Lagarde: EU Recovery Fund to Favor Loans

The European Central Bank (ECB) is expecting the European Union (EU) to prefer grants over loans as a funding mechanism for its anticipated economic stimulus fund against the impacts of COVID-19, said ECB President Christine Lagarde, Reuters reported.

“Our assumption is that the recovery fund will come about and will be a strong mixture of grants on one hand in a larger proportion than loans on the other.”

“Certainly, there are very strong expectations, which have to do with addressing the damage to those countries and sectors which have been massively hurt.”

“Unless there are significant upside surprises, our baseline is that we will need the entire envelope of the [Pandemic Emergency Purchase Program] PEPP.”

“It is important for European leaders to quickly agree on an ambitious package.”