Coronavirus, to the Eurogroup smoked gray: “It is shock that affects everyone. Consensus on the Mes but more work is needed”. The ball to the heads of state

A few steps aheadEurogroup on Tuesday evening. Eurozone finance ministers ended their meeting without drafting a conclusions document for the EU leader who will meet by videoconference Thursday. But they have at least shown the way: Covid-19 is one “symmetrical shock“, Not comparable to the debt crisis of ten years ago. So yes to the use of the state-saving fund, but with the only restriction that loans are used to deal with the emergency. Problem: the “details” remain to be filed. Which are politically anything but secondary: theItaly and the France they ask that the conditionalities disappear and that there is no penalty. A group of Northern European countries, starting fromHolland, continues to insist that there is a memorandum with binding commitments.

“We started the debate on new forms of support, we are committed to exploring all the possibilities to support our economies in these difficult times,” explained the president Mario Centeno during the video press conference that he saw in Lisbon, Paolo Gentiloni quarantined in Brussels e Klaus Regling, director of Mes, in Luxembourg. But “the discussion has just begun and more work is needed to reach the conclusion”. Heads of state, therefore, will have to decide what to do.

“The challenge that our economies face is in no way similar to the previous crisis. This is an external symmetrical shock, ”said the Portuguese. “Moral hazard considerations“, That is, the idea that states can use the loans obtained at this stage for other purposes,”are not allowed. We must keep this in mind when considering the tools available. This is particularly true of any MES tool developed during the past crisis. ”

“There is ample support among finance ministers,” explained Centeno, “to consider a safeguard against the pandemic based on the existing instruments of the Mes, such as the conditional credit lines Eccl. ” These tools should take into account the “external and symmetrical shock” nature of Covid 19. This also applies to any conditionality. In the short term they would be bound to the Coronavirus emergency, and in the long term, countries should return to stability. ” But it should be the individual country to apply for help. Many economists have instead hoped that the Fund will offer everyone credit lines, in order to wipe out the “stigma” still linked to the intervention of the Mes from the time of the Greek crisis. The amount of loans could reach “2% of GDP“. But “although there is broad support for these issues, more work is needed on the details.”

On the other hand, the perspective of coronabond: “I am an instrument that remains on the table”, Gentiloni limited himself. “We must go on with the discussions and build a consensus.”

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