BRUSSELS (MNI) – The European Commission reiterated Tuesday that it
was contemplating ways to leverage the E440 billion European Financial
Stability Facility (EFSF) but said that formal talks on the subject were
not yet taking place.

“Further leveraging of the EFSF is being contemplated,” but there
is “no formal debate,” a spokesman for the Commission said.

Because the EFSF, a financial rescue fund for Eurozone countries
being squeezed out of debt markets, is an institution created on a
separate legal basis to the EU treaties, the Commission cannot present
legislation to alter it, the spokesman clarified.

With little evidence that the crisis is abating, the size of the
fund is looking increasingly inadequate, some analysts think. As a
result, Eurozone governments and EU officials are scrambling to examine
a host of possibilities to increase the firepower of the EFSF through
leverage prior to a meeting of finance ministers in Luxembourg next
Monday and a summit of EU leaders, scheduled for 17-18 October.

Eurozone finance ministers are also expected to discuss the
situation in Greece, where authorities are still struggling to cut the
government’s fiscal deficit, implement structural reforms, and raise
funds from the sale of state assets in order to guarantee access to a
crucial E8 billion tranche of aid from Greece’s Eurozone partners and
IMF.

Inspectors from the European Commission, IMF and the European
Central Bank need to sign off on Athens’ progress before Eurozone member
states and the IMF can agree to release the funds, but still no date has
been set for a team from the three institutions to return to the Greek
capital.

The inspectors’ return is expected to be announced “soon” the
commission spokesman said, adding that a team could be dispatched “as
soon as the conditions are met.” A team sent to Athens earlier this
month left abruptly following a dispute over Greece’s failure to meet
its fiscal targets.

“There have been no new developments since yesterday,” with regard
to when the inspectors may return, the European Commission spokesperson
said.

Greek Finance Minister Evangelos Venizelos, however, promised last
night promised in a speech at the Institute of International Finance in
Washington to unveil on Tuesday further spending cuts totaling between
E6.5 billion and E7 billion, Greek business daily Ekathimerini reported.

The measures are expected to include retroactive cuts in tax
exemptions from January 2011, and additional cuts in pensions and state
salaries, the report said.

–Brussels Newsroom +324-9522-8374 pkoh@marketnews.com

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