Greece has met the conditions for the second instalment of a 110-billion-euro rescue loan after making swift progress in its budgetary reform efforts, the EU’s executive arm said on Thursday.

The European Union and International Monetary Fund put together the three-year package for Greece, worth 141 billion dollars, in May in return for severe austerity measures aimed at restoring its public finances to health.

Some 20 billion euros was handed over in a first tranche.

Euro finance ministers are expected to approve the second tranche, which totals nine billion euros, 6.5 billion from the eurozone and 2.5 billion from the IMF when they meet on September 7, the European Commission said.

Greece should receive the money 24 hours later, a commission spokesman said.

“Greece has managed impressive budgetary consolidation during the first half of 2010 and has achieved swift progress with major structural reforms,” European Economic and Monetary Affairs Commissioner Olli Rehn said.

The assessment followed a mission by experts from the European Commission, the European Central Bank and the IMF to assess the progress made by Greek authorities to slash a huge public deficit.

The audit mission had concluded that Athens had made “considerable progress in a vast array of areas” but that “key challenges” remained.

Rehn also found that “despite the significant progress made, challenges and risks remain.

“The main immediate challenge is to safeguard adequate liquidity and financial stability of the banking sector,” he said.

“At the same time, the structural reform agenda needs to be pressed ahead to unleash the huge potential for raising growth”.

The measures undertaken by Greece have begun to bite and the country’s economy is forecast to contract by 4.0 percent this year.

Meanwhile The Bank of Greece governor George Provopoulos said Thursday that there is “every reason to be optimistic on the progress that Greece is making.”

“Public finances are under control, structural reforms have ambitiously started and the country has begun on an upward virtuous cycle,” he said.

The The Bank of Greece governor met with Prime Minister George Papandreou where they discussed the current economic situation in Greece and the further reforms that may be required.