May 8, 2020
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The common European Corona aid should flow from June 1st. The finance ministers of the Eurogroup made a corresponding decision in a video conference this Friday afternoon. In doing so, they agreed on the conditions for making use of the funds raised from the ESM euro rescue fund.
According to this, member states should be able to receive up to two percent of their gross domestic product in the previous year. The money is to be used to finance direct and indirect health expenditure in connection with the coronavirus epidemic. Funding is said to be available for twelve months, although the deadline could be extended by a further six months. Applications should be open until the end of 2022.
A decision by the ESM committees and national institutions is still required for the Corona aid to flow. In Germany, the Bundestag must also agree.
After the Eurogroup meeting, EU Economic Commissioner Paolo Gentiloni emphasized that the Brussels authority would only monitor the correct use of the funds. “There will be no additional conditions,” said the ex-prime minister, referring to Rome’s fears that the distribution could be linked to further savings requirements.
German finance minister Olaf Scholz welcomed the notification of the Eurogroup as a prerequisite for “now quickly activating the rescue package in order to provide member states with quick and targeted support. 240 billion euros is a powerful answer that enables the euro countries to get through the crisis better ”.
Finance Minister Gernot Blümel (ÖVP) reaffirmed Austria’s solidarity with the countries particularly affected by the corona crisis. “It is clear to us that we also offer solidarity in Europe. We have therefore launched a European aid package together, ”said Blümel of the APA.
In addition to the funds from the ESM, a program to support small and medium-sized enterprises through loans from the European Investment Bank (EIB) and a European short-time work program are planned. The package agreed in April is worth a total of 540 billion euros.
The exact modalities of the planned EU reconstruction fund, which is to be docked to the EU budget, remain unclear. On Friday, the French government launched its own concept for a 150 to 300 billion euro fund, financed by bonds issued by the EU Commission. The debt is to be repaid from the EU budget by 2060. There should be a hard struggle between EU net payers and recipients on this issue.
The Eurogroup also discussed the Austrian budget in the video conference. Because of the corona crisis and government support measures worth billions, there is no longer any talk of a zero deficit. Instead, the deficit is expected to rise significantly above the three percent of gross domestic product (GDP) limit set in the EU Treaty.
Finance Minister Gernot Blümel (ÖVP) said that he had informed his counterparts about the budget process. However, he apparently did not provide any precise information on the extent of the budget deficit. “At the moment we don’t know how much help it will ultimately need and how big the impact on the budget will be,” said Blümel. This applies to all countries. Eurogroup leader Mario Centeno said in the press conference after the video conference that the discussions on Austria’s budget were “mainly a formality”.
Following the video conference, Centeno was also asked about his personal future, as his mandate as head of the Eurogroup expires in July. He will announce his decision on whether to pursue a second mandate “in good time”. At the moment, however, he is busy with other things, he said with a view to the deliberations on the EU Corona aid.
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