Eurozone backs 10-year credit lines for coronavirus costs

Countries have until end-2022 to obtain funds with the Commission watching how they're spent.

Eurozone backs 10-year credit lines for coronavirus costs

Eurozone governments have until the end of 2022 to open credit lines from a shared bailout fund to pay health costs stemming from the coronavirus, finance ministers agreed Friday.

Countries tapping the European Stability Mechanism would then have 10 years to pay back the debt, under the preliminary agreement struck by the Eurogroup ministers in a short videoconference. Their leaders have asked for the credit lines to be ready by June 1.

Once ministers complete legal formalities, the ESM rescue fund — created during the government-debt crisis last decade — could offer as much as 2 percent of a country’s annual economic output. The European Commission would monitor how the money is spent.

“There are no other strings attached to the use of the facility,” Eurogroup President Mário Centeno said after the meeting.

Roberto Gualtieri, the Italian finance minister, hailed the agreement not to impose conditions such as economic and labor reforms, mandated in the fund’s original rules for government rescues. The prospect of such terms, along with opposition to shared bonds, had sparked outrage from Italy while it was bearing the brunt of the pandemic.

The ministers who sit on the ESM board could decide later to shorten or extend the end-2022 deadline to draw on the fund.

The credit lines are part of a three-pronged, €540 billion economic package that aims to protect governments, workers and companies from financial ruin because of the pandemic.

Treasury officials earlier this week tentatively agreed on a €100 billion jobless reinsurance plan that would compensate employees for lost income if their companies reduce working hours. This jobless initiative also ends December 31, 2022.

The European Investment Bank, meanwhile, is finalizing a €200 billion guarantee fund that can issue loans to cash-strapped companies.

Source : Politico EU More   

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Sassoli demands bigger European Parliament role in recovery plan

President calls for regular meetings with heads of other EU bodies.

Sassoli demands bigger European Parliament role in recovery plan

European Parliament President David Sassoli has called for the leaders of the EU’s three main institutions to be placed at the heart of producing Europe’s economic recovery plan.

In an interview with POLITICO, Sassoli called on the European Commission to trigger an article in the EU’s governing treaties that would launch regular meetings between the presidents of the Parliament, Council and Commission to reach a common position on budgetary issues. Such a move would give Sassoli and the Parliament a more prominent role than it has now.

Sassoli also warned that the Parliament could reject the next long-term EU budget, the Multiannual Financial Framework, due to begin at the start of next year, if it is not “ambitious” enough.

Commission President Ursula von der Leyen has declared that a revised MFF plan will be at the core of efforts to revive Europe’s economy from the huge damage inflicted by the coronavirus crisis. The Commission warned this week that Europe faces “a recession of historic proportions.”

Sassoli’s comments reflect a drive by members of the Parliament to seize a greater role in Europe’s response to the crisis, having been largely sidelined in the initial months as national governments, the Commission and the Council took the initiative.

“We have put forward the idea that activating Article 324 of the Treaty is indispensable at this moment to allow the Parliament to be fully at the table of negotiations,” said Sassoli, speaking from his office in a video call. “We believe that in the weeks to come, the European Parliament must be involved and there should not be exclusively a negotiation between Commission and Council.”

Under the EU treaties, the Parliament is not directly involved in negotiations on the MFF itself. But it has a key role in legislation governing programs within the budget and it has the power to reject the final version of the MFF, once it has been agreed by EU leaders.

Sassoli warned that EU governments should not take Parliament’s approval of the budget plan for granted. “If the proposal is not ambitious,” he said, “I believe that the verdict of the Parliament could be negative … which means rejecting the proposal.”

Many EU diplomats and officials doubt the Parliament would use the nuclear option of rejecting a budget plan when the Continent is in dire need of recovery funding. But the fact that the Parliament has the veto power, and the legitimacy the assembly can claim from being directly elected, means governments and the Commission cannot afford to simply ignore its calls for a role in the process.

Earlier this week, Sassoli said the Parliament should not be considered a “mailbox,” to receive the final plans on the budget and economic recovery.

The Commission has floated raising recovery funding on financial markets, using guarantees provided by EU members by increasing the ceiling on how much they could contribute to the EU budget. It has suggested this could be done by using Article 122 of the Treaty on the Functioning of the European Union — an emergency measure that does not require the European Parliament’s approval.

The prospect of bypassing the Parliament in such a major crisis has sparked anger from MEPs across the political spectrum — not just from Sassoli and the center-left Socialists & Democrats group to which he belongs, but also from the legislature’s biggest group, the center-right European People’s Party.

Manfred Weber, the EPP group leader, and Siegfried Mureșan, one of his deputies, wrote in a letter to von der Leyen this week that the group would “only give its consent” to the MFF if the Parliament is involved in crafting the recovery plan, arguing that any budget requires parliamentary oversight.

The plan “cannot be an exception to this basic rule of democracy and legitimacy,” they wrote in their strongly-worded letter to von der Leyen, who is also a member of the EPP political family.

Source : Politico EU More   

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