Bulgaria parliament approves EU's Stability Mechanism

(SOFIA) - Bulgaria's parliament approved on Friday the setting up of the ESM, the new mechanism to combat the eurozone debt crisis, Foreign Minister Nikolay Mladenov announced in a statement.

"Bulgaria is not a member of the eurozone but is actively participating in carving out the common decisions aimed to stabilise it and to help Europe's economy recover," Mladenov said.

Parliament's decision to join the European Stability Mechanism (ESM) -- a new bailout fund due to come into effect shortly -- will not entail any immediate financial engagements for Bulgaria, he added.

The 500-billion-euro ($630-billion) ESM will take over from the European Financial Stability Facility (EFSF) as the bloc's permanent bailout fund, and will be able to recapitalise ailing banks directly, without adding to the country's national debt.

It will also be allowed to buy bonds on the secondary market, helping ease the pressure on struggling eurozone countries that must pay higher rates to borrow money.

Bulgaria's parliament has yet to ratify EU's Fiscal Stability Treaty for greater budgetary discipline and economic policy convergence, which it also agreed to join on the condition that its taxes remain unchanged.