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EU bailout

th/pfd , dpa/AP/AFPMay 5, 2009

The European Union has agreed to double the amount of a bailout fund to 50 billion euros ($67 billion). The fund was created to provide emergency loans to eastern EU countries hit hard by the financial crisis.

https://p.dw.com/p/HkIv
Graphic with stacks of euro banknotes, the EU flag and a bar graph
The EU will make 50 billion euros available to hard hit eastern membersImage: DW

EU finance ministers approved plans on Monday that doubled loans available to eastern European members hit by the global financial downturn.

Despite having been doubled to 25 billion euros in December, the emergency aid fund was quickly being depleted. Hungary and Latvia alone drew nearly 10 billion euros from it last year and Romania is seeking five billion euros as part of a larger rescue package put together by the International Monetary Fund and the European Bank for Reconstruction and Development.

Light at the end of the tunnel?

The EU fund was designed to help the 11 EU nations, which don't use the euro currency. Most of these are export-dependent, eastern European countries. Their currencies have been hit particularly hard as foreign investors have pulled back, worried about the financial crisis.

The decision to increase money available in the fund was made by the EU's 27 finance ministers, who met in Brussels on Tuesday amid gloomy new forecasts predicting four-percent contraction in the bloc's economy this year.

"It seems these days and weeks (that) the recession is at its worst, but hopefully next year we start coming out of it," said Czech Finance Minister Miroslaw Kalousek, who chaired the EU meeting.

"Hopefully, the light at the end of the tunnel is not a train (traveling) in the opposite direction," he added.

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Romania's economy is in trouble, and it's looking for international help.

Euro zone finance ministers are meeting in Brussels today to discuss ways out of the current economic slowdown, triggered by the banking crisis. The European economy is forecast to contract by 4 percent this year and probably will not stabilize until 2010. The ministers called for a return to fiscal discipline once growth returns. Until then, however, they will double the EU emergency loan fund to help those members struggling with liquidity problems.
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