Finance ministers mis-managing euro crisis

  • 2011-09-21
  • From wire reports

TALLINN - After returning from a meeting of the EU ministers of finance in Wroclaw, Poland, the Estonian minister Jurgen Ligi stated that the Estonian Parliament ought to take a more serious stance towards the euro area’s financial crisis issue, reports National Broadcasting. “The debates were fierce, on different issues and in general terms the ministers noted that the European economic situation was deteriorating,” said the minister in an interview with Estonian National Broadcasting’s radio news.

“The most important question for me is what will happen to EFSF,” he added.
The European Financial Stability Facility (EFSF) was created by the euro area member states following the decisions taken May 9, 2010 within the framework of the Ecofin Council, reports As part of the overall rescue package of 750 billion euros, EFSF is able to issue bonds guaranteed by EAMS (euro area member states) for up to 440 billion euros for on-lending to EAMS that are in financial difficulty, subject to conditions negotiated with the European Commission in liaison with the European Central Bank and International Monetary Fund and to be approved by the Eurogroup.

“Member states are very much needed to ratify the amendments to the treaty in a prompt manner, and that very clearly includes Estonia and Estonia’s Parliament,” said Ligi. “Making it appear as if the debates here are only just beginning – this is something I strongly oppose; after all, EFSF has been discussed for a year and a half and every MP needs to know the general aspects of it,” he added.

The minister emphasized that the international crisis has lasted for more than four years already and action must be taken swiftly, the decision-makers cannot afford to procrastinate. “The mechanism will not enter into force before the last country will have ratified it and, according to current plans, if the Riigikogu Committee on Finance will stay firm on its opinion, Estonia would be the last state to manage it,” he said.

Members of the Social Democrats’ faction in Riigikogu, MPs Eiki Nestor and Rannar Vassiljev, stated at the meeting of the Riigikogu Committee on Economic Affairs on Sept. 20 that the Parliament is not authorized to adopt a decision with which Estonia would provide its guarantee to the euro area’s rescue plan in the form which the government has proposed.
The Committee on Economic Affairs discussed the draft decision initiated by the government with which Estonia would pledge to guarantee the debt obligations of the EFSF with up to 1.995 billion euros.

“In my opinion, this proposal violates the State Budget Act which lists the subjects to whom the State is allowed to issue its security. EFSF is a private enterprise registered in Luxembourg and here the law that is currently in force will not allow assuming financial obligations on behalf of the State,” explained Nestor. “I do not understand at all what the government was doing all through the summer. It ought to have convened the Parliament to an extraordinary session to amend the State Budget Act,” he added.

Deputy chairman of the Committee on Economic Affairs Rannar Vassiljev stated that Social Democrats want the Parliamentary committee to initiate the necessary legislative amendments. “Acceding to EFSF is a matter of utmost importance and it cannot be done by violating the law,” he noted.