BERLIN — The 17-nation eurozone is set to shore up its bailout fund to contain the debt turmoil that threatens to engulf more countries, and German lawmakers said Monday that the plan could boost the fund’s lending capacity to more than $1.39 trillion.
A document obtained by The Associated Press shows the zone wants to boost the $600 billion bailout fund by offering sovereign bond buyers an insurance against possible losses and by attracting capital from private investors and sovereign wealth funds.
Eurozone governments hope the enhanced European Financial Stability Fund, or EFSF, will be able to protect countries such as Italy and Spain from being engulfed in the debt crisis. To do that, however, it needs to be bigger or see its lending powers magnified.
German opposition lawmakers, briefed Monday by Chancellor Angela Merkel, said the fund’s lending capacity will be boosted beyond $1.39 trillion.
But the draft document by the eurozone working group — which Germany’s government was sharing with key lawmakers Monday — did not provide a headline figure for the bailout fund, stressing “a more precise number on the extent of leverage can only be determined after contacts with potential investors” and rating agencies.
Because of the move’s significance, members of Merkel’s party proposed that the change receive full parliamentary approval on Wednesday — although it would have been enough for the parliament’s budget committee to approve the plan.
