EU rescue fund should be increased: Belgian finance minister

By Justyna Pawlak

BRUSSELS (BestGrowthStock) – The European Union’s permanent rescue fund should be larger than the money available currently and the increase could be made before 2013, Belgian Finance Minister Didier Reynders said on Saturday.

However, any decision to top up funds for countries with crippling debt problems should be made after the 27-member bloc decides on the shape of a permanent solution to address financial crises, he said.

Euro zone finance ministers outlined plans on Sunday for such a permanent system, which the bloc would put into place in 2013 and base it on the current European Financial Stability Facility (EFSF) that was set up in May.

Together with money from the International Monetary Fund and other cash, 750 billion euros ($989 billion) was made available in May for rescue efforts.

“We need to increase the total amount of money for the permanent mechanism coming in 2013. I am not asking for such an increase now,” Reynders said on the sidelines of a conference in Brussels.

“(But) If we decide (to increase it) in the next weeks or months, why not apply it immediately to the current facility,” he said. Belgium holds the EU’s rotating president until 2011.

The EU has already dipped into the funds to bail out Ireland, and financial markets are not convinced the debt crisis enveloping Europe has been contained. Spain and Portugal are seen as the next in the markets’ firing line.

However, any moves to increase bailout funds would be politically sensitive. Several euro zone countries, notably Germany, were already reluctant to set up the EFSF and Berlin might balk at the idea of putting up more cash.

Responding to Reynders’ comments, a German finance ministry spokeswoman said Berlin saw no need to increase the size of the safety net.

“There is no need to expand the fund,” Jeanette Schwamberger said.

But Reynders said some support for the idea may be building within the IMF, which had put cash into the EFSF.

“The IMF is in favor of a larger mechanism … and they are ready to follow the process if we decide it in Europe.”

Earlier this week, a U.S. official told Reuters Washington would be ready to support the extension of the EFSF via a commitment of money from the IMF.

Reynders also said Belgium was safe for now from economic woes of the scale that hit Ireland and Greece. In the past week, financial markets appeared increasingly concerned about risks posed by political squabbling in Belgium.

“We don’t have any real problems in Belgium for the moment like that,” he said, adding that Belgium’s debt and deficit levels were in line with EU requirements and the overall economic situation was good.

EU rescue fund should be increased: Belgian finance minister