Following Friday’s agreement by eurozone finance ministers, Greece stands to receive low-interest loans from the emergency credit line of the European Stability Mechanism without any of the heavy conditions it had to meet in the 2010s.
The Eurogroup video conference agreed on the activation of the Pandemic Crisis Support, the new tool of the ESM, and that all eurozone members are eligible to benefit from it, as the European Commission had previously proposed. The loans, with an average maturity period of 10 years, will have an interest rate “marginally above zero,” ESM chief Klaus Regling told a press conference. Loans could reach up to of 2 percent of each borrower state’s gross domestic product according to 2019 data.
Both Regling and Eurogroup head Mario Centeno, as well as European Economy Commissioner Paolo Gentiloni, stressed on Friday that the only condition for the provision of assistance is the countries’ pledge they will spend the cash they will receive on covering direct and indirect needs related to the health crisis. The monitoring will also be relaxed.
Gentiloni and Commission Vice President Valdis Dombrovskis said in a letter that, given the very specific and limited scope of the Pandemic Crisis Support, which is a one-off instrument of a temporary nature associated with the Covid-19 crisis, a simplified framework of data supply and monitoring is justified.
A senior source at the Greek Finance Ministry expressed satisfaction regarding the access terms and the soft method of assessment of the Pandemic Crisis Support. Based on the 2 percent limit, Greece may draw up to 3.7 billion euros from the ESM, although Athens does not have any immediate plans to resort to the new line of credit.
The new line of credit expires on December 31, 2022, but could be abolished earlier, with a decision by the ESM board. Credit will be offered to countries that ask for it for 12 months with the possibility of two six-month extensions.