The package contains three safety nets for Governments, Businesses and Workers:
A line of credit from the European Stability Mechanism, or ESM.
A rescue fund with €240 billion in loans.
And a European Investment Bank fund containing 200,000 million in loans for companies and a temporary unemployment fund of 100,000 million euros.
“It is arguably the most sizeable and ambitious package ever prepared by the Eurogroup,” said Mario Centeno, Eurogroup President. “It’s a plan that will shield us Economically and Socially as we dive into a recession.”
According to diplomatic sources, the deal was clinched after the Netherlands withdrew its demand that access to the ESM rescue fund be subject to the beneficiary countries complying with macroeconomic conditions, such as structural reforms.
Madrid has insisted from the start that the loans should not be subject to the kind structural reforms or privatisation programs that were demanded with traditional bailouts, since no State is responsible for the coronavirus crisis and that view was vigorously supported by the Third Vice President, Nadia Calviño.
The final agreement states that the only condition for accessing the funds will be that the money be used for health expenses, directly or indirectly.
The Eurogroup President is convinced that countries that need access to credit will be able to identify expenses linked to the cure and prevention of the disease for up to 2% of their GDP, which is the maximum funding that the ESM could provide.
The EU Finance Ministers also agreed to work on a 'recovery fund' for the post-pandemic phase, but decisions on legal and practical aspects will be left to Heads of State and the Government.
Spain and Italy are demanding a coronavirus debt-sharing agreement between EU member states in the form of coronabonds, but Germany and the Netherlands refused to agree to that.
"We have reached a good agreement within the Eurogroup, with a triple safety net for workers, companies and States to fight COVID-19 and we will continue working on common financing mechanisms for economic recovery,” Nadia Calviño Tweeted.
The Emergency Finance Package must now be endorsed by EU leaders.
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