July 5, 2020

The euro budget will allocate up to 20% to countries in crisis



The embryo of the eurozone budget that the ministers of Economy of the single currency (Eurogroup) agreed in the early hours of Thursday will reserve a maximum of 20% of its funds to help countries cope with a specific crisis situation by financing a series of reforms and investments.

The remaining 80% of the funds will be allocated to the Nineteen depending on their population and taking into account the GDP per capita of each partner, regardless of the economic situation of each. However, none can receive less than 70% than contributed

This euro zone budget will be framed in the EU Multiannual Financial Framework (MFF) for the period 2021-2027 and, in the absence of the Twenty-eight closing the negotiations in this regard, it is estimated that it will have a size of about 17,000 million Euros for the entire period. Therefore, the part dedicated to responding to crisis situations will not exceed 3,400 million euros.

In general, the Competitiveness and Convergence Budget (BICC) will help the euro countries to implement structural reforms and investments that follow the recommendations of the European Semester and must be previously approved by The European Commission

The capitals will have to contribute 25% of the funds required by each project, but this percentage may be reduced by half (12.5%) in the case of "severe economic circumstances".

This modulation had the opposition of the most reluctant countries to launch this tool, like the Netherlands. The consensus solution is finally based on the fact that the euro budget will not contribute the money that will stop adding the country that faces the crisis situation, but will decrease the total money dedicated to financing the project.

Both the mattress for delicate moments and the modulation in the national co-financing rate were two elements defended by Spain to provide this tool with a certain stabilizing character, waiting for the debate on European unemployment insurance to evolve with a true countercyclical component. .

The Spanish Government has also been open to the single currency partners to contribute additional funds to the initial amount if the BICC was ambitious enough, but this possibility has been left in the air waiting to hear the opinion regarding the services Legal advice of the EU Council.

“Only two years ago, fiscal capacity for the euro was only a purely academic issue. Last night, after 11 hours of negotiations, we made it a reality in the form of a budget instrument for the eurozone, ”said Eurogroup President Mário Centeno in a press conference.

The Commissioner for Economic and Monetary Affairs, Pierre Moscovici, has insisted that the eurozone budget instrument agreed on Thursday «Is not the last step» on the "long journey" towards a eurozone budget. "I consider it an important first step and not just a symbolic one," he said, and then emphasize that the euro zone "can and should go further."

With a similar position, the Minister of Economy and Business, Nadia Calviño, has affirmed that it is a «starting point» and «not of arrival», while highlighting that the agreed instrument is an «embryo» of another That could have a greater impact.

In any case, the Spanish has stressed that the general parameters agreed by the Eurogroup «Fully respond to the objectives that had been set» the Government in this negotiation to include elements of stabilization of the cycle and principle of solidarity in the allocation of funds between countries.

The French Bruno Le Maire has also signed the agreement, for whom it is "an important step in the right direction" and has ensured that, although "much remains to be done", the euro partners must be "proud" of the agreement reached after the "difficult" discussions.

. (tagsToTranslate) budget (t) euro (t) crisis

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