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Franco-German 500 billion euro recovery fund step towards EU fiscal union: Centeno

FILE PHOTO: German Chancellor Angela Merkel holds a joint video news conference with French President Emmanuel Macron in Berlin, Germany, May 18, 2020. Kay Nietfeld/Pool via REUTERS/File Photo

FRANKFURT (Reuters) - Eurogroup chief Mario Centeno said plans by Germany and France to set up a 500 billion euro ($545 billion) recovery fund to cope with the coronavirus pandemic would be a step towards a fiscal union of the bloc.

“This initiative is a brave step in the right direction to overcome this crisis,” Centeno told German weekly Welt am Sonntag.

“The German-Franco proposal would be a great step towards a fiscal union and a properly functioning currency union, even if the recovery fund is only temporary,” said Centeno, who is also Portugal’s finance minister.

The two biggest EU countries had unveiled the proposal on Monday, aimed at offering grants to European Union regions and sectors hit hardest by the coronavirus pandemic.

The proposal foresees the European Commission borrowing the money on behalf of the whole EU and spending it in addition to the 2021-2027 EU budget that is already close to 1 trillion euros over that period.

Reporting by Christoph Steitz; Editing by Ros Russell