Syriza, the radical leftist party, which fell painstakingly short of an overall majority in Greece's general election yesterday, has formed a coalition government with another anti-austerity party Anel, also known as the Independent Greeks.
"I want to say, simply, that from this moment, there is a government," Panos Kammenos, the Independent Greeks leader, told local media.
“The Independent Greeks party will give a vote of confidence to the Prime Minister, Alexis Tsipras. The Prime Minister will go to the President and … the cabinet make-up will be announced by the Prime Minister. The aim for all Greeks is to embark on a new day, with full sovereignty.”
Anel clashes with Syriza over social issues such as immigration - nevertheless it still agrees with the majority party's demands for change.
Market reaction remained muted, with the euro having recovered from an 11-year low of $1.1088 earlier in the day, and now trading at $1.127.
The Euro Stoxx 600 closed slightly up at 372.97 points in mid-afternoon trade. Meanwhile, the Athens Stock Exchange was closed down 3.2 per cent at 813.55 points, having shed as much as five per cent earlier in the day.
Despite Syriza's promise to eliminate Greece's debt obligations to its international lenders - the European Union, the International Monetary Fund and the European Central Bank - analysts have suggested EU members generally think that the country should remain inside the Eurozone.
But earlier today Christine Lagarde, head of the International Monetary Fund, told French newspaper that Greece shouldn't be given special treatment over its debts. "There are internal Eurozone rules to be respected ... we cannot make special categories for such and such country," she said.