Euro Fund Loan Terms Criticized

Proposal would allow loans of up to 10% of the size of a country's economy.

Europe’s new bailout fund may be authorized to provide credit lines amounting to as much as 10 percent of a country’s economy, a draft document shows. Some German lawmakers said that would put an intolerable burden on taxpayers.

The enhanced fund, called the European Financial Stability Facility, may be able to offer loans to countries “before they face difficulties raising funds” in bond markets, the draft guidelines obtained by Bloomberg News show. The document also says that the EFSF, which is authorized to buy government debt, should buy no more bonds in the primary market than private investors.

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