EUROPE’S bailout fund has approved a €6.7 billion (£5.9bn) loan instalment to Greece as part of its third international rescue programme.

The European Stability Mechanism (ESM) said the approval came following the Greek Government’s completion of a series of required reforms.

The funds will be used to service the country’s debt and clear domestic arrears.

The ESM said an initial fund of €5.7bn (£5bn) will now be disbursed.

The remainder, to be used for clearing arrears, may be disbursed after May 1 if the country “makes progress in reducing its stock of arrears”.

Greece has depended on international rescue loans since 2010. Its third bailout ends this summer.

It comes after former Greek finance minister Yanis Varoufakis launched a new anti-austerity party on Monday.

It will run against the governing left-wing Syriza party in the next general election, which must be held by the autumn of 2019.

The 56-year-old was Prime Minister Alexis Tsipras’ outspoken finance minister for six months in 2015, but split from the party when Greece signed up to its third successive international bailout.

Varoufakis said the European Realist Disobedience Front, or MeRA25, would press for restructuring Greece’s bailout debt.