22nd Jan 2022

Slovakia clears way for euro bail-out fund

  • The new government may yet try to leave the mechanism down the line (Photo: Fotolia)

The future centre-right government in Slovakia will not block the creation of the European Financial Stability Facility (EFSF), the €750 billion eurozone support mechanism.

"The decision about political agreement on the European stabilization mechanism is irreversible and therefore the new government will not block its creation," the Slovak Democratic and Christian Union party (SDKU), the leading party in the future coalition government, said in a statement on Thursday (1 July).

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"Today we are in situation when we are choosing from amongst bad solutions, we have to chose the least bad one," Ivan Miklos, the most likely next Slovak finance minister, told SME, a local daily, the day before.

The formal SDKU statement ends a potential deadlock on the bail-out fund, which requires approval by all 16 eurozone countries.

The deadlock emerged after outgoing Slovak PM, Robert Fico, said he would not sign the ratification instrument unless the incoming new government had first declared that it backs the EFSF, with Mr Fico sensing that his solitary signature could be used as a political weapon against him in future.

Thursday's breakthrough statement comes after SDKU leaders had previously slated the fund, which envisages a €4.3 billion contribution from Slovakia, the eurozone's newest member.

Iveta Radicova, the likely new prime minister, had in pre-election debates called it "bad, dangerous and [the] worst possible solution."

The Radicova-Miklos camp has said that any country seeking to actually get money from the bail-out fund in future would be subject to fresh negotiations on a case-by-case basis.

It has also indicated that it may try to negotiate an exit for Slovakia from the EFSF once it comes to power.

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