BRATISLAVA, February 1, (WEBNOVINY) – At its regular session on Wednesday, the Cabinet of Iveta Radicova approved the draft treaty establishing the permanent European Financial Mechanism (ESM). Slovakia will pay its contribution to the permanent bailout fund in five annual installments, totaling EUR 659.2 million. The overall value of shares subscribed by Slovakia will reach EUR 5.768 billion. The fund’s basic capital will be EUR 700 billion with EUR 80 billion in paid-in shares and EUR 620 billion in callable capital. During the period when the EFSF and ESM will be effective simultaneously, their overall lending capacity will not exceed EUR 500 billion.
According to the Finance Ministry, the prepared paper is the second version of the Treaty Establishing the European Stabilization Mechanism and was approved at the euro zone summit in Brussels on January 30. Following the Cabinet’s approval, the material still requires the green light from Parliament. The ministry assured that the approval and subsequent ratification of the treaty would not have any impact on public finances. Slovakia will have to provide the money for ESM only in April 2012 when the Slovak Cabinet approves the acquisition of Slovakia’s share in the ESM capital. Slovakia will use state financial assets for this purpose.
The ESM will have following decision-making authorities: the Board of Governors (Finance Ministers of ESM member countries), the Board of Directors and a Managing Director. The provision of financial assistance to an ailing country will require unanimous approval. Decisions on extraordinary cases when the stability of the euro zone would be disturbed considerably will require an 85-percent majority. The ESM is an intergovernmental organization.
SITA