Slovak government approves euro zone safety net

The Slovak government approved signing the euro zone's emergency loan facility designed, a government spokesman said.

Slovak government approves euro zone safety net

The Slovak government approved the euro zone's emergency loan facility on Thursday, yielding to pressure from its European partners to drop its resistance.

The euro area's poorest member, led by the new centre-right cabinet of Prime Minister Iveta Radicova, had been holding up the 750-billion euro European Financial Stability Facility (EFSF) after objections to bailouts became a campaign issue in the country's June election.

The previous leftist government of Robert Fico, which stepped down last Thursday, endorsed the aid mechanism.

"We want to set an example of following the rules of the game. Because of this, the government has supported the political declaration given by the previous government in May," Radicova told reporters after the cabinet meeting.

Approval of the safety net was unanimous but no date had been set for signing the framework agreement, she said.

Pressure on Bratislava to unblock the EFSF in the past few weeks because the fund is a crucial part of Europe's efforts to restore confidence in financial markets after the Greek debt crisis.

But the cabinet did not budge on a separate promise made to voters that it would not back aid for Greece, agreed by European countries separately from the EFSF.

The cabinet recommended parliament not to approve an 800 million euro ($1.02 billion) bilateral loan to Greece, which would be Slovak contribution to the EU package.

"The Greek loan is about irresponsible government policies, irresponsible behaviour of the banking sector, rating agencies, but also the of the Eurostat and malfunctioning of other institutions," Radicova said.

The cabinet recommended parliament support the EFSF, but also agreed it would demand creation of stricter fiscal rules in the euro zone, including a mechanism for bankruptcy for countries with irresponsible fiscal policies, before any aid from the fund is released.

Temporary financial support to troubled countries will have to be in line with the International Monetary Fund's policies and conditions, the government said.

Finance Minister Ivan Miklos, a fiscal hawk charged with slashing the excessive fiscal deficit, introduce further market reforms and re-start domestic economy, said he expected the parliament to debate Slovak participation in coming weeks.

Slovakia's share in the overall 750-billion euro fund is 4.5 billion euros worth of guarantees. The country of 5.4 million adopted the single currency in January last year, but the public is angry that it has been asked to help bail out Greece, a far wealthier country.

The minimum wage in the ex-communist country of 5.4 million, which adopted the single currency in January last year is 308 euro, well below the Greek minimum legal wage of 863 euro.

Reuters

Güncelleme Tarihi: 15 Temmuz 2010, 15:33
YORUM EKLE