LONDON — Austria’s finance chief believes there is no need for concern over the EU’s recovery funds, with investors growing increasingly wary about a delay in the much-needed post-pandemic cash.
The EU agreed in July to tap financial markets in search of 750 billion euros ($898 billion) to distribute across the 27 nations and prop up their economies after the coronavirus shock. However, in order to receive these funds, countries have had to detail how they will be using them — a process that has not yet concluded.
In addition, the German constitutional court threw a curveball at the process. Last month, it raised doubts about it and effectively halted the necessary legislative steps in Germany, before the funds could be released.
“We of course have followed quite closely the developments by the court ruling in Germany. To a certain extent they are stipulating what many critics say that there is a danger to implementing temporary measures in a permanent way,” Gernot BlümeI, the finance minister of Austria, told CNBC on Friday.
The German court acted after a group called the Citizens’ Will Alliance complained that the EU treaties did not allow the bloc to take on debt jointly. The German judges said that the federal government should ensure that borrowing at the EU level “does not become a permanent solution” — an opinion shared by Austria.
“I can understand what the German court said and in some parts I agree,” he said, adding that Austria is “a little bit more skeptical when it comes to a permanent mutualization of debts within the European Union” in comparison with France and Germany.
“That’s not what the Union was designed for. And we have now taken crisis combatting measures. But per (its) definition a crisis is a temporary situation, so the measures that we have put up to fight this crisis have also a temporary motive,” BlümeI told CNBC’s “Squawk Box Europe” Friday.
There is another element needed before the funds can be released: All EU member states need to conclude the ratification process in their national parliaments. Austria is among the 10 EU nations that is yet to do that and without this, the EU cannot tap the debt markets.
“I am convinced there will be no delay to be able to also emit those European bonds because it is an important measure to re-boost the European economy,” Austria’s finance chief said when asked why his country had not taken this step yet.
“We have agreed on those measures, Austria is paying a big share of 12 billion euros into this pot and we do this because we think it is the right way to increase growth within the European market because all citizens of Europe will benefit from it,” he added.
Nothing wrong with negotiating vaccines with Russia
Austria, just like other EU nations, has struggled to rapidly roll out Covid-19 vaccines to its citizens.
But Chancellor Sebastian Kurz confirmed last weekend that negotiations to buy the Russian Sputnik V vaccine had concluded, even though this shot has not yet been approved by the European Medicines Agency.
BlümeI said that Austria had followed the rules and “tried to get more doses for vaccination, just to be quicker in recovering the economy and giving the people back their freedom.”
“I can’t see anything wrong in doing so,” he said.
A few eastern EU nations, such as Hungary, have decided to go beyond the deals negotiated by the European Commission to purchase more vaccines themselves, even if these haven’t received medical approval across the bloc.
Speaking to CNBC, BlümeI said he is optimistic that in the next two to three months, Austria will have vaccinated all of its adult population who wish to receive a 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 continues with Covid-19 restrictions.
JOE KLAMAR | AFP | Getty Images
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