France proposes EU COVID recovery fund worth 150-300 bln euros per year in 2021-23 - document

Paris has proposed that the European Commission issues bonds to finance a recovery fund for the European Union worth 1-2% of GNI per year, or some 150-300 billion euros, in 2021-23, according to a French proposal seen by Reuters. The proposal comes as the EU debates how to kickstart growth after the coronavirus slump. The bloc's executive Commission is due to make a formal proposal in the week starting May 18 of a new joint budget for all the 27 member states (MFF) for 2021-27 and an accompanying Recovery Fund.

"The size should be at least 1% to 2% of EU GNI per year over the next three years, which would provide the EU budget a top-up of 150 to 300 billion euros each year between 2021 and 2023," the French discussion document read. "Loans to member states could help to close the gap, but need to remain a top-up to grants. To ensure maximum added value, such loans should have a grace period, very long maturity, and low-interest-rate ... It is also essential that this fund be set-up as soon as possible, possibly before the entry into force of the next MFF."