On the second attempt: Eurogroup agreed on a plan to support the economy for 540 billion euros
Eurogroup chairman Mario Centeno after the extended video conference announced that the recession in the EU will begin within two weeks, and by this time the community will launch an economic support program worth € 540 billion that was approved on April 9.
- The EU economic support plan is 540 billion euros. It will be launched within 2 weeks, when we are diving into a recession, Finanz quotes Centeno at an online press conference.
An EU summit will be convened to approve the program.
According to the adopted plan, 100 billion euros will go to finance schemes to protect jobs, 200 billion euros to the program of the European Investment Bank for lending to businesses, 240 billion euros to the program to support the most vulnerable countries (money will be given at preferential interest rates to EU countries to protect from defaults).
Recall that at the end of March, the EU summit decided to suspend the Stability and Growth Pact, which limits the level of budget deficits in Europe to three percent of their GDP, and public debt to 60% of GDP. Note that almost none of the EU countries comply with public debt standards.
The lifting of restrictions aims to allow countries to take state loans to finance their own national measures to protect enterprises and social protection. But the size of these expenses may be too large for many states that are members of the community. The third package of the plan (240 billion euros) as intended to stabilize them.
“Countries will be able to receive support on equal terms in the form of soft loans attracted on the basis of a very high credit rating of ESM,” said the head of ESM Klaus Regling, adding that funds can only be used for the needs of the fight against coronavirus, and their maximum amount is limited to 2% GDP of states.
The half-trillion euro program is just “an emergency plan to restart the economy after the crisis.” This was stated by European Commissioner for Economics Paolo Gentiloni.
“For a long-term recovery, we will need to provide for a separate plan, an article in a seven-year long-term budget, which guarantees the stability of our economy and the fulfillment of our social and climate goals. The discussion about this program will continue in the near future, said Gentiloni.
At its last meeting on April 7, the Eurogroup was unable to adopt a common plan to save the European economy.
Initially, the program was supposed to be worth 500 billion euros. But Italy and the Netherlands have not been able to come to a common decision on the question of under what conditions it is necessary to provide loans to countries to combat the pandemic.