IMF Approves $38 Billion Loan for Greek Economic Crisis

May 6: A protestor gestures to the riot police officers as they stand outside the Greek parliament during an anti government rally in Athens. (AP)

The International Monetary Fund Sunday approved a three-year, $38 billion loan to help pull Greece out of an economic quagmire.

The IMF loan, the largest financial commitment the institution has ever made to a single country, is part of a $140 billion package that includes conditions requiring Athens to tighten their fiscal belt and raise taxes.

Europe's finance ministers late last week cleared the way for disbursement of their portion of the loan, with the package clearing its highest hurdle Friday: approval by the German parliament.

Under the terms of the deal, Greece will cut its budget deficit from a record 13.6 percent of GDP last year to 8.1 percent this year, and below an EU ceiling of 3 percent by the end of 2014, translating into EUR30 billion in combined spending cuts and higher taxes.

IMF officials have said they're confident the measures are enough to bring the Mediterranean country back from the brink.

But markets are skeptical that Greece will have the discipline to see the required reforms through and that the country's economy will be able to grow enough to repay their loans on time.

Last week, traders sought to alleviate risk as Greeks rioted in Athens after the parliament approved major austerity measures. Investors migrated out of the Euro and into the dollar, gold hit $1,200 an ounce and the Dow Jones Industrial Average plummeted.