PARIS (Reuters) – The European Union should mobilise all of its existing crisis measures in response to the coronavirus outbreak and come up with new joint mechanisms to finance the recovery, France’s finance minister said on Thursday.
Bruno Le Maire said the European Stability Mechanism, the bailout fund with 400 billion euros ($436.8 billion) in firepower, should be made available as a source of financing to countries with only minimal conditions attached and without stigma for using it.
He said new financing of up to 200 billion euros should also be made available from the European Investment Bank and gave his support to a European Commission proposal for a unemployment reinsurance scheme for a total amount of 100 billion euros.
“These three instruments could be our common European framework to immediately face the economic crisis,” Le Maire said in an online news briefing.
“In addition to the framework, the EU should be reflecting on long-term instruments that would be useful to restart the economy after the crisis.”
Last week EU leaders gave finance ministers until April 9 to come up with ideas how to finance the recovery after Germany and the Netherlands shot down a call from France, Italy, Spain and six other countries for a common debt instrument issued by a European institution.
Le Maire floated the idea of a temporary joint fund aimed solely on financing and coordinate the economic stimulus after the health crisis.
Focusing the fund on a single purpose and limiting its lifespan to five to 10 years could help overcome traditional opposition in fiscally conservative Germany and the Netherlands to joint debt.
The fund would be financed by issuing bonds benefiting from a guarantee from all EU member states and operated by the European Commission, Le Maire said, declining to say how big the fund should be.
Countries could tap into the fund depending on how much economic damage they suffered during outbreak and would be kept out of the European Union’s long-term budget.
(Reporting by Leigh Thomas; Editing by Alison Williams)