Most EU leaders signed onto a fiscal pact that aims to tighten fiscal discipline and restore confidence in the euro.
NEW YORK (CNNMoney) -- In a widely expected move, top leaders from most European Union nations signed an accord Friday that aims to strengthen economic ties and restore confidence in the euro.
The fiscal pact was signed on day two of a summit in Brussels, where a more difficult decision on the size of Europe's financial firewall was delayed.
Leaders welcomed steps Greece has taken to qualify for more bailout money, but they stopped short of officially backing the full release of a second €130 billion package of loans.
The summit came as EU policy makers seek to shift their focus from crisis management to dealing with the challenge of reviving economic growth in a time of austerity.
"It was a drama free summit -- this is not a bad thing," said Jose Barroso, president of the European Commission. "Because there is now less tension regarding some issues related to the euro, it was possible to focus minds on the need for structural reform for growth."
In particular, EU leaders are focused on reducing unemployment, which rose to a record high of 10.7% in the eurozone during January. But the policy options are limited with most European governments under pressure to cut public spending.
Fiscal pact is signed
In a step toward greater economic and political integration, all but two members of the 27-nation EU signed a treaty aimed at ensuring fiscal discipline.
The so-called fiscal compact, first announced in December, includes a "balanced budget rule" that requires governments to keep deficits below 0.5% of gross domestic product. Those that break the rule will be subject to an "automatic correction mechanism," which has yet to be defined.
The pact still needs to be approved by the parliaments of individual EU governments. It will be legally binding after it has been ratified by 12 member states and incorporated into EU treaties within five years, leaders said.
The goal is to prevent a future crisis and foster economic growth by ensuring that governments do not spend beyond their means and rack up unsustainable debts, said European Council president Herman Van Rompuy at Friday's signing ceremony.
"The restoration of confidence in the future of the eurozone will lead to economic growth and jobs," he said. "This is our ultimate objective."
But the EU already has deficit rules on the books that most member states have routinely flouted in the past, and many analysts say the latest treaty may be watered down before it is officially enacted.
Ireland plans to put the pact to a popular vote, a move that could make the nation ineligible for more EU bailout money. In France, the leading candidate in this year's presidential election, Francois Hollande, has suggested that he would not support the pact.
The United Kingdom and Czech Republic opted out of the agreement.
Firewall size in question
The leaders agreed to expedite payments into the European Stability Mechanism, a €500 billion rescue fund set to come into effect in July. They also reiterated their commitment to reassess the adequacy of the ESM by the end of the month.
European leaders are under pressure to boost their overall financial firewall by committing more money or combining the ESM with remaining resources from the existing European Financial Stability Facility.
But the effort has been blocked by Germany, which is opposed to backing more bailout money beyond what it has already committed.
The Group of 20 called on EU leaders last week to strengthen their firewall before the group will make a decision on additional resources for the International Monetary Fund.
Euro area finance ministers are expected to discuss the firewall at the next Eurogroup meeting on March 12, setting the stage for EU leaders to make a decision before the IMF's spring meeting in April.
Greece inches toward bailout
The Eurogroup of euro area finance ministers said Thursday that Greece has made "sufficient progress" on the so-called "prior actions" it needs to meet the conditions of its second bailout program.
The finance ministers agreed to release funds to recapitalize Greek banks and authorized the eurozone's contribution to a planned restructuring of the nation's debt.
However, they stressed that the entire bailout cannot be released until a full assessment of the prior actions is complete and the private sector officially accepts the terms of the restructuring.
Greece needs a sufficient number of private sector investors to accept the proposal by March 9 in order to secure the money it needs to avoid an outright default on a bond payment due March 20.
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