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Next Generation EU recovery fund

By Duncan Mil

May 28, 2020 - The European Commission plans to borrow €750 billion on capital markets to issue grants and low-interest loans to EU countries to kick-start a recovery from the coronavirus pandemic.

Italy, worst hit by the pandemic, stands to receive €81.8 billion ($90 billion) in emergency grants and up to €91 billion in loans from the package. Spain could receive €77 billion in grants and €63 billion in loans, while Greece could get €32 billion in grants and €9.4 billion in loans.

“This is Europe’s moment,” Commission President Ursula von der Leyen said. “Our willingness to act must live up to the challenges we are all facing.”

The programme, which still needs to win the backing of all 27 member states, would be funded by joint debt issuance. Two-thirds of the money would take the form of grants, while the rest would be conditional loans, which some other bloc members advocate.

Italian Prime Minister Giuseppe Conte praised the EU. “Now let’s speed up the negotiation and make the resources available soon,” he said.

There was a more cautious reaction from some of the so-called “frugal” states of Northern Europe which object to taking on debt for other countries. Austria, the Netherlands, Denmark and Sweden reject the idea of cash handouts to relatively poorer countries rather than low-interest loans.

“We believe this should consist of loans, without any mutualisation of debts,” said Dutch Prime Minister Mark Rutte.

The money raised on the capital markets would be paid back over 30 years between 2028 and 2058.

Sources
PUBLISHED: 28/05/2020; STORY: Graphic News; PICTURES: Getty Images
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