BRUSSELS (MNI) – Eurozone finance ministers are meeting in Brussels
this evening to discuss ways to reduce debt across the 16 country
currency bloc without dampening growth.

The euro weakened to a four-year low Monday on concerns that
massive debts and deficits in some Eurozone countries could drag on
growth in the coming years.

In a bid to restore confidence in the Euro, Eurozone finance
ministers earlier this month thrashed out a deal with their EU partners
and the International Monetary Fund to provide a pool of loans and loan
guarantees worth up to E750 billion for Eurozone states with problems
repaying their debts.

In tandem, the European Central Bank took an unprecedented step,
buying government bonds on the secondary market and reopening foreign
currency swap lines with other major central banks in addition to
reactivating other liquidity providing operations.

So far that action has only partially reassured investors, as the
Euro’s downtrend continues, though spreads on Eurozone sovereign debt
have stabilized for the time being.

“I am not worried as far as the current [euro] exchange rate is
concerned; I am worried as far as the rapidity of the fall is
concerned,” Eurogroup President Jean-Claude Juncker said as he arrived
for today’s meeting, which he will chair.

Belgian finance minister Didier Reynders said the level of the
currency reflected concerns about debt levels in southern European
countries and that those countries should take decisive action to reduce
their budget deficits and public debt.

Austrian finance minister Josef Proell said the tightening of
Eurozone government spreads “shows that the plan that we adopted one
week ago was the right one.”

“It’s necessary if we have to reduce our debt that we find
solutions that don’t destroy growth,” Proell said. “Namely not to
completely infringe on growth, but…meaningfully reduce deficits.”

“I think the measures we’ve already taken are very solid,” Dutch
Dutch finance minister Jan Kees de Jager said.

“We are still working for the future,” he said. He added that the
finance ministers were still discussing ways of reinforcing the EU
budget rules, as set out in the stability and growth pact.

EU rules stipulate limits for government debts and deficits but
haven’t been strictly enforced in recent years. That, combined with the
impact of the financial crisis, has allowed some Eurozone countries to
breach the limits by a big margin. Greece is the worst offender, at over
four times the budget deficit limit, but Spain is not far behind.

The European Commissioner for Economic and Monetary Affairs, Olli
Rehn, is set to present to EU finance ministers on Tuesday the
Commission’s plans for strengthening the rules.

–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com

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