Finland not authorised to back more EU loans: committee

(HELSINKI) - A Finnish parliamentary committee said Thursday it would not allow the government to guarantee further loans linked to the European Union stability mechanism, to be discussed at a eurozone summit on Friday.

"The Grand Committee has not granted the government cabinet authority for new loan guarantees," said the Grand Committee, which sets national policy in regards to the European Union.

In its statement, the committee noted that it had been briefed by Prime Minister Mari Kiviniemi on the summit, but that the government had not asked for greater authority to back loans.

Nonetheless, the committee decided in a vote that granting her authority to back more loans was premature because it believed that "no decision on... stability mechanisms can be made on the basis of available information" at Friday's meeting.

It left the door open to changing its decision further ahead.

"If the situation changes, the Grand Committee assumes it will have the opportunity to express its views before the matter is decided on an EU level," the committee said.

Kiviniemi is participating in the 17-nation eurozone summit, which is set to discuss, among other things, the state of the bloc's financial safeguarding mechanisms.

The Brussels meeting is a prelude to a meeting on March 24-25, where all 27 EU nations will discuss strengthening the bloc's bailout fund, the European Financial Stability Facility (EFSF).

Granting the ESFS broader lending powers would most likely require members states such as Finland to increase the amount of loans they are willing to back.

Greece and Ireland last year accepted loan bailouts from the EU and the International Monetary Fund which they have to repay at a rate of over five percent. Athens is now also seeking a longer repayment period on its loan.