Mes, what is the European stability mechanism that the Meloni government does not want to ratify

In fact, every intervention of the Mes is usually accompanied by the promise of economic and fiscal reforms by the requesting countries. A practice that is known by the name of cash-for-reform. When you access Mes aid, national economic policy is placed under the supervision of the organization and other international institutions: the IMF, the ECB and the European Commission. This group, named troikafrom the Russian trio, supervises the implementation of public spending cutsespecially in the welfare sectors, to safeguard the state budget and reduce the deficit.

What is Isee, that the government wants to change

The Equivalent Economic Situation Indicator is used to identify households eligible for subsidies and bonuses. The executive wants to change the calculation procedures

Access to credit

Access to Mes credit lines can take place in two ways. There Precautionary conditioned credit lines (Pccl) is opened for virtuous countrieswhich comply with the rules of the Stability and Growth Pact – i.e. whose deficit-GDP ratio does not exceed 3% – and have sustainable public debt.

While the Enhanced credit line conditions (Eccl) concerns those states that request the support of the Mes, but fail to meet all the necessary conditions to access the PCCL. To benefit from the credit, the State in question must implement policies that improve the national budget by reducing the deficit, the so-called austerity. For this reason, the measures include a substantial spending reviewsi.e. the downward revision of public spending, and the implementation of these cuts is reviewed periodically.

The criticisms of the Mes

If it is true that the economies of countries such as Greece, Cyprus, Ireland and Portugal have returned to health thanks to the adoption of the program, the austerity policies that accompanied the European loans have caused great protests in the countries concerned. In fact, the neoliberal practices imposed on the states have cost a heavy price at the social level, with severe cuts in the pensions and to healthcarethe increase of tax burden on citizenship and a consequent increase in inequalities.

The reform

Following the pandemic, the Eurogroup has decided to propose a reform of the classic Mes, divided into three fundamental parts. The first goes to change the governance and the tasks of the Mes in financial assistance to member countries, with an extension of the tasks of the director general, who will be able to compete, together with the European Commission, in the negotiate terms which will have to be respected by the country receiving support.

The second concerns precisely the conditions to grant financial assistance, which take on a more stringent nature for the PCCL and an assessment of debt sustainability before the countries receive help from the ESM. While the third goes to make the Mes guarantor of the interventions of Single Resolution Fundi.e. the European fund, managed by the Single Resolution Board, to resolve banking crises in the euro area.