Sunday 26 March 2017

Fund chief predicts eurozone crisis will end by 2014

DEBT

Emmet Oliver

THE head of Europe's €440bn rescue fund has predicted the continent's debt woes will be over by 2014 and described the chances of the eurozone breaking up as "zero''.

Klaus Regling, famous in Ireland for authoring a report on the economic collapse, said the current crisis would be over in two to three years at most, as countries cut their deficits and shored up their banks.

He said Ireland, in particular, was getting back on its feet.

Mr Regling, who heads up the European Financial Stability Facility (EFSF), is an influential German figure with strong links to the EU and the IMF.

He was speaking in an interview with German title, 'Spiegel'.

"One can justifiably expect the crisis to be over within two to three years. In all eurozone countries the fundamentals are improving," he said.

Mr Regling claimed all of the eurozone states had already started to cut their deficits and get overall debt levels down.

He said the states worst affected by the crisis "most notably Ireland'' were getting back on their feet.

Mr Regling said countries needed to implement their savings and reform plans and the risk that the euro would break down was "zero'' because both weak and strong countries had an interest in keeping it.

"The risk that the euro is discarded, from whatever quarter, is zero,'' he said, responding to what he called excessive pessimism within Germany.

"The US deficit, for example, is three times higher than the eurozone,'' he claimed.

The €440bn EFSF is due to be replaced in 2013 by a similar fund known as the European Stability Mechanism.

In the meantime, Mr Regling has already provided assistance from his fund to Ireland and Portugal.

Effectively, the EFSF raises money itself on the markets and then lends it on to countries in the IMF/EU programme.

The borrowings are guaranteed by most of the main European economies.

Last year the fund was awarded a AAA rating and a large number of Asian funds have been attracted by their bonds.

Irish Independent

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