Although eurozone ministers agreed Tuesday to boost the value of the rescue fund, they acknowledged that they might call on the International Monetary Fund for help to do so after Italy’s borrowing costs soared to nearly 8%, a euro lifetime high.
Reuters reported that the 17 ministers from the eurozone agreed at their meeting to approve a detailed plan to guarantee the first 20-30% of new bond issues from countries wallowing in debt; they also said they would create co-investment funds designed to bring in investors who would purchase eurozone government bonds.
Eurogroup chairman Jean-Claude Juncker said that both plans would be operational by January, with the European Financial Stability Facility having about 250 billion euros available after a second bailout for Greece is funded. He added that the goal was for matching funds to come from the IMF to support the strengthened EFSF.
He was quoted in the report saying, “We also agreed to rapidly explore an increase of the resources of the IMF through bilateral loans, following the mandate from the G20 Cannes summit, so that the IMF could adequately match the new firepower of the EFSF and cooperate even more closely.”