LONDON – Austria’s chief financial officer believes there should be no worry over the EU’s recovery fund, with investors increasingly wary of a much-needed post-pandemic cash delay.
The EU agreed in July to leverage financial markets to find 750 billion euros ($ 898 billion) to distribute to 27 countries and shore up their economies after corona virus shock. However, to receive these funds, countries must specify how they will use them – a process that is not yet finished.
In addition, Germany’s constitutional court gave the process a shock. Last month, he raised doubts about it and effectively halted necessary legislative steps in Germany before the funds could be disbursed.
“We have of course followed quite closely the development of court decisions in Germany. To some extent they established what many critics say that there is a danger of implementing temporary measures permanently,” Gernot BlümeI, Austria’s finance minister, told CNBC on Friday.
German courts acted after a group called the Citizens’ Willing Alliance complained that the EU agreement did not allow the bloc to take on collective debt. The German judge said that the federal government must ensure that borrowing at the EU level “does not become a permanent solution” – a view shared by Austria.
“I can understand what the German court is saying and I agree to some extent,” he said, adding that Austria was “a little more skeptical about permanent debt mutualization within the European Union” than France and Germany. .
“That’s not what the Union was designed for. And we have now taken crisis countermeasures. But by definition (its) crisis is a temporary situation, so the actions we are taking to counter this crisis also have temporary motives,” BlümeI told CNBC “Squawk Box. Europe “Friday.
There is another element that is required before funds can be disbursed: All EU member states need to complete the ratification process in their national parliaments. Austria is one of the 10 EU countries that has not done that and without this, the EU cannot take advantage of the debt market.
“I am sure there will be no delay in being able to issue European bonds as well as this is an important step towards boosting the European economy again,” Austria’s chief financial officer said when asked why his country had not taken this step.
“We have agreed to the measures, Austria paid most of the 12 billion euros into this pot and we are doing this because we think this is the right way to increase growth in the European market because all European citizens will benefit from it,” he added. .
Austria, like other EU countries, has struggled to quickly roll out a Covid-19 vaccine to its citizens.
But Chancellor Sebastian Kurz confirmed last weekend that negotiations to buy Russia’s Sputnik V vaccine were complete, although this injection has not yet been approved by the European Medicines Agency.
BlümeI said Austria was following the rules and “trying to get more doses for vaccinations, only to be faster in restoring the economy and restoring their freedom.”
“I don’t see anything wrong in doing it,” he said.
Some eastern EU countries, such as Hungary, have decided to go beyond the deals negotiated by the European Commission to buy more vaccines themselves, even if these have not received block-wide medical approval.
Speaking to CNBC, BlümeI said he was optimistic that in the next two to three months, Austria would vaccinate all adult populations wishing to receive the vaccine.
A man sits on a park bench in the Volksgarten in front of the Hofburg palace in Vienna, Austria on April 8, 2021 as Austria resumes Covid-19 restrictions.
JOE KLAMAR | AFP | Getty Images