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2020.03.19 15:00

Lithuanian president backs eurozone's ‘coronavirus bonds’

Vaidotas Beniušis, BNS 2020.03.19 15:00

Lithuanian president backs the idea of joint borrowing by eurozone countries to finance economic rescue plan in the wake of the coronavirus epidemic.

According to Simonas Krėpšta, an adviser to President Gitanas Nausėda, EU leaders discussed the prospect of issuing the so-called ‘coronavirus bonds’ at their teleconference summit earlier this week.

Read more: Lithuania extends 90-percent subsidies to keep jobs during coronavirus downtime

“While the idea was not the main topic of the meeting, it was rather well received by the participants,” the adviser told BNS. “The president views it positively, too.”

“The project is only at an idea stage. Many details and risk management elements would have to be agreed. But the president views positively the idea as a move toward greater financial integration in the eurozone and an additional step toward a common market,” he said.

The idea of common bonds is not entirely new in the European Union, but the economic blow from the coronavirus puts it back on the table, Krėpšta noted.

“The idea of a common Eurobond issued by several states, rather than an individual state, is not new. It was floated by the European Commission back in 2011. It is back on the table now, because we see that Europe's economic growth is facing challenges and is likely to contract significantly,” the advisor said.

“Member states will respond by increasing their spending and, of course, will actively borrow, which makes this idea much more relevant,” he said.

“This would help member countries to attract the necessary financial resources more effectively, and, in the longer term, it would be a positive step toward greater financial integration.”