Mubasher: The International Monetary Fund (IMF) announced on Thursday that it has approved in principle a loan of EUR 1.6 billion ($1.8 billion) for Greece, according to a press release.

The agreement will only become effective after the IMF receives assurances from European partners on debt sustainability and provided that the economic program remains on track.

Greece’s economic program focuses on policies to restore macroeconomic stability in the medium run and facilitate market access, and it aims to rebalance budget toward more growth-friendly and socially-inclusive policies in the long run, the statement noted.

The arrangement, which supports the authorities’ economic adjustment program, has been approved in principle, which means it will become effective only after the Fund receives specific and credible assurances from Greece’s European partners to ensure debt sustainability, and provided that Greece’s economic program remains on track.

A second decision by the IMF board is needed to make the arrangement effective. The arrangement will expire on 31 August 2018, shortly after the expiration of the European Stability Mechanism program, the report explained.

“I strongly welcome Greece’s new economic adjustment program, which focuses on policies that will help restore medium-term macroeconomic stability and growth, and supports the authorities’ efforts to return to market financing on a sustainable basis,” the IMF managing director, Christine Lagarde said in a statement.

The program provides both breathing space to mobilize support for the deeper structural reforms that Greece needs to prosper within the euro area, and a framework for Greece’s European partners to deliver further debt relief to restore Greece’s debt sustainability,” she added.

“As we have said many times, even with full program implementation, Greece will not be able to restore debt sustainability and needs further debt relief from its European partners. A debt strategy anchored in more realistic assumptions needs to be agreed. I expect a plan to restore debt sustainability to be agreed soon between Greece and its European partners. Effectiveness of the new Stand-By Arrangement is contingent on this agreement on debt relief, as well as implementation of the program,” Lagarde noted.