ATHENS, Greece — European and global financial leaders have agreed to release (euro) 44 billion ($5.2 trillion) in critical loans to Greece and provide billions in additional debt relief in order to help the country stabilize its ailing economy.

After three weeks of negotiations, Greece’s euro partners and the International Monetary Fund agreed early yesterday morning to release the loans in four installments beginning next month. The leaders also settled on a raft of measures — including a debt buyback program and an interest rate cut on loans — that will reduce the country’s debts by about (euro) 40 billion.

Greek Prime Minister Antonis Samaras hailed the agreement in Brussels as a victory that heralds “a new day for all Greeks.” But the country will still face years of economic pain as austerity measures agreed to as part of the bailout package are implemented.

Most stock markets in Europe were modestly higher on the news out of Brussels with the Stoxx 50 index of leading European shares closing up 0.2 per cent. Meanwhile the euro gave up earlier gains to trade 0.4 per cent lower at US$1.2941. The interest rate charged on Greece’s benchmark 10-year bonds, an indicator of investor confidence in a country’s finances, fell 0.2 percentage points to 14.47 per cent on the news of the debt deal.

“There remains the potential for this deal to fall apart in the medium term as there are a lot of moving parts and it is a long way away from the permanent fix that the IMF had been insisting upon,” said Gary Jenkins, managing director of Swordfish Research.

“It is just one more big kick of the can down the road.”

For three years, Greece has been struggling to convince markets as well as its creditors that it can get a grip on its public finances, which had spiraled out of control. The country is predicted to enter its sixth year of recession and is weighed down by an unemployment rate of 25 per cent.

The so-called troika of the European Central Bank, IMF and the European Commission has twice agreed to bail out Greece, pledging a total of (euro) 240 billion in rescue loans — of which the country has received about (euro) 150 billion so far. In return for its bailout loans, Greece has had to impose several rounds of austerity measures and submit its economy to scrutiny.