German Parliament Approves Increase in Bailout Fund

Posted September 29th, 2011 at 2:45 pm (UTC-5)
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German lawmakers have approved a bill to increase the size of a bailout fund for struggling eurozone countries.

The lower house of parliament voted to expand the fund to $593 billion on Thursday. The vote was seen as a key test of German Chancellor Angela Merkel's center-right coalition.

The $593 billion figure was agreed to by European leaders more than two months ago. Finland approved the increase on Wednesday. Six other countries have yet to ratify it.

The Berlin vote came as auditors from the International Monetary Fund, European Central Bank and European Union resumed talks with Greece on its debt crisis. They are in Athens looking at Greek efforts to slash its huge debt. The inspectors will recommend whether Greece should receive another installment of last year's $159 billion bailout.

The Greek Parliament approved a controversial new property tax earlier this week, trying to show its international creditors that Greece is committed to economic reform. But Deputy Prime Minister Theodoros Pangalos said on Greek television Wednesday that Greeks are exhausted by taxes.

Some financial experts say $593 billion is still not enough in the bailout fund. They say that several trillion dollars are needed to deal with Greece's debt woes, bailouts for Ireland and Portugal, and possible aid for Italy and Spain.

Greek Prime Minister George Papandreou plans to meet Friday in Paris with French President Nicolas Sarkozy to discuss Greece's financial plight.

The Greek debt crisis is not the only worry for the eurozone, the 17-nation bloc that uses the common euro currency. Its overall economy is weakening, and on Thursday a new survey showed that in September, for the seventh straight month, the region's businesses and consumers had diminished confidence in their economic prospects.