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THE EUROPEAN Union has formally approved a short-term loan of 10.5 billion dollars to Greece, while offering guarantees to non-euro nations their taxpayers will not be at risk.

Valdis Dombrovskis, the EU Commissioner for the euro said the agreement had been backed by all 28 member states.

The bridge loan means Athens can meet a huge repayment to the European Central Bank on Monday.

The loan approval came as Greek Prime Minister Alexis Tsipras announced a reshuffle of his government, following a major mutiny in his radical left Syriza party over the country’s punishing bailout deal.

Full support ... Valdis Dombrovskis, the EU Commissioner for the euro said the agreement

Full support … Valdis Dombrovskis, the EU Commissioner for the euro said the agreement had been backed by all 28 member states. Picture: AFP Source: AFP

Tsipras sacked 10 members of his team who voted against the sweeping austerity measures demanded by the country’s creditors, including ministers and deputy ministers.

The measures in the bailout deal agreed earlier this week were much harsher than the ones rejected by voters in a referendum almost two weeks ago.

Meanwhile, German MPs gave Chancellor Angela Merkel the green light to resume talks on a new EU-IMF bailout deal for Greece, after she passionately argued it was the last chance to prevent chaos in the crisis-hit country.

Merkel, like Greece’s hard-left Prime Minister Alexis Tsipras, faced rebels in her own party ranks, but still won broad approval from the chamber where her coalition commands an overwhelming majority.

The measure to seek a new $126.32 billion rescue package sailed through the Bundestag by 439 to 119 votes with 40 abstentions.

From news.com.au