The International Monetary Fund has approved the release of €2.2 billion for Greece under the joint IMF-EU rescue programme for the country.
The money, which will be released immediately, is part of a new €8 billion instalment of funds from the programme, the release of which was conditional on adherence to a strict austerity plan.
Last week EU finance ministers said they were also set to unlock the €5.8 billion share of the loan tranche, which has been held back since since August because of delays in implementing reforms.
In November a new Greek government was formed under Prime Minister Lucas Papademos, a former European Central Bank deputy chief, in a coalition effort to rescue the country's finances and save it from looming bankruptcy.
The IMF loan approval came after its executive board completed a review today of Greece's economic performance under the €110 billion IMF-EU bail-out loan set last year. The IMF is contributing €30 billion of that.
Italy collapse "would have put euro at risk"
Italian Prime Minister Mario Monti has said Italy risked a Greek-style economic collapse which could threaten the future of the euro without the austerity package approved by the government.
Monti's announcement of the plan on Sunday kicked off one of the most crucial weeks since the launch of the euro more than a decade ago, ending with a summit of European leaders in Brussels on Thursday and Friday to seek a wider set of crisis measures.
"If Italy were not capable of reversing the negative spiral of growth in debt and restoring confidence to international markets, there would be dramatic consequences, which could go as far as putting the survival of the common currency at risk," Monti told parliament.
"Italy is ready to do what it has to do but Europe must not fail to do its part," he said.
The package, dubbed a "Save Italy" decree by Monti, aims to raise more than €10 billion from a property tax, a new levy on luxury items like yachts, higher VAT, a crackdown on tax evasion and an increase in the pension age.
"Without this package, we think that Italy would have collapsed, that Italy would go into a situation similar to that of Greece," Monti told foreign journalists before heading to parliament to present the package to deputies.
He acknowledged the package would weigh on Italy's fragile economy which most analysts say is already in recession, but said without action the consequences would have been much worse.
The package, packed into an emergency decree that takes effect before formal parliamentary approval, is expected to gain the backing of most parties, with the exception of the regional pro-devolution Northern League party.
Italy, the euro zone's third-largest economy, has been at the centre of the crisis since mid-year, when its borrowing costs began to approach the levels that forced Ireland, Greece and Portugal to seek an international bail-out.
Markets welcomed the measures, which analysts said should be enough to persuade the European Central Bank to continue to hold down borrowing costs by buying Italian bonds on the market. Yields on 10-year Italian bonds dropped to just below 6%, around a full percentage point lower than last week.
Italy austerity goes 'in the right direction' - EU
The European Commission said today that Italy's austerity drive goes "in the right direction" and contributes to euro zone efforts to give a "bolder" answer to the debt crisis.
"The steps taken yesterday are very important," the commission's economic affairs spokesman, Amadeu Altafaj, told a news briefing. "They definitely go in the right direction of decisive structural reform."
"All these elements contribute to make our crisis response bolder, more effective but still there's lot to do," Altafaj said.
EU Economic Affairs Commissioner Olli Rehn welcomed the measures but urged Rome to do even more. "This package is a very important step to shore up the public finances and support economic growth," Rehn said, adding that the commission would make a "detailed assessment" of the measures once it has received all the details.
"The low growth potential of the Italian economy cannot be corrected overnight, but the measures announced on Sunday will help removing some bottlenecks to growth," he said.
"It is crucial to keep the momentum in economic reform and in the political renewal to take further decisions that can bring more growth and more and better jobs in a fair way," he added.
