Greece's Finance Minister Evangelos Venizelos arrives at an euro zone finance ministers' meeting in Brussels Nov 7, 2011. [Photo/Agencies]

Urging Greece to make clear commitment

Eurozone leaders Monday called upon the incoming coalition government of Greece to reaffirm the indebted nation's commitment to implementing the terms of a second international bailout.

"We will wait for written commitments from the new government in Greece before starting the second rescue program," said Eurogroup President Jean-Claude Juncker at a joint press conference following a meeting of finance ministers of the single-currency area late Monday.

Echoing Junker, the economic and monetary affairs commissioner Olli Rehn of the European Union (EU) called for the coalition government to make clear commitments related to the EU/IMF bailout package.

"We will work with the new government only if it makes clear and written commitments," Rehn told reporters at the press conference. He also raised hopes for Greece by saying that "It is possible that the sixth tranche of loans to Greece would be issued during November".

European leaders have been refusing to sign off on the long-overdue bail-out loans of 8 billion euros (about $11 billion) that Athens desperately needs in several weeks if it is to avoid default, owing to doubts that Greece was fully committed to the terms it agreed with international lenders.

Calling for all stake-holders in Greece to take their own responsibilities, Rehn said "We have done our part, and they must do theirs".

As he arrived for the finance ministers meeting, German Finance Minister Wolfgang Schaeuble described the situation in Greece as "cataclysmic".

"Every day a new situation. Greece must assure that what has been agreed can be implemented by Greece," he said.

EFSF to be boosted in December

On boosting the European Financial Stability Facility (EFSF), head of the bailout fund said at the press conference that the fund would be boosted in December through enhancing the credit of sovereign bonds and creating special investment funds.

In a joint press conference following the meeting of eurozone finance ministers, chief executive officer of the EFSF Klaus Regling outlined the conditions and terms of maximizing the firepower of the rescue fund based on two approaches.

One option involves credit enhancement to primary sovereign bonds issued by eurozone member states, Regling said, adding this aims to remove concerns about the liquidity position of member states, increase demand for new issues of member states' bond programs and lower their funding costs.

Eurozone countries have also decided to beef up the EFSF by "creating one or more Co-Investment Funds (CIF)", which would combine public and private funding to provide additional liquidity and to enhance market capacity to fund loans, according to Regling.

"The CIF would provide funding directly to member states through the purchase of primary bonds, and this funding could be used by member states for bank recapitalization," said a document published by the EFSF ahead of the press conference.

Regling also expected further legal and operational work related to the two approaches to be finished by the end of November after consultations with member states, market participants, rating agencies and other stakeholders, followed by implementation in December.

Urging Italy to honor promises

The finance ministers' meeting was held amid intensifying concerns over the health of the Italian economy.

Italian government bond yields soared to near 15-year highs on Monday, putting the eurozone's third largest economy at the center of the debt crisis, despite scrambling efforts by policymakers to stem the growing contagion.

The eurozone finance ministers and leaders called upon the Italian government to fulfill its promised fiscal and labor market reforms.

As he arrived at the meeting, the EU economic and monetary affairs commissioner Rehn said "It's essential now that Italy will stick to its fiscal targets, ensure their implementation and intensify the structural reforms that can boost growth and job-creation".

"It's important that in fiscal policy, Italy ensures that all objectives will be met, while in the structural reforms there is more room for being (on the) offensive and taking more courageous decisions, in order to boost growth and jobs in Italy," Rehn said.

While ratching up pressure on Italy, German Finance Minister Schaeuble tried to calm the market. "Italy is not in a comparable situation. The real numbers from Italy do not justify the nervousness in the markets," Schaeuble said.