Slovakia - Eurozone

Slovakia in crucial vote on eurozone rescue fund

Reuters/Petr Josek

Europe's main stock markets slipped on Tuesday over mounting uncertainty over whether Slovakia will vote to increase the eurozone bailout fund. 

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London's FTSE 100 index of leading shares sank 0.73 per cent, Frankfurt's DAX 30 declined 0.78 per cent and in Paris the CAC 40 dropped 0.95 per cent.

Slovakia's deadlocked centre-right coalition met for fresh talks on Tuesday on bolstering the EU's debt rescue fund, the EFSF, ahead of a key parliamentary vote it must win for the crucial eurozone deal to go through.

Slovak Prime Minister Iveta Radicova said she would tie the vote to a motion of confidence in her coalition government, suggesting it could be a very close ballot which might require a second vote.

Dossier: Eurozone in crisis

The liberal Freedom and Solidarity, SaS, party is threatening to vote against the deal unless Slovakia is exempt from providing guarantees worth 7.7 billion euros for the revamped 440-billion-euro EFSF.

It also wants an opt-out from the European Stabilisation Mechanism, a permanent bailout fund designed to replace the EFSF in mid-2013, and veto power for Slovakia over future emergency loan disbursements from the EFSF.

Radicova's coalition commands 79 votes in the 150-member parliament and depends on the SaS's 22 seats in the vote scheduled for Tuesday afternoon.

The ballot comes after the 16 other eurozone members approved changes to revamp the EFSF, set up in May 2010 after Greece was bailed out to save it from default.

Eurozone leaders agreed in July to boost the EFSF's powers in the hope of stemming the fallout from the eurozone's deepening sovereign debt crisis which now threatens the euro project, the bloc's banking system and the economy.

Meanwhile, new strikes hit Greece on Tuesday as the government finalised talks with its EU-IMF creditors on additional spending cuts to secure payment of a bankruptcy-saving loan.

Greece's reserves to pay wages and pensions runs out in November, when it could face default if the 8.0 billion euros is blocked.

 

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