Alexa
  • Directory of Taiwan

German Chancellor Merkel urges quicker reforms after S&P’s downgrades

 German Chancellor Angela Merkel speaks at a press conference in Kiel, northern Germany, Saturday Jan. 14, 2012 after a meeting with Christian Democra...

Germany Europe Financial Crisis

German Chancellor Angela Merkel speaks at a press conference in Kiel, northern Germany, Saturday Jan. 14, 2012 after a meeting with Christian Democra...

German Chancellor Angela Merkel said euro-area downgrades by Standard & Poor’s reinforce Germany’s stance that European leaders must speed up plans to resolve the debt crisis as governments prepare to sell more debt next week.

“We are now challenged to implement the fiscal compact even quicker ... and to do it resolutely, not to try to soften it,” she said Saturday at a meeting of her conservative Christian Democrats (CDU) in the northern city of Kiel.

“We will also work particularly to implement the permanent stability mechanism, the ESM, so soon as possible -- this is important regarding investor trust,” she added.

Germany was left with the euro-area’s only stable AAA rating as S&P downgraded 9 Eurozone countries’ credit ratings Friday.

France and Austria were cut one level to AA+ from AAA. Italy and Spain were cut two levels. S&P also cut ratings on Malta, Portugal, Cyprus, Slovakia and Slovenia.

“In our view, the policy initiatives taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone,” S&P said.

Merkel said that the S&P downgrades won’t “torpedo” efforts to provide financing to indebted member states by weakening the current bailout fund, the European Financial Stability Facility.

The EFSF could provide firepower even if its creditworthiness sinks below AAA status, she said.

“I was never of the opinion that the EFSF necessarily has to be AAA,” Merkel said.

Germany and France are pushing for stricter budget rules as the bedrock of European governments’ response to the debt crisis that emerged in Greece in late 2009 and is now buffeting Spain and Italy. Merkel and French President Nicolas Sarkozy will meet with Italian Prime Minister Mario Monti in Rome on Jan 20 to prepare for a European summit on Jan 30.

Germany has aligned itself with the European Central Bank in warning fellow member states not to weaken the tougher debt rules outlined in the so-called fiscal pact being drafted for the Jan 30 summit.

Spanish Prime Minister Mariano Rajoy, responding to Spain’s downgrade in a speech in Malaga, pledged spending cuts and a banking-system cleanup, as well as a “clear, firm and forceful” commitment to the euro’s future.