30 Sep 2011

German MPs approve expanded EU bailout fund

6:04 am on 30 September 2011

The German parliament has approved enhancements to a bailout fund for euro zone economies by a large majority.

The measure, approved by a vote of 523 - 85 in the lower house, is a major step toward tackling the euro zone's debt crisis.

It means Germany will in future guarantee loans to the European Financial Stability Facility (EFSF) of up to 211 billion euros rather than 123 billion euros so far.

The MPs were voting on European leaders' decision in July to increase the effective lending capacity of the fund to 440 billion euros and give it new powers, such as buying the bonds of shaky countries or lending money to governments before they get into a full-blown crisis.

Germany's upper house of parliament was expected to pass the measure on Friday.

The fund expansion has to be ratified by all 17 euro zone nations to take force.

On Wednesday, Finland voted in favour of expanding the fund's powers despite earlier threats to pull out of a rescue plan for Greece.

In Greece itself, meanwhile, civil servants have been protesting against austerity measures, ahead of talks with the European Union and the International Monetary Fund on helping the Greek government to avoid defaulting on its debts.

European and IMF inspectors have returned to Greece after earlier accusing it of not taking strong enough measures to deserve a bailout.