Olli Rehn, the European commissioner for economic and monetary affairs, confirmed last night that ministers had agreed on a solution to Finland’s demands for a collateral arrangement, which would be available to all Eurozone countries.
Klaus Regling, chief executive of the European Financial Stability Facility, said that countries that do receive collateral will have to compensate by paying their capital into the future European Stability Mechanism in one tranche in the first year.
Under the terms of the arrangement, profits earned by the European Financial Stability Facility to the countries that receive collateral will be reduced. The collateral will also be frozen until the ESM is unwound in case of default.
“It is the price to be paid and this is the reason why it is unlikely that no other country except Finland will make this request,” Regling told a news conference in Luxembourg.
The agreement comes despite Greece’s draft budget sent to parliament yesterday, showing the current year’s deficit would be 8.5 per cent of gross domestic product, well above the 7.6 per cent agreed in Greece’s EU/IMF bailout programme.
Jean-Claude Juncker, head of the Eurogroup meeting of Eurozone finance ministers, however, firmly denied all rumours that Eurozone members were pushing for a Greek default and said that the country will be in a position to meet its financial obligations.