The terms under which European governments can access thenew line of loans from the European Stability Mechanism(MEDE) to finance the direct and indirect healthcare costs caused by the Covid-19 pandemic are already closed. The ministers of economy and finance of theEurozoneThey have signed an agreement on Friday on the technical details of the loans with which the fund could be operational on June 1. “Agreement in the Eurogroup on a treasury line of240,000 million eurosfor the States that want them to face the financial needs linked to Covid “, announced the French Minister of Finance,Bruno Le Maire, shortly after five thirty in the afternoon of this Friday.
Contrary to what happened with the bailouts granted during the euro crisis, lCountries requesting support from the European rescue fund will not be subject to special supervision nor will they receive regular visits from so-called ‘men in black’.It is a toxic element in Italy, which had generated much controversy among Italian politicians, and which led to the government ofGiussepe Conteto strenuously resist accepting the use of this instrument, part of the triple safety net designed by the EU to finance the economic hole caused by Covid-19.
To overcome Italian doubts, the Vice President of the European Commission,Valdis Domvrovskis, and the commissioner for economic affairs,Paolo GentiloniThey have written down the terms of what the new surveillance will be like.
Brussels proposes to focus its supervision on direct and indirect healthcare costswithout any added conditionality or enhanced surveillance, in the style of that imposed during the bailouts of the euro crisis, when inspectors from the Commission and the European Central Bank regularly traveled to European capitals. “The Commission will not conduct ad hoc on-site missions apart from regular visits in the framework of the European semester,” Domvrovskis and Gentiloni guarantee in writing.
Since the conditions “are strictlylimited to the use of the credit line to support domestic financing of direct and indirect costs in health, treatment and prevention “Nor will the usual requirements for adjustment or macroeconomic reforms apply, nor will it be necessary to require countries to provide additional information on their respective financial systems. The only thing governments asking for help will have to prove is thatthe funds are used to cover healthcare costs.
Available from June 1st
Sources of the Spanish Ministry of Economy had already pointed out that the technical texts arrived quite closed, waiting to close some fringes such as the maturity dates of the credits and the costs, with which the agreement could be operational before June 1, the date agreed by EU leaders at the summit on April 23. Before the final guarantee can be produced, some countries will have to complete their parliamentary procedures, as in the case ofNetherlands and Germany.
Although no country so far has announced its intention to request liquidity through this line of loans, governments may request loans of up to 2% of their GDP (about 25,000 million in the case of Spain) tofinance the direct and indirect health costs of the pandemic “under very favorable conditions and long repayment terms”, the Eurogroup president, Mário Centeno, assured shortly before the start of the meeting. The only condition will be to spend money on that objective, without added macroeconomic conditions, while the contracts to be signed by governments will be a kind of “light Memorandum of Understanding”. Before
The new MEDE line of credit is one of the pieces of the triple safety net agreed by the EU together with the new SURE fund to support employment,with 100,000 million euros,and the new guarantees of the European Investment Bank that aspires to mobilize 200,000 million in loans for companies. Negotiation on these two elements proceeds somewhat slower because it implies guarantees that some Member States will have to approve in their respective parliaments. “We are going to try to arrive with everyone on time but we are not worried if it does not arrive on June 1 and it is a little later“diplomatic sources point out.