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3 maltatoday | WEDNESDAY • 1 APRIL 2020 NEWS CORONAVIRUS Malta does not support COVID-19 eurobonds MATTHEW VELLA MALTA will not support the is- sue of a COVID-19 eurobond, or 'coronabond' so that member states can receive a massive li- quidity injection to keep public spending up. Nine eurozone countries sent a letter last week to the EU Presi- dent Charles Michel, asking for a common debt instrument that can help them mitigate the dam- age from the shuttered economy caused by the coronavirus crisis. Belgium, France, Italy, Luxem- bourg, Spain, Portugal, Greece, Slovenia and Ireland said the Eu- robond could help them secure long-term financing to counter the damage of the pandemic. "We are all facing a symmet- ric external shock, for which no country bears responsibility, but whose negative consequences are endured by all. And we are collec- tively accountable for an effective and united European response," the letter said. But Malta is not in support of the eurobond, with northern countries like Germany and the Netherlands leading the staunch opposition of the debt instru- ment. "Issuing a eurobond [means] Malta may become jointly and severally liable to debts of anoth- er country. Malta may go as far as accepting liability up to a par- ticular share of the outstanding EU debt but not beyond," finance minister Edward Scicluna told MaltaToday. In this Scicluna echoed the cau- tious stand of countries like Ger- many who are generally sceptical of debt mutualization, because it fears other countries would be free-riding on its fiscal prudence. Eurobonds is debt issued under joint and several liability, to pro- vide member states with liquidity to deal with the large economic shock from the COVID-19 epi- demic. When this debt is issued by the European Investment Bank or European Central Bank, such bonds come with a high credit rating for banks to consider them as "safe assets". Italy needs the money after launching a €25 billion fiscal stim- ulus, with its government deficit expected to surge as the economy contracts sharply. France wants the EIB, the EU's lending arm, to issue these bonds, with the Euro- pean Stability Mechanism (ESM) – the eurozone's rescue fund – offering a guarantee. A substantive eurobond would go far in helping member states afflicted by austerity and hit fur- ther by the coronavirus pandem- ic. A quicker route to a fiscal stimulus could come from the European Central Bank, which announced it would buy €750 bil- lion in public and private-sector securities that can be used flexi- bly. Scicluna however said Malta is not willing to take up the debt for other countries. "Malta is in favour of solidarity towards an affected country. We express this ourselves when we request the EU to agree to burden-sharing on migration. However while with migrants the story ends once the migrants are flown to another EU member state, with financial bor- rowing the story is much more complicated. "When we chipped in the past financial crisis's bailout, we con- tributed about 3% of GDP, a rath- er high figure – but at least it was capped. It was not open-ended. We cannot be in favour or against a Eurobond unless the details of this bond are given," Scicluna said. Malta prefers to use the ap- proved instruments of the ESM, which can issue credit lines to sound but stressed countries, in- cluding Malta. "ESM precautionary cred- it lines are designed to main- tain access to market financing for ESM Members whose eco- nomic conditions are still sound but may come under stress. Two types of credit lines are available: precautionary conditioned cred- it line (PCCL) and an enhanced conditions dredit line (ECCL)." But Scicluna said the hesitancy of using these credit lines is at the moment down to the reputation- al risk associated with borrowing from the ESM, since the ESM is associated with bailouts. "However if many countries de- cide to make use of these credit lines, the ESM would be seen as a normal European bank. Hav- ing said that, all loans would be 'conditioned'. Unlike eurobonds the credit would be available and used for specific purposes in the interest of the creditor countries providing the capital and the guarantees. It should therefore garner full support from around all member states." The member states supporting the coronabonds also support specific funding for COVID-19 related spending. "By giving a clear message that we are facing this unique shock all together, we would strength- en the EU and the Economic and Monetary Union and, most im- portantly, we would provide the strongest message to our citizens about European determined co- operation and resolve to provide an effective and united response," the member states said in their letter to the EU Council. KARL AZZOPARDI THERE were 13 new cases of coro- navirus on Tuesday, bringing the to- tal to 169 and bucking the low trend of the previous days. Eight of the new cases were local transmission, the highest number of locally contracted infections so far. Five people contracted the virus abroad, mostly in the UK. The local transmissions include a group of five patients linked to a workplace colleague who previous- ly registered positive and continued to go to work despite having symp- toms. The new cases of domestic trans- mission also include an eight-year- old girl, who had a parent who previously registered positive for Covid-19, and two elderly people in their 70s, who contracted the virus from a family member who had re- turned from abroad. Public Health Superintendent Charmaine Gauci continued to urge vigilance, calling on people to stay inside and respect social distancing. Two people were transferred out of intensive therapy but two remain, including a 72-year-old man who is on a ventilator. Gauci said all new patients were doing fine. The health authorities carried out 563 swabbing tests between Monday and Tuesday. Gauci said that since the start of the pandemic, Malta had carried out 6,934 tests. Over the previous days, Malta was registering single-digit numbers for new cases. Tuesday's development indicates that the risk of local trans- mission remains high and the situa- tion could rapidly turn to the worse if clusters of people get infected at the same time. Gauci said people who feel symp- toms should self-isolate immediately and wait for the test results at home. The government on Monday in- troduced new restrictive measures on public gatherings of more than three people. Police are now empowered to fine anyone in groups of four and more. The fine stands at €100 per person. Police officers were yesterday out in force on the beat in popular areas to ensure that social distancing rules are obeyed as Malta tries to limit the risk of contagion. Eight-year-old girl among new cases Public Health Superintendent Charmaine Gauci Finance minister Edward Scicluna