EU assures troubled members will get financial aid

5th March 2009, Comments 0 comments

EU leaders recently rejected a Hungarian plea for a package to help eastern European nations cope with an increasingly dire economic crisis, opting instead to help on a case-by-case basis.

Brussels -- The European Union will extend a helping hand to any member state, whether in the euro zone or not, facing a financial meltdown, European Commission President Jose Manuel Barroso assured on Wednesday.

"We are considering all options,” he told journalists in Brussels. “We are monitoring the situation inside the euro zone and outside the euro zone, and I am sure that we are going to respond to any difficult situation."

EU leaders rejected a Hungarian plea on Sunday for plans for a regional package to help eastern European nations cope with an increasingly dire economic and financial crisis, opting instead to help on a case-by-case basis.

While the EU has a 25-billion-euro (31-billion-dollar) standing credit facility available for non-euro members of the 27-nation bloc, there is no similar arrangement for euro zone members that run into difficulties meeting their debts.

In the absence of a mechanism for helping euro zone countries in trouble, concerns are growing about whether and how a euro country could be assisted if one were to find itself unable to meet its financial obligations.

Increasingly risk-averse investors are demanding higher interest rates on debt issued by high-deficit members of the euro zone, fuelling fears of such worst-case scenarios.

"We are considering all options and we believe that we have instruments in Europe to react" if a country were threatened by default, Barroso said.

AFP/Expatica

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