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European Union Proposes 750 billion- euro COVID-19 recovery fund

The announcement by the European Union came as the 27- nation trading bloc has entered its deepest-ever recession as COVID-19 ravages the economies of the nations.

May 28, 2020 14:23 IST
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The Commissioner Paolo Gentiloni on May 27 announced that the European Union (EU) has proposed a 750 billion-euro recovery fund to help the economy of the countries as they go into deep recession induced by Coronavirus Pandemic.

Paolo Gentiloni confirmed the size of the fund announced by the EU. He is in charge of economic affairs at the European Union’s Executive Body.

The announcement by the European Union came as the 27- nation trading bloc has entered its deepest-ever recession as COVID-19 ravages the economies of the nations.

Key Highlights:

•   In order to keep the health care systems, jobs, and businesses alive, every country has broken the European Union’s deficit limit.

•   Earlier, leaders of France and Germany had agreed on a one-time $543 billion fund. The proposal aimed at adding further cash to an arsenal of financial measures that the bloc has been deploying in order to cope with the economic fallout.

•   The plan involved the European Union borrowing money in the financial markets to help the countries and the sectors that have been affected by the pandemic.

•   The blueprint of the European Commission is likely to resemble the Franco-German Plan in many ways while also attaching the funds to the EU's next long-term budget.

Question of Grants and Loans:

The question that persists is that of how much money will take a form of loans and how much would be of grants.

Denmark, Australia, Sweden, and Netherland have been reluctant in regard to the money given away without any strings attached. This reluctance will result in a combined opposition to the grants that can hold up the project.

Swedish Finance Minister, Magdalena Andersson has stated that the question whether will it be grants or loans, or if it will be grants who will be paying it. She further added that loans will be a more interesting way forward for the discussion but we will still need to discuss the conditions under which we shall give these loans.

With the question of grants or loans, the announcement of the fund will for sure spark a heated debate in the EU. As the new budget period begins on January 1, countries have become desperate for the funds. It will be important that all the 27 countries must agree for the recovery fund to come into effect immediately.

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