The Euro Finance Ministers want to use the ESM Euro Crisis Fund as soon as possible in the fight against the economic consequences of the corona crisis. For this option, there is “broad support” from the Euro states, the head of the Eurogroup, Portugal’s Finance Minister Mario Centeno, said after a video conference of the 27 heads of department in Lisbon on Tuesday evening. A solution is currently being worked on, according to which all euro countries could draw on extended credit lines from the ESM.
The ESM has an available credit volume of 410 billion euros. According to the proposed solution, each country should have access to 2 percent of its gross domestic product, said the Portuguese. ESM chief Klaus Regling added that the funds should be made available for health expenditure and to cushion the economic consequences of the pandemic. The 2 percent is a “considerable amount”. However, some countries may still need more. The ESM does not have any responsibilities in health care. The use of credit lines is the right instrument because the pandemic affects all states equally and it is, therefore, a “symmetrical shock”. The loans would only be granted under conditions. Centeno said the best thing would be if no country had to access the amount.
Even though Centeno spoke of “broad support” for the ESM solution, it was quite obvious that the unanimity required for this was not achieved for the time being. Unlike usual, the ministers did not publish a joint communique. The Dutch finance minister Wopke Hoekstra, in particular, opposed the direct use of the ESM. “No country currently says it is in such a difficult situation that it needs the ESM. We don’t know if this moment will ever happen. ” Federal Finance Minister Olaf Scholz said nothing after the switch conference. Centeno appears to be betting on EU leaders reached an agreement that was not reached under his chairmanship. He will inform the “bosses”, who will advise in a video conference on Thursday, about the state of the discussion.
It became clear in the evening that the states would not support the community bonds for the corona crisis (“corona bonds”), which had been requested by various parties, until further notice. EU Monetary Affairs Commissioner Paolo Gentiloni said that his authority is still working on “all conceivable” options. But you need even more time. Work on a “European reconstruction program” for the period after the corona crisis had to be started. Gentiloni has been in self-selected quarantine for a few days because one of his employees has symptoms of Covid 19.
