EU launches € 100bn fund to help finance ERTEs
CORRESPONDENT IN BRUSSELS
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The governments of the European Union have reached a political agreement on Friday to launch the European fund of 100,000 million euros that will help countries finance their plans to avoid mass layoffs due to the Covid-19 pandemic, such as the Spanish Temporary Employment Regulation (ERTE) file.
The Twenty-seven have reached a consensus on this instrument (baptized with the initials SURE) at the ambassadorial level. Now it must be formally approved at the level of ministers, something scheduled for next Tuesday, with the aim of making it already operational from June 1, as reported by the Council of the EU in a statement.
To finance it, the European Commission will issue European debt with the guarantee of the Member States. In fact, the fund will not start operating until all the Member States have provided their specific guarantee, the size of which will depend on the GDP of each one, reaching a total of 25,000 million.
The funds will be transferred to countries that request it and that can demonstrate a "sudden and significant" increase in public spending as of February 1 related to partial work schemes (ERTE in Spain) or similar measures for self-employed.
Financial assistance to Member States will take the form of a 'concessional loan' and the instrument will be temporary, with an end set on 31 December 2022. However, European governments may in the future extend its term for a additional six-month period "if serious economic disruptions caused by the Covid-19 outbreak persist."
This European unemployment fund is one of the three safety nets agreed by the Eurogroup to respond in the short term to the impact of the pandemic. Together with loans from the European bailout fund (MEDE) and guarantees from the European Investment Bank (EIB) to support liquidity in the private sector, this response reaches 540,000 million euros.
On the other hand, the governing board of the European Stability Mechanism (MEDE), made up of the ministers of Economy and Finance of the 19 countries of the eurozone, gave this Friday the definitive green light to the credit line of up to 240,000 million euros for the pandemic, with which it is already operational.
This line of credit is part of the liquidity package agreed by the European Union (EU) to help countries respond to the most immediate needs generated by the pandemic and its objective is to ensure that countries have access to financing on terms favorable without undergoing the conditions of a traditional rescue.
Specifically, the states that request it may receive a loan from the MEDE for up to 2% of their GDP (about 24.9 billion euros in the case of Spain) to cover health costs, direct or indirect, linked to the coronavirus crisis, with the only condition that the funds be used for this purpose.
“As a consequence of the coronavirus pandemic and the unprecedented economic downturn, governments have increased spending to address urgent health needs. As a result, all 19 member states will have large fiscal deficits this year, "ESM Managing Director Klaus Regling said in a statement.
With this line for the pandemic, countries "can finance part of those needs in a safe way, with very low interest rates," he added, stressing that "this can be very attractive because the only condition is the requirement to spend money on expenses. direct or indirect health sector, linked to the pandemic, "reports Efe.
The line of credit will be available until December 31, 2022, the loans will have a maturity of ten years and, when a country requests it, disbursements will be made for a period of one year, extendable twice for a period of six months.
