PARIS (Reuters) – The euro zone should mobilize its bailout fund to counter the economic hit from the coronavirus outbreak, and impose as few conditions as possible on states that access it, France’s finance minister said on Tuesday.
Euro zone finance ministers are due to discuss on Tuesday evening proposals from the European Commission about how to make use of the European Stability Mechanism (ESM) fund, which has 410 billion euros ($445 billion) of unused lending power.
Bruno Le Maire said the ESM was created to fight an economic shock and should now be used.
Furthermore, “we should not add conditions (on top of) conditions to get use of this instrument,” the French minister told an online news conference, adding that he expected the bloc to reach a compromise “in a few days”.
Italy, the country on the front line of the epidemic in Europe, believes the fund should be deployed without restrictions, its Deputy Economy Minister Antonio Misiani told Reuters earlier on Tuesday.
The ESM was created at the height of last decade’s sovereign debt crisis to be a lender of last resort to governments cut off from markets.
Both Germany and the Netherlands have said they do not favor ESM loans being granted without economic conditions attached, even to cushion against the impact of the virus.
The Commission has also said it is ready to consider backing common debt issuance in the euro zone to help the bloc weather the economic storm.
Le Maire said France was in favor of introducing such ‘coronabonds’ “in a few weeks or in a few months”.
But issuing debt backed by all the bloc’s states is still too much to stomach for some of its richer members, notably Germany.
(Reporting by Leigh Thomas; editing by John Stonestreet)