Meeting in ‘extended Eurogroup’ format, the Finance Ministers of the European Union put the finishing touches, on Friday 15 May, to two of the three safety nets approved by the European Council to deal with the economic crisis caused by Covid-19 (see EUROPE 12487/4, 12465/2). The question of the Pan-European Guarantee of the European Investment Bank remains to be decided.
“We have been busy making good on our promise to add a new line of defence of up to €540 billion”, Eurogroup President Mário Centeno said after the Eurogroup meeting, once again recalling the ground-breaking speed of political decisions being taken.
To date, support in the event of a pandemic crisis is operational, Mr Centeno said. Meeting within the Board of Governors of the European Stability Mechanism (ESM), the ministers validated the credit line of the euro-area rescue fund (€240 billion). At this stage, no country has applied for this credit line, said Mr Centeno.
Available for two and a half years, it will cover budgetary expenditure directly and indirectly linked to the fight against Covid-19 up to 2% of the GDP of a beneficiary country, which is not required to carry out structural reforms in return (see EUROPE 12483/1). The European Commissioner for the Economy, Paolo Gentiloni, said the instrument is “ready to be used”. The only condition for using this line of credit is to use the money for direct and indirect health costs, he said.
For Klaus Regling, Director of the ESM, this credit line is available, and it is important that the Commission’s assessment confirms that all 19 members of the euro area and the ESM are eligible for support.
Ministers also endorsed the political agreement reached on the same day at the level of Member States’ ambassadors to the EU (Coreper) on the SURE instrument to support national short-time work schemes (€100 billion) (see other news and EUROPE 12488/5). This instrument will be formally adopted by the EU Council on Tuesday 19 May, Commissioner Gentiloni said.
On the other hand, on the creation of a Pan-European Guarantee fund of the European Investment Bank, which will make it possible to help European companies to the tune of €200 billion, the ministers made progress without reaching a final agreement. Two open questions remain: – the scope, i.e., does the fund focus only on SMEs or also on larger entities?; – the degree of risk that the EIB can take without jeopardising its triple AAA financial rating.
Clarifying expenses
In addition, the Eurogroup discussed the strategic priorities for the recovery with ministers from countries outside the euro area. Ministers had already agreed on some key features of the Recovery Fund (temporary, targeted and commensurate with the extraordinary costs of the crisis, and solidarity with the most affected Member States), Mr Centeno recalled.
The Eurogroup held a strategic discussion today on the characteristics, design, size and priorities of the recovery. “I know the issue of financing attracts much interest, but the spending is no less important”, he conceded. He spoke of a “broad consensus” to take advantage of the recovery to “accelerate the modernisation of our economies”, in particular the transition to a green and digital economy. Policies to relaunch the Single Market and preserve the integrity of supply chains, which demonstrate the interdependence of our economies, are also a priority.
Mr Gentiloni assured that the Commission will present the recovery plan and the 2021-2027 Multiannual Financial Framework in the last week of May. (Original version in French by Lionel Changeur, Marion Fontana and Mathieu Bion)