Euro crisis: EU leaders hope to reach debt plan
Baku, October 26 (AZERTAC). European Union leaders are gathering for an emergency summit in Brussels to try to finalise details of a plan to tackle the eurozone debt crisis.
There is disagreement on how to boost the firepower of the EU`s bailout fund for troubled euro-using countries.
There are fears that the Greek debt crisis could spread to Italy and Spain.
There are growing doubts the leaders will reach a comprehensive deal at the summit.
Before heading for Brussels, German Chancellor Angela Merkel faces a vote in parliament on increasing the bailout fund`s firepower without involving more German taxpayers` money. The measure is expected to pass but the key question is whether Mrs Merkel will need to rely on opposition support.
Additionally, Italy has been asked to provide details of its plans for tackling its huge public debt before the summit begins later on Wednesday.
The ruling coalition led by Prime Minister Silvio Berlusconi is reported to have reached a last-minute limited deal on economic reforms - including the contentious issue of increasing the pension age.
His coalition partner, Northern League leader Umberto Bossi, said late on Tuesday: "In the end we have found a way. Now we will see what the EU says."
There are unconfirmed Italian media reports that the two reached a secret deal for Mr Berlusconi to step down in December or January and for early elections to be held soon after.
A spokeswoman for the Northern League has said that the reports are not true and the two only discussed pensions.
Among the main points of agreement reportedly reached at the weekend by EU officials are:
European banks must raise more than 100bn euros (£87bn) in new capital to shield them against possible losses to indebted countries
The European Financial Stability Facility (EFSF) - the single currency`s 440bn-euro bailout fund - will be given more firepower, although it is not as yet clear how this will be achieved
Lenders to Greece will be asked to agree to much deeper losses than the 21% write-off currently on the table.
According to the plan, the 100bn-euro bank recapitalisation would be provided to banks by commercial investors, national governments and the EFSF.
Key points of disagreement remain between the main eurozone powers.
France had hoped that the European Central Bank (ECB) would support the EFSF by providing it with loans that could increase the fund`s total capacity to 2tn-3tn euros.
But this idea was blocked by Chancellor Merkel.
Instead, governments are expected to agree that the EFSF can help out troubled eurozone governments such as Italy and Spain by providing partial guarantees to investors and banks who lend them more money.
Chancellor Merkel has told Prime Minister Silvio Berlusconi that Italy`s high level of debt "has to be reduced in a credible way in the years ahead".