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  Eurozone countries agree to boost firewall to 800 bln euros  

  

 

In the statement, the ministers said the current overall ceiling for the EFSF/ESM will be raised to 700 billion euros from the ceiling of 500 billion euros in December 2011.

  COPENHAGEN, March 30 (Xinhua) -- The 17 eurozone member countries agreed to build an 800-billion-euro (about 1.1 trillion U.S. dollars) financial firewall against the current debt crisis, finance ministers said Friday.

  "All together the euro area is mobilizing an overall firewall of approximately 800 billion euros, more than 1 trillion U.S. dollars," said a statement of the Eurogroup, a meeting of eurozone finance ministers.

  The bailout funds, the so-called "firewall," primarily comprise the temporary European Financial Stability Fund (EFSF) and the 500-billion-euro permanent European Stability Mechanism (ESM).

  In the statement, the ministers said the current overall ceiling for the EFSF/ESM will be raised to 700 billion euros from the ceiling of 500 billion euros in December 2011.

  In addition, 49 billion euros and 53 billion euros from existing programs, such as bilateral loan facility to Greece, have already been paid out to the so-called "program countries," the statement said.

  The combined figure of all these rescue funds tops 800 billion euros, which the ministers said is the total size of the latest firewall, indicating that there is no new money being added to the rescue mechanisms.

  Explaining how the bailout funds will be deployed, the Eurogroup said the ESM will be the "main instrument" to finance new EU programs from July 2012, when it comes into force.

  As a rule, the EFSF will only finance programs started before July 2012. However, it may engage in new programs to ensure "full fresh lending capacity of 500 billion euros" until mid-2013.

  By mid-2013, the maximum lending volume of the ESM will be 500 billion euros, while the combined lending ceiling of EFSF/ESM will remain at 700 billion euros, the statement said.

  The ministers added that eurozone countries have committed to providing 150 billion euros' additional bilateral contributions to the International Monetary Fund (IMF).

  In the statement, they said they had "reassessed" the adequacy of the lending ceiling of the EFSF/ESM "in order to further improve market confidence."

  The European Commission had suggested combining various committed and left over ESM/EFSF funds to reach a possible total of 940 billion euros ahead of Friday's meeting.

  However, the German government has maintained that no fresh money should be committed to the funds, and the Finnish government was also against boosting the funds to 940 billion euros.

  The Eurogroup discussion took place prior to the informal Economic and Financial Affairs Council (ECOFIN) meeting, which is hosted by the current Danish EU Presidency and runs from Friday to Saturday.

  Finance ministers of all 27 European Union (EU) countries will now meet to discuss EU-wide economic stability packages, the upcoming seven-year EU budget and proposals for a tax on financial transactions.

  No formal decisions will be taken at the ECOFIN meeting, but the discussions are expected to move forward EU's growth and stability agenda. (1 euro = 1.33 U.S. dollars)

 

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