Germany rules out euro bailout fund hikes

(BERLIN) - Germany's government Monday categorically ruled out any hike in bailout fund guarantees following the ratings downgrade of nine countries by Standard and Poor's.

"The guarantees for the EFSF (European Financial Stability Facility) are largely enough for what it has to do in the coming months," German Finance Minister Wolfgang Schaeuble told Deutschlandfunk public radio.

He said the EFSF had already had to pay higher rates to borrow on the markets in the past, meaning "that it does not therefore only depend on the rating".

Germany, Europe's top economy, is already the EFSF's main guarantor, which began with 440 billion euros ($556 billion) but has 250 billion euros left following rescues of Portugal and Ireland.

"The government has no cause to assume that the volume of guarantees the EFSF has now are not enough to fulfil its current obligations," Chancellor Angela Merkel's spokesman Steffen Seibert told a regular news conference.

Merkel said at the weekend she did not believe the ratings downgrade would affect Germany's contribution to the bailout fund.

Seibert pointed out that European leaders had decided to bring forward the introduction of the EFSF's successor, the permanent European Stability Mechanism (ESM), to July 2012, with funding of 500 billion euros.

The ESM will be influenced less by ratings agencies because of a different capital structure, he said.

Schaeuble again called for the influence of ratings agencies to be reduced to return "their role to what it really is."

The EU is working on transparency rules for ratings agencies to avoid possible conflicts of interest, he added.

The head of the eurozone finance ministers, Jean-Claude Juncker, has said the bloc was determined to protect the triple-A credit rating of its bailout fund after the S&P downgradings that included top-rated France.