Germany shoots down talk of euro rescue fund boost

27th September 2011, Comments 0 comments

Germany Tuesday shot down suggestions that the EFSF eurozone rescue fund, whose new powers are currently being debated by parliament, should be boosted beyond its current 440-billion-euro ($590 billion) ceiling.

"There is full agreement within the federal government that the EFSF, as it will be voted on by parliament on Thursday, stands precisely as was agreed on July 21" by eurozone leaders, government spokesman Steffen Seibert told a regular press conference.

"The federal government is holding no such discussions and considering no such plans," he added following Tuesday's cabinet meeting.

Spain's Finance Minister Elena Salgado Tuesday had also dismissed such reports, saying that while it might be necessary to "strengthen" the European Financial Stability Facility, "a strengthening does not necessarily mean an increase."

German Finance Minister Wolfgang Schaeuble also said Monday that there was no plan to boost the size of the eurozone rescue fund.

"We are giving it the tools so it can work if necessary," he said in an interview with news channel NTV.

"Then we will use it effectively but we do not have the intention of boosting its volume."

In comments published Monday, European Union Finance Commissioner Olli Rehn said the EU was thinking of strengthening the fund.

He did not give any figures but reports have said it could be boosted to more than 2.0 trillion euros.

The German parliament is due to vote on Thursday on whether to expand the rescue fund for faltering countries such as Greece, which is on the verge of defaulting on its debts.

Just eight of the 17 eurozone states have so far ratified the new EFSF powers agreed at a July eurozone summit.

Greece, Ireland and Portugal have all had to be bailed out by the EU and IMF to prevent a default. Recent market turbulence has also shown the crisis threatens to spread to Italy and Spain.

© 2011 AFP

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