Merkel rejects extending euro rescue package

28th September 2010, Comments 0 comments

Chancellor Angela Merkel said on Tuesday that Germany would not back an extension of the European Union's multi-billion-euro bailout fund for debt-laden countries beyond 2013.

"Germany will not consent simply to extending the funds, as we have them now," Merkel said in a speech to the BDI employers' federation.

In May, faced with a ballooning deficit crisis in Greece, EU leaders cobbled together a huge rescue deal backed by the International Monetary Fund and central banks worldwide.

The package consisted of 440 billion euros (593-billion-dollars) of guarantees from euro countries, 250 billion euros of loans from the IMF and 60 billion euros in loans raised by the full, 27-nation European Union.

"We need to make sure that countries that are weaker today become stronger," said the chancellor.

Germany pays in most to the fund as Europe's top economy and Berlin has pushed for tougher punishments for EU countries that persistently break the bloc's deficit rules.

Finance Minister Wolfgang Schaeuble recently drew up a position paper outlining Germany's support for automatic sanctions for rule breakers, including the suspension of voting rights and EU development aid.

Schaeuble said the EU's Stability and Growth Pact needed "more bite" by speeding up the penalty process.

© 2010 AFP

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