DAVOS, Switzerland (Reuters) - Finland is not ready to join a bailout of any more European countries, Prime Minister Mari Kiviniemi said on Friday, adding that the euro zone’s bailout facility had sufficient funds.
“We are not ready for any bailouts of the other European countries,” Kiviniemi told Reuters Insider at the World Economic Forum in Davos.
Europe is discussing ways to beef up its European Financial Stability Facility (EFSF) rescue fund to show it has enough firepower to support other states struggling with their borrowings, hoping this will ease the region’s debt crisis.
“We have to concentrate on how to make EFSF function better,” Kiviniemi said.
The fund has a headline value of 440 billion euros but an effective lending capacity estimated at just 225 billion euros because of the need to secure a triple-A credit rating.
Referring to this capacity constraint, Kiviniemi said: “There’s still a problem.”
The worry is that the fund could be wiped out if a larger European economy needed rescuing, and if that happened the fallout may not remain contained within Europe.
The challenge is to boost it without raising the headline sum, which would be difficult to sell politically to Germany’s parliament and public in particular, and for ‘AAA’-rated countries not to take more than their share of the burden.
Reporting by Natsuko Waki, writing by Paul Carrel