ESM Board of Governors’ agreement makes Pandemic Crisis Support available with immediate effect

15th May, 2020

This afternoon (Friday), the Minister for Finance and Public Expenditure and Reform, Paschal Donohoe TD, met with other euro area Finance Ministers, via videoconference, in their capacity as Members of the European Stability Mechanism (ESM) Board of Governors. They endorsed the ESM Pandemic Crisis Support instrument.

Speaking following the meeting, Minister Donohoe said: ‘This funding instrument is an important and credible safety net for euro area sovereigns, both in its magnitude and its availability to all euro area Member States. Our endorsement today makes the instrument operational with immediate effect, fulfilling the task that Finance Ministers received from the European Council on 23 April, regarding the introduction of the instrument by 01 June. Euro area Member States, that require ESM Pandemic Crisis Support, can make a request for the facility until 31 December 2022. I am very pleased that, by working together, we have approved this support measure well in advance of the proposed deadline. This demonstrates the seriousness with which Euro Member States view the current crisis and the need to ensure funding streams are available to those who need them’.

The ESM instrument is based on the existing Enhanced Conditions Credit Line (ECCL), but has been tailored to meet the challenges of this crisis and will be available to all Euro Area Member States for amounts of 2 percent of the respective Members’ GDP as of end 2019 as a benchmark to support domestic financing of direct and indirect healthcare, cure and prevention related costs arising from the Covid-19 crisis – thus providing a credit line of circa €240bn for the entire euro area.

Minister Donohoe continued: ‘Ireland has a strong track record of market access and we are well placed to increase our borrowing activity arising from the economic disruption relating to the pandemic. In this context, I note that yesterday the NTMA successfully completed an auction of €1.5 billion of the benchmark Irish Government bonds, comprising of the 1.1% Treasury Bond (maturity 2029) and 1.5% Treasury Bond (maturity 2050). This brings the total issuance of benchmark bonds in 2020 to €12.5bn. Discussions will continue on the two other safety nets: the SURE proposal and the establishment of the EIB pan European guarantee fund to support European workers and businesses’.

Following the ESM Board of Governors meeting, the Ministers met in the Eurogroup formation as Eurozone Finance Ministers.  They had an exchange of views, with the European Parliament’s Chair of the Economic and Monetary Affairs Committee, Ms Irene Tinagli, on the economic outlook for the Euro Area with particular reference to impact of the Covid-19 crisis.

The Eurogroup Finance Ministers in inclusive formation, then had a discussion on the economic response to the Covid 19 Pandemic, including a strategic discussion on the priorities for relaunching EU economies.  Ministers also discussed the second amendment (adopted on 8 May 2020) to extend the scope of the state aid temporary framework in light of the Pandemic.