May 7, 2020 / 5:38 PM / 22 days ago

EU Commission proposes scrapping usual conditions for ESM use in virus battle

ROME, May 7 (Reuters) - The European Commission on Thursday proposed scrapping the usual conditions for countries using the euro zone’s bailout fund as they try to revive their economies hit by the coronavirus epidemic.

The proposal may make the fund more palatable for Italy, which has always pushed back against conditionality in the use of the so-called European Stability Mechanism (ESM).

Commission Vice President Valdis Dombrovskis and economic affairs chief Paolo Gentiloni said in a letter to Eurogroup head Mario Centeno that countries drawing on the fund would not face any macroeconomic adjustment programme.

So-called “enhanced surveillance” of countries taking credit lines will only ensure they use the funds for coronavirus-related health spending.

Once the money is spent and Brussels has checked it was used properly, the surveillance will end, the letter said.

Reporting by Gavin Jones and Giuseppe Fonte

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