Here’s what is not in the competitiveness pact:
- An extension of bailout terms for Ireland since they refused to raise their corporate tax rate
- No agreement to buy the ECB’s portfolio of PIG bonds by the EFSF
What is in the agreement:
- Size of bailout fund raised to EUR 500 bln
- EFSF will be able to buy bonds directly from weak states
- There will be cash contributions to the fund rather than only debt guarantees
- Greek loan rates cut by 1%
The economic overhauls, originally dubbed a “pact for competitiveness” and renamed a “pact for the euro,” stem from a proposal made by Germany and France more than a month ago. But the version approved Friday during a lengthy dinner is vaguer than the original, and tough provisions have been softened or removed.
Never under-estimate the euro group’s ability to over-promise and under-perform…
