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Eurogroup agrees on €240-billion Pandemic Crisis Support fund

The Eurogroup approved on Friday cheap loans from the European Stability Mechanism for emergency pandemic crisis support without conditionality. According to the deal reached, Euro area member countries hit by the coronavirus pandemics have access to loans totaling 240 billion euros with zero interest and practically without conditions.

The rescue fund will be operational on June 1 and can be tapped until the end of December 2022.

All ESM members meet the eligibility criteria to access this safety net.

Given the economic recession though, “we need a robust recovery plan to protect the single market and the European project,” said Eurogorup head Mario Centeno in a statement.

According to a press released issued by the Eurogroup, terms and conditions are:

The size of the instrument would be 2% of individual member state GDP, as a benchmark.

Member states requesting support will commit to use this instrument to support domestic financing of direct and indirect healthcare, cure and prevention related costs due to the COVID 19. There are no other strings attached to the use of the facility and no other requirements attached to the use of the facility.

This commitment will be detailed in a “Pandemic Response Plan” prepared on the basis of a common template that the Eurogroup has also agreed upon.

After accelerated procedures to grant Pandemic Response Support, the facility will be available, on a precautionary basis, for the member state concerned for a period of 12 months, which can be extended twice, by six months.

Disbursements would then be available on request.

Loans will have an average maturity of 10 years and will carry a low financing cost of 0.115%. .

Monitoring and surveillance will remain proportionate with the particular challenge of the crisis, meaning that it will focus on the health-related expenditures.

Termination date for this instrument at the end of December 2022 but this could be adjusted, either made shorter or extended, if the crisis is prolonged.

The next step is the formal confirmation of the Eurogroup agreement in the ESM Board of Governors, expected to  happen well ahead of 1 June. The confirmation could be already on 15 May, subject to the completion of national procedures.

The agreement was hailed by

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