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Saturday 21 September 2019

Debt crisis: Slovakia pledges to clinch bailout deal after rejection collapses government

Slovak Prime Minister Iveta Radicova
Slovak Prime Minister Iveta Radicova

Slovakia's leaders have pledged to rescue a key euro bailout bill rejected by parliament, triggering the collapse of its government and threatening Europe-wide efforts to ease the debt crisis threatening the world's economy.

But late on Tuesday night the outgoing prime minister and her main opponent said they would now work to approve the bill quickly.

The agreement to talk came shortly after parliament voted against an expanded euro bailout fund - a vote that prime minister Iveta Radicova had tied to a confidence measure.

Parliament is due to convene again, but it is not clear when another vote might be held.

The eyes of officials and investors around the world are on the small central European country, because expanding the fund requires the approval of all 17 countries that use the euro.

Sixteen countries have already approved and now Slovakia - with a population of just 5.5 million people - holds in its hands the fate of a measure that will affect all Europe, and by extension, the global economy.

But the statements of the country's leading politicians left little doubt the Slovakian parliament would approve the measure soon.

"We decided that we have to do it as soon as possible," Ms Radicova said after announcing her party would hold talks with the primary opposition party, led by former prime minister Robert Fico.

Mr Fico took much the same line, saying: "Slovakia has to approve the fund."

Although 16 countries have given the thumbs-up, approval of the changes has found itself in potential jeopardy because of the opposition of a junior member of Slovakia's governing coalition, the Freedom and Solidarity Party. The party's chairman, Richard Sulik, calls the expanded bailout fund "a road to hell" and has vowed to block it.

European Affairs Minister Lucinda Creighton today pointed to new multi-billion euro stimulants from Brussels as a hope for growth in the economy with a knock on for job creation.

The Minister said that while there was a lot of talk about the austerity required to get national economies in places like Greece back into shape - that country's budget deficit is already running at €19bn this year - she said there was other financial injection coming down the line.

She agreed there would have to be cuts and raising of revenue but the effects of the Common Agriculture Policy (CAP) as well as Cohesion and Structural Funding coming into economies across the zone which would have beef up the current situations.

Ms Creighton said that the President of the European Commission José Manuel Barroso would listen to the Irish view on a range of issues when he meets Taoiseach Enda Kenny this week.

On the question posed by German Chancellor Angela Merkl that the 27 states of the European Union might need votes on further EU treaty changes, the Minister said on Morning Ireland: "Nothing is impossible but there is no appetite for such a process."

She stressed that the heads of states in the EU had already met in July and agreed a comprehensive package including economic governance.

"We will have to see how they work," she added.

The Commission will unveil plans today banks recapitalisation against a backdrop of the Greek debt causing a lending crisis among European banks.

This move was badly affected by Slovakia, the last country to come to a decision on the issue, after its junior coalition partner brought down the government.

But delicate plans to boost the EU's rescue mechanism have been thrown into disarray after the junior coalition partner in Slovakia, the last country to vote on the issue, rejected the measure, bringing down the government.

However the opposition declared its support for expanding the EU's bailout mechanism but has insisted on a general election as they prices for such backing.

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