EU Faced Serious Loan Problems

By Marko Vidrih on The Capital

The European Commission has faced serious problems with the implementation of the 750 billion euros stimulus plan, designed to provide financial assistance to the EU member states that have suffered the most from the coronavirus crisis.

27 heads of EU member states will discuss a plan for allocating funds at the summit, which will be held next week. Its goal is to distribute funds in the form of grants in the amount of 500 billion euros and loans of 250 billion euros to the countries and sectors most affected by the pandemic.

However, some countries opposed the idea of ​​attracting new loans, said in an interview with CNBC Karel Lannoo, Executive Director of the European think tank CEPS.

The European Commission, experts say, has never before allocated community funds on such a large scale. Although most countries welcomed the proposal, given how significant the shock was for all European economies, at least four countries do not want to endorse the plan as proposed by the European Commission.

Austria, the Netherlands, Denmark and Sweden would prefer that financial support be provided solely in the form of loans rather than grants, and without taking into account the total debt of the EU.

The authorities of some countries also expressed concerns that their tax deductions will be used “for other purposes” by the governments of other countries.

In addition, it was reported that the Finnish authorities demanded that the EU allocate a smaller amount for borrowing and increase the share of loans compared to the amount allocated to grants. This means that governments and companies will have to wait a while before receiving additional financial support.

The second problem is how to calculate the specific amount of funds allocated for an individual EU member state.

Author: Marko Vidrih

Featured image credit: Unsplash

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