(Updates with plan details in sixth, seventh paragraphs.)
Oct. 6 (Bloomberg) -- Slovakia’s Freedom and Solidarity party, known as SaS, has proposed a compromise in which it would agree with its three partners in the ruling coalition on an overhaul of the euro area’s temporary bailout mechanism.
The partners need time to evaluate the offer, Richard Sulik, the SaS leader, told reporters in Bratislava today without elaborating on the proposal. It calls for creating a committee in Slovakia that would decide on any disbursement of funds from the European Financial Stability Facility, said Bela Bugar, an official from the coalition’s Most party.
“They are reverting to our original proposal,” Bugar told reporters today. “Creating a committee? Yes. The question is what would be its composition?”
If approved by the ruling coalition, the proposal would heal a rift in Prime Minister Iveta Radicova’s bloc over a key element in the European Union’s plan to prevent the debt crisis from spreading. The Slovak row risks sinking the EU package, which needs the unanimous consent of the 17 euro-sharing countries to come into force. Malta and the Netherlands are also yet to approve passage of the facility.
Slovak lawmakers are set to vote on the legislation on Oct. 11. Smer, the largest opposition party, has said it won’t vote for the package, leaving Radicova, of the Slovak Democratic and Christian Union, to rely on the SaS to win approval for it.
The SaS plan calls for creating a committee with representatives of all parliamentary parties, each of whom would have the right to veto disbursement of money to individual countries seeking help from the bailout fund, the Sme newspaper reported.
The Sas has also made its backing for an enhanced bailout fund conditional on the rejection of Slovakia’s participation in its permanent replacement, the European Stability Mechanism, which is scheduled to come into force in 2013, according to Sme.
The enhanced powers of the 440 billion-euro ($590 billion) EFSF were approved at a July 21 meeting of European leaders in Brussels. The measures would allow the fund to buy the debt of stressed euro-area nations, aid troubled banks in the region and offer credit lines to governments. The EFSF’s current role is to sell bonds to finance rescue loans.
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