Economy Commissioner Paolo Gentiloni encouraged Italy and other countries to make use of emergency finance from the European Stability Mechanism, assuring them that the money will not come with “draconian” conditions.
In an interview with La Repubblica published late Saturday, the former Italian prime minister said the credit line which was finalized on Friday, is “the symbol of the different way in which we face the crisis: ten years ago a country in trouble asked for help in exchange for draconian conditions while today, with Europe facing a common crisis, we have an instrument accessible to all and without conditions.”
The ESM would allow countries to borrow up to two percent of their gross domestic product, which, “for Italy is €36 billion to €37 billion at a rate close to zero,” Gentiloni said.
The ESM has become politically toxic in Italy because of the stigma attached to the labor and budgetary reform conditions that were imposed on Greece during the euro crisis.
Countries tapping the ESM would have 10 years to pay back the debt, under the preliminary agreement struck by the Eurogroup ministers in a short videoconference. Their leaders have asked for the credit lines to be ready by June 1.
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