Greek Prime Minister Alexis Tsipras announced Thursday that he will resign, clearing the way for elections next month as Greece deals with its ongoing debt crisis.
Tspiras made the announcement Thursday night, as the country began tapping into a new bailout deal meant to ensure its financial future.
Officials who spoke only on condition of anonymity to The Associated Press said the snap polls would be held on Sept. 20.
The government had been rumored to be considering early elections or a confidence vote since last week, when Tsipras faced a party rebellion over a bailout vote in parliament. It had delayed a decision until after it received the first installment from the bailout and made a debt repayment to the European Central Bank, both of which it did Thursday.
"The certainty is that the need for elections has arisen," Energy and Environment Minister Panos Skourletis said on state television earlier Thursday.
He said there are two reasons for snap polls, which would come just nine months after the government came to power.
The first is that dozens of Tsipras' governing left-wing Syriza party lawmakers voted against the government on the bailout deal. Tsipras relies solely on opposition support to pass legislation in parliament. The government "has lost its majority (in parliament) - one can't avoid this," Skourletis said.
The other reason was that Syriza is part of a government that needs to implement a program that is different to that which it was elected for.
Tsipras and his coalition government made a major U-turn in policy by accepting stringent budget austerity conditions that creditors had demanded in exchange for the $96 billion, three-year bailout program. Tsipras and his radical left Syriza party came to power in January promising to scrap such spending cuts and tax hikes.
He has since said that accepting the terms was the only way to ensure his country remains in the eurozone, which opinion polls have shown the vast majority of his population wants.
The political uncertainty took its toll on the market, with the Athens Stock Exchange down 3.5 percent in early afternoon trading.
"The Greek stock market is coming into a new circle of uncertainty while we are waiting for new elections to be announced," said analyst Evangelos Sioutis, head of equities at Guardian Trust Securities. "For the stock markets it is a factor of uncertainty."
Greek banking is still restricted under capital controls imposed in late June to stem a bank run sparked after Tsipras called a referendum on creditor proposals for reforms following a breakdown in bailout negotiations. There are weekly limits on cash withdrawals and Greeks can only transfer up to 500 euros abroad per month. Companies have faced problems paying suppliers abroad, with all international payments requiring a laborious process of approval by a special finance ministry committee.
"Greece has capital controls, the economy is choking, and we will now have uncertainty from elections, so you understand that it has been a difficult month," Sioutis said.
Greece received the first $14.5 billion from its new bailout package on Thursday, allowing it to repay its ECB debt and avoid a messy default.
Greece could not have afforded the debt repayment, which was confirmed by the debt management agency, without the rescue funds from 18 other European nations that share the euro currency. Missing the payment would have raised new questions about the country's ability to remain in the euro.
European bailout fund supervisors approved the release of the first batch of loans on Wednesday evening, with 12 billion euros earmarked for repaying debts and the remainder for settling arrears to public sector suppliers.
The Associated Press contributed to this report.