Spain’s Prime Minister Pedro Sánchez will propose a recovery fund worth of about €1.5 trillion at Thursday’s EU leaders videoconference summit, Spanish newspaper El País reported on Monday, citing an internal government document.
The fund would be financed through perpetual debt backed by EU countries, and would be allocated through grants, not as debt, among the countries worst-hit by the coronavirus crisis.
The non-paper prepared by Spain reads that the recovery fund would be related to the bloc’s Multiannual Financial Framework 2021-2027, as it “could be anchored within the umbrella of the Multiannual Financial Framework, below the own resources ceiling but above the expenditure ceiling,” the document reads.
The recovery fund proposed, would not lend money to the countries worst-hit by the pandemic, but would provide direct grants to EU countries “based on a national allocation key related to the impact of the Covid-19 crisis on the basis of clear and transparent indicators, such as percentage of population affected, drop of GDP, increase in unemployment levels, etc.,” the document explains.
Madrid’s move aims at preventing an increase of the countries’ public debt and proposes that financing should be ready by January 1, 2021, and that operational work for the “full implementation of the three instruments” that constitute the “triple safety net of around €500 billion for states, companies and workers” should be completed by June 1, 2020.
The country’s PM has already discussed the proposal with the Presidents of EU Commission and Council, Ursula von der Leyen and Charles Michel, correspondingly, and will attempt to persuade his counterpart on Thursday.
Also on Monday, the German Chancellor Angela Merkel backed the issuance of EU bonds and the use of a bigger EU budget to finance the bloc’s economic recovery from the Coronavirus crisis, but remained sceptical towards issuing the so-called Coronabonds, that Southern European countries are pursuing.
On April 9, Eurogroup agreed to the use of the European Stability Mechanism’s (ESM) credit lines, the Commission’s SURE mechanism to support workers and the European Investment Bank’s (EIB) enhanced lending capacity for businesses and particular SMEs, while a recovery fund will also be created, that will be available as soon as the recovery starts. The measures so far agreed, foresee loans that would have to be repaid by the member states, with the recovery fund expected to be further discussed on Thursday’s summit.
