Aiming to accelerate recovery in the aftermath of the coronavirus (Covid-19) outbreak, the European Commission announced on Wednesday its proposal for a new recovery tool that help will boost jobs and growth of impacted Union economies.
Dubbed Next Generation EU, the new 750-billion-euro instrument to be part of the revamped long-term EU budget, will prioritise actions needed to propel Europe’s recovery and resilience in an inclusive for all member states and fair manner.
In this direction, the Commission is proposing to tap into the EU budget as well as target reinforcements to the 2021-2027 EU budget bringing the total available support to 1.85 trillion euros, the Commission said in a statement.
“The Commission is today proposing a new recovery instrument, called Next Generation EU, within a revamped long-term EU budget. In total, this European Recovery Plan will put 1.85 trillion euros to help kick-start our economy and ensure Europe bounces forward.”
The decision comes after Germany and France proposed the creation of a 500-billion-euro recovery fund that would be raised through EU-backed bonds.
According to reports, Greece is set to receive 22.5 billion euros in subsidies from the recovery fund and 9 billion euros in loans.
It should be reminded that earlier this month, the EU’s finance ministers agreed to open a 240-billion-euro credit line to member states in an attempt to mitigate the impact of Covid-19 on the Union’s economies.
Under that 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.
With regard to the Commission announcement, Greek Government Spokesman Stelios Petsas said Greece would be seeking to secure “large sums, which would mean that, first, the government could plan an effective program to tap into these resources; and secondly, that these funds will benefit the Greek economy, businesses and employees”.
On his part, Greek PM Kyriakos Mitsotakis, tweeted:
We welcome the @EU_Commission‘s bold proposal for a package of €750 billion, mainly in the form of grants funded via joint debt issuance.
— Prime Minister GR (@PrimeministerGR) May 27, 2020
Besides ensuring fair distribution among all members states, the plan supports urgent investments, with emphasis on green and digital transitions.
More specifically, under Next Generation EU, funding will be invested in supporting EU members with investments and reforms focused on green and digital transitions; boosting the EU economy by mobilizing private investments to urgently support viable European companies in the sectors, regions and countries most affected; and lastly, focus funding on health-oriented programs in the aftermath of Covid-19 with the launch of EU4Health, funding the EU’s civil protection mechanism, and support for the forHorizon Europe for health research.
“Relaunching the economy does not mean going back to the status quo before the crisis, but bouncing forward. We must repair the short-term damage from the crisis in a way that also invests in our long-term future. All of the money raised through Next Generation EU will be channelled through EU programs in the revamped long-term EU budget,” the Commission statement reads.
According to European Council President Charles Michel, the European Commission’s proposal on a Recovery Fund and the Multiannual Financial Framework, will be discussed at the regular European Council on June 19.
“Our citizens and businesses have been heavily impacted by the pandemic. They need targeted relief without delay… I urge all Member States to examine the Commission’s proposal swiftly and work constructively towards a compromise in the best interests of the Union,” he said in a statement.