LISBON — Eurozone finance ministers Wednesday agreed to use “all appropriate policy tools” to protect their economies from the impact of the coronavirus but stopped short of specifying any measures.
“We are prepared to take further policy action,” Eurogroup President Mário Centeno told reporters from a prepared statement after a telephone conference with other ministers. “This includes fiscal measures, where appropriate as they may be needed to support growth in the euro area taking into account countries specific circumstances.”
The ministers decided that across-the-board action was not needed now, considering that the localized impact of the virus.
Centeno said, “We will coordinate our responses and stand ready to use all appropriate policy tools to achieve strong, sustainable growth and to safeguard against further materialization of downside risks.”
Asked about the possibility of Italy being excused from its commitments under Stability and Growth Pact deficit and debt limits, Centeno said the pact has “enough flexibility to cater for the response needed in each of our countries.”
He added that European Commission has power to assess requests for flexibility from countries in line with clauses allowing for temporary derogation from the budget rules “while preserving fiscal stability.”
The Eurogroup teleconference, which included European Central Bank Governor Christine Lagarde and ministers from outside the currency zone, came a day after the U.S. Federal Reserve cut its benchmark interest rate by half a percentage point amid global concern over the economic impact of the virus.
That decision followed a rare telephone conference by finance ministers and central bankers from the G7 economic powers. That group also declared its members — including EU countries Italy, France and Germany — would use “all appropriate policy tools” including fiscal measures to protect economies against the risks of COVID-19.
Rather than immediate action, Centeno said the Eurogroup ministers mandated deputies to prepare policy options covering the “full range of fiscal, financial and structural policies” to be discussed at Read More – Source