Slovak Lawmakers Agree to Expand Eurozone’s Bailout Fund

Posted October 12th, 2011 at 11:10 am (UTC-5)
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Slovak lawmakers agreed Wednesday to reverse their vote against expanding a bailout fund for Europe’s financially troubled countries.

Leaders of Slovakia’s four main political parties reached accord a day after the nation’s Parliament rejected a bid calling for the impoverished central European nation to guarantee $10 billion of the expanded $596 billion fund. The Tuesday vote toppled the center-right government of Prime Minister Iveta Radicova, with her opponents saying the country could not afford to support debt-ridden countries like Greece.

The lawmakers said a new vote on the expanded rescue fund would be held by the end of the week.

Opposition leader Robert Fico, head of the Smer-Social Democracy, said that in exchange for his party’s support, Slovak political leaders have agreed to hold an early general election on March 10. That is two years ahead of when the Radicova government would normally have faced a new vote.

After the Tuesday vote, key European leaders pressed Slovakia to act quickly to reverse it. With its approval, all 17 nations that use the common euro currency will have given their assent for the expanded bailout.

German Chancellor Angela Merkel, whose country has Europe’s biggest economy, warned that the global economy is “heavily affected” by Europe’s governmental debt crisis. She said that “every country must contribute its share” to the expanded fund to cover future bailout needs.

While Slovak lawmakers reconsidered their vote, European Commission President Jose Manuel Barroso declared that the continent’s banks needed to “significantly” boost their reserves to withstand possible losses they could incur on securities they have purchased from financially distressed governments.

He said the banks should not be allowed to pay bonuses to executives or dividends to investors until they have increased the reserves.

In Greece, civil servants staged a new wave of strikes against the government’s austerity measures, blocking access to the country’s finance ministry and shutting down the country’s museums and archaeological sites. More strikes are planned throughout October.

Greece has won preliminary approval to secure another segment of its $159 billion bailout from last year. But its financial condition continues to worsen. The government said Wednesday that its deficit for the first nine months of the year grew to more than $26 billion, a figure 15 percent higher than the same period a year ago.