BRUSSELS (MNI) — The European Financial Stability Fund has more
than enough lending capacity and there is no need to increase it at
present, EFSF Chief Executive Klaus Regling said on Monday.

The E440 billion EFSF was set up earlier this year to provide loans
to needy Eurozone states. So far only Ireland has tapped it for cash,
but some fear that further bailouts – perhaps of Spain and Portugal –
could test the capacity of the fund.

“I sometimes hear and read that the EFSF might be insufficient,
that the amount might be too small to deal with relevant cases, and I
think that this is wrong, the amounts needed for the Irish programme…
are relatively small compared to the lending capacity of the EFSF,”
Regling told reporters at a press conference after a meeting of the
Eurogroup in Brussels.

He said the EFSF was using “much less than 1/10th of its overall
lending capacity” for the Irish aid deal and that there would be
sufficient capacity left if it was needed for other cases.

“We are in the final phase of preparing the Irish agreement, which
means that the loan facility agreement will be signed with the Irish
government before Christmas,” Regling said. “I expect to issue bonds of
around E5 billion, or a little bit more, in the second half of January,”
he added.

Regling said he continues “to receive positive signals from
investors around the world — large investors, like central banks,
sovereign wealth funds, institutional investors” — and therefore
expects “no problem at all on the funding side.”

European Commissioner for Economic and Monetary Affairs, Olli Rehn,
said he expected Ireland wouldn’t need to access the bond markets for
two years.

Eurogroup President Jean-Claude Juncker said the Eurogroup had
discussed the budget plans of Spain and Portugal and that the Eurozone
finance ministers were “very impressed.”

But he added they had asked Portugal for more details on how it
will bring its budget deficit back below the EU’s stipulated 3% limit.

Juncker said ECB President Jean-Claude Trichet had been “crystal
clear” in communicating the central bank’s strategy and that all of the
Eurozone’s politicians had reiterated their commitment to the stability
of the single currency.

The ministers will be joined Tuesday by their colleagues from the
non-EMU members of the European Union for another set of meetings.

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

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