The Netherlands puts conditions on expanding EU bail-out fund

The Netherlands has stopped its opposition to the expansion of a European emergency fund to bail out countries which get into financial trouble on condition countries get their finances in order.

The financial stability fund can borrow up to €440bn and is central to the €750bn eurozone bail-out system. But in order to maintain a good credit rating, it can actually only lend countries around €250bn.
Finance minister Jan Kees de Jager said at the start of a two-day Ecofin meeting in Brussels that ‘we must make sure the money we have promised is actually available’.
While it is ‘theoretically possible’ to increase the fund’s loan capacity without raising individual contributions ‘that will be difficult’, he said in an interview in the Financieele Dagblad.
Debt crisis
Both Greece and Ireland have been bailed out during the debt crisis and there are worries Portugal and possibly Spain may also apply for emergency financing. But there are fears the fund needs more money because it will not be enough to cover both countries.
De Jager told Dow Jones news agency the Netherlands, Germany and Finland want eurozone members to commit to budget, banking sector and structural economic reforms before they take action on the fund.
The capacity should be expanded, ‘only under the condition that the other countries deliver on other topics – economic reforms, fiscal consolidation, and address any concerns if any in the banking sector,’ Dow Jones quoted De Jager as saying.
The Netherlands is one of six eurozone AAA rated members – alongside Germany, France, Austria, Luxembourg and Finland. The Dutch guarantee currently stands at €26bn.

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