July 22, 2020 / 1:45 PM / 22 days ago

EU's pandemic fund 'could have been better', ECB's Lagarde says

FILE PHOTO: European Central Bank (ECB) President Christine Lagarde gestures during a news conference on the outcome of the meeting of the Governing Council, in Frankfurt, Germany, March 12, 2020. REUTERS/Kai Pfaffenbach

FRANKFURT (Reuters) - A historic European Union deal creating a 750-billion-euro ($870 billion) fund to help the bloc’s weaker economies recover from the coronavirus pandemic “could have been better”, European Central Bank President Christine Lagarde said on Wednesday.

The accord, struck on Tuesday after fraught negotiations, will see the European Commission disburse 390 billion in grants and 360 billion in cheap loans to member countries based on criteria including their unemployment rate in recent years and, later, the economic damage wrought by the pandemic.

But Lagarde stood out as a rare critic, saying she would have preferred a greater proportion of grants over loans, in line with the Commission’s original proposal that was changed to convince fiscally frugal countries such as the Netherlands.

“It could have been better but it’s a very ambitious project,” Lagarde told a live-streamed interview with the Washington Post.

Over the weekend, Lagarde had said EU leaders should aim for a package in line with the Commission’s proposal, which was for 500 billion euros in grants, even if it took longer to reach an agreement.

Germany’s finance minister compared the deal to the decision of Alexander Hamilton, one of the U.S. Founding Fathers, to federalise the debts of U.S. states in 1790.

($1 = 0.8633 euros)

Reporting By Balazs Koranyi and Francesco Canepa; Editing by Toby Chopra/Mark Heinrich

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