BRATISLAVA, June 22, (WEBNOVINY) — Iveta Radicova’s Cabinet has approved the agreements on European financial stability mechanisms. According to them, Slovak participation in the European Financial Stability Facility (EFSF) should increase and a permanent European Stability Mechanism II (ESM II), where states would also send cash, should be created.
“We are essentially against Slovakia entering the ESM II and are also against extending the EFSF,” said Speaker of Parliament Richard Sulik at a news briefing after Wednesday’s unscheduled coalition council meeting initiated by liberal government party SaS. Sulik added that his party’s four ministers would not support these proposals.
According to the prime minister, the Cabinet agreed with grossing up the EFSF in order to preserve continuity and fulfill an inherited obligation so that the capacity of EFSF corresponds with the sum of funds originally agreed upon. “The Cabinet adopted both proposals with a majority of votes,” said the prime minister adding, that SaS ministers and conservative KDH Interior Minister Daniel Lipsic did not support them. Radicova, however, explained that although the Cabinet approved the agreements, she can not guarantee their adoption by parliament.
Slovak guarantees in EFSF should, according to the proposal, increase from the original EUR 4.37 billion to EUR 7.72 billion. The guarantees in the system should altogether increase from EUR 440 billion to EUR 779 billion. The result is providing more capacity of the mechanisms to originally intended 440 billion euros, which was not reached as several participating countries did not reach the highest AAA rating. Finance ministers of the euro zone agreed upon increasing the EFSF guarantees in mid May. In March, EU leaders agreed with increasing the EFSF effective loan capacity to 440 million euros from the original level of 250 million euros from June. As a result of efforts to maintain the highest AAA rating, effective loan capacity of the fund is lower than its nominal value. EFSF, a temporary financial stability mechanism, should be replaced by permanent European Stability Mechanism.
SITA