Vienna, 22 July 2011 Fekter: Euro Management is working In the Eurozone, budget consolidation has highest priority

“The management of the Eurozone is working”, stressed Finance Minister Maria Fekter on Friday, 22 July, referring to the Euro Summit on Thursday evening, which was attended by all heads of state and government. Fekter added that a broad approach had been pursued, extending far beyond the second aid package for Greece.

“With the new powers of the temporary rescue umbrella, the EFSF, the crisis-combating instruments have become significantly more flexible,” declared Fekter, adding that as well as this fund, there would be a kind of Marshall Plan, and the heads of government had undertaken to put their budgets in order.

Concerning fears that the new powers of the EFSF could lead to the institution evolving to become the Eurozone’s state finance provider, Minister Fekter added: “The finance ministers will not allow the EFSF to become a “bad bank” that buys up junk bonds”. According to the decision of principle adopted on Thursday, one of the objectives is to allow the rescue umbrella to buy government bonds on the secondary market. “However, this requires an expert analysis by the European Central Bank (ECB) and mutual agreement between the EU finance ministers,” stresses Fekter. This should be interpreted as the need for adoption of a unanimous decision.

“I am convinced that Austria will receive repayment in full, with agreed interest, of the bilateral loans granted within the framework of the first aid package,” added Fekter. “This is a bilateral agreement, and I expect it to be observed.” The instalments still to be provided to Greece by Austria will now be paid into the EFSF, which is taking over financing, and in future no longer be transferred bilaterally.

Fekter stresses that the heads of government have declared budget consolidation in the Eurozone to be their absolute priority. “Austrian Federal Chancellor Werner Faymann has also approved this resolution,” Fekter points out. “As a result, Austria too will have to make austerity efforts. Austria has not even started to reduce its debts, and is still living beyond its means,” concludes Fekter.