June 12, 2020 / 12:44 PM / a month ago

Dutch cenbank chief Knot positive on European spending plan

AMSTERDAM (Reuters) - While the Dutch government has been a prominent sceptic of a plan for the European Union to spend 750 billion euros on economies hurt by coronavirus, the president of the country’s central bank on Friday praised the idea.

In a speech to Dutch business leaders, Klaas Knot said a European Commission plan proposed last month to borrow and then re-distribute funds to countries in a mix of grants and loans is fundamentally different to debt-sharing, or “coronabonds”, which the Dutch oppose on principle.

Rather, it would be an “increase of budgetary power of which the purpose is coupled to the current, very exceptional circumstances,” Knot said.

“I would like to underline that I applaud solidarity at the European level from my heart, and I do so not least out of the Netherlands’ own self-interest.”

The Dutch government is one of the “frugal four” nations with Sweden, Denmark and Austria, that have argued against the 500 billion in grants contained in the plan, much of which would go to Italy and Spain, the EU countries worst affected by pandemic.

In a June 9 letter to parliament, Dutch Finance Minister Wopke Hoekstra said the financing of the proposals was “far removed from the Netherlands’ position.” The European Council is due to discuss the plan at a meeting June 19.

Reporting by Toby Sterling; Editing by Toby Chopra

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