BRUSSELS – Eurogroup finance ministers reached an agreement late Thursday to make available 500 billion euros ($546 billion) in credit and employment subsidies for European Union member-states struggling to cope with the COVID-19 coronavirus pandemic that has claimed tens of thousands of lives on the continent.
The accord, which followed more than 16 hours of talks spread across two days, was quickly approved by all 27 EU governments.
The three main elements of the package are a 240-billion-euro line of credit for states to be administered by the European Stability Mechanism (ESM), an additional 200 billion euros in guarantees that will allow the European Investment Bank to expand lending to firms and a 100-billion-euro emergency fund aimed at maintaining wages.
Diplomatic sources said that the breakthrough came when the Netherlands, at the urging of Germany and France, dropped its demand that countries seeking loans from the ESM would have to commit to future austerity measures as a condition for getting help.
Italy, which has the world’s highest COVID-19 death toll, and likewise hard-hit Spain categorically rejected the Dutch position.
Madrid has insisted from the start of the negotiations that attaching conditions under the current circumstances was unacceptable, as no EU member-state bears responsibility for the crisis.
Spain’s Economy Minister Nadia Calviño “fought hard” for that principle in bilateral meetings ahead of Thursday’s conference, a diplomatic source said.
The final agreement establishes only one condition for accessing ESM funds: that the money go exclusively to meet the costs – both direct and indirect – of the health emergency crisis and that recipients pledge to return to the path of fiscal rectitude as soon as possible.
The Eurogroup chair, Portuguese Finance Minister Mario Centeno, said that the pact contained “bold and ambitious proposals that didn’t seem possible just weeks ago.”
Though the accord includes a promise to formulate proposals for helping EU economies recover, the language reserves for the 27 heads of government the decision on whether to turn to “innovative financial instruments” such as the “Coronabonds” proposed by Italy, Spain and several other member-states.
Germany, the EU’s largest economy and most powerful member, remains against the idea of jointly issued debt embodied in the Coronabond proposal.
“We have reached a good deal in the Eurogroup, with a triple security network for workers, companies and states in the fight against COVID-19. We will continue working in common financial mechanisms for the economic recovery,” Calviño said on Twitter after the meeting.