability Fund (FSF) would be created. Improved market confidence and growth was expected.
On August 5, after a visit to Athens, the European troika (the IMF, the European Central Bank and the European Commission) expressed satisfaction with the government's implementation of the program. According to the troika, the program "has made a strong start" with implementation in fiscal policy (the government "kept spending below the budget limit at the state level"), the financial sector (the FSF "will soon became operational") and structural reforms ("Parliament's approval of the landmark pension reform").
On September 10, the IMF Executive Board completed its first review of Greece's performance under the SBA and authorized the disbursement of 2.16 billion SDR. The troika emphasized the need for more reforms, including cuts in health spending and wages, privatization and the abolition of trade barriers, on November 23.
The second SBA review was completed on December 17, and the IMF Executive Board approved a disbursement of 2.16 billion SDR. According to Deputy Managing Director and Acting Chair Murilo Portugal, "An arrangement for Greece under the Extended Fund Facility (...) will be brought forward for consideration by the IMF's Executive Board".
In their February 2011 Third Review Mission to Greece, the troika reported that all necessary reforms were being adopted and expressed their support for the Greek government. The third SBA review, completed on March 14, allowed the government to draw 3.6 billion SDR. The troika acknowledged overall progress on June 3, citing the need for fiscal structural reform to reduce Greece's deficit.
On July 8, the Fourth Review Under Stand-By Arrangement was completed and the IMF disbursed SDR 2.9 billion SDR. The fund said on October 11 that "the recession will be deeper than was anticipated in June and a recovery is now expected only from 2013 onwards. There is no evidence yet of an improvement in investor sentiment and the related increase in investments (...) Overall, the authorities continue to make important progress". On December 5, 2011 The IMF completed its Fifth Review Under Stand-By Arrangement for Greece, approving a 1.9 billion SDR disbursement.