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Brian Lenihan arrives at yesterday's meeting of the Eurozone's finance ministers. Virginia Mayo/AP

Eurozone ministers still deadlocked over bailout expansion

There’s no deal from Brussels over whether to add more money to the bailout pot, but support is growing.

THE FINANCE MINISTERS of the 17 Eurozone countries have still to reach an agreement on whether the bloc’s financial stability fund should be expanded, but support is growing for the idea, according to reports.

The Wall Street Journal says that the expansion of the European Financial Stability Fund – which needs to be given greater funding in order to freely lend without losing its AAA rating – has been supported by almost all of the nations, but that Germany, the Netherlands and Finland still had reservations.

WSJ quotes Dutch finance minister Jan Kees de Jager as saying the Eurozone needed structural and banking reforms before the bailout fund could be reinforced.

Kees de Jager’s comments came after his German counterpart Wolfgang Schauble urged a slower reform, preferring not to rush into a decision about expanding the €440bn pot given the more recent calmness on the world’s bond markets.

That calmness came after Spain, Portugal and Italy all held successful bond auctions last week – easing the prospect of their needing help from the bailout fund, which still has €417.5bn to lend after Ireland’s funding has been provided for.

The head of the Eurogroup, Jean-Claude Juncker, has insisted that the reform will continue, however, saying ministers were still in broad agreement on “speed[ing] up our preparations” for a larger fund.

The talks continue today, though obviously without Ireland’s finance minister Brian Lenihan, who is attending the Fianna Fáil parliamentary meeting in Dublin.

Discussions later, Reuters suggests, will involve discussions on new banking stress tests, which would be performed in the third quarter of 2011.