(Adds details on loan agreement)
WASHINGTON, July 20 (Reuters) - The International Monetary Fund on Thursday approved in principle a $1.8 billion standby loan arrangement for Greece, making a conditional commitment to help underpin the country's long-running bailout program for the first time in two years.
But the IMF's approval-in-principle means the fund will not make any money available until after it receives "specific and credible assurances" from Greece's European lenders to ensure the country's debt sustainability.
The approval is also conditional on Greece keeping its economic reforms on track. The current bailout, Greece's third since 2010, is now shouldered exclusively by European institutions.
A second Executive Board decision will be needed to make the IMF program fully effective, the IMF said. The arrangement will expire on Aug. 31, 2018, shortly after Greece's European Stability Mechanism loan program ends.
"The program provides both breathing space to mobilize support for the deeper structural reforms that Greece needs to prosper within the euro area and a framework for Greece's European partners to deliver further debt relief to restore Greece's debt sustainability," IMF Managing Director Christine Lagarde said in a statement.
(1 euro = $1.1631) (Reporting by Lesley Wroughton; Editing by Richard Chang and Peter Cooney)