Forex News – EFSF vote is in the hands of Slovakia, final voting euro zone member

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Forex Asia Review - Euro temporarily retreats from recent losses; Euro debt woes still persistThe expansion of the European bailout fund, the European Financial Stability Facility (EFSF), is in the hands of Slovakia, which is the final country in the 17-nation euro zone to vote today to ratify the new measure.

However, there is fear that the Slovak vote will derail the EFSF expansion as a dispute between the four-party coalition government and rebel lawmakers may lead to rejection of the new measure to give more powers to the EFSF.

It has been difficult to gather support among one of the poorest citizens of the euro zone, whose average salaries are well below those of Greece, and so are reluctant to provide further aid to the indebted euro zone economies.

It is necessary for all 17 euro zone members to vote in favour of ratifying the new measures. An enhanced EFSF is crucial as it is aimed at preventing the Greece debt crisis from spiralling out of control and in turn preventing contagion to the rest of the peripheral countries.

Slovak Prime Minister Iveta Radicova failed to bring all opposing parties to an agreement on Monday evening in last-ditch coalition talks. Sources close to Radicova said she would decide on one of three options by Tuesday morning: to tie the EFSF vote to a confidence vote, to resign before the vote, or to resign after the vote in case it fails.

The likely scenario is that if the vote today fails, the Slovak parliament can put the ratification to repeated ballot within hours or days after that once a political agreement with the opposition is in place.