ECONOMY

Eurogroup backs Greece as fund grows to 500 bln euros

The head of the Eurogroup, Jean-Claude Juncker, and European Economic Affairs Commissioner Olli Rehn have both backed Greece?s efforts to improve its public finances following a meeting where the prospect of extending the repayment period for the country?s emergency loan package was discussed.

Juncker described as ?impressive? Greece?s efforts to meet the targets set by the European Union and the International Monetary Fund (IMF) and said he was satisfied with plans to privatize 50 billion euros worth of state assets over the next five years.

Following the meeting in Brussels on Monday, Rehn also commented on the controversy over Greece?s privatization plans, saying that it was ?unfortunate? that representatives of the Commission and the IMF should announce the scheme before the Greek government.

?The Greek government has sole responsibility for the decisions that will affect the privatization program in Greece,? said the commissioner.

The finance ministers did not conclude on an extension to Greece?s loan repayment period, which is expected to be finalized at an EU leaders? meeting next month, but they did agree to double the size of a fund set up for future bailouts of eurozone countries.

The European Stability Mechanism, a permanent rescue fund to be established from the beginning of 2013, will have an effective capacity of 500 billion euros, the ministers decided.

“I would think that this will be enough,» said Juncker after talks.

The current fund, known as the European Financial Stability Facility, is effectively a 440-billion-euro guarantee from eurozone governments.

However, only about 250 billion euros of this can be made available. The rest remains as collateral, allowing eurozone states to borrow money at rates that make it viable for them to lend.

“We are already agreed on the volume of the lending capacity for the ESM,» Juncker said, adding that the full sum would be its «effective» capacity.

He also said the size would be subjected to «regular review at least every two years.”

Juncker, who is also Prime Minister of Luxembourg, said that further talks would be needed to continue reforms to make supervision of eurozone member state budgets more rigorous.

Rehn said the «unwritten understanding» with the IMF was that it would again offer «50 cents to one euro» put up by the Europeans to go alongside the future ESM.