EU recovery fund should hit 1.5t euros: Commissioner

[PARIS] The European Union's proposed coronavirus recovery fund to help repair the massive economic damage caused should total around 1.5 trillion euros (S$2.32 trillion), EU Economic Affairs commissioner Paolo Gentiloni said on Wednesday.

"We need a fund worth about 10 per cent of our GDP, that is about 1.5 trillion euros," Mr Gentiloni told Les Echos daily in an interview.

EU leaders agreed last week that the European Commission, the bloc's executive arm, should draw up plans for a fund to pay for reconstruction after the coronavirus crisis is over on top of the multi-year 2021-17 budget.

The accord notably settled sharp differences between northern EU member states, led by Germany, and their southern partners, led by France and Italy, over how the rescue package should be paid for.

It is still not clear if any of this funding will come with economic policy conditions or if it will be in effect made up of loans which will have to be repaid.

"I agree with (European Commission head) Ursula von der Leyen when she says it will be a mixture of the two," Gentiloni said, adding that any loan should be very long term, perhaps even "perpetual," meaning that it is not repaid.

Spain supports this idea.

Mr Gentiloni said it will be difficult to find a consensus in the Commission over how the fund will work.

"The devil is in the details and one can say that there will probably be many devils, be they of the amount, the timing or the composition of the fund," he said.

There was no easy way of resolving such issues but Mr Gentiloni said it was absolutely necessary to act quickly, suggesting a launch in the second half of the year.

"Unless there is a (coronavirus) vaccine, there will never be a time, as in war, when you can say it's all over," he sad.

"We are going to enter this phase of reconstruction in the next few weeks, living with the virus."

"And it is during this phase that we need to put in place our recovery strategy. It is out of the question to wait a year to do it."

AFP