US, WASHINGTON (ORDO NEWS) — In the fight against the corona economic crisis, 240 billion euros are available for the euro states from the ESM rescue fund . The ESM leadership finally gave the green light on Friday for the credit lines, which are part of a rescue package worth more than 500 billion euros.
Federal Finance Minister Olaf Scholz praised the rapid joint reaction of the Europeans to the crisis. The difficult debate about a reconstruction plan is still pending.
In April, the EU countries agreed on the 500 billion euro package as rapid crisis aid. In addition to the lines of credit from the European Stability Mechanism (ESM), these include the short-term work program “Sure” worth EUR 100 billion and a EUR 200 billion loan program for businesses from the European Investment Bank .
In view of the dramatic economic downturn during the pandemic, a billion-dollar reconstruction program is to follow soon. EU Commission chief Ursula von der Leyen wants to make a proposal on May 27, as her spokesman Eric Mamer said. Originally, the concept should already exist. But details are so controversial that the presentation is always delayed.
It is already known that von der Leyen wants to embed the reconstruction plan in the next seven-year EU budget 2021-2027. With the help of guarantees from the EU countries, it intends to borrow on the capital market to finance it. However, it is not only the exact financing that is controversial. It is also unclear how much money is needed for the reconstruction, whether it is given as a loan or a grant and what it is used for.
Euro group leader Mario Centeno and some member states are demanding speed. Finance ministers should already be discussing key priorities and constructing the recovery plan, Centeno said before a video conference on Friday. The German position is still unclear. Scholz only said that there is broad consensus that an economic stimulus is necessary after the crisis and that this should be quickly implemented. The aim is to support growth, competitiveness and green investments.
The European Parliament, with a large majority, adopted its own cornerstones for the development plan in a resolution. This includes the demand to develop the EU’s own sources of income, for example taxes. Otherwise the EU countries would have to pay higher contributions. Parliament estimated the size of the program at two trillion euros. The deputies want to have a say in the implementation.
The aid from the already agreed 500 billion package is only loans. The now available ESM lines of credit of up to EUR 240 billion are intended to help the Eurozone to finance the direct and indirect health costs of the pandemic. The scope can be up to two percent of the respective gross domestic product. This is particularly advantageous for countries that would have to pay higher interest rates on the capital market than the ESM due to high levels of debt, such as Italy and Spain. Germany, on the other hand, has very low financing costs. No country has yet submitted an application.
Also on Friday, the EU countries agreed on details of the “Sure” short-time work program, which is supposed to save jobs in the corona crisis. It is planned that the EU Commission will take up guarantees from the member states of up to 100 billion euros in debt on the capital market and then pass the money on to the EU countries as cheap loans for short-time work. Costs can be covered since February 1st.
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