Daily Management Review

EU continues talks on creating economic recovery fund


The EU countries are trying to agree on the creation of an economic recovery fund in the amount of €750 billion. The European Commission has previously made such a proposal. The fund aims to provide financial support for the economic development of European countries in the long term. However, there are too many disagreements, and it is not yet clear whether the EU member states will be able to come to a consensus before the EU summit, scheduled for June 19.

EU countries continue negotiations on the creation of a fund to restore the EU economy after the COVID-19 pandemic. “We need to reach an agreement on this issue as soon as possible. In economic terms, it will be the best coronavirus vaccine,” said Valdis Dombrovskis, Vice President of the European Commission at an online conference at the end of last week. It is about a trust fund of € 750 billion: the European Commission presented its draft on May 27.

According to the European Commission's plan, these funds will be borrowed in international financial markets under EU guarantees and will be sent to member countries in the form of grants and loans for economic recovery in 2021–2027 and financing projects in various industries, including alternative energy, transport, and the digital economy.

Recall that last week the European Union launched a program of lending to states and companies as part of a package of emergency measures for € 540 billion, and this plan to support the European economy was a real breakthrough. The plan made it possible to coordinate it at the level of finance ministers of the participating countries in early April.

For two and a half years, in addition to the € 100 billion from the European Commission, another € 200 billion allocated by the European Investment Bank will go on loans for small and medium enterprises, € 240 billion will be invested in healthcare through the European Stabilization Mechanism. EU countries that used the EU Stabilization Fund loan and allocated funds for the prevention and treatment of coronavirus will be able to return the money within ten years. The new € 750 billion trust fund, in turn, should provide not emergency, but long-term financial support.

source: ec.europa.eu