EUROZONE countries have agreed in principle to put aside €500bn (£421m) to set up a permanent bail-out fund, finance ministers said yesterday.
The bloc had long planned to replace its current €440bn stability fund with a long-term facility, which expires in 2013, in a bid to settle the ongoing sovereign debt worries throughout the Eurozone.
The early-stage agreement between Eurozone finance ministers, who consulted with the rest of the EU member countries, could pave the way for the new scheme to start before 2013.
Head of the Eurogroup of finance ministers, Luxembourg Prime Minister Jean-Claude Juncker, said yesterday that struggling countries will be able to borrow the full €500bn if necessary – double the effective €250bn lending limit of the interim fund. He added that the size of the fund, named the European Stability Mechanism, will be reviewed at least every two years.
French finance minister Minister Christine Lagarde suggested the interest rates paid by countries using the fund could vary depending on the member state’s financial track record, though she warned that the details are yet to be finalised.
The IMF has also agreed in principle to provide cash for the fund.