Your Children will be paying for the Greek

Heidi Söyrinki, Elina Kilpi, Minna Rajainmäki

Finland has obliged to guarantee loans to Greece for about 12 billion euros through The European Financial Stability Facility EFSF. It was created by the euro zone states to safeguard financial stability in Europe. EFSF is a temporary facility that has a lending capacity up to 440 billion euros Greek’s second bailout package was just accepted recently.

According to the Finnish Financial Newspaper Taloussanomat, Finland’s liabilities of the Greek bailout are a lot higher than The Parliament of Finland has accepted. The government has informed that the guarantee liability is maximum 6,6 billion. But because of the interests were not taken into account in the estimation, the actual obligations are over 12 billion.

European Stability Mechanism ESM will be created next year instead of these temporary mechanisms EFSF and EFSM.  The capital of ESM will be 80 billion euros, of which Finland’s share will be 1.4 billion. In addition Finland will guarantee capital of more than 11 billion.

The rumors say that the temporary funds are not going to be abolished, but will exist side by side with the temporary ones. And more money needs to be pumped in both of them.

The politicians’ defend

Finland has lent its credibility for the Greeks. Finland is forced to take loans to be able to pay its part of the bailout-package. As long as we have a good credit rating the interests are a lot less for us than they would be for the bankrupt Greeks.

The Prime Minister and the former minister of finance Jyrki Katainen estimated once that Finland is going to earn some money for itself by lending money to Greece.  But according to the report of the Ministry of Finance last October Finland is not going to earn anything as it now has agreed on the guarantees with the Greek banks.

The critics believe that Greece goes bankrupt and is not able to pay its debts. In this case Finland among others would be left to cope with the immense loans.

–It’s clear that there is no 100 percent guarantee in this insecure world, the previous undersecretary of the Ministry of Finance Martti Hetemäki has said.

There are different views on the Greek loans within the political field in Finland. The euro-sceptic Finns-party criticizes that the European tax payers are now the ones who have to rescue the crises countries as well as the banks.  About the permanent fund a Finnish MEP Sampo Terho says that no one seems to know exactly what Finland has engaged itself into.

–Even in the parliament they have been counting how much we have promised to pay already in the temporary fund. When you count together all the money, used and reserved, we could end up with something like 30 billion euros.

Finland got a guarantee of the collateral securities of their share of the package from the Greek banks, but the agreement was made secretly and is therefore criticized.

Has the parliament been lured?

The National Audit Office of Finland demands Finnish government to explain more in detail the responsibilities and obligations Finland has made to European stability mechanisms. What comes to the payments in EFSF in recent years, the National Audit Office requires it all must be shown in the financial statement and the balance sheet of the government.

The Office scrutinized the balance sheet of the government and the reporting of financial commitments on year 2010. It found out that government has commit­ted to payments of more than 17 billion euros in 2010. It did not, however, point out the complexity and the timeframe of the financial obligations.

The National Audit Office of Finland sees that the obligations effect on the budget for years on, or it may impact the national budget only after several years. The Office expects the parliament to have the actual and relevant information on all the obligations.

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