Ruairi Quinn (Dublin South East, Labour)
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Question 28: To ask the Minister for Finance his views on recent developments in the eurozone; when he expects to bring forward legislation to allow for Irish participation in the €750 billion stabilisation fund; and if he will make a statement on the matter. [25622/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The European Council has taken a number of steps in recent weeks and months to safeguard the financial stability of the euro area. There is also a broad understanding that economic governance within the euro area needs to be improved. The Commission recently issued a Communication (2010) 250 on reinforcing economic policy coordination. The President of the European Council Herman Van Rompuy has established a Task Force to look more closely at reform and is considering many of the Commission's proposals.

The Task Force – of which I am a member – has met twice already and is looking at a number of issues, including a crisis resolution mechanism for the euro area, addressing macroeconomic imbalances, reinforcing the Stability and Growth Pact and enhanced budgetary coordination. In discussing these issues, a general view is emerging that all avenues for improvements that could be advanced quickly should be considered, while taking account of national budgetary procedures and the role of national parliaments. The President will provide an interim oral report to the European Council today, Thursday 17 June. A final report will be made to the European Council in October. I look forward to further engagement with this important process.

In relation to the European stabilisation fund, in the wake of the crisis in Greece, the Ecofin Council decided at an Extraordinary meeting on 9 May 2010 to establish a comprehensive package of measures in order, if needed, to financially support Member States in difficulties caused by exceptional circumstances beyond their control and to safeguard financial stability in Europe.

The support measures which amount in total to €750bn consist of:

The European Financial Stabilisation Mechanism (EFSM) based on Article 122 of the Treaty providing up to €60 billion in loans or credit lines which could be very rapidly mobilised, if needed. The Regulation setting up the EFSM has already been enacted by the Ecofin Council. The Mechanism will be administered by the Commission and be guaranteed by Member States through the EU Budget.

The European Financial Stability Facility, an inter-governmental agreement by euro area Member States to provide up to €440 billion in additional loans or credit lines, if required, via a special purpose vehicle (SPV). Member states would guarantee the funding raised by the SPV to finance loans under the Facility. Guarantees issued by Member States would be in the same proportion as their ECB capital shares, similar to the case of the Euro Area Loan Facility for Greece. Ireland's share of the guarantees would amount to just over €7bn.

The funding costs including principal and interest repayment will be the responsibility of the beneficiary member state. Financial assistance is in all cases to be subject to strong policy conditionality.

The IMF have also committed to provide up to a maximum of €250 billion in loans to euro area Member States on a country by country basis, in the manner that the IMF recently agreed a package with the Greek Government.

I welcome all of these measures. They are important for the EU, the euro area and for Ireland. Their overriding purpose is to safeguard financial stability. Legislation is required to provide for Ireland's participation in the European Financial Stability Facility.

On 25 May 2010 the Government approved Ireland's participation, along with other euro area Member States, in the intergovernmental agreement setting up a Special Purpose Vehicle (SPV), a necessary step in creating the Facility. The Government also agreed to the issuing of guarantees associated with the SPV, if needed, on a joint and pro-rata basis with the other shareholders in the SPV.

The SPV which will raise funds, if needed, to provide loans to beneficiary Member States was established on 7 June 2010 as a limited liability company under Luxembourg law (Société Anonyme) and it will be known as the European Financial Stability Facility (EFSF). At present Luxembourg is the only shareholder but shares will be distributed in due course to all Euro Area Member States including Ireland.

On 15 June 2010, the Government approved the publication of the European Financial Stability Facility Bill 2010 and subject to agreement with the Whips Office, I propose to introduce it in the Dáil towards the end of next week. The main purpose of the Bill is to provide for Ireland's participation in the Facility and to issue guarantees, if required, subject to the terms of the related Framework Agreement which I signed last week. The Agreement, which will be scheduled to the Bill, sets out the parameters for the Facility and the relationships between the participating Member States. The Articles of Association for the SPV will be laid before the Houses of the Oireachtas at the same time as the Bill.