Slovakia Completes the ESM Ratification Process

BRATISLAVA, July 9, (WEBNOVINY) — On behalf of Slovakia, President Ivan Gasparovic has ratified the establishment of the permanent European bailout fund. As the president’s office informed on Monday, the head of state signed the ratification decree to the Treaty Establishing the European Stability Mechanism (ESM). Furthermore, the president signed the ratification treaty to the decision of the European Council amending the treaty on the union’s operation enabling the establishment of the stability mechanism. The ESM ratification process in Slovakia has thus been completed.

The Slovak Parliament voted on Friday, June 22, to approve the Treaty Establishing the European Stability Mechanism. As expected, MPs gave their consent to the ratification of the so-called permanent bailout facility with a clear majority. Of 144 MPs present in the 150-member Slovak Parliament, 118 proposal voted for the proposal, 20 members were against. There were five abstentions and one MP did not vote. The majority of opposition deputies thus supported the ratification, too.

The ESM is to serve as a form of a monetary fund in Europe. Its purpose is to help countries that will not be able to finance their debt on the financial markets or will face problems with their financial sectors. Differently from the European Financial Stability Facility called also the temporary bailout fund that worked on the basis of guarantees for issued bonds, members will contribute directly to the European Stability Mechanism by subscribing shares in the company’s share capital that will represent EUR 700 billion. Of this, EUR 80 billion will be in form of paid up shares and the additional EUR 620 billion in the form of stock payable on call.

The Slovak Republic will have to pay its stake at EUR 659.2 million in five equal installments. The total sum of Slovakia’s stake in the permanent rescue mechanism will stand at EUR 5.768 billion. The remaining capital will paid on call.

The first installment of EUR 131.84 million is due this year within fifteen days of the date when the framework agreement on permanent European bailout fund takes effect. The next installment in the same volume will be probably due in October, and the next three in 2013 and 2014 in the total volume of almost EUR 396 million.

Payment of the first installment of 131.8 million euros is to be made using state financial assets without their strengthening by increasing sources of funding of government debt. „This subscription to capital payable on call from the viewpoint of the ESA 95 methodology will not influence the deficit or the general government debt. According to ESA 95 methodology, the amount will be recorded as a financial operation not influencing the general government budget deficit and public debt,“ stated the Ministry of Finance.

SITA

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Viac k osobe Ivan Gašparovič