EU finance ministers agreed on a compromise strategy Thursday to fight the coronavirus economic fallout with emergency credit lines and spending plans — but no corona bonds.
EU member states have agreed to an emergency response plan of €500 billion.
“This proposal contains bold and ambitious proposals that would have been unthinkable just a few weeks ago”, the Portuguese Finance minister and president of the Eurogroup Mario Centeno said in a video conference on Thursday.
“We can all remember the response to the financial crisis of the last decade, when Europe did too little too late. This time around is different.”
The proposal, he added, “implements the strong response that Europe needs”.
Shortly after they reached an agreement, finance ministers enthusiastically announced the news on social media.
“Excellent agreement between EU finance ministers on the economic response to coronavirus,” French finance minister Bruno Le Maire tweeted.
“500 billion euros will be made available immediately. A stimulus package is to come. Europe is standing up to face the seriousness of the situation.”
Le Maire added: “This is an important day for Europe.”
POLITICO reports that the Ministers quickly signed off on a deal that France, Germany, Italy, the Netherlands and Spain had put together in private talks before the online Eurogroup meeting formally began at 9:30 p.m. Brussels time, more than four hours late.
The finance ministers said “Today we are engaged in an effort to safeguard the health and lives of European citizens and to tackle the immediate economic challenge. This includes the fiscal means Member States need to finance the necessary measures. The recovery of the European economy poses a big challenge. We will act together in solidarity and we will deliver. This includes the necessary progress in strengthening the European Union.”
In their final declaration they stated that at this critical juncture, “we are ready to step up the EU response to support, bolster and complement efforts made so far. We are committed to ensure the conditions for an adequate response to the crisis in every EU Member State. In that context, measures envisaged by the European institutions should be implemented in light of the severity of the economic consequences of the pandemic on individual Member State.”
The finance ministers agreed with the EIB Group’s decision to create a pan-European guarantee fund of EUR 25 billion, which could support EUR 200 billion of financing for companies with a focus on SMEs, throughout the EU, including through national promotional banks. We invite the EIB to operationalize its proposal as soon as possible and stand ready to put it in place without delay, while ensuring complementarity with other EU initiatives and the future Invest EU programme. This initiative is an important contribution to preserving the level playing field of the single market in light of the national support schemes.
The ministers agreed to work on a Recovery Fund to prepare and support the recovery, providing funding through the EU budget to programmes designed to kick-start the economy in line with European priorities and ensuring EU solidarity with the most affected member states.
Such a fund would be temporary, targeted and commensurate with the extraordinary costs of the current crisis and help spread them over time through appropriate financing. Subject to guidance from Leaders, discussions on the legal and practical aspects of such a fund, including its relation to the EU budget, its sources of financing and on innovative financial instruments, consistent with EU Treaties, will prepare the ground for a decision.
In view of this the next EU Multiannual Financial Framework (MFF) will play a central role in the economic recovery. It will have to reflect the impact of this crisis and the size of the challenges ahead, by setting the right priorities, to allow Member States to effectively address the fallout of the coronavirus crisis, to support the economic recovery, and ensure that cohesion within the Union is maintained through solidarity, fairness and responsibility.
Meanwhile, work is ongoing on a broader Roadmap and an Action Plan to support the recovery of the European economy through high quality job creation and reforms to strengthen resilience and competitiveness, in line with a sustainable growth strategy. It should put in place the conditions to relaunch our economies whilst promoting economic convergence in the EU and reducing any fragmentation resulting from the crisis, including through the rapid restoration of the full functionality of the Single market.
The President of the Commission and the President of the European Council, in consultation with other institutions, including the ECB, have started work to this end. The Eurogroup stands ready to contribute and support this endeavour.
There was also agreement on a dedicated COVID-19 instrument to support the financing of emergency aid, through the provision of grants, is necessary, to first and foremost reinforce our healthcare systems. In this context, we welcome the Commission proposal of 2 April to re-activate the Emergency Support Instrument in the context of the COVID-19 outbreak. This instrument can at this stage provide support of EUR 2.7 billion from EU budget resources. Its firepower can be strengthened rapidly, through additional voluntary contributions from Member States.
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