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Agreement paves way for introduction of key instrument in European response to COVID19 – Donohoe
The Minister for Finance and Public Expenditure and Reform, Paschal Donohoe TD, attended the Eurogroup yesterday (Friday), via videoconference, where Ministers agreed the features and standardised terms of the European Stability Mechanism (ESM) Pandemic Crisis Support instrument.
This agreement paves the way for the introduction of the instrument by 01 June, fulfilling the task that Finance Ministers received from the European Council on 23 April regarding the introduction of the instrument in the short term. This agreement also highlights the solidarity and collective efficiency of the Eurogroup Finance Ministers in reaching agreement within two months on the elements required to operationalise the instrument.
The ESM instrument is based on the existing Enhanced Conditions Credit Line (ECCL), but has been tailored to meet the challenges of this crisis and will be available to all Euro Area Member States for amounts of 2% of the respective Members’ GDP as of end 2019 as a benchmark to support domestic financing of direct and indirect healthcare, cure and prevention related costs arising from the Covid-19 crisis - thus providing a credit line of circa €240bn for the entire euro area.
Welcoming the agreement, Minister Donohoe said:
“This is an important and credible safety net for euro area sovereigns, both in its magnitude and its availability to all euro area Member States. We have a strong track record of market access and Ireland is well placed to increase its borrowing activity arising from the economic disruption relating to the pandemic. In this context, I note that the NTMA successfully borrowed €6bn in the bond market for 7 years at less than ¼ of 1 percent, as recently as last month.”
Discussions will continue on the two other safety nets, that is the SURE proposal and the establishment of the EIB pan European guarantee fund to support European workers and businesses.
The Eurogroup also discussed the European Commission Spring 2020 economic forecast which was published earlier this week.