Slovakia Set to Reject Expanded Eurozone Bailout Fund

Posted October 11th, 2011 at 10:15 am (UTC-5)
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Slovakia appears set Tuesday to reject an expanded European bailout fund and topple the government of Prime Minister Iveta Radicova, although a new parliamentary coalition could approve the bigger aid plan in the coming days.

Sixteen of the 17 nations that use the euro currency have already approved the $596 billion bailout fund. But in impoverished Slovakia, opposition has grown against committing the country to guaranteeing $10 billion in the fund for debt-ridden countries like Greece, where the average worker is paid more than in the central European nation.

Ms. Radicova said Tuesday’s vote on the expanded fund is a confidence vote on her center-right coalition government. But Slovakia’s largest opposition party, the Freedom and Solidarity Party, says it will not take part in the voting, leaving the prime minister short of a majority.

She said that if approval of the bigger fund fails, a second vote would be held in the next few days, possibly with other opposition lawmakers joining her supporters to form a majority favoring the expanded fund. She said it is “unacceptable” for a prime minister to allow Slovakia to be isolated among the eurozone nations.

In Athens, auditors for Greece’s international creditors approved of the country’s latest austerity measures to help cut its deficit spending. With that favorable assessment, after weeks of review, Greece could by early November receive another segment of its $159 billion bailout from last year and help it avoid a default on its international obligations.

Slovakia’s debate over the expanded bailout fund came as European Central Bank President Jean-Claude Trichet said the continent’s debt crisis has “reached a systemic dimension” and “must be tackled decisively.”

Trichet said the eurozone nations must quickly adopt fiscal reforms and add new funding for debt-distressed banks.

He said the eurozone nations are “at the center of a global crisis.”

With the uncertainty of the Slovakia vote, European stock indexes fell in midday trading Tuesday.