Eurogroup chief calls for new fiscal tools to answer virus crisis
Top eurozone official Mario Centeno has called on his fellow EU finance ministers to consider new tools as the search for a remedy to the bloc’s economic ills divides member states.
“We should explore ways to put existing instruments to use, but should be open to consider alternatives, where the former turn out to be inadequate,” the Portuguese finance minister and eurogroup chief wrote in a letter to his colleagues seen by dpa.
Dealing with the severe recession anticipated due to the new coronavirus pandemic will inevitably mean higher debt levels, Centeno wrote.
“But this effect and its lasting consequences should not become a source of fragmentation,” he urged.
EU finance ministers should deliver proposals at talks next Tueday, following a request from national leaders after their own talks last week ended without agreement.
The issues of how much and what fiscal firepower to roll out has reopened the familiar schism of the eurocrisis; the wealthier, more fiscally conservative north versus the poorer south, more strongly in favour of fiscal integration.
Italy and Spain are pushing for corona bonds, a debt mutualization instrument that could help bring down their borrowing costs and ease access to funds. They are backed by France, but Germany, the Netherlands and Austria oppose the move.
A cross-party group of Italian mayors took out a full-page advert in the fiscally conservative German newspaper Frankfurter Allgemeine Zeitung on Tuesday to make their case.
It is not about the communitization of old public debts, the Italians wrote to their “dear German friends,” stressing rather that action was necessary to generate sufficient funds for a major European rescue plan.
Italian Prime Minister Giuseppe Conte appeared on German television on Tuesday evening, to argue that the issuance of the bonds would not make Germans liable for Italian debts.
Creating eurobonds “does not mean […] that German citizens would pay a single euro of Italian debts,” Conte told public broadcaster ARD.
“It simply means putting together a common response and creating more favourable market conditions” to raise cash for post-coronavirus reconstruction efforts, he stressed.
Dutch Prime Minister Mark Rutte came under criticism domestically, with his own coalition partners distancing themselves from his opposition to the measure and saying hard-hit Spain and Italy need help.
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European Council President Charles Michel called for “a common strategy in a spirit of solidarity.”
“It is time to think outside of the box,” Michel said in a statement on Tuesday, following a phone call with Centeno, EU executive chief Ursula von der Leyen and European Central Bank President Christine Lagarde.
The European Commission is pushing for member states to see the next EU long-term budget, running 2021-2027, to be made part of the solution. This could be less controversial than coronabonds, or the use of European Stability Mechanism, the eurozone bailout fund. (dpa)
