The eurozone’s rescue fund could offer up to 240 billion euros to help member countries hit badly by the coronavirus outbreak, the head of the single currency group said.
Mario Centeno, who is also Portugal’s finance minister, said the funds would be made available via the European Stability Mechanism (ESM), a body set up at the height of the financial crisis in 2012 to help save the eurozone by offering credit lifelines to member states.
In an interview with several European newspapers published Saturday, Centeno said any credit line should be designed to help, not make matters worse for those states needing aid.
This was an apparent reference to the ESM’s normal rules which include often tough austerity conditions attached to its loans.
Italy and Spain — both of which needed help during the financial crisis, say that this time around such conditions would only add to their problems.
“There would be no sense in linking a pandemic crisis to a programme of (say) privatisation or reform of the labour market,” Centeno told French daily Le Figaro ahead of a videoconference of eurozone finance ministers on Tuesday.
Any loans “must not add to the economic and social suffering,” said Centeno, whose own country Portugal also need an EU bailout in the financial crisis.
He conceded that there would be some “form of conditionality… but the ESM is ready to dissociate its credit lines from the logic of the sovereign debt crisis.”
Tuesday’s meeting will also bring together non-eurozone European Union member states in an effort to agree an overall bloc strategy to cope with the massive economic damage caused caused by the coronavirus.
EU leaders met but failed to agree such a policy late last month due to differences over how any plan should be funded.
Italy and Spain, backed by France, wanted Brussels to back the idea of “coronabonds,” a shared debt instrument sold on the markets to raise money.
Germany and other fiscal hardliners insist however that issuing common debt would in effect get the weaker southern member states off the hook while exposing them to increased debt.
Centeno, recalling these divisions, said it was important not to let them stand in the way of finding a solution.
“We will come back to our debate when we have to think about getting economies going again,” he added.