27th Oct 2016

Slovakia may hold up eurozone rescue fund

  • Slovakia is expected to contribute as its share of the bail-out some €816 million over the next three years (Photo: formulaphoto)

The emerging new leadership in Slovakia has said the country will not contribute its share of the €110 billion rescue package for Greece. In addition, Bratislava is likely not to add its signature to the €750 billion eurozone support mechanism - something that could put the entire project on ice.

Sources say that by Wednesday (16 June), all countries sharing the single currency are expected to have signed the so-called Framework Agreement on the European Financial Stability Facility (EFSF), a legal instrument agreed by finance ministers earlier this month following the risk of Greece's debt crisis spreading to other weak economies.

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"It would be a serious blow to the EFSF and the euro area's ability to stand behind its members [if a member does not sign]," a senior eurozone official told this website.

He explained that all 16 signatures on the document - which specifies provisions on how to issue loan guarantees if necessary - are required to bring the emergency mechanism to life.

The cabinet of outgoing social democratic Prime Minister Robert Fico, who will not return to power after last weekend's elections, has decided to leave the sensitive issue to his successor after EU bail-out plans featured prominently in the campaign.

Conservative politician Iveta Radicova, the likely next prime minister, described the bloc's €750 billion rescue fund during the pre-election debates as "bad, dangerous and [the] worst possible solution."

On Tuesday (15 June), Ms Radicova also re-iterated that she is against Slovakia providing any financial support to Greece.

"In a situation when we must deal with floods, [when] we do not have enough resources and the use of European funds is insufficient ... we will primarily channel resources to solving flood consequences, and that is how I will present it during talks in Brussels," she told press, shortly after four centre-right parties signed a declaration on political co-operation that should result in a new government.

Slovakia is expected to contribute some €816 million over the next three years as its share of the Greece bail-out scheme - a figure reportedly amounting to the annual budget of the country's interior ministry.

Previously, the newest eurozone member state had been content to sign the so-called inter-creditor agreement that paved the way for Athens to receive the first tranche of the loan - €80 billion from the euro area and €30 billion from the International Monetary Fund.

The deal still needs the approval of the Slovak parliament, however.

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