Finance Ministers make progress on the Euro zone budget

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Almost two years after the Macrons idea of a Euro zone budget there is progress – but also a number of construction sites. The Finance Ministers agreed on key points for a future budget for the Eurozone.

EU financial Commissioner Pierre Moscovici and Greek Finance Minister Euclid Tsakalotos at the Meeting

After an overnight marathon session, the Euro reached-the Minister of Finance progress in the controversial Euro-zone budget, the Central questions remained open. “We have undertaken a series of small steps, more work is needed,” said Euro group boss, Mario Centeno, after a good 15-hour session in Luxembourg. Question is still, how the planned Budget is to be funded. The exact amount is still unclear.

France’s Finance Minister Bruno Le Maire language despite the moderate progress after months of struggle, however, of a “breakthrough”. “We have for the first time, an agreement to a Euro-zone Budget,” he said. It is reality will. However, he also pointed out that the amount and source are still unclear. In the conversation initially, 17 billion euros for the EU financial period from 2021 to 2027 are in the past. The Details of the negotiations in Luxembourg were not immediately known.

Is now, among other things, that the Budget is provided for Euro-States, as well as for countries which want to join the single currency in sight. In the case of the use of the money in each case, a national Co-financing should apply, this could vary depending on the circumstances.

The discussions on the financing of the budget would be continued at a later date, wrote the Dutch Finance Minister Wopke Hoekstra in the short message service Twitter.

Protection against financial crises

The Euro zone budget originally belonged to the Europe-visions of the French President, Emmanuel Macron. Him 2017 floated a Multi-billion budget exclusively for the Euro-States. He understood the Budget as a Symbol of a major new departure for the EU. The common currency area should be protected better against any future financial crises.

Governments can apply for from the Euro-zone Budget funds in order to promote concrete reform projects

The Greece crisis in the highly indebted and economically ailing country was on the verge of state bankruptcy, the Euro-States, among other things, that the enormous economic differences to financial shocks that hit other countries.

German Chancellor Angela Merkel (CDU) indicated Macron in the past year in the Brandenburg Meseberg in principle support for the project. In consequence, Germany and France worked out a joint Plan.

Strengthening the competitiveness of

The EU heads of state and government agreed in December 2018, in principle, to the introduction of a Euro zone budget, and gave the Finance Ministers of the order, the Details of a budget for the 19 countries in the common currency area to prepare.

This should serve primarily to the strengthening of competitiveness and convergence of economic conditions. Contentious last in addition, the extent to which it could also be used to stabilize the economy in times of crisis used.

The contract had been partially not fulfilled, it was now from EU circles. “The original proposal Macrons of a powerful household have diluted the Minister of Finance recognition”, criticized the Green European parliamentarian Sven Giegold.

Upcoming Challenges

“We have created the Euro zone budget and put us on the core elements of its structure and governance have agreed,” said Le Maire. “But it’s still a long way, especially in the question of how we Finance the new Budget.” He under-estimated the challenges ahead not.

France’s Finance Minister Bruno Le Maire answers journalists ‘ questions in Luxembourg, he spoke of a “breakthrough”

After years of growth, had darkened the economic Outlook for Europe last significantly. One reason for the increase in trade tensions between the United States and China, as well as the risk of a disorderly EU exit of great Britain.

The Euro rescue Fund ESM

The Finance Ministers agreed to strengthen the Euro bailout Fund, the ESM, which primarily loans to bankrupt threatened States against austerity and reform conditions can be awarded. At its core, this decision was taken also in December. Now it was about to pour it in a binding Text. The Ministers discussed in Luxembourg, specifically, a 70-pages long text of the contract.

Among other things, the ESM should play in Bank failures in the future play a more important role, and the so-called Backstop (“backstop”) for the Bank resolution Fund, SRF posts. This is to ensure that no tax dollars are used more for the rescue of banks.

“Fire wall of protection in the event of a crisis”

Le Maire said that the now agreed new ESM Treaty will change the Functioning of the rescue Fund “radical”. He was going to a “real fire-wall of protection in the event of a crisis”. In addition, it was now “set in stone” that the ESM would fill in as a Backstop, if you Bank more money processing would be necessary. “This last safety net is to reassure savers and markets.”

Until 2024, the ESM will be filled by the banks themselves with more than 55 billion euros. This sum is not sufficient in severe crises, could in the future of the ESM to step in, at the earliest however, from 2020 onwards.

ni/stu (AFP, dpa)