BRATISLAVA, June 20, (WEBNOVINY) — The Cabinet is soon to discuss the draft contract on establishment of the European Stability Mechanism (ESM II). The new eurozone permanent bailout instrument, the European Stability Mechanism, should replace in 2013 the existing temporary stabilization system, which consists of guarantees of individual states. “Unlike the European Financial Stability Facility (EFSF) bailout fund, individual states will contribute to ESM directly by buying shares from the company’s share capital representing EUR 700 billion, of which EUR 80 billion will be in the form of paid-up shares and the remaining EUR 620 billion in the form of shares payable upon request.
The Slovak Republic would thus have to pay up its share of EUR 659.2 million in five installments within five years. The first installment would be due in July 2013. Liberal member of the governing coalition, the SaS party, is fundamentally against Slovakia’s participation in the mechanism. SaS Chairman Richard Sulik confirmed the party’s disapproval in a statement released last week. “We oppose an increase in the volume of ESM I and participation in ESM II. SaS‘ stand is unambiguous and will not change,” he said. The contract would require parliament’s approval.
ESM is in the second wave of measures aimed at provision of assistance for eurozone member states in a difficult situation, thus preserving the eurozone’s financial stability. ESM follows the European Financial Stability Facility (EFSF), established for a limited period, namely until June 2013. The stability facility was intended to stop provision of financial assistance after this date and operate only as an administrator of already paid financial aid.
SITA
