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Greece Debt Crisis: Euro Partners Approve Billions in New Loans

Belgian Finance Minister Johan van Overtveldt said the ministers agreed on a memorandum of understanding drafted by negotiators.
French Finance Minister Michel Sapin talk to Greek Finance Minister Euclid Tsakalotos, left, during a meeting of eurozone finance ministers at the EU Council building in Brussels on Friday, Aug. 14, 2015.Laurent Dubrule / AP

Finance ministers of the 19-nation euro single currency group on Friday approved the first 26 billion euros ($29 billion) of a vast new bailout package to help rebuild Greece's shattered economy.

Eurogroup chairman Jeroen Djisselbloem said that "of course there were differences but we have managed to solve the last issues."

Ten billion euros will be made available to recapitalize Greece banks, while a second slice of 16 billion euros will be paid in several installments, starting with a 13 billion euro installment by Aug. 20 when Greece must make a new debt payment to the European Central Bank.

"On this basis, Greece is and will irreversibly remain a member of the Euro area," said European Commission President Jean-Claude Juncker after the deal was sealed.

Related: Greek Bailout Is No Cure for Sick Economy

The final rescue package would eventually give Greece up to 86 billion euros ($93 billion) in loans over three years in exchange for harsh spending cuts and tax hikes.

The deal must still be approved by some national parliaments, including Germany, but that is largely considered to be a formality.

The move saves Greece from a disorderly default on its debts which could have come as soon as next week and helps to cement its membership of Europe's single currency, but means more hardship for ordinary Greeks.

The approval came after Greece's parliament passed a slew of painful reforms and spending cuts after a marathon overnight session that divided the governing party, raising the specter of early elections.

The bailout bill passed through the Greek parliament thanks to support from opposition parties, with 222 votes in favor, 64 against, 11 abstentions and three absent in the 300-member parliament.