According to media reports available, senior European leaders are negotiating the overhaul of the Emergency Financial Stability Fund (EFSF) – the emergency rescue fund set up to bailout crisis struck economies, in exchange for stricter spending cut and closer supervision of the struggling ‘peripheral’ states.
Unnamed sources have claimed that leaders are mulling “enhanced surveillance” of Spain and Portugal rather than simple assistance, which will give mark of approval from the EU on the proposed reforms and boost investor confidence.
Olli Rehn – European Unions Economic and Monetary affairs Commissioner said to FT in an interview that: “The EU should not try to impose a programme on any country” adding “Spain is taking very bold and profound measures”.
However, leaders are unlikely to reach a consensus at the summit meeting of EU leaders scheduled in Brussels on Friday.
Also, sources claim that the EU is planning to extend the loan tenure of Greece and Ireland to 30 years in an effort to contain the trading bloc’s debt crisis.
The loans to Greece and Ireland “had no guarantee of success”, said John Lipsky – the IMF’s First Deputy Manager, adding that the debt crisis of both the countries were extremely difficult in nature.
“There is no getting around that. That is why the measures were implemented”, lamented Mr. Lipsky.
He said it is difficult to say if the measures undertaken to salvage the situation will work since “there are so many variables”.
“The emphasis is on the authorities’ efforts to put their economic and financial houses in order in a difficult situation”, he added.