Frugal four propose loans for loans approach to coronavirus recovery fund

The EUs so-called frugal four — Austria, Denmark, the Netherlands and Sweden — are pushing for a “loans for loans” approach for the blocs coronavirus recovery fund, according to a position paper seen by POLITICO.

France and Germany on Monday called for a €500 billion recovery fund that would give cash to EU countries impacted by the economic fallout of the coronavirus crisis. The proposal would allow the European Commission to borrow cash on financial markets, then distribute money as grants.

In their non-paper, the frugals, who came out against the Franco-German plan, argue for a European Recovery Fund that is based on a “modernized EU budget” and ensures countries are “better prepared for the next crisis.”

The recovery fund should be temporary and one-off, with a sunset clause after two years, and should not lead to debt mutualization, according to the paper.

Such a fund would allow loans to be made on favorable terms to member countries in need, while “limiting the risk to all Member States and providing sound incentives.” LoRead More – Source