Council of the European Union
- The COVID-19 pandemic constitutes an unmatched difficulty with very serious socio-economic repercussions. We are committed to do whatever necessary to meet this challenge in a spirit of solidarity.
- A coordinated and detailed strategy is necessary to handle health emergency situation requires, to support financial activity and to prepare the ground for the recovery. This strategy needs to integrate short, medium and long-term efforts, taking account of the spill overs and interlinkages between our economies and the need to preserve self-confidence and stability.
- A number of steps have actually already been taken at the nationwide and EU levels, as set out in the declaration of the Eurogroup in inclusive format of 16 March. A subsequent letter of the President of the Eurogroup of 24 March laid out more aspects of policy action under factor to consider. The European Council, in its declaration of 26 March, invited the Eurogroup to provide propositions on the financial action to the COVID-19 pandemic within two weeks. Replying to the Leaders’ mandate, this report analyzes actions taken so far and lays out a detailed and collaborated financial action.
Collaborated actions taken up until now at the level of the Member States, the EU and the euro location
- Because the start of the crisis, Member States have continuously stepped up efforts to support the economy.
- A prompt, temporary and targeted discretionary financial stimulus is being supplied in a coordinated manner. Considerable public resources are directed to enhance the healthcare sector and civil protection systems and to support afflicted employees and economic sectors. To date, the aggregate amount of Member States’ discretionary financial measures totals up to 3% of EU GDP, a threefold increase given that 16 March, on top of the substantial effect of automated stabilisers.
- Additionally, Member States have up until now dedicated to offer liquidity support for sectors facing disturbances and companies dealing with liquidity shortages, including public guarantee plans and postponed tax payments, which are now approximated at 16% of EU GDP, up from 10% on 16 March. The Ministers of Financing stand ready to take additional procedures as required, as developments unfold.
- Flexibility in EU guidelines. On 23 March, Ministers of Financing agreed with the assessment of the Commission that the conditions for using the general escape clause of the EU fiscal framework, a serious financial downturn in the euro area or the Union as a whole, are fulfilled. This offers the versatility essential to the nationwide spending plans to support the economy and to respond in a collaborated manner to the effect of the COVID-19 pandemic. Total fiscal guidance will be supplied within this structure and as part of a streamlined European Term exercise. We welcomed the Commission’s decision to provide a particular momentary state-aid structure to speed up public support to companies, while ensuring the needed equal opportunity in the Single Market in addition to the current extension of the framework to cover assistance for research study, testing and production appropriate in the fight against the COVID 19 pandemic. We also invite the Commission’ assistance on making use of all the versatilities provided by the EU public procurement structure in this emergency circumstance, released on the 1st of April.
- Use of the EU spending plan. We invite the proposals by the Commission to make finest usage of existing EU spending plan resources to fight the crisis. The proposal for a Coronavirus Reaction Investment Effort was approved by the European Parliament and the Council and is in force as of the 1st of April. This will permit the usage of EUR 37 billion under cohesion policy to resolve the consequences of the COVID-19 crisis. In addition, the scope of the Solidarity Fund was widened to include significant public health crises. Beginning with the 1st of April, this allows the hardest struck Member States to get access to financial support of up to EUR 800 million in 2020.
- Monetary Policy. We invite the undaunted action taken by the European Reserve bank to support liquidity and funding conditions to homes, businesses and banks, which will assist to preserve the smooth arrangement of credit to the economy. On 18 March, the ECB chose to introduce a EUR 750 billion Pandemic Emergency Purchase Program (PEPP), to broaden the range of eligible possessions under the business sector purchase programme (CSPP) and to ease the security standards. These procedures are focused on guaranteeing that all sectors of the economy can gain from supportive funding conditions that enable them to absorb the Covid-19 shock.
- Financial Stability: We welcome the assistance provided by supervisory authorities to financial institutions on the analysis and application of the regulatory requirements in the existing extraordinary circumstances. We likewise welcome the release of capital buffers. To overcome the financing pressures dealt with by firms and families, making complete use of the flexibility attended to in the regulatory structure is necessary. We will continue to keep track of carefully the evolution of the scenario and to coordinate European and national steps. Where required, we stand all set to take additional actions, consisting of legal measures, if appropriate to alleviate the impact of Covid-19.
Additional crisis reaction instruments and preparing the ground for the recovery
- At this important juncture, we are prepared to step up the EU response to support, bolster and match efforts made so far. We are devoted to guarantee the conditions for an adequate reaction to the crisis in every EU Member State. Because context, measures imagined by the European organizations need to be executed because of the intensity of the financial repercussions of the pandemic on private Member States.
- EU budget flexibility. We invite the Commission’s propositions concerning the more momentary flexibility in making use of EU funds, such as allowing transfers between funds, areas and policy objectives, deserting national co-financing requirements and supporting vulnerable members of society. This will assist to mobilise efficiently the EU budget plan to face the repercussions of the COVID-19 pandemic.
- Emergency situation Support. We agreed that a dedicated COVID-19 instrument to support the funding of emergency situation aid, through the arrangement of grants, is necessary, to most importantly strengthen our health care systems. In this context, we welcome the Commission proposal of 2 April to re-activate the Emergency situation Support Instrument in the context of the COVID-19 outbreak. This instrument can at this phase offer support of EUR 2.7 billion from EU budget resources. Its firepower can be strengthened quickly, through extra voluntary contributions from Member States. We contact Member States to check out methods to more strengthen the Emergency situation Assistance Instrument in the context of the legal process.
- Reinforcing EIB activities. We welcome the initiative of the EIB Group to produce a pan-European guarantee fund of EUR 25 billion, which might support EUR 200 billion of financing for companies with a concentrate on SMEs, throughout the EU, consisting of through nationwide advertising banks. We welcome the EIB to operationalize its proposition as soon as possible and stand ready to put it in place without delay, while ensuring complementarity with other EU efforts and the future Invest EU program. This effort is an essential contribution to preserving the level playing field of the single market due to the nationwide assistance schemes.
- Safeguard in the EU and EA. Safeguard are in location in the euro location and the EU. In the euro area, the ESM is geared up with instruments that might be used, as required, in a way adapted to the nature of the symmetric shock triggered by COVID 19. We propose to establish a Pandemic Crisis Assistance, based on the existing ECCL preventive credit limit and adjusted because of this specific difficulty, as a pertinent safeguard for euro area Member States impacted by this external shock. It would be readily available to all euro location Member States during these times of crisis, with standardised terms concurred ahead of time by the ESM Governing Bodies, reflecting the current challenges, on the basis of up-front evaluations by the European institutions. The only requirement to access the line of credit will be that euro area Member States asking for assistance would devote to utilize this line of credit to support domestic financing of direct and indirect healthcare, remedy and avoidance related expenses due to the COVID 19 crisis. The provisions of the ESM Treaty will be followed. Access granted will be 2% of the respective Member’s GDP since end-2019, as a standard. With a required from the Leaders, we will strive to make this instrument offered within 2 weeks, while appreciating nationwide procedures and constitutional requirements. The credit limit will be readily available until the COVID 19 crisis is over. Afterwards, euro location Member States would remain dedicated to strengthen economic and financial principles, constant with the EU economic and financial coordination and monitoring frameworks, including any flexibility applied by the proficient EU institutions. The Balance of Payments Facility can supply financial backing to Member States that have not embraced the euro. It should be applied in a manner which properly takes into consideration the unique scenarios of the existing crisis.
- SURE. In the spirit of uniformity and in light of the exceptional nature of the COVID -19 crisis, we agree on the need to establish, throughout of the emergency situation, a short-term loan-based instrument for financial help under Short article 122 of the Treaty on the Performance of the European Union. We will aim to make the instrument operational as soon as possible. In this context, we invite the Commission proposal of 2 April to set-up a short-term instrument supporting Member States to secure employment in the specific emergency scenarios of the COVID-19 crisis. It would offer monetary support throughout the time of the crisis, in the kind of loans given on beneficial terms from the EU to Member States, of approximately EUR 100 billion in overall, constructing on the EU spending plan as much as possible, while making sure sufficient capability for Balance of Payments support, and on warranties provided by Member States to the EU spending plan. The instrument might mainly support the efforts to protect employees and tasks, while respecting the national skills in the field of social security systems, and some health-related procedures. This proposal must be taken forward without hold-up in the legislative procedure. The Member States’ position on this emergency instrument does not pre-judge the position on future propositions connected to joblessness insurance. Consistent with its legal basis, access to the instrument will be terminated as soon as the COVID-19 emergency has actually passed.
- We concur that a meaningful method in the EU is needed to support Member States’ efforts to return to a typical performance of our societies and economies and to promote a relaunch of financial activity and financial investment to ensure sustainable development.
- Recovery Fund. In this context, we also accepted deal with a Healing Fund to prepare and support the recovery, offering funding through the EU spending plan to programs designed to kick-start the economy in line with European top priorities and ensuring EU solidarity with the most affected member states. Such a fund would be momentary, targeted and commensurate with the extraordinary costs of the current crisis and assist spread them with time through suitable financing. Topic to assistance from Leaders, discussions on the legal and useful aspects of such a fund, including its relation to the EU spending plan, its sources of financing and on innovative financial instruments, consistent with EU Treaties, will prepare the ground for a choice.
- Upcoming MFF. The next EU Multiannual Financial Structure (MFF) will play a central role in the financial recovery. It will have to show the impact of this crisis and the size of the challenges ahead, by setting the best top priorities, to allow Member States to efficiently attend to the fallout of the coronavirus crisis, to support the economic healing, and guarantee that cohesion within the Union is kept through solidarity, fairness and duty. We invite the Commission’s intention to adjust its MFF proposal to show the brand-new circumstance and outlook.
- Roadmap for Recovery. Work is continuous on a wider Roadmap and an Action Plan to support the recovery of the European economy through high quality task development and reforms to reinforce strength and competitiveness, in line with a sustainable growth technique. It must put in location the conditions to relaunch our economies whilst promoting economic merging in the EU and lowering any fragmentation arising from the crisis, including through the quick remediation of the full performance of the Single market. The President of the Commission and the President of the European Council, in assessment with other institutions, consisting of the ECB, have actually begun work to this end. The Eurogroup stands prepared to contribute and support this endeavour.
- Today we are participated in an effort to secure the health and lives of European people and to take on the instant financial difficulty. This consists of the fiscal methods Member States require to finance the necessary measures. The healing of the European economy presents a huge difficulty. We will act together in solidarity and we will deliver. This consists of the essential progress in strengthening the European Union.
- The Eurogroup will pursue the work required taking into account the intention of the Council Presidency to take the legislative propositions forward without delay.
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Luis Rego Eurogroup President Representative +352 621 136 935 If you are not a reporter, please send your request to the general public information service.Topics: COVID-19 Euro area Economy & financing Source