LUXEMBOURG (MNI) – Eurozone finance ministers tried to dampen
expectations of any concrete decisions as they headed into the Eurogroup
meeting on Monday even as they recognize that further delays may prove
costly.

Before discussions on possible leveraging of the European Financial
Stability Facility (EFSF) can take place, the decisions taken on July 21
to give new powers to the fund must first be implemented, they insisted.

German finance minister Wolfgang Schaeuble noted that “only 10% of
the EFSF’s funds are currently occupied,” indicating that there was no
immediate pressure to increase the fund’s firepower.

He also said that he was not willing to speculate about a possible
leveraging of the fund before all Eurozone member states had approved
the changes to the bailout fund.

“I ask first the implementation of the decisions of July 21 before
discussing other elements for the future. We need first to implement the
decisions taken in July,” Belgian Finance Minister Didier Reynders.
said.

Luxembourg’s Finance Minister Luc Frieden added his voice, saying,
“leveraging of the EFSF is not a decision of today. Today will focus on
the medium to long-term roadmap.”

Only Finnish Finance Minister Jutta Urpilainen said the topic of
EFSF leveraging would be on the agenda of tonight’s meeting.

While Finland does “not want to increase the capacity of the EFSF,”
Urpilainen said that leveraging it is “the one issue that we are going
to discuss tonight.”

She also said that she is “sure” that finance ministers will
discuss the demand by Finland for collateral to guarantee any further
aid it grants to Greece. But “whether we find a solution is impossible
to say,” she added.

Given the high degree of pressure on Eurozone officials to find a
solution that will ringfence Italy and Spain, there should in fact be
little doubt that finance ministers will discuss various options for
EFSF leveraging.

Finance ministers are merely buying more time to forge a common
deal — a strategy they know may well be costly as the experience with
Greece has shown.

“Each day that passes that we send negative signals, we lose time
and money,” Reynders said. “After all the efforts made by Greece, I hope
we can quickly, today or in the coming days, confirm the next tranche of
aid to Greece.”

All the national parliaments of the euro area need to approve the
changes to the EFSF agreed by EU leaders in July, which include an
increase in the lending capacity of the fund to E440 billion, along with
greater flexibility to buy distressed sovereign bonds, recapitalize
banks and provide pre-emptive financing to countries with reduced access
to market funding.

While parliaments in key Eurozone members, including AAA-rated
Germany and Finland, have already ratified the changes to the EFSF, the
votes are expected to be close in the Netherlands and Slovakia, where
junior members in the governing coalition have threatened to vote ‘no.”
Failure to ratify the EFSF changes in one euro area country could
jeopardize the entire bloc’s crisis strategy, as the approval of all
member states is required.

EU officials, including the President of the European Commission,
Jose Manuel Barroso, have urged EMU governments to agree to the EFSF
enhancements before EU leaders meet at a summit in Brussels on October
17.

–jtreeck@marketnews.com, pkoh@marketnews.com,

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