Eurozone ministers finalise loan scheme

By DPA

Eurozone finance ministers are expected to finalise a scheme on Friday for member states to access coronavirus loans, but no progress is expected on a larger, contentious recovery fund to weather the crisis.

EU leaders agreed in April to a credit line facility for member states to cover direct and indirect health care costs related to the pandemic.

They gave finance ministers until June 1. to get the scheme up and running.

The issue of how to manage the economic fallout of Covid-19 has reopened acrimonious divisions between EU capitals, with several economically weaker southern member states set to suffer more than their northern neighbours.

Friday’s talks come after the European Commission predicted a recession of historic proportions and a patchy recovery.

The commission has been tasked with drafting a recovery plan, after member states failed to agree on the size and financing of a fund expected to be worth at least 1 trillion euros (1.1 trillion dollars).

The credit line one of three strands of the European Union’s economic response to the crisis that have been approved  will be issued by the eurozone bailout fund, the European Stability Mechanism.

However, the scheme is unpopular among those likely to need it most, tainted by memories of the eurozone crisis a decade ago and fears of rigorous economic scrutiny.

The commission sought to allay these concerns in a letter this week to Mario Centeno, who heads the Eurogroup of eurozone finance ministers.

Monitoring should only focus on whether the credit is being spent on health care costs and should not entail “ad hoc on-site missions,” commission Vice President Valdis Dombrovskis and EU Economy Commissioner Paolo Gentiloni proposed.