Centeno: ‘The old books by which we governed are of no use in this period’

Portuguse Minister of State and Finance Mario Centeno during an EU Eurogroup finance ministers' meeting at the European Council in Brussels, Belgium, 20 January 2020. [EPA-EFE/STEPHANIE LECOCQ]

In an interview with the Portuguese newspaper Público, the President of the Eurogroup, Mário Centeno, shared some leads about the EU’s recovery plan. He believes that the new recovery plan should have its “own, appropriate and innovative funding mechanism”.

Following Eurogroup’s meeting on 9 April, there was general agreement between the EU finance ministers on the need to “work on a Recovery Fund to prepare and support the recovery, providing funding through the EU budget to programmes designed to kick-start the economy in line with European priorities and ensuring EU solidarity with the most affected member states”, said the report after the meeting.

This fund would be temporary, targeted and commensurate with the extraordinary costs of the current crisis.

The president of the Eurogroup shared some of the crucial points of the future recovery plan, which EU leaders will discuss at a video summit on Thursday (23 April).

“This is a symmetrical crisis that will inevitably lead to all countries getting more short-term debt and facing, in the third quarter of 2020, a truly overwhelming recession. The old books by which we governed are of no use in this period – maybe they can come back to us to serve there later on. The answer we have to give now has to be framed in this new reality,” Centeno argued.

There are currently different visions among EU leaders about how this fund should be financed. In Centeno’s vision, this new recovery plan should have its “own, appropriate and innovative funding mechanism”.

At the moment, there is the French proposal, which includes the issue of common debt to fund the fund. Other countries see this mechanism more within the next Multiannual Financial Framework, the EU’s seven-year budget. “The two views are not mutually exclusive. Even if indirectly the fund is used to reinforce EU budgets programs,” he said.

Centeno also defended the importance of protecting the Single Market. In his opinion, this time, the answer is not limited to the Economic and Monetary Union.

“In the latest Eurobarometer, the euro was at its peak of appreciation in all Economic Monetary Union countries – far, far above the levels recorded at the time it was created. And far, far above the most critical point of the last crisis,” he said.

“It is an asset that policymakers have to value. But we are not just protecting the EMU. We are also protecting the Single Market because that is fundamentally what it is about,” he added.

The recovery fund should be temporary in terms of support to the countries, “but it must be successively long in the maturities in which this support is later reimbursed so as not to compromise the mobilisation of resources for recovery”, Centeno explained.

[Edited by Jorge Valero/Zoran Radosavljevic]

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