BRATISLAVA, Sept 7 (Reuters) - The Slovak government approved a plan on Wednesday to strengthen the euro zone's joint bailout fund, but it will face an uphill battle in parliament, whose consent is required to conclude the ratification process.
Euro zone leaders agreed in July to allow the European Financial Stability Facility (EFSF) to give precautionary loans to countries under attack in financial markets and, in some cases, to buy sovereign bonds.
The Slovaks have resisted paying out under previous deals on aid and its finance ministry urged lawmakers on Monday not to wait until December to vote on the EFSF, as suggested by the head of a junior governing party, to avoid prolonging uncertainty over when the rescue fund's new powers take effect.
The euro area faces renewed market pressure as its most-indebted members scramble to convince investors and the rest of Europe of their commitment to tackle their debt problems and the bloc's key paymaster Germany fights increasing opposition to more aid.
Activation of new firepower for the EFSF is seen crucial in a battle to end two years of turmoil over government debt, but for that to happen national parliaments need to approve the changes - a major hurdle in member states where aid to euro zone stragglers is very unpopular.
Slovakia, the bloc's second poorest member wants to wait until all other countries have voted on the measures, in part because the centre-right government lacks a parliament majority for the plan. One junior coalition partner has declared it would vote against it on the grounds that it would not sign up for paying huge debts for others in the future.
The Freedom and Solidarity (SaS) party, led by parliamentary speaker Richard Sulik, is adamantly against all European bailout funds and says default is the only reasonable solution for Greece.
The parliament is expected to start debate on all EFSF-related bills in the coming days, and Prime Minister Iveta Radicova will need to try to bring Sulik's SaS on board or seek support from the opposition party SMER, her fiercest critic.
Source: www.reuters.com
Euro zone leaders agreed in July to allow the European Financial Stability Facility (EFSF) to give precautionary loans to countries under attack in financial markets and, in some cases, to buy sovereign bonds.
The Slovaks have resisted paying out under previous deals on aid and its finance ministry urged lawmakers on Monday not to wait until December to vote on the EFSF, as suggested by the head of a junior governing party, to avoid prolonging uncertainty over when the rescue fund's new powers take effect.
The euro area faces renewed market pressure as its most-indebted members scramble to convince investors and the rest of Europe of their commitment to tackle their debt problems and the bloc's key paymaster Germany fights increasing opposition to more aid.
Activation of new firepower for the EFSF is seen crucial in a battle to end two years of turmoil over government debt, but for that to happen national parliaments need to approve the changes - a major hurdle in member states where aid to euro zone stragglers is very unpopular.
Slovakia, the bloc's second poorest member wants to wait until all other countries have voted on the measures, in part because the centre-right government lacks a parliament majority for the plan. One junior coalition partner has declared it would vote against it on the grounds that it would not sign up for paying huge debts for others in the future.
The Freedom and Solidarity (SaS) party, led by parliamentary speaker Richard Sulik, is adamantly against all European bailout funds and says default is the only reasonable solution for Greece.
The parliament is expected to start debate on all EFSF-related bills in the coming days, and Prime Minister Iveta Radicova will need to try to bring Sulik's SaS on board or seek support from the opposition party SMER, her fiercest critic.
Source: www.reuters.com
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