€704m: Malta’s share and guarantees in rescue fund

Malta’s contribution and guarantees to the eurozone’s bailout fund will increase by 76.77 per cent from €398.44 million to €704.33 million, according to the published Participation and Guarantees under the European Financial Stability Facility (Amendment) Bill, which will be discussed by the House in all stages this evening.

The Bill will be introduced by Finance Minister Tonio Fenech, back from a eurozone Finance Ministers’ meeting in Luxembourg. The ministers put off a decision on releasing the latest tranche of Greece’s financial bailout.

Greece is expected to go into default in November unless it receives an €8 billion bailout instalment. Inspectors from the so-called “troika” of the European Union, International Monetary Fund (IMF) and the European Central Bank (ECB) have been in Athens to examine the government’s efforts to reduce its deficit. The tranche is only to be released if the inspectors are satisfied that Greece is doing all it can to reduce its debt.

Malta is one of the last three eurozone member states to approve its contribution, the others being Slovakia and The Netherlands.

The leader of the junior party in Slovakia’s governing coalition had threatened to block changes to the EFSF that would give the fund new powers and increase its lending capacity. But Luxembourg Prime Minister and eurozone group leader Jean-Claude Juncker said that Slovakia’s parliament would likely approve changes to the bailout fund. He said the country’s finance minister had indicated that there would be “a positive vote”.

Analysts said there should not be any problem regarding The Netherlands.

Under the new terms, the EFSF’s lending capacity would be increased to €440 billion and it would have new powers to buy up bonds of shaky economies or lend to governments before they reach full-blown crisis. Changes to the fund have to be approved by all 17 eurozone member-states.