EU pledges fund to tackle virus crisis, but no fresh money

EU pledges fund to tackle virus crisis, but no fresh money

© Reuters. FILE PHOTO: EU Council President Charles Michel and EU Commission President von der Leyen hold a news conference following a meetig with Turkish President Tayyip Erdogan in Brussels

BRUSSELS (Reuters) – The European Commission will set up an EU fund with a firepower of 25 billion euros ($28 billion) from existing resources to tackle the economic crisis caused by the coronavirus, the head of the EU executive said on Tuesday.

Speaking after an emergency video conference of EU leaders, Ursula von der Leyen said the investment fund should be financed with 7.5 billion euros of EU money and help vulnerable sectors of the economy.

“This instrument will reach 25 billion euros quickly. To realize this I will propose to council and parliament this week to release 7.5 billion euros of investment liquidity,” von der Leyen told a news conference in Brussels.

The 7.5 billion euros are EU funds that national governments had not been able to spend due to bureaucratic complexities. Instead of being sent back to Brussels, they can be used to help the economy, an EU official told Reuters.

The total of 25 billion euros would be reached by adding EU “structural funds” which had been already committed to EU countries under the current EU budget, the official said, adding that without this financial engineering it could have been difficult to spend them.

Money should start flowing in the coming weeks, von der Leyen said, adding funds will be channeled to healthcare systems, smaller companies and the labor market.

“We stand ready to make use of all instruments necessary,” the European Council President Charles Michel told the same conference.

He said EU leaders agreed to provide liquidity against the crisis. EU fiscal rules and regulations on state aid will also be relaxed to facilitate public spending, he added.

Von der Leyen said guidelines on how to interpret fiscal rules and public subsidies regulations more leniently will be issued this week by the EU executive.

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