The European Stability Mechanism has today approved the release of a third tranche of bailout funds to Greece worth €8.5 billion, the ESM said in a statement. 

A first disbursement will amount to €7.7 billion and is expected to be made by on Monday, the euro zone bailout fund said.

Some €6.9 billion will be used to service debt and €0.8 billion to clear arrears. 

Greece needs new loans under its current €86 billion bailout programme, the third since 2010, to make debt repayments due this month. 

"This payment is recognition of the tremendous efforts that the Greek people have continued to make to stabilise their economy," European Economics Commissioner Pierre Moscovici said in a statement. 

A further €800m may be paid out in September, subject to the Greek government paying arrears, the ESM added. 

"The government should continue on this path to rebuild a competitive economy and regain investors' trust," ESM Managing Director Klaus Regling said. 

At a meeting last month, euro zone finance ministers reached a political deal to disburse new financial aid to Athens. 

But the actual disbursement was linked to some conditions that needed to be fulfilled by Greece. 

One of the issues was a case involving three former privatisation officials from Italy, Spain and Slovakia, who had been charged in Greece with breaches of duty during the sale in 2015 of state properties. Greece has dropped the charges. 

The Eurogroup is due to meet again on Monday in Brussels.