Eurozone agrees on offering cheap loans to countries hit by coronavirus
Eurozone finance ministers have agreed on the details of cheap loans that the bloc will offer to countries hit by the coronavirus crisis.
The deal, struck at a video conference today, forms a key part of the response to the crisis, that’s put the European Union on track for the steepest recession in its history. Italian bonds rallied, with yields on 10-year notes dropping 8 basis points to 1.84%.
Under the emergency support instrument, euro-area governments will have access to cheap funds worth up to 2% of their 2019 output, without any of the onerous belt-tightening terms that were attached to the loans granted during the sovereign debt crisis. The European Stability Mechanism will be able to lend to countries on terms normally reserved for sovereigns with a pristine credit rating, and with few questions asked.
“We agreed today on the features and standardized terms of the Pandemic Crisis Support, available to all euro area Member States for amounts of 2% of the respective Member’s GDP,” the ministers said in a joint statement issued at the end of an online meeting.
“Subject to the completion of national procedures, we expect the ESM Board of Governors to adopt a resolution confirming this well before the 1st of June 2020,” they said, referring to the European Stability Mechanism - the EU rescue fund - which will provide the credit lines to states.
