20 December 2011, 17:53  Fitch: European Financial Stability Facility can lose its top AAA status

Сredit rating agency Fitch has warned of a risk that it may downgrade the euro zone's bail-out fund, the European Financial Stability Facility. Fitch said the fund could lose its top AAA status if its main sponsors France and Germany did. "The AAA rating on debt issues of the European Financial Stability Facility largely depends on France and Germany retaining their AAA status," the company said in a statement. Fitch said its decision last week to change its outlook on France to "negative" implied that the risk of a downgrade of the EFSF had increased. Meanwhile, Europe has urged G20 nations and other big contributors around the world to come to the aid of euro zone bail-out efforts through the IMF, after British resistance saw finance ministers miss a self-imposed EU target. Euro zone chief Jean-Claude Juncker said after a three and a half hour conference call that euro zone countries had pledged €150 billion in new loans for the International Monetary Fund to use in stabilising the debt-laden euro area. The shortfall from a €200 billion target set on December 9 was in large part caused by Britain's refusal once more to agree to the terms demanded. Britain's share, based on IMF quotas determined by wealth and size, would be about €30 billion. The IMF currently has some €296 billion available for lending to countries that enter reform programmes. "The EU would welcome G20 members and other financially strong IMF members to support the efforts to safeguard global financial stability by contributing to the increase in IMF resources so as to fill global financing gaps," Juncker said in a statement. He said the non-euro zone Czech Republic, Denmark, Poland and Sweden had each pledged to make loans, but added that Britain would only "define its contribution early in the new year in the framework of the G20." However the Czech finance ministry spokesman told the CTK news agency that no decision had yet been taken. A British government spokesman said: "The UK has always been willing to consider further resources for the IMF, but for its global role and as part of a global agreement." A diplomat involved in the talks said the 27-nation European Union as a whole "implicitly" agreed to cough up, using individual loans. The IMF, meanwhile, welcomed the proposed new contributions. "We welcome the EU finance ministers' support for a substantial increase in the IMF's resources, as we work to strengthen our capacity to fulfill our systemic responsibilities to our global membership," it said. A key factor will be how the US responds to pressure to chip in, as the biggest single IMF member economy and a major trading partner of the euro zone. Washington however has its own debt and budget crises to contend with. Juncker, who spoke of a "special responsibility" for euro zone states, noted that for some countries, notably Germany, parliamentary approval will be required before it will come up with the lion's share.

© 1999-2024 Forex EuroClub
All rights reserved