COPENHAGEN (Reuters) - Euro zone finance ministers have agreed to boost the currency bloc’s debt crisis firewall to roughly 800 billion euros ($1.06 trillion), Austrian Finance Minister Maria Fekter said on Friday.
After what sources called a heated discussion, the 17 countries sharing the euro agreed on the lowest common denominator favored by countries such as Germany, Finland and the Netherlands, where public opinion is against more money for bailouts, EU sources said.
The amount would comprise 500 billion euros in fresh money through the permanent rescue fund, the European Stability Mechanism (ESM), when it comes online in July, and 200 billion already committed under the existing European Financial Stability Facility (EFSF).
Another 53 billion euros would come from bilateral loans already extended to Greece and 49 billion euros in aid from the bloc’s first response to the crisis, known as the European Financial Stability Mechanism (EFSM), Fekter told reporters.
A senior euro zone official confirmed the figures.
The EFSF has a total capacity of 440 billion euros and the uncommitted 240 billion would serve as a buffer in case of an emergency over the next 15 months, when the currency area’s temporary and permanent rescue funds run in parallel, Fekter said.
The European Commission, France and several of the world’s biggest economies had been pushing hard to increase the euro zone bailout capacity, in the belief that once investors see a wall of money supporting euro zone debt, confidence would return and the rescue funds would never have to be used.
But until early this week, Berlin was against raising the pot of money in advance, saying it was ready to do so only if needed, noting that markets have calmed down from the peak of the debt crisis and that implementation of agreed reforms was more important.
The decision will give the euro zone something to present to finance ministers of the world’s 20 biggest developing and developed economies in April in Washington during talks about bigger global contributions to the International Monetary Fund.
“We are now in a strong position for discussion on the IMF in April. It is a good signal,” said French Finance Minister Francois Baroin.
A higher euro zone bailout capacity is a pre-condition for most G20 countries to contribute more money to the IMF. ($1 = 0.7532 euros)
Reporting by Annika Breidthardt and Paul Carrel, additional reporting by Francesca Landini, editing by Mike Peacock