The Eurozone ministers of Economy and Finance reached an agreement on Thursday to mobilise €540 billion in loans and launch a fund to boost the economy once the health crisis is over, but they have parked the discussion for Eurobonds that Spain, Italy, France have been demanding from leaders of the EU.
AFTER the highest political officials from the EU spent another intense day of bilateral meetings and phone calls, a pact was arranged after 10.00pm.
“We have reached a good agreement within the Eurogroup, with a triple safety net for workers, companies, and states in the fight against Covid-19” celebrated the Vice President of Economy, Nadia Calviño on Twitter. She recalls that they “will continue to work on common financing mechanisms for economic recovery.”
The French Finance Minister, Bruno Le Marie, has welcomed the fact that Europe has stepped up to the plate amidst the severity of the crisis. Bruno Le Marie commended this as an “excellent agreement among European finance ministers regarding the economic response to the coronavirus: 500 billion available immediately.”
Wopke Hoekstra, his Dutch colleague, who recently came under attack for being the blockade in the agreement has also agreed that they reached a satisfactory pact, “After long and intense talks in recent days we have reached a good conclusion. We have reached a reasonable agreement together for Europe and the Netherlands to face the coronavirus,” he said.
The emergency plan is based on three pillars. The first is a line of credit through the European Stability Mechanism or rescue fund (MEDE) worth €240 billion, which will allow countries in need of help to request financing of up to 2 per cent of their GDP (in Spain’s case this is €25,000 million) at low interest rates.
“The only requirement is that the member states requesting support must commit to using this line of credit to support national financing to deal with the direct and indirect costs of Covid-10” explained the president of the Eurozone, Mario Centeno. Once EU leaders back the deal and national parliamentary procedures are completed, the funds can be accessible within two weeks.
The second pillar is the €200 billion European Investment Bank guarantee fund and the third is an Employment Reinsurance Fund to finance 100 billion ERTEs. These three pillars encompass the commitment to begin working on a ‘recovery plan’ which will boost investment and support the reconstruction of the European economy once the emergency is over, however, it does not mention the issue of joint debt demanded by Spain and Italy.