Monday

15th Apr 2024

Pressure mounts to boost eurozone rescue fund

  • Belgian finance minister Didier Reynders is encouraging fellow ministers to endorse a hike in the bail-out cash (Photo: Fotolia)

Belgium, the current EU presidency, has called for an increase in the funds available from the eurozone's rescue fund, with the International Monetary Fund (IMF) and the European Central Bank (ECB) making similar calls.

Speaking on Saturday (4 December) to reporters, Belgian finance minister Didier Reynders issued the suggestion just as the International Monetary Fund and the European Central Bank were making similar calls.

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"I'm in favour of an increase in the permanent mechanism but if it's possible to do that earlier, why not?" Mr Reynders told Brussels reporters.

He added that he saw no "real difficulty until 2013 for the current facility."

However, he added that the existing pool of resources should be expanded by "a huge amount of money, because if we don't do that, you always have speculation."

The IMF has urged the EU to hike its bail-out fund, Reuters reports, based on a document from the international lender it has seen. Jean-Claude Trichet, head of the ECB, also said on Friday that the EU should boost its €440 billion European Financial Stability Facility.

There are growing concerns that while there will be enough cash that can be lent to Ireland and Portugal, a Spanish bail-out would breach the lending ceiling.

EU finance ministers are due to meet Monday and Tuesday to discuss the rapid deterioration in recent days in the eurozone sovereign debt crisis, a break-down that has only worsened despite the announcement of an €85 billion rescue for Ireland.

The ministers are expected to focus their talks on the Irish situation and give the green light to the package, but worries about both Portugal and Spain will also be discussed.

On Sunday, EU Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso, Mr Trichet and economics commissioner Olli Rehn held talks to discuss the growing crisis.

Separately, the head of the eurozone and Luxembourg's prime minister, Jean-Claude Juncker and Italian finance minister wrote in an opinion piece for the Financial Times on Monday arguing it was time for the launch of European bonds, a move, they said that would finally send a message to the markets that European leaders would do whatever it takes to defend the euro currency.

Eyes this week will also be turning once again to Greece.

Greek Prime Minister George Papandreou will speak to Mr Barroso about extending the payment period for its €110 billion loan agreed in May.

Other European leaders have made positive noises about extending the schedule, but the request comes at a difficult time for the country.

Monday is the two-year anniversary of the murder of Greek teenager Alexis Grigoropoulos by a police officer, an event that kicked off riots across the country that lasted for three weeks.

Students and other young people have announced a series of demonstrations in 17 cities while the police on Sunday announced the arrest of six individuals after having discovered a series of caches of guns and explosives.

Two of the suspects were wanted by the police in connection with the militant anarchist group Conspiracy of the Cells of Fire, allegedly the perpetrators of a letter bomb campaign against EU targets in November.

The government has also instituted a 21-hour traffic ban on all cars in central Athens ahead of the demonstrations.

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