HELSINKI Finland has reservations about a proposed centralized eurozone budget to help struggling countries in the currency zone, its prime minister said on Sunday.
The idea of a budget, which would be separate from the long-term budget of the wider European Union, is due to be discussed at an EU summit this week and it is backed by Germany and France [ID:nL5E8LCC1A].
Jyrki Katainen said Finland, known for its tough stance towards many euro crisis measures, has many concerns about the budget plan.
"At first a philosophical question - is it right to separate the integration of EU states and non-EU states? Secondly, what would it mean to EU budget, would the money come from there," Katainen said in a radio interview with YLE.
Asked about a recent EU idea for euro states to pool short- term funding, Katainen said Finland remains opposed to common euro zone bonds.
Greece, one of the countries at the center of the crisis, is expected to agree a new austerity package with its lenders by the time EU leaders meet on October 18-19.
Katainen did not comment on a proposal to give Athens an extra two years to hit its deficit reduction targets. However, he said the country had to keep its austerity program on track even though it hits growth in the short term.
On the situation in Spain, Katainen said a sovereign bailout would be a serious problem.
"I do not think Spain will need a so called full-scale bailout package, and I think that would not necessarily be possible to create either."
(Reporting By Jussi Rosendahl; Editing by Erica Billingham)