Business, Finance & Economics

Slovakia to vote on euro zone bailout expansion


In this photo illustration a Greek flag is covered with one Euro coins on October 4, 2011 in Berlin, Germany.


Sean Gallup

Slovakia's parliament reopened its session to vote on an expansion of the euro zone's bailout fund. Slovakia will be the last of the 17 euro zone countries to vote on the European Financial Stability Facility which was agreed on by euro zone members in July to address the debt crisis, reports the Wall Street Journal.  

The government, led by Prime Minister Iveta Radicova, is expected to lose a confidence vote that Radicova has linked to the vote on the bailout fund in order to convince the rebels in her four-pary coalition to support the bailout fund. 

According to the Associated Press, the 440 billion euro EFSF, would increase the size and powers of Europe's financial rescue program. This would allow large amounts of funds to be quickly released to the banks and to governments.

Analysts are predicting that a repeat vote on the EFSF may be held later in the week and passed if the government receives the support of the opposition. According to the Wall Street Journal, this would require a reshuffling of the cabinet. 

Finance Minister Ivan Miklos, explained that rejection of the fund would bring about a new economic crisis. 

"This time even a worse one than the 2008 crisis after the collapse of Lehman Brothers," Mr. Miklos said when he took to the floor to present the EFSF accord to the legislature referring to the U.S. investment bank's bankruptcy.

The Associated Press reports that the Dow Jones industrial average slipped on Tuesday on worries that Slovakia might not approve the EFSF.

The New York Times reports that Slovakia's resistance is the most "significant hurdle standing in the way of the deal."

If Parliament does not approve the agreement, not only the euro currency's future, but the future of a united Europe and the global economy could be in jeopardy.