BRATISLAVA, July 4, (WEBNOVINY) — An uncontrolled default of Greece, to which the proposal of the ruling coalition member the SaS party to narrow the mandate of Finance Minister Ivan Miklos for negotiations in Brussels would lead, would also jeopardize Slovakia’s consolidation plans, the minister opines. “Then an increase in interest rates could mean a great danger to the stability of public funds and to fulfillment of our plans to reduce the deficit and stop the growing debt,” Miklos said at Monday’s news conference.
A week ago in Parliament, the finance minister stated with regard to the proposal of SaS deputies on explicit participation of the private sector on restructuring of the Greek debt through a write-down of the principal, which would mean the country’s default that Greece’s uncontrolled default would reflect in the Slovak economy through a hike of interest rates on refinancing of the state debt. He went on to say that if interest rates were to go up by one percentage point, the costs of refinancing Slovakia’s state debt would increase by EUR 2.6 billion over next ten years.
Miklos went on to say that the euro zone’s finance ministers have discussed only marginally the second bailout package for Greece to be paid from the ESM bailout fund. They should debate the terms of the loan next week in Brussels. Approval of the second bailout to the debt-stricken Greece is not on the agenda until mid-September. Until then, the amount and form of participation of the private sector and the total volume of the loan should be determined.
Among the requirements that Miklos will go the Brussels with are a political consensus of the Greek opposition and ruling coalition on fulfilling the recovery program, the participation of the International Monetary Fund, privatization and an analysis of the sustainability of the Greek debt. The Slovak Parliament is to vote on Wednesday on the SaS proposal to require the finance minister to demand a more significant participation of the private sector in the form of write-down of the principal.
SITA