Transport and tourism are among the severely affected sectors in the EU that are to receive liquidity support, including suspension of tax obligations and public guarantees to help companies to borrow as well as support to affected workers, according to Monday’s Eurogroup which was dedicated to a coordinated EU economic policy response to the Covid-19 virus.
The Eurogroup of European Union finance ministers discussed by video conference how to respond to the “extraordinary human and economic crisis” caused by the coronavirus.
Aiming to limit the socio-economic consequences of the COVID-19 outbreak, the Eurogroup put together a first set of national and European measures while setting a framework for further actions to respond to developments and to support the economic recovery.
Representing Greece in the video conference was the country’s finance minister, Christos Staikouras, who later said in a statement: “We decided to implement, immediately and in a coordinated way, a coherent plan to support public health, entrepreneurship, liquidity, employment and social cohesion. Today’s decisions fully cover Greek positions and priorities.”
According to the Eurogroup, all national authorities, to the extent required by the evolving situation in each country, will implement temporary measures such as:
- Immediate fiscal spending targeted at containment and treatment of the disease. Adequate resources will be provided to each Member’s health sectors and civil protection systems;
- Liquidity support for firms facing severe disruption and liquidity shortages, especially SMEs and firms in severely affected sectors and regions, including transport and tourism – including tax measures, public guarantees to help companies to borrow, export guarantees and waiving of delay penalties in public procurement contracts;
- Support for affected workers to avoid employment and income losses, including short-term work support, extension of sick pay and unemployment benefits and deferral of income tax payments.
Moreover, the Eurogroup approved coordinated efforts at European level that will supplement national measures, including:
- the Commission’s proposal for a 37 billion euros “Corona Response Investment Initiative” directed at health care systems, SMEs, labour markets and other vulnerable parts of EU member economies, and to make a further 28 billion euros of structural funds fully eligible for meeting these expenditures.
- the initiative of the Commission and the EIB Group to mobilise up to 8 billion euros of working capital lending for 100,000 European firms, backed by the EU budget, by enhancing programmes for guaranteeing bank credits to SMEs.
- the initiative of the EIB Group to catalyse 10 billion euros in additional investments in SMEs and midcaps for their own account and to accelerate the deployment of another 10 billion euros backed by the EU budget.
According to the Eurogroup, the budgetary effects of the temporary fiscal measures taken in response to COVID-19 will be excluded when assessing compliance with the EU fiscal rules, targets and requirements.
Therefore, according to Minister Staikouras, the 3.5 percent target of GDP (gross domestic product) set by Greece’s lenders will not be expected this year.
According to Staikouras, the Greek government in the coming days will announce additional significant measures for Greece stemming from Monday’s Eurogroup decision.
Press here for the Eurogroup’s whole announcement on the Covid-19 economic policy response.