Dutch approve euro rescue fund boost

6th October 2011, Comments 0 comments

Dutch MPs Thursday approved new powers for the 440-billion-euro ($590 billion dollars) euro rescue fund, making it the 15th eurozone country to do so.

"The bill has been approved," parliamentary chairwoman Gerdi Verbeet said of the beefed-up European Financial Stability Facility (EFSF), which still has to be approved by Malta, and more problematically, by Slovakia where opposition is very strong.

Approval by all 17 eurozone nations is needed for the changes to come into effect, giving the EFSF what many hope and believe will be crucial role in taming a eurozone debt crisis threatening the economy and the banking system.

Lawmakers voted 96 members in favour in the 150-seat Lower House.

With an effective lending capacity of 440 billion euros, around 25 billion euros of which are guaranteed by the Dutch, the deal will allow the EFSF to lend money to countries before they get into real difficulty so as to prevent the debt crisis spreading.

The EFSF, which will be replaced in 2013 by the more permanent European Stability Mechanism (ESM), may also then buy sovereign bonds of struggling eurozone states on the secondary market and provide countries with money to recapitalise their banks hard-hit by debt writedowns.

Malta is expected to vote on the issue on Monday and Slovakia on Tuesday.

© 2011 AFP

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