EU's #Coronavirus fund 'could have been better', ECB's Lagarde says

A historic European Union deal creating a €750 billion ($870bn) fund to help the bloc’s weaker economies recover from the coronavirus pandemic “could have been better”, European Central Bank President Christine Lagarde (pictured) said on Wednesday (22 July), write Balazs Koranyi and Francesco Canepa.

The accord, struck on Tuesday after fraught negotiations, will see the European Commission disburse €390bn in grants and €360bn in cheap loans to member countries based on criteria including their unemployment rate in recent years and, later, the economic damage wrought by the pandemic.

But Lagarde stood out as a rare critic, saying she would have preferred a greater proportion of grants over loans, in line with the Commission’s original proposal that was changed to convince fiscally frugal countries such as the Netherlands.

“It could have been better but it’s a very ambitious project,” Lagarde told a live-streamed interview with the Washington Post.

Over the weekend, Lagarde had said EU leaders should aim for a package in line with the Commission’s proposal, which was for €500bn in grants, even if it took longer to reach an agreement.

Germany’s finance minister compared the deal to the decision of Alexander Hamilton, one of the US Founding Fathers, to federalise the debts of US states in 1790.

($1 = €0.8633)