Berlin plays down talk of full ESM payment in 2012

Berlin played down talk of Germany paying its whole contribution to the permanent euro zone bailout scheme up front next year instead of over five years to boost market confidence, with the finance ministry saying on Monday this was not very likely.
Finance Minister Wolfgang Schaeuble was quoted in a e-mail preview of a newspaper interview late on Sunday saying Berlin might bring forward its contribution to the European Stability Mechanism to 2012, instead of paying over five years as European leaders agreed earlier this year.
But there was no such direct quote in the Rheinische Post's print edition. To a question about making a full payment in 2012 the minister replied: "The sooner and the more paid-in capital the ESM has, the more it gains trust on the financial markets".
"It is not very likely we will pay the full contribution (in 2012)," responded his spokesman Martin Kotthaus when asked at a news conference on Monday about Schaeuble's comments.
The prospect of Germany paying up front would have been a strong signal to markets about its commitment to the ESM — but the impact on Germany's budget would have made it difficult to get through parliament, which is wary of breaking domestic budget rules and burdening taxpayers with more contributions to the bailout scheme.
European leaders agreed in Brussels last week to accelerate the launch of the ESM by a year to mid-2012, as part of measures aimed at putting an end to a devastating debt crisis.
Of the ESM's effective lending capacity of 500 billion euros and total subscribed capital of 700 billion, 80 billion will be paid-in capital from euro zone countries. Leaders agreed earlier this year the paid-in capital will be channelled into the fund over five years in equal installments.
"At the moment the agreement is for five yearly tranches," said Kotthaus, adding that details of "what, when, where and how" countries pay into the ESM should be finalised in January.
Germany's total contribution to the paid-in capital should be 21.5 billion euros, paid in instalments of 4.3 billion euros. Earlier this year, it was reticent to agree faster payments due to concerns about sticking to its debt brake and budget goals.
But a government source told Reuters last week Germany's first instalment could be much higher than previously planned "because people want the ESM to be able to act soon" and the minister was quoted as Germany would fund its contribution with a supplementary budget.
The chairman of the Eurogroup of euro zone finance ministers, Jean-Claude Juncker, said last week he would like all paid-in capital for the ESM to be contributed during its first year of operation to give it the firepower to deter speculation.