July 7, 2012 / 10:55 AM / 6 years ago

Condition for ESM bond-buying will be reforms: EU's Rehn

ROME (Reuters) - Countries who want the euro-zone’s permanent bailout funds to buy their bonds to help lower borrowing costs will have to commit to a reform program, EU Economic and Monetary Affairs Commissioner Olli Rehn said in an Italian daily on Saturday.

Rehn wrote in La Repubblica that the market intervention would be available only to countries who pursue policies to control public finances, who adopt reforms to boost growth and employment and who take steps to fight macroeconomic imbalances.

“This short-term support will of course have to be accompanied by a commitment to reforms,” Rehn said. “Just like in the case of financial assistance offered to countries in the euro zone, there will be conditions,” he said.

Italy and Spain are seen as potential beneficiaries of the scheme agreed at last week’s EU summit that would allow the EU’s bailout funds to stabilize financial markets.

But the deal is yet to be finalized and Finland and the Netherlands have expressed doubts about it and threatened to block its approval.

Rehn also said that by the end of this year the euro zone was due to set out a timetable for greater economic union that would strengthen and complete its monetary union.

“To achieve this result, an unprecedented integration of economic and budgetary policies will be required and it will be necessary to evaluate the option of debt mutualisation,” he said. “That will be justified only by greater fiscal integration.”

Writing by Catherine Hornby; Editing by David Holmes

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