EU ‘bazooka’ package ratified in June

Portuguese Finance Minister João Leão believes that the five EU member states that have yet to ratify a €312Bn ‘bazooka’ package to rescue and rebuild Europe’s economy after the Covid-19 pandemic, will do so by the end of May.

“We really hope that in the coming weeks, if possible in May, that the five remaining countries will ratify,” Leão told Lusa in a joint interview with the president of the Eurogroup of Euro-zone finance ministers, Paschal Donohoe.* (*Don’t miss his interview with the Irish-Portuguese Business Network (IPBN) in Essential Business on Wednesday).
“We have positive prospects, from the contacts we have had, that the five countries can meet this objective.”
Portugal, as current holder of the presidency of the Council of the EU, is organising a meeting of Ecofin, which brings together member states’ ministers of economy and finance.
The EU members yet to ratify are Austria, Hungary, the Netherlands, Poland and Romania, according to Valdis Dombrovskis, commission executive vice-president, on Tuesday.
Leão said it was “very important” that all member states ratify the decision by the end of May, so “the European Commission can prepare to go to the markets … before the summer” to raise finance for the EU’s post-pandemic recovery plan.
“It is very important that before the summer break, when there is less liquidity in the market, that the European Commission has the opportunity and capacity to go to the markets to finance itself,” he said. “This would be a very important signal for the European economy and for the markets.”
The ratification is need to raise the loans for the Recovery and Resilience Mechanism (RRM), worth a projected €672.5Bn (at 2018 prices), which is the central element of Next Generation EU, the €750-billion fund approved by EU leaders in July last year and which is aimed at relaunching EU economy after the crisis caused by the Covid-19 pandemic.
The mechanism is to make a total of €312.5 billion in grants and €360 billion in loans available to member states. To access it EU governments must submit to the commission their national Recovery and Resilience Plans (RRPs), containing reform and investment programmes for the period to 2026, but it is also necessary for all to ratify the own-resources decision first.
Leão, who on Friday and Saturday hosted informal meetings of the Eurogroup and Ecofin in Lisbon, expressed the hope that Portugal’s RRP “may already be approved by June” given that Portugal was the first country to submit a final plan.
He also told the news agency Lusa that the EU budget rules “are complex,” saying that it is important that in the future the rules “are credible” and that countries are able to comply with them, “and at the same time are able to focus on what is important, which is the recovery of the economy and the social conditions of the population.”
Donohoe agreed that the budget rules were “very complicated” and that it was a challenge “to explain them clearly”. However, he added “sometimes this complexity can also be a source of flexibility in demanding situations” such as the current pandemic.