Report on the comprehensive economic policy response to the COVID-19 pandemic
1. The COVID-19 pandemic constitutes an unprecedented challenge with very severe socio-economic consequences. We are committed to do everything necessary to meet this challenge in a spirit of solidarity.
2. A coordinated and comprehensive strategy is necessary to deal with health emergency needs, to support economic activity and to prepare the ground for the recovery. This strategy should combine short, medium and long-term initiatives, taking account of the spill overs and interlinkages between our economies and the need to preserve confidence and stability.
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Additional crisis response instruments and preparing the ground for the recovery
12. At this critical juncture, we are ready to step up the EU response to support, bolster and complement efforts made so far. We are committed to ensure the conditions for an adequate response to the crisis in every EU Member State. In that context, measures envisaged by the European institutions should be implemented in light of the severity of the economic consequences of the pandemic on individual Member States.
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15. Strengthening EIB activities. We welcome the initiative of the EIB Group to create a pan-European guarantee fund of EUR 25 billion, which could support EUR 200 billion of financing for companies with a focus on SMEs, throughout the EU, including through national promotional banks. We invite the EIB to operationalize its proposal as soon as possible and stand ready to put it in place without delay, while ensuring complementarity with other EU initiatives and the future Invest EU programme. This initiative is an important contribution to preserving the level playing field of the single market in light of the national support schemes.
16. Safety nets in the EU and EA. Safety nets are in place in the euro area and the EU. In the euro area, the ESM is equipped with instruments that could be used, as needed, in a manner adapted to the nature of the symmetric shock caused by COVID 19. We propose to establish a Pandemic Crisis Support, based on the existing ECCL precautionary credit line and adjusted in light of this specific challenge, as a relevant safeguard for euro area Member States affected by this external shock. It would be available to all euro area Member States during these times of crisis, with standardised terms agreed in advance by the ESM Governing Bodies, reflecting the current challenges, on the basis of up-front assessments by the European institutions. The only requirement to access the credit line will be that euro area Member States requesting support would commit to use this credit line to support domestic financing of direct and indirect healthcare, cure and prevention related costs due to the COVID 19 crisis. The provisions of the ESM Treaty will be followed. Access granted will be 2% of the respective Member’s GDP as of end-2019, as a benchmark. With a mandate from the Leaders, we will strive to make this instrument available within two weeks, while respecting national procedures and constitutional requirements. The credit line will be available until the COVID 19 crisis is over. Afterwards, euro area Member States would remain committed to strengthen economic and financial fundamentals, consistent with the EU economic and fiscal coordination and surveillance frameworks, including any flexibility applied by the competent EU institutions. The Balance of Payments Facility can provide financial support to Member States that have not adopted the euro. It should be applied in a way which duly takes into account the special circumstances of the current crisis.
17. SURE. In the spirit of solidarity and in light of the exceptional nature of the COVID -19 crisis, we agree on the need to establish, for the duration of the emergency, a temporary loan-based instrument for financial assistance under Article 122 of the Treaty on the Functioning of the European Union. We will strive to make the instrument operational as soon as possible. In this context, we welcome the Commission proposal of 2 April to set-up a temporary instrument supporting Member States to protect employment in the specific emergency circumstances of the COVID-19 crisis. It would provide financial assistance during the time of the crisis, in the form of loans granted on favourable terms from the EU to Member States, of up to EUR 100 billion in total, building on the EU budget as much as possible, while ensuring sufficient capacity for Balance of Payments support, and on guarantees provided by Member States to the EU budget. The instrument could primarily support the efforts to protect workers and jobs, while respecting the national competences in the field of social security systems, and some health-related measures. This proposal should be taken forward without delay in the legislative process. The Member States’ position on this emergency instrument does not pre-judge the position on future proposals related to unemployment insurance. Consistent with its legal basis, access to the instrument will be discontinued once the COVID-19 emergency has passed.
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19. Recovery Fund. In this context, we also agreed to work on a Recovery Fund to prepare and support the recovery, providing funding through the EU budget to programmes designed to kick-start the economy in line with European priorities and ensuring EU solidarity with the most affected member states. Such a fund would be temporary, targeted and commensurate with the extraordinary costs of the current crisis and help spread them over time through appropriate financing. Subject to guidance from Leaders, discussions on the legal and practical aspects of such a fund, including its relation to the EU budget, its sources of financing and on innovative financial instruments, consistent with EU Treaties, will prepare the ground for a decision.