France says euro fund boost 'premature'

14th January 2011, Comments 0 comments

European Union efforts to boost eurozone rescue funds for vulnerable countries are "premature," France's Finance Minister Christine Lagarde said on Friday.

"If we had to increase the European stability fund a figure would have to be calculated (but) ... it is premature" to do so, Lagarde told reporters, after Belgium proposed doubling the fund to 1.5 trillion euros ($2 trillion).

Belgian Finance Minister Didier Reynders told AFP Thursday that discussions were underway about doubling the system's lending capacity amid concerns that Portugal and even bigger eurozone economies such as Spain may need bailouts.

Europe, with the backing of the International Monetary Fund, last year set up a 750-billion-euro financial backstop to rescue any country in trouble in the wake of a massive bailout of Greece.

"An increase of the European Financial Stability Facility is an option we are looking at" among a "range" of others including the structure and conditions of the lending, Lagarde said. "It is not only a question of money."

On the French economy, Lagarde said estimates showed growth was 1.5 percent in 2010, lower than her 1.6 percent forecast, but insisted "the growth outlook is good." The government is aiming for two percent growth in 2011.

Budget Minister Francois Baroin said separately that France's state budget deficit for 2010 was lower than expected at 148.8 billion euros.

He hoped would help it meet its aim of an overall 2010 public deficit of 7.7 percent of Gross Domestic Product, more than double the limit set by EU treaties. He said France aimed to get its public deficit below the three percent limit by 2013.

© 2011 AFP

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