Forex News – Slovakia rejects vote on bailout fund; re-vote later this week

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As feared, the Slovak parliament rejected a vote to ratify a bill to expand the EFSF, which is the euro zone’s rescue fund.

Slovakia is the only euro member yet to ratify the deal, which must be approved by all 17 countries that use the single currency in order to take effect.

Slovakian Prime Minister Iveta Radicova failed to gather enough support from her coalition government as the dissenting ruling party abstained in confidence vote, toppling her government .

A total of 55 lawmakers of the 124 present backed the motion, short of the required majority of 76 deputies. Nine were against it. The vote was destined to fail after the Freedom and Solidarity party, one of four coalition members, said it wouldn’t support the changes.

The party argued that, as one of the poorest members of the single currency club, Slovakia should not pay for debts racked up by richer countries.

With average salaries still below those in Greece, it was tough to garner support among the poorest euro citizens for further aid to their Mediterranean partners.

The expanded powers of the 440 billion-euro ($600 billion) EFSF would allow the rescue fund to buy the debt of stressed euro-area nations, aid troubled banks in the region and offer credit lines to governments. The EFSF’s current role is to sell bonds to finance rescue loans.

The Slovak government said it hoped to pass the measure by the end of the week with opposition support. Radicova’s finance minister, Ivan Miklos, said Slovakia was still likely to find a way to ratify the agreement soon.

“There is an assumption that the EFSF, one way or the other, will be approved by the end of the week,” he said.