Whether it will enable them to cut into their deficit is another story. That all depends on what they do in the market with this 5% peg. 40 billion from the EU and IMF at, say, 4.6% (3/4 EU loan at 5% and 1/4 IMF loan at 3.25%) may be offset by much higher loans at either 6 or 7% in the market. If Greece can sell at 6%, then the mix with the 4.6% will help them to slog through. But if they are selling at 7%, then the 4.6% may not be enough.

Other factors come into play, such as Greece's forecast uses 4.5% as the number to predict next year's deficit. Also, older Greek bonds from the pre-eurozone days are maturing. Wolfgang Munchau has stated that Greece's bond structure shows a healthy mix with a long average maturity at low rates and the bonds expiring shortly are at high rates.

We shall see.

If true, Greece should have given the IMF $10 billion about a decade ago.

I have no idea how that formula works but surely the amount given to the IMF should be a percentage of GDP and not an arbitrary "donation."

http://www.ft.com/cms/s/0/762c8ebc-4596-11df-9e46-00144feab49a.html

I wonder what he would say knowing the amount is for half of what he thought.