Slovakia backs rescue fund by big majority

Vote for extension of the European financial stability facility opens way to more loans for struggling eurozone states Slovakia has become the 17th and final country to approve the expansion of the eurozone’s rescue fund, two days after rejecting the plan . MPs in Bratislava ratified the extension of the European financial stability facility (EFSF) to €440bn (£382bn) by a substantial majority on Thursday. The vote means that the EFSF can now issue more bonds, make loans to struggling eurozone states, and fund the recapitalisation of weak banks. Despite opposition to the plan, 114 of Slovakia’s 150 MPs voted to give the EFSF more powers. Thirty MPs voted against, with six either abstaining or not attending the vote. “Slovakia is back on the map of Europe,” declared Robert Fico, head of the opposition Smer party. Smer had opposed the EFSF expansion on Tuesday because the prime minister, Iveta Radicova, had made it a vote of confidence in her coalition government. The eurozone debt crisis has gathered pace since July, when EU leaders agreed to expand the EFSF to €440bn. Now, experts warn that the bailout fund may need to be increased to €2tn. “The EFSF would still be too small to support countries such as Italy or Spain should the necessity arise,” said Lutz Karpowitz, an analyst at Commerzbank in Frankfurt. President Herman van Rompuy and President José Manuel Barroso said the enhanced EFSF would provide a “stronger, more flexible tool to defend the financial stability of the euro area”. Radicova lost Tuesday’s confidence vote because a junior coalition partner, Freedom and Solidarity, refused to support the EFSF. It argued it was unfair to expect Slovakia, which endured tough austerity measures before joining the eurozone in 2009, to help wealthier Greece. Slovakia’s parliament also agreed to hold a general election in March 2012. Smer is currently leading the opinion polls, suggesting it could lead the next government. Radicova, who remains as prime minister, has asked Freedom and Solidarity to quit her cabinet. European debt crisis European Union European banks Europe European monetary union Europe Slovakia Banking Graeme Wearden guardian.co.uk

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