Eurozone: Slovakia Bailout Fund Vote Crucial

Slovakian Prime Minister says her coalition has not come to an agreement.

Slovakian Prime Minister says her coalition has not come to an agreement.

Slovakia is set to vote on measures to increase the size and power of the eurozone bailout fund. The passage of this vote in Germany was seen as a huge triumph for Angela Merkel and the bailout fund itself is a key part of the emerging policy to fight the eurozone debt crisis.

All 16 of the other eurozone member states have already approved the measures, but they must be approved by all of the countries in the bloc.

Coalition troubles

One party within the Slovakian government coalition is holding out on approving the bill, insisting that Slovakia does not have the resources to bail out other countries.

The other three parties back the expansion, but the resistance from one of the coalition parties could mean that the Slovakian government will have to rely on opposition support. The opposition has already made its own difficult demands concerning their approval of the bailout fund measures, which include new elections.

“I have to say that the coalition partners have failed to reach an agreement,” Iveta Radicova, Prime Minister of Slovakia, said.

Fund details

Expanding powers of the fund, called the European Financial Stability Facility or EFSF, mean that the fund will rise to an effective lending capacity of 440 billion euros (£383 billion).

The EFSF will also have the power to buy debt from eurozone member goverments, and offer credit lines to both banks and member states.

While eurozone member states have grappled with the huge sums being negotiated in increasingly large bailout fund, experts say that the expansions are not nearly enough. The plans were made in July, and experts say that the fund should be closer to 2 trillion euros to have the effect that is hoped for.

Despite eurozone turmoil, bank shares rose slightly on the heels of an announcement by French President Nicholas Sarkozy and German Chancellor Angela Merkel, who said they will do all that it takes to protect European banks affected by the debt crisis.

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