The European Union (EU) has approved a €500 billion rescue package for countries in the region that were greatly affected by the coronavirus pandemic.
A €500 billion rescue package was agreed upon by EU finance ministers to help European countries hit hard by the coronavirus pandemic in their recovery.
The deal, which was finalized following marathon discussions in Brussels, was announced by Eurogroup chairman Mario Centeno.
The approval of the rescue package comes as Spain's prime minister said the country was close to passing the worst of the outbreak. Currently, Spain has the highest number of confirmed COVID-19 cases with 152,446 and over 15,000 deaths.
Looming economic crisis
Kristalina Georgieva, chairwoman and managing director of the International Monetary Fund (IMF), warned the the world will experience the worst economic crisis since the Great Depression of the 1930s.
Georgieva said the pandemic will push down economic growth to "sharply negative" this year but a partial recovery is expected in 2021.
She said: "Just three months ago, we expected positive per capita income growth in over 160 of our member countries in 2020. Today, that number has been turned on its head: we now project that over 170 countries will experience negative per capita income growth this year."
She argued that if the pandemic eased in the second half of 2020, a partial recovery might happen in 2021 but the situation could also worsen.
"I stress there is tremendous uncertainty about the outlook. It could get worse depending on many variable factors, including the duration of the pandemic," added Georgieva.
The rescue package
At the discussions, the EU ministers did not approve a demand from France and Italy to share out the cost of the crisis through the issuance of "coronabonds".
The approved package is also smaller than what the European Central Bank (ECB) recommended. According to the ECB, the EU may need need up to €1.5 trillion to address the coronavirus crisis.
Despite the rejection of coronabonds, France's Finance Minister Bruno Le Maire, commended the agreement and called it the most important economic plan in EU history. In a tweet, he said: "Europe has decided and is ready to meet the gravity of the crisis."
The €500 billion rescue package included the European Stability Mechanism, the bailout fund of the EU, which will provide €240 billion to guarantee spending by indebted countries under pressure.
The agreed upon package also included other measures, such as €200 billion in guarantees from the European Investment Bank and a European Commission project for national short-time working schemes.
The agreement was expected to be finalized on Wednesday but a dispute between Italy and the Netherlands over how to apply the recovery fund caused talks to be resumed the next day.
David Sassoli, the Italian president of the European Parliament, tweeted: "Our faith in Europe has proven correct!" after the finance ministers announced the rescue package.
However, a diplomat from an influential EU country said: "This has not been our finest moment. Our response has come late and has been marred by nationalism. Solidarity went out the window with the first coronavirus victim."
