Akhir 1432 / 14 March 2011, SPA -- Eurozone finance ministers have been summoned to an extra meeting next week to clinch a deal on budget discipline and bailout rules ahead of an European Union summit on March 24-25, officials said Monday, according to dpa. EU countries are desperate to shore up confidence in the bloc's single currency, after its credibility was battered over the last 18 months as Greece and Ireland were forced to seek bailouts from fellow eurozone members and the International Monetary Fund (IMF). To avoid future crises, eurozone leaders at a summit on Friday asked finance ministers to agree on tougher budget discipline rules and a boost to the lending power of current and future euro bailout funds, so that next week's summit could sign off on the reforms. The so-called Eurogroup panel of eurozone finance ministers met Monday in Brussels to work out the details, but Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group, said another round of talks was necessary. "I have decided to summon the Eurogroup again on March 21," he told reporters. He expressed confidence that remaining differences would be ironed out then. "There are no big divergences" on the draft reform plans, he said. A key question is how much more money the 17 euro countries would have to offer to boost the financial firepower of bailout mechanisms - with the current fund expected to double its total lending capacity to 440 billion euros. A new fund, scheduled to be operational in 2013, is to increase that amount to 500 billion euros. Juncker insisted that the forthcoming decisions would reassure financial markets about the eurozone's solidity, contradicting speculation that Portugal might also need a bailout soon. Last week, the Portuguese government had to offer a 6-per-cent yield to convince investors to buy its two-year government bonds - more than Ireland and Greece are paying on their EU-IMF loans. But Finance Minister Fernando Teixeira dos Santos said, "Our intention is to keep going to the market, borrowing the money we need to finance our accounts." Juncker also said the Eurogroup believes that "better regulation" of credit rating agencies - which downgraded Spanish and Greek sovereign debt in the midst of the eurozone reform debate - is "of particular urgency." "Several ministers expressed surprise at the timing of rating adjustments," he noted. As part of the decisions made at last week's eurozone summit, Greece's interest rate was reduced by one percentage point to 4.8 per cent. A similar benefit was denied to Ireland because it refused to heed France's demand to raise its 12.5-per-cent corporate tax rate. Ireland's Finance Minister Michael Noonan defended that stance, saying low tax rates were needed to boost manufacturing exports, "which we hope will help us to get us out of difficulties we are in." In a worrying development, he also warned that forthcoming EU "stress tests" would reveal that Irish banks need more than the 10 billion euros (14 billion dollars) earmarked by the EU-IMF loan package to avoid bankruptcy. "The commitment was 10 billion, but the view of the Irish central bank governor is that they will exceed that figure. But he is not prepared to estimate yet by how much," he said. "We have a clear plan on how to manage the situation," EU Economy Commissioner Olli Rehn assured. "Of course, it is now important that stress tests are conducted with all clarity and rigour." Also on Monday, finance ministers from all 27 EU states met to discuss six draft laws aimed at boosting budget discipline and economic coordination by introducing tougher penalties for eurozone countries that deviate from EU-mandated targets.
