25 March 2020

Video conference of the Eurogroup

The Eurogroup took stock of all the measures taken at national and EU level to respond to the COVID-19 fallout. Ministers also discussed further policy responses that are being explored by EU institutions.

The Eurogroup discussed further policy responses to the COVID-19 economic fallout, following the invitation of members of the European Council on 17 March.

Full press release

Remarks by Mário Centeno following the Eurogroup videoconference of 24 March 2020

[...]Today we took stock of all the measures already taken and also of the initiatives that are being explored among institutions. The aim is to prepare for the meeting of the Leaders on Thursday where decisions are expected.

First, there is a clear increase in our fiscal response. In one week alone, the total amount of the fiscal measures at national level has doubled and is now estimated at 2% of GDP. Liquidity support schemes for firms and workers have been scaled up from 10% to more than 13% of GDP.

Second, coordinated measures at the European level are being deployed, supplementing national efforts. There has been significant progress since our last meeting.

To provide for the required flexibility in our budget, the Commission has activated the general escape clause of our fiscal rules.

The decisions taken by the ECB last week have provided a strong element of reassurance and we have welcomed them unanimously.

We also welcomed the Commission’s temporary State-aid framework, which helps our efforts to provide public support to our companies, while safeguarding the level playing field in the Single Market.

The Corona Response Investment Initiative will help to support healthcare systems, SMEs and the labour market, by making resources from the structural funds available for the challenges we face today. Accelerated legislative work is now underway to make this initiative operational.

The EIB’s proposal for a €25 billion pan-European guarantee, announced by President Hoyer, which will represent an additional €200 billion in support to SME’s, midcaps and corporates which are struggling to cope with the virus fallout.

Third, we have started a debate on additional forms of support to reinforce crisis management and prepare the ground for economic recovery.

We are committed to explore all possibilities necessary to support our economies get through these difficult times. This involves all our institutions. This discussion has just only started and more work is needed to get to the finish line.

The challenge our economies are facing today is in no way similar to the previous crisis. This is a symmetric external shock. Moral hazard considerations are not warranted here. We must bear this in mind when we consider coronavirus dedicated instruments. This is particularly true for any ESM instruments which were set up during the last crisis.

We look forward to more initiatives, namely from the European Commission which is expected to bring forward its unemployment insurance proposal.

Our discussions are more advanced on the ESM workstream because we can build upon the strong framework already in place. There is broad support to consider a Pandemic crisis support safeguard based on an existing ESM precautionary instrument, such as the Enhanced Conditions Credit Line (ECCL). This would provide an additional line of defence for the euro and work as insurance to protect us against this unfolding crisis.

The features of this instrument would need to be consistent with the external, symmetric nature of the COVID-19 shock. This is also true for any attached conditionality. In the short term it will be targeted to coronavirus response and in the longer term, countries are expected to return to stability.

 

This instrument would be available for all countries to apply, individually. The size of the available instrument could be in the range of 2% of members’ GDP, as a benchmark. While there is broad support among members around these features, more work is needed on details.[...]

Full press release

Letter of Eurogroup President Mario Centeno to the President of the European Council following the Eurogroup of 24 March 2020

Economic developments are confirming that COVID-19 and the urgent containment measures are having a far-reaching impact on the supply and demand sides of the economy. Accordingly, we agreed on the imperative to implement and scale up our agreed actions to support our citizens and businesses. This strategy includes further discretionary stimulus and coordinated action, designed, as appropriate, to be timely, temporary and targeted. The concrete steps we have already taken following the Eurogroup videoconference of 16 March are encouraging signs of the capacity of Member States to rise to the challenge in a co-ordinated manner. The aggregate amount of Member States’ discretionary fiscal measures increased twofold to close to 2% of Euro Area GDP, while liquidity support schemes for firms and workers have been scaled up to more than 13% of Euro Area GDP, up from 10%. This is a clear increase in our fiscal response.

This aggregate fiscal response is supported at the European level. To provide for the required flexibility for our public finances, the Commission activated the general escape clause and Ministers welcomed this on 23 March. This will give national budgets leeway to support the health sector and civil protection, to implement the agreed discretionary elements of our fiscal strategy and to allow automatic stabilisers to fully operate.

In addition to the fiscal response, the decisions taken by the ECB last week have provided a strong element of reassurance and we have welcomed them unanimously. Heightened vigilance remains important and we stand ready to continue to respond in a co-ordinated manner.

We also welcome that the Commission has issued a specific temporary State-aid framework to expedite public support to companies to mitigate the economic impact of the crisis, while ensuring the necessary level playing field in the Single Market.

Discussions have now progressed to making additional resources available at the European level to complement our national measures, enhance cooperation and demonstrate common purpose and solidarity. Accelerated legislative work is now underway to make the Corona Response Investment Initiative operational. This initiative will make it possible to mobilise €37 billion to support Member States’ urgent initiatives.

In addition to taking stock of the important progress made in the implementation of instruments announced in previous meetings, we also made significant progress on additional forms of support that could be made available. In particular, we broadly agreed that the significant resources of the ESM should contribute to our coordinated response and I can report there is a readiness to use the ESM, as needed, in a manner consistent with the external, symmetric nature of the COVID-19 shock. There was broad support to make a Pandemic Crisis Support safeguard available, within the provisions of the ESM Treaty, building on the framework of the existing Enhanced Conditions Credit Line (ECCL).

 

We are in broad agreement that Pandemic Crisis Support is a relevant safeguard for any ESM Member affected by the symmetric pandemic shock and that it would be available to all, with appropriate standardised terms, on the basis of an up-front assessment by the institutions. Given the current health emergency, there was broad support for making the applicable terms and conditions, consistent with the particular nature of the shared challenge our societies are facing. If the credit line is drawn, ESM support would be used specifically for the costs of responding to the Corona outbreak including health costs and incurred economic costs. In the longer-term, Members should focus on ensuring a sustainable path. There is also broad agreement that significant resources should be allocated to Pandemic Crisis Support and the ESM could set around 2% of Member State GDP as a benchmark, which could be adjusted depending on the development of the pandemic. I proposed that we deliver without delay and develop the necessary technical specifications before the end of next week. [...]

Letter of Eurogroup President Mario Centeno to the President of the European Council following the Eurogroup of 24 March 2020

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