EU ministers to focus on quick stimulus options

BRUSSELS: Eurozone finance ministers are likely to converge today on three quick options to support the economy in the wake of the coronavirus epidemic, officials said on Friday, with some discussion also of longerterm ideas to aid a recovery.

EU leaders asked the ministers on March 26 to come up with proposals for cushioning the effects of the pandemic, which economists expect will push Europe into a deep recession this year as activity has slowed to a crawl amid lockdowns. “The ministers are likely to put together a list of ideas for leaders to discuss and choose from. They do not all have to have the full backing of all the ministers,” one senior euro zone official said.

“The three ideas that are likely to get the most support are probably the use of the ESM bailout fund, the European Investment Bank and the Commission’s shorttime work scheme,” the official said.

The standby credit line from the European Stability Mechanism (ESM) could be up to 2 percent of the requesting country’s GDP, be available for 12 to 24 months and, if drawn upon, have a maturity of 5-10 years. The credit line would come with minimal conditions focused on the pandemic and, crucially, would unlock the possibility of European Central Bank unlimited bond buying if yields surge. The second idea is guarantees for the European Investment Bank, the government-owned investment arm of the EU, possibly up to 25 billion euros. This would allow the bank to provide 200 billion euros more in loans to small and medium-sized companies. There is also an option of increasing the EIB’s capital.—Reuters