La bozza di documento sull'uso del meccanismo europeo di stabilità

1. POSSIBLE USE OF ESM CREDIT LINES AS PART OF THE
CORONA VIRUS RESPONSE
Eurogroup meeting, 24 March 2020
ESM Internal Use

2. POSSIBLE TYPES OF ESM SUPPORT
• ESM available lending capacity is € 410 billion.
• ESM instruments can be used for a coordinated response to the
exogenous symmetric shock by the corona virus in line with ESM Treaty
• Option 1: Use of Enhanced Conditions Credit Line (ECCL)
• Use existing framework as basis.
• Option 2: Rapid Liquidity Facility
• Need to develop a new instrument.
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3. PANDEMIC RESPONSE ECCL (OPTION 1)
• Objectives:
• Make ECCL available to all in line with ESM Treaty
• Apply the existing ECCL framework in the context of corona virus response
• Main issues:
1. Eligibility and conditions
2. Process to grant the credit lines
3. Debt sustainability analysis
4. IMF involvement
5. Volume/ Maturity
6. Pricing/ Funding strategy
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4. 1. ELIGIBILITY AND CONDITIONS FOR ECCL
• Eligibility criteria (in line with the existing guideline)
• ECCL for all ESM Members in view of corona virus related risks.
• Conditions (common basis for MoU)
• Use of ESM support for health and economic cost of response. Members
commit to respecting EU fiscal rules and European Semester (including
flexibility applied by the EU institutions).
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5. 2. PROCEDURAL STEPS FOR ECCL
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•Eurogroup [or Euro summit] statement showing coordinated and joint response to the corona virus using the ECCL available
to all ESM Members.
•COM and ECB provide the three required assessments under Art. 13(1) ESM Treaty for all ESM Members (global, preliminary)
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•Board of Governors (BoG) endorses in principle the stability support and sets out the overall framework: template MoU and
the Financal Facility Agreement (FFA).
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•An ESM Member wishing to access the facility requests the ECCL instrument.
•COM and ECB confirm the assessments under Art. 13(1) ESM Treaty (in line with previous ones if unchanged circumstances).
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•Finalisation of the MoU, in line with the template MoU.
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•The ESM Board of Directors (BoD) approves individual FFAs.
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6. 3. DEBT SUSTAINABILITY ANALYSIS (DSA) FOR ECCL
• ESM Treaty requires a DSA for any stability support
• Pandemic response ECCL would rely on existing COM DSA methodology
• Up-to-date DSA will be available for all ESM members by end-March
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7. 4. IMF INVOLVEMENT
• The requesting ESM Member is “expected, whenever possible, to
address a similar request to the IMF” (ESM Treaty).
• The IMF has made available its rapid financing facilities in response to
the corona crisis to low income and emerging market countries. Nearly
80 countries are requesting IMF help in the context of corona virus.
• ESM Members can use the ESM. IMF involvement only in a technical
advisory capacity.
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8. 5. OPERATIONAL ELEMENTS
• Volume
• Upfront announcement of around 2% of Members’ GDP as a benchmark.
Could be adjusted in view of Members’ the severity of the coronavirus
outbreak and its impact.
• Availability period and maturities
• Initial availability period of 12 months; could be extended to up to 2 years.
Any drawings would need to be repaid [over the medium term/within an
average maturity of 5-10 years].
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9. 6. OPERATIONAL ELEMENTS (2)
• Pricing
• Existing Pricing Policy would apply. However, to reflect the purpose of the
instrument in the current circumstances, the existing margin and/or the
service fee level (85 basis points) should be lowered.
• Funding strategy
• ESM would use the Diversified Funding Strategy (DFS). The credit line could
be financed through “Social Stability Bonds” or “corona bonds” to attract
investors.
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