Europe Politics

EU ministers agree details of small euro zone budget

The flags of the EU member states in front of the European Parliament in Strasbourg, France
Thomas Trutschel | Photothek | Getty Images

European Union finance ministers agreed the details of a small budget for the euro zone for investment and reforms that will come into existence from 2021, their chairman Mario Centeno said on Thursday.

"We have a new pillar to support the euro," Centeno told a news conference.

The euro zone budget will be around 17 billion euros -- the euro zone share of the 25 billion that the European Commission proposed for reform support in the EU.

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But euro zone governments also agreed that they may increase that size through an intergovernmental agreement (IGA), with details to be sorted out before the new, wider EU long-term budget kicks in from 2021.

Countries will get back in the form of financing from the budget at least 70 percent of what they pay in. They will co-finance projected funded by the budget in 25 percent.

Ministers agreed that 80 percent of the money from the budget would be allocated using two criteria -- population and inverse GDP per capita -- while 20 percent can be used to react to country specific challenges by supporting packages of reforms and investments that are especially ambitious.

The amount of money provided by governments themselves may be halved in severe economic circumstances that are defined in EU budget rules.