Eurogroup chief calls Franco-German 500 bln euro recovery fund a step towards EU fiscal union

epa08430412 French President Emmanuel Macron (L) and German Chancellor Angela Merkel (R) during a joint video press conference at the Elysee Palace in Paris, France, 18 May 2020. France and Germany discussed Europe?s economic recovery plans to respond to the virus crisis. Germany and France propose a 500-billion-euro European programme to support the economic recovery following the coronavirus crisis. EPA-EFE/Francois Mori / POOL MAXPPP OUT

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Eurogroup chief Mario Centeno said plans by Germany and France to set up a 500 billion euro ($545 billion) recovery fund to cope with the coronavirus pandemic would be a step towards a fiscal union of the bloc.

“This initiative is a brave step in the right direction to overcome this crisis,” Centeno told German weekly Welt am Sonntag.

“The German-Franco proposal would be a great step towards a fiscal union and a properly functioning currency union, even if the recovery fund is only temporary,” said Centeno, who is also Portugal’s finance minister.

The two biggest EU countries had unveiled the proposal on Monday, aimed at offering grants to European Union regions and sectors hit hardest by the coronavirus pandemic.

It is not yet clear, though, the way the Commission will share the cash:. “Before we talk about the distribution of money, we need to know how much each country needs. The money from the reconstruction fund must go to the countries most affected by the crisis,” he said.

The proposal foresees the European Commission borrowing the money on behalf of the whole EU and spending it in addition to the 2021-2027 EU budget that is already close to 1 trillion euros over that period.

Reuters / Politico

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