European round-up
April 2010 | Issue 17
Euro-area leaders reach agreement on Greek aid
Euro-area leaders agreed at the European Council meeting held on 25 March on coordinated financial support to help Greece finance its debt. Euro area Member States are expected to contribute about two thirds of the overall funding, leaving the remaining third to the IMF. The mechanism will only be activated as a last resort, if market financing is insufficient, and the interest rate offered to Greece will not be too favourable, in order to encourage Athens to return to market financing as soon as possible. Moreover, the mechanism can only be triggered by unanimous agreement of all 16 members of the euro area. The contribution of each euro area member to the mechanism will be based on their respective European Central Bank capital key, suggesting that wealthier nations will contribute most. In order to address future problems, Herman Van Rompuy, the European Council president, is to head a working group tasked with proposing, by the end of this year, changes to the euro area’s legal framework for economic governance.
European round-up
April 2010 | Issue 17
Camdessus report on EIB proposes strengthening EU external lending
On 24 February the Commission and the EIB welcomed a report on the EIB’s external financing activity by a committee of ‘wise persons’chaired by former IMF Managing Director Michel Camdessus. It proposed an extra EUR 2 billion in EIB loans for projects that further the fight against climate change. The current EIB external mandate for lending beyond the EU’s borders provides for a maximum of EUR 25.8 billion under EU guarantee for the period 2007-2013. The report also suggested longer-term options to consolidate the delivery of financial aid in support of EU external policies. The Commission will submit a legislative proposal for amendments to the current mandate within the next few weeks, drawing upon the report.
