Euro zone releases 2.8 billion euro loan tranche to Greece

October 25, 2016 6:00 AM EDT

A street vendor displays Greek national flags for sale in front of the Bank of Greece headquarters during a student parade marking the "Ohi" (No) day, the country's rejection on Italy's ultimatum to surrender as the World War II flared up, in Athens, Gree

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BRUSSELS (Reuters) - The euro zone bailout fund ESM released on Tuesday a 2.8 billion euro loan tranche to Greece, following a commitment made by euro zone finance ministers earlier this month which was conditional on an assessment of the clearance of net arrears by Greece.

"The government has completed key milestones in the area of pension reform, bank governance, the energy sector, and revenue collection," ESM Managing Director Klaus Regling said.

"It has also taken further steps in making the new privatization and investment fund operational. If the government continues to implement the reforms agreed in the ESM program, growth of the Greek economy could accelerate next year and the government may be able to start issuing bonds again next year," he said.

Of the 2.8 billion euro tranche, 1.1 billion euros is to be used for debt servicing and 1.7 billion euros will go to a dedicated account for clearing arrears.

Over the three bailouts for Greece, euro zone bailout funds have so far disbursed 173.5 billion euros to Greece, making the rescue funds the country's largest creditor.

(Reporting By Jan Strupczewski; Editing by Raissa Kasolowsky)

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