The French/German proposal for a €500 bn Recovery Fund to be integrated in the multi-year budget, is a great proposal. The Funds will be distributed as budget transfers, not grants, prioritising the more affected countries and not according to GDP (or GNI) /1
Repayment will be via annual budget contributions during a long period of time. It looks like the EU Commission will have to borrow long term. Exactly what was necessary. Compare with my recent statements /2
“The EU Commission could issue bonds with a very long term, around 25 years.The money should then go from the Recovery Fund, into the individual EU countries in the form of budget transfers, not loans”(Handelsblatt) Budget contributions will not count for national debts upfront.
I suggested 800 billion but 500 is around 4% of GDP and sizable. The Commission has a triple A rating and if it borrows at 20 years, total debt service (w/ amortisations) paid via annual countries budget contributions will be very low, starting at about 0.2% of GDP and going down
