Merkel, Sarkozy urge quick action

Thursday 25 November 2010 21.58
European Commission - Denied reports that stability facility will double
European Commission - Denied reports that stability facility will double

German Chancellor Angela Merkel and French President Nicholas Sarkozy urged quick action on an agreement providing Ireland with a financial bailout from the EU and IMF.

The two leaders, who spoke by telephone, ‘agreed that negotiations with the Irish government must be rapidly concluded,’ a statement from the chancellor's press office said.

Merkel and Sarkozy also said they had been ‘impressed by the public finance recovery program presented by the Irish government,’ the statement added.

Diplomatic sources in Brussels said the talks were set to be wrapped up on Sunday, with an announcement ‘probable’ the same day.

A meeting of finance ministers from the 16-nation eurozone followed by talks among finance chiefs from the full 27-nation EU, most likely by telephone, is scheduled for Sunday to approve the aid package and the conditions that Dublin would to have to meet in exchange.

Ireland would thus become the second eurozone member to receive EU-IMF financial support following an aid package approved for Greece in May.

Merkel and Sarkozy in their exchange also agreed that a mechanism currently in place to assist EU countries in financial difficulty ‘will remain in effect without modification until 2013,’ according to the statement from the chancellor's office.

But the German and French governments ‘are working intensively on a joint proposal for a permanent crisis resolution mechanism that would replace it (the current facility) after 2013,’ the statement added.

EC denies rescue fund will double

The European Commission has denied reports that it proposed to double the size of a eurozone financial safety net to €880bn.

The German daily Die Welt reported that the European Union's executive arm wanted to pump more money into the €440bn European Financial Stability Facility, which was created to help any euro zone nation in trouble.

'It's false,' European Commission economic affairs spokesman Amadeu Altafaj Tardio said.

The newspaper said Germany had rejected the idea of doubling the fund's size.

The 16-nation eurozone decided to create the EFSF in May to prevent a new crisis after the Greek debt drama rocked the value of the bloc's common currency and triggered fears of contagion to other weak economies.

The mechanism is part of a wider programme that also includes €60billion from the 27-nation European Union and another €250bn from the IMF, bringing the total safety net to €750bn.

Six months after the €110bn Greek bailout, Ireland is finalising an deal with the EU and IMF for loans expected to be worth around €85bn.