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Greece’s Prime Minister Says He’s Resigning After Party Rebels Over Bailout Agreement

"The Greek stock market is coming into a new circle of uncertainty."

Alexis Tsipras, Greece's prime minister, pauses during a parliamentary session ahead of a vote by lawmakers on a bailout deal in Athens, Greece, on Friday, Aug. 14, 2015. (Photographer: Yorgos Karahalis/Bloomberg via Getty Images)

ATHENS, Greece (AP) -- Greece's Prime Minister Alexis Tsipras will call early elections for next month, government officials said Thursday, as he tackles a rebellion by hardliners within his governing left-wing party who oppose the terms of the country's new bailout.

Alexis Tsipras, Greece's prime minister, pauses during a parliamentary session ahead of a vote by lawmakers on a bailout deal in Athens, Greece, on Friday, Aug. 14, 2015. (Photographer: Yorgos Karahalis/Bloomberg via Getty Images)

The officials, who spoke only on condition of anonymity pending an announcement by the prime minister, said the snap polls would be held on Sept. 20.

Tsipras was to make an announcement Thursday night, another government official said, while he was expected to also visit the country's president - a necessary formality in calling early elections, for which he would have to step down as prime minister.

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 will also be calculating that a better election result if polls are held before the steep tax hikes and spending cuts in the bailout are felt by the electorate.

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 86 billion euro, 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.

Pro-euro protesters demonstrate in front of the parliament building in Athens on June 30, 2015. Thousands of people rallied in Athens in support of a bailout deal with international creditors which has been rejected by Prime Minister Alexis Tsipras, leaving Greece on the brink of default. (Photo credit should read Louisa Gouliamaki/AFP/Getty Images)

Opinion polls have shown Tsipras to continue enjoying popular support and to be far ahead of his opposition rivals, although no polls have been published since the bailout deal was finalized.

A new mandate would allow him to move away from the hardliners in his party, some of whom have openly advocated leaving the euro and returning to the drachma. The hardliners, including prominent members such as former energy minister Panagiotis Lafazanis and possibly the flamboyant former finance minister, Yanis Varoufakis, are likely to split from Syriza.

Some analysts took the reports of early elections as an indication that Greece will struggle to implement its bailout.

"Given its anti-austerity roots, the remaining Syriza party will still struggle to implement the demanding bailout conditions, especially in the likely event that Greece sinks further into recession," said Jennifer McKeown, senior European economist at Capital Economics. "And major reforms seem unlikely to be passed in the period running up to the election."

However, initial reaction from European authorities appeared cautiously optimistic. Martin Selmayr, head of the cabinet of European Commission President Jean-Claude Juncker, tweeted that quick elections "can be a way to broaden support for (the bailout) stability support program."

The political uncertainty took its toll on the market, with the Athens Stock Exchange closing 3.5 percent.

"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 13 billion euros ($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.

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