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Finnish PM dismisses rejection of loan guarantee deal with Greece

(Xinhua)

13:20, August 23, 2011

HELSINKI, Aug. 22 (Xinhua) -- As credit rating agency Moody's predicts a rejection by eurozone nations of a Finland-Greece deal loan guarantees, Finnish Prime Minister responded on Monday, saying rejection would mean Finland will not sign up to the second bail-out package.

Admitting that gaining approval of guarantees for the Greek bail-out loan is politically difficult, Prime Minister Jyrki Katainen said Finland had worked hard on the issue and had achieved its goal. The prime minister added that work also had been carried out to minimize harm to other eurozone nations.

"This is a challenging situation and we are negotiating with various countries and aim to find a good solution," he said.

Katainen also warned that if Moody's prediction became true and other eurozone nations did not accept the Finnish-Greek deal, Finland will not be a party to the package.

Finland hammered out a deal with Greece last week, under which Greece will provide cash collateral in exchange for Finland's participation in the second bail-out package.

However, news of the agreement prompted other eurozone members such as the Netherlands, Austria and Slovakia to ask for similar deals.

Credit rating agency Moody's added its voice to those expressing concern about the Finnish-Greek deal, saying on Monday that the agreement may scupper second bail-out to Greece.

According to Moody's, guarantees could damage the credit ratings of Greece and other euro nations facing financial problems, while increasing instability in the eurozone and delay the provision of emergency bail-out cash to Greece.

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