Eurozone could add trillions to budget rescue fund

The European Union is looking at a possible quadrupling of its rescue fund, the European Financal Stability Facility, EFSF, to solve the eurozone’s financial problems. The fund, which currently stands at 440 billion euros, could be boosted to more than two trillion euros. 

Reuters/Remote/Pawel Kopczynski

The reported increase comes ahead of a crucial week for the eurozone as the International Monetary Fund and the European Union are set to decide whether to release the next slice of rescue funds of eight billion euros for Greece since a first payout in May last year. Without this money, Greece will be unable to pay its current bills from around the middle of October.

Greek Finance Minister Evangelos Venizelos said in Washington on Sunday that Athens would introduce new measures to fight the debt crisis and the risk it could spread to Italy and Spain.

A senior official said on Monday that the government could announce a number of privatisations including a concession for a gaming monopoly and the sale of licenses for video lotteries.

The debt-laden Socialist government has pledged to privatise and lease the equivalent of 50 billion euros in state companies and property by 2015. But the programme has been thrown into doubt by the government’s poor track record after months of promises.

Many financial markets suffered heavy losses last week as analysts complained that mixed messages and lack of clarity from the Group of 20 leading economies fuelled concern that another global financial crisis is looming.

But European shares rebounded on Monday amid intense speculation over a banking recapitalisation plan and an orderly Greek default, although the euro came under further pressure from the debt crisis.

In late morning trading, the London stock market added 0.42 per cent, Paris advanced 1.84 per cent and Frankfurt jumped 2.09 per cent. Italian and Spanish shares rose by about 3.0 per cent.

But the euro sank to 1.33 dollars, hitting the lowest point since January in early morning London deals, and hit another ten-year low at 101.94 yen in Asian trade.