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Europe

Eurogroup ministers agree to double size of bailout fund

Eurozone finance ministers have agreed to double the size of a bailout fund for countries that use the single currency. Despite this, it appears that an agreement on further reforms is needed before any final deal.

A life ring with a euro sign in the middle

A new arrangement is planned from the beginning of 2013

Finance ministers meeting in Brussels on Monday agreed to double the size of a fund set up for future bailouts of eurozone countries.

A permanent rescue fund to be established from the beginning of 2013 will have an effective capacity of 500 billion euros ($675 billion), said Jean-Claude Juncker, head of the eurogroup of finance ministers.

"I would think that this will be enough," said Juncker after talks.

Jean-Claude Juncker

Juncker said he felt satisfied with the planned fund's capacity

The current fund, known as the European Financial Stability Facility, is effectively a 440-billion-euro guarantee from eurozone governments.

However, only about 250 billion euros of this can be made available. The rest remains as collateral, allowing eurozone states to borrow money at rates that make it viable for them to lend.

The size of the fund would be subject to review at least every two years.

Juncker, who is also Prime Minister of Luxembourg, said that further talks would be needed to continue reforms to make supervision of eurozone member state budgets more rigorous.

Franco-German ideas draw criticism

In addition, he said, discussions were necessary on a "competitiveness pact" proposed by Berlin and Paris in return for their commitment to the future funding arrangement.

"Nothing is agreed until everything is agreed," said Juncker.

Leaked drafts of the Franco-German pact reveal plans for European harmonization on matters including retirement age and corporate tax accounting.

A pensioner taking money out of a container

The competitiveness pact proposes harmonization of retirement ages

The pact has attracted criticism from some EU countries because of the bilateral nature of the way it was drawn up by France and Germany, as well as a perceived lack of detail.

Freezing of Egyptian assets on agenda

EU diplomatic sources said that a request had been made by Egypt for the freezing of assets of several Egyptian officials, following the resignation of President Hosni Mubarak. However, the former president was not believed to have been on the list.

France and Britain have both proposed that the issue be discussed at the talks on Tuesday.

Britain - which is not part of the eurozone but which did contribute to a bailout fund for Ireland - was represented at the eurogroup meeting because of the relevance of the rescue fund topic to the wider EU.

A further meeting of eurozone leaders is to take place on March 11 in Brussels with the possibility of an additional meeting ten days later, ahead of an EU-wide summit beginning on March 24.

Author: Richard Connor (AFP, dpa, Reuters)
Editor: Joanna Impey

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