Germany: ESM aid should be disbursed without lengthy visits from officials

Germany: ESM aid should be disbursed without lengthy visits from officials

© Reuters. The spread of the coronavirus disease (COVID-19) in Bavaria

BERLIN (Reuters) – Euro zone states that need aid from the bloc’s bailout fund to tackle the coronavirus should get it quickly and be first subjected to visits from officials proposing policies like during the euro zone crisis, Germany’s finance minister said.

Olaf Scholz told broadcaster ARD late on Thursday he was convinced the European Stability Mechanism – a bailout fund with 400 billion euros ($433.88 billion) in firepower – had instruments suitable for use during the coronavirus outbreak, which has hit euro zone countries like Italy and Spain hard.

“We have the possibility to say we can do something as a precaution,” Scholz said. He added any such action would be tied to rules but that these needed to be appropriate for the current situation in which funds were required for health and securing jobs.

“From my point of view it’s especially important to ensure that if a country says it wants to use these funds, that there’s not then a load of commissioners who go there and first spend weeks discussing with them how they should change their policies in the coming years,” Scholz said.

He stressed that the aid needed to flow quickly, adding: “We don’t need a Troika to come and first make proposals for the future, like we’ve seen in other countries.”

When Greece was bailed out during the euro zone sovereign debt crisis, a team of officials from the International Monetary Fund, the European Commission and the European Central Bank – known as the Troika – famously visited Athens regularly to check progress on its bailout commitments and decide whether to release the next tranche of loans.

On Thursday, French Finance Minister Bruno Le Maire said the ESM should be made available as a source of financing to countries with only minimal conditions attached and without stigma for using it.

Last week, EU leaders gave finance ministers until April 9 to come up with ideas on how to finance the recovery after Germany and the Netherlands shot down a call from France, Italy, Spain and six other countries for a common debt instrument issued by a European institution.

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