Finance ministers from the 17 euro countries agreed on Friday to pay off Greece’s next batch of bailout loans, avoiding a potentially disastrous default, and moved closer to reducing the country’s massive debt burden.

But Greece’s debts are only one piece of Europe’s economic puzzle. The ministers meeting in Brussels were also struggling with two more complicated – and arguably more important – issues: boosting the firepower of the eurozone’s €440 billion bailout fund to keep the crisis from spreading, and forcing weak banks to increase their capital buffers as a defence against market turmoil.

An EU official said that ministers had made progress on strengthening the banks, and that a plan should be ready for a summit of EU leaders today. He spoke on condition of anonymity to discuss confidential negotiations.

However, more work remains to be done regarding Greece and the bailout fund – the European Financial Stability Facility (EFSF). Decisions on those two fronts were not expected until a second summit on Wednesday.

Greek Finance Minister Evangelos Venizelos welcomed the news that Athens would get the next €8 billion instalment, calling it a “positive step”. A day earlier, the Greek parliament had approved new, deeply contentious austerity measures to get the money.

The loans, which still need the approval of the International Monetary Fund (IMF), should be delivered during the first half of November. The money will keep Greece afloat for a little longer, but most economists agree that the country also needs a substantial cut to its debt load.

The findings of a report by Greece’s international debt inspectors piled more pressure on European finance chiefs to find a solution for the country, whose troubles kicked off the crisis almost two years ago.

According to the report, Athens will not be able to raise money on financial markets until 2021 unless it is allowed to write off more of its debt load. If that does not happen, the country will need hundreds of billions of euros in new bailout loans.

A person familiar with the report said a tentative deal reached with banks in July to give Greece easier terms on its bonds would still leave it with a huge debt load of 152 per cent of economic output in 2020. The person spoke on condition of anonymity because the report is confidential.

Germany is pushing for a revision of the July deal to have Greece’s private creditors take bigger losses of 50 to 60 per cent and reduce its debt to some 120 per cent of GDP by 2020.

The EU official said ministers had moved closer to Germany’s position on steeper cuts to Greece’s debt, but some financially weaker countries were still worried that this could destabilise their markets and push their borrowing rates higher. “I wouldn’t say there’s a consensus, but something close to that,” he said.

The eurozone needs to find a way of ensuring that larger countries such as Spain and Italy do not become engulfed in the debt crisis, as they would be too expensive to bail out.

Increasing the firepower of the EFSF is intended to offer that protection, but Germany and France still disagree over how to do it.

Ministers failed to make much progress on that front on Friday, and the meeting broke up shortly after starting discussions on the EFSF.

A German official, speaking on condition of anonymity, said that a combination of two options had crystallised as the most likely solution to giving the fund more leverage. The first would involve the EFSF acting as an insurer for bond issues from wobbly countries like Italy. That would essentially compensate investors against a first round of potential losses and keep governments’ borrowing costs in check.

In addition, the IMF – which has already provided about a third of the bailout cash for Greece, Ireland and Portugal – would supply other stragglers with precautionary credit lines to make sure they have ready access to cheap money.

Last weekend, at a meeting in Paris, the finance chiefs from the Group of 20 leading economies opened the door for a larger role by the IMF, but only if the eurozone first plays its part.