Eurogroup addresses post-crisis recovery pending EC plan

The economy and finance ministers of the Eurozone (Eurogroup), along with those of the rest of the European Union (EU), addressed on Friday the priorities for relaunching the economy after the coronavirus pandemic, pending the presentation of the European Commission (EC) recovery plan on 27 May.

"The Eurogroup had already agreed on some of the key features of the recovery fund. It should be temporary, targeted and proportionate to the extraordinary costs of this crisis. It should help spread the costs over time and ensure solidarity with the most affected Member States," said Eurogroup President Mário Centeno at the press conference following the video conference meeting. He added that on Friday "the characteristics, design, size and priorities for recovery" were discussed.

After several delays, the Commission plans to present its recovery plan on 27 May. The plan being prepared by Brussels will contain a proposal for the future long-term EU budget (2021-2027) and one for the creation of a recovery fund.

Commission President Ursula von der Leyen told European Parliament on Wednesday that the recovery fund will focus on the countries most in need of aid. She also confirmed that part of it will come in the form of non-repayable grants, as claimed by Spain and France, which would be combined with loans.

Asked about the possibility that in exchange for aid from the recovery fund, structural reforms would be required of Member States, Economy Commissioner Paolo Gentiloni denied that such conditionality would be applied.

The Managing Director of the European Stability Mechanism (ESM), Klaus Regling, stressed that there is only one European economy and not 27 across the EU, so helping the countries most affected by the pandemic "is not solidarity, but is in the interest of all Member States". "I think a similar approach will be needed in the recovery phase, the second phase, which will follow the emergency phase and can be much longer, probably two or three years," he said.

He added that the recovery fund and the EU budget will be "essential" in the recovery "because it is difficult to see how non-repayable grants can be provided except through the EU budget".

In addition to addressing recovery from the pandemic, Ministers reviewed the measures they had already agreed to in response to the crisis.

The ESM governing board, composed of the finance ministers of the 19 eurozone countries, gave the final green light on Friday to the credit line of up to 240 billion euros for the pandemic, making it operational.

The States that request it will be able to receive a loan from the ESM for up to 2% of their GDP (some 24.9 billion euros in the case of Spain) to cover health costs, direct or indirect, linked to the coronavirus crisis, with the only condition that the funds are used for this purpose.

The managing director of the ESM stressed that if countries use the line of credit for health expenses, they will be able to use their own money to finance "other parts of the growing fiscal deficit". However, Centeno admitted that, so far, no country has indicated its intention to ask for a loan from the rescue fund.

Spanish Vice President for Economic Affairs Nadia Calviño linked the decision on the use of the European Stability Mechanism's pandemic credits to minimising the costs of financing and stressed that for now Spain is favourably financing itself.

The government does plan to request assistance from the European SURE fund against unemployment, which will have up to 100 billion euros to grant credits to the States to finance the implementation of temporary employment regulation (TER) files.

The ambassadors of the countries of the European Union reached a political agreement on this instrument on Friday. It will become operational once the Member States have provided 25 billion euros in guarantees that will allow the Commission to obtain the funds to finance the tool on the markets.

In some states, parliaments must give the green light before providing guarantees, so, according to Gentiloni, SURE will be operational in the summer, "probably in July".

Ministers also discussed progress on the European Investment Bank fund which will have up to 200 billion euros and provide loans to companies.