Greece received the first 13 billion euros ($14.5 billion) from its new bailout package on Thursday, allowing it to pay a debt of 3.2 billion euros to the European Central Bank and avoid a messy default.
Greece could not have afforded Thursday’s debt repayment, which was confirmed by the debt management agency, without the rescue funds from 18 other European nations that share the euro currency. Missing the payment would have raised new questions about the country’s ability to remain in the euro.
European bailout fund supervisors approved the release of the first batch of loans on Wednesday evening. Twelve billion euros are earmarked for repaying debts and the remainder for settling arrears to public sector suppliers.
The new three-year bailout package – Greece’s third bailout in little more than five years – is worth a total of 86 billion euros ($96 billion), and the gradual disbursement of funds depends on the Greek government implementing a series of reforms, including steep tax hikes and spending cuts.
Accepting the conditions was a major reversal of policy for Prime Minister Alexis Tsipras and the coalition government between his radical left Syriza party and the small nationalist Independent Greeks. It has cost him a major rebellion within Syriza that threatens to split the party and could lead to an early election as soon as next month.
Tsipras has been contemplating his options after a parliament vote to approve the bailout conditions led to dozens of his own party lawmakers voting against him. Among the options being discussed are for him to call a vote of confidence in his government or to call an early election outright, potentially in September.
The government has said its main priority was to secure the bailout funding and to repay the ECB loan on Thursday, after which it would announce any further action.
The prime minister was holding meetings with his ministers, and there was speculation an announcement could come as soon as Thursday afternoon.
The political uncertainty took its toll on the market, with the Athens Stock Exchange down 2.8 percent in early afternoon trading.
Tsipras won general elections in January on promises to repeal similar austerity measures attached to Greece’s two previous bailouts. But he has said accepting creditor demands for yet more reforms was the only way to ensure his country remains in the eurozone, which opinion polls have shown the vast majority of his population wants.
Hardliners within his party have accused him of capitulating to unreasonable demands that will plunge the Greek economy further into recession.