European Union (EU) finance ministers (Eurogroup) agreed to open a 240-billion-euro credit line to member states in efforts to mitigate the impact of the coronavirus (Covid-19) pandemic on Union economies.
Under the emergency response tool – referred to as Pandemic Crisis Support – EU member states will have access to European Stability Mechanism (ESM) funds worth up to 2 percent of their 2019 GDP.
The loans have a maximum average maturity of 10 years and applications can be submitted as of June 1 until the end of 2022. Initial availability for each credit facility has been set at 12 months, with the option to extend it twice for six months.
The interest rate on these loans could be around 0.1 percent, ESM Managing Director Klaus Regling said. It should be noted that the support program could be in place as early as May 15 as long as it is approved by member state parliaments.
Under the ESM’s Covid-19 credit line, Greece could receive 3.8 billion euros. However the Greek government, as well as those of Spain and Italy, have initially ruled out the option despite the low borrowing costs.
In the meantime, the European Commission is examining the creation of a recovery fund jointly financed by member states aimed at mobilizing some 2 trillion euros in investment and financing, according to Bloomberg.
The EU is set to suffer the steepest recession in its history this year due to Covid-19.