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Slovakia Votes to Strengthen Rescue Fund

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Slovakia’s ruling coalition, which lost a no-confidence vote tied to the modification of the European Financial Stability Facility on Tuesday, cobbled together an agreement with the opposition Smer party that led to the passage of the strengthening of the bailout fund on Thursday at the cost of its power. 

Reuters reported that the defeat of the measure on Tuesday by Smer and by the Freedom and Solidarity party was designed more to oust Prime Minister Irena Radicova’s Cabinet than it was to oppose Slovakia’s share of the bailout mechanism.

Although SaS opposes Slovakia’s participation, Smer has already said that the bailout fund modification must be approved; the latter has, however, demanded that a general election planned for 2014 be moved up to March 10, 2012 as a condition of ratification. 

Slovakia is the only country of the 17-member eurozone that has failed to approve measure. Once the measure is passed, the amount of the rescue fund will be increased to 440 billion euros ($604.192 billion); it will also be granted the ability to buy sovereign bonds to give countries relief from deteriorating markets, extend emergency lending to countries, and recapitalize banks.

Radicova’s Cabinet is expected to remain in place until a new administration is put together.