BERLIN (MNI) – Germany’s upper house of parliament, the Bundesrat,
which represents the 16 states, Friday passed a bill authorizing the
country’s share of the financing in the EU rescue plan for fiscally
troubled member states.
Given that Germany’s share of the loan guarantees will come out of
the federal budget, the Bundesrat would have had only the right to
temporarily delay the bill. But it did not object to the bill.
The lower house of parliament, the Bundestag, already approved the
bill earlier today. It will now become law after having been signed by
the German President.
EU finance ministers agreed earlier this month on a special fund to
raise up to E440 billion over three years through a “special purpose
vehicle” to aid fiscally troubled member states. Eurozone countries are
to guarantee the loans, and the amount each country has to guarantee
will be calculated based on its share in the capital of the ECB.
Germany’s share will be up to E123 billion in loan guarantees plus
up to 20% on top of that in the case of “an unexpected and irrefutable
need,” the government’s bill states. This means that Germany’s full
share of the aid package could rise to around E148 billion in the worst
case scenario.
However, should that need arise, the budget committee of the
Bundestag would have to approve any loan guarantees beyond the E123
billion.
In its bill, the government points to a worsening of financing
conditions in some EU member states over a very short period which
cannot be explained by fundamental data.
“A further escalation of the situation would put the solvency of
these states at risk and would lead to a serious danger for financial
stability in the currency union,” it warned.
–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com
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