Germany backs lower Greek rescue loan rate in Merkel turnaround

German Chancellor Angela Merkel told lawmakers late on Thursday that she would back lower interest rates for emergency loans if Greece agrees to sell state assets and Ireland backs a common corporate tax base in the euro region.

Merkel briefed a closed-door parliamentary session late on Thursday in Berlin on her position as European Union leaders seek to break a deadlock before a March 25 deadline on reinforcing their bailout plan and coordinating economic policies, four lawmakers who attended the session of the body?s European Affairs Committee told Bloomberg.

Her willingness to back what she called a moderate reduction in the cost of the rescue loans sought by Greece and Ireland marked a turnaround.

The comments followed the first acknowledgement by her government yesterday that an expansion of the European Financial Stability Facility to lend its full capacity was on the table.

As part of the quest for a comprehensive plan to stem the debt crisis, the EU is nearing agreement on a plan to be put to today?s summit to raise the region?s competitiveness and tighten economic cooperation, German and French officials said.

The pact, which includes chapters on competitiveness, labor, sustainable public finances and the stability of financial systems, sets objectives rather than binding targets, leaving countries free to find their own policy mix, the officials said on condition of anonymity because the talks are not public.

Merkel indicated support for raising the EFSF?s effective lending capacity to its headline figure of 440 billion euros and for making sure that the facility replacing it in 2013 can pay out the full 500 billion euros if needed, the lawmakers said.

Still, Merkel won?t support bond buying in the secondary market by the EFSF and the future permanent rescue fund, she told lawmakers. The post-2013 fund can only be allowed to dispense aid as a last resort, she said.

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