Brussels – European Union finance ministers have struck a deal on a 500-billion-euro (546.5-billion-dollar) stimulus plan for the economic fallout from Covid-19.
The measures are aimed at helping states hit by the coronavirus pandemic, while also supporting companies and shielding jobs. The breakthrough came after ministers failed to overcome their differences in protracted talks earlier.
Common debt issuance set aside
A controversial call from hard-hit countries such as Italy and Spain for common debt issuance had already been set aside, after coming up against strong opposition from Germany, the Netherlands and Austria.
However, a key sticking point remained regarding the conditionality attached to bailout fund disbursements, diplomatic sources said.
EU Economy Commissioner Paolo Gentiloni described the agreement in a tweet as “a package of unprecedented size to support the health system, redundancy funds, liquidity for businesses and the fund for a revival plan.”
Positive reactions among EU ministers
“Today is a great day for European solidarity,” German Finance Minister Olaf Scholz said after the talks. “This is about the health of citizens, this is about securing jobs and this is about many companies surviving this crisis,” he added.
French Finance Minister Bruno Le Maire, whose country had been pushing for so-called coronabonds together with Italy and Spain, spoke on Twitter of an “excellent” compromise, adding that 500 billion euros were to be made “immediately available.”
Italian Economy Minister Roberto Gualtieri also spoke of an “excellent” outcome.
“We are presenting to leaders an ambitious package of proposals and Italy will fight resolutely to make sure that the decisions of the European Council will be up to the challenge that Europe is facing,” he said.
The stimulus package, which requires final approval from EU leaders, consists of three elements: a precautionary credit line of up to 240 billion euros from the eurozone’s bailout fund, the European Stability Mechanism (ESM); a guarantee fund from the European Investment Bank (EIB) for business liquidity amounting to 200 billion euros; and 100 billion euros for the EU’s “Sure” programme to pay salaries of workers who would otherwise be laid off.
Netherlands shows flexibility
The Netherlands had originally insisted on strict conditions for access to the ESM credit line, which Italy and other countries rejected. In the final agreement, the only requirement for a loan is that the money be spent directly or indirectly on financing health care efforts against Covid-19.
With what are being dubbed “Recovery Funds,” the deal hopes to show solidarity with the member states most struggling in the pandemic, by meeting the astronomical costs of the crisis to national economies.
However, the details of this EIB funding are still being hammered out, including how to finance it. Several states are pushing for common debt, while others are resisting such a move, meaning the heated coronabonds dispute is yet to be resolved.
Covid-19: The hardest hit countries