Eurozone finance ministers have approved a fresh $171-billion (130 billion euros) bailout for Greece, after more than 13 hours of tense negotiations in Brussels.

The bailout will reduce Greece’s government debt from around 160 percent of the country’s gross domestic product to just over 120 percent by 2020 — the maximum level considered sustainable by the International Monetary Fund.

The deal was reached early Tuesday after private holders of Greek debt agreed to take on a bigger-than-expected 53.5-percent face value loss on their bonds. They had previously offered a 50-percent writedown. Around $130 billion (100 billion euros) will now be written off as part of the debt exchange.

The euro made substantial gains Tuesday on news of the deal, which should help Greece avoid a catastrophic debt default when its government bonds come due next month.

Eurozone chief Jean-Claude Juncker says the bailout will preserve the financial stability of both Greece and the eurozone. But he warned Athens must meet a series of conditions to secure the full amount of the emergency loan, which is Greece’s second in as many years.

“The eurogroup is fully aware of the significant efforts already made by the Greek citizens, but also underlines that further major and joint efforts by all parts of the Greek society are needed to return the economy to a sustainable growth path.”

The Greek government has already approved deeply unpopular austerity measures that include a 22-percent cut in the country’s minimum wage and the elimination of 15,000 government jobs.

But donor countries who are skeptical of Greece’s ability to enact further austerity measures to pay back their debts insisted that the new bailout deal contain a special account that sets aside some of the bailout funds specifically to cover interest payments on Greece’s massive debt.

Analysts have warned that if Greece had defaulted next month, it could have had catastrophic consequences for the eurozone, and possibly have led to a sharp downturn in the world economy.