“European loans for green transition are still debt”

The European Commission has no intention of considering the investments that will be made by the Member States using the loans of the Next Generation Eu, not even when they are used for the green transition; but, on the other hand, a large part of these investments can be financed, instead of with loans, with the non-repayable transfers provided by the device «Recovery and Resilience Facility» (Rrf), which do not go into debt. Furthermore, the loans from this Recovery Fund will be disbursed by the Commission on extremely convenient terms for Member States, and should not lead to an increase in their interest expenditure. The executive vice president of the European Commission responsible for economic affairs reminded us of this in Brussels, Valdis Dombrovskis, during the online press conference at the end of the Ecofin videoconference meeting.

“When a Member State takes out a loan, it adds to its national debt. At the same time – explained Dombrovskis – the Member States will be able to have the loans “foreseen by the” Next Generation EU “at very favorable conditions. For example, “for the European Sure mechanism”, which finances the national redundancy fund systems, and which prefigures, on a smaller scale, the system that will be used for the Recovery Fund, “we issued bonds with a maturity of seven years and interest rates negative interest of 0.497% “. This means that if a Member State takes a € 105 loan, it will only have to pay back € 100 after seven years. Clearly – underlined the executive vice-president of the Commission – this type of loans can allow Member States to reduce their cost of debt ”.

Responding to a more specific question on the hypothesis of encouraging green investments through their deduction, even partial, from public debt, Dombrovskis specified: “When EU countries accumulate more debts”, even if taking the loans assigned to them in the context of the «Next Generation EU» to finance the green transition, the loans «must be counted as state debt, otherwise uncertainties and doubts are created in the markets on the true state of the public debt of the member states, and this could be counterproductive».

However, the executive vice president continued, as regards the Recovery Fund Rrf “investments for the goal of the green transition, which must be at least 37%” of the total in the national plans “clearly do not add to the public debt if they are financed by the transfer quota ”of the Fund, while“ they must be added only if they are financed with the loan quota envisaged by the RFF mechanism ”.

“A different theme, which will return once the crisis is over – added Dombrovskis finally – concerns the revision of the rules on budgets and their simplification”. And in this context, he explained, “in fact one of the issues we are looking at is the proposal that has been put forward by the ‘European Fiscal Board’, concerning a so-called ‘limited Golden rule'”.

“The idea once again – the executive vice president pointed out – is not to pretend that the debt does not exist, but to see how we interpret this debt with regard to the purposes of the rules on budgets and compliance with the Stability and Growth Pact” , concluded Dombrovskis.

The “Golden rule” is a criterion concerning public budgets according to which expenditure for productive investments is considered in a very different and positive way compared to current expenditure.

(with source Askanews)

Source: RSS DiariodelWeb.it Economia by www.diariodelweb.it.

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