(Bloomberg) -- Euro-area finance ministers agreed on the final key elements of a small budget for their currency bloc, capping two years of fraught negotiations over a tool that falls far short of the original sweeping vision of French President Emmanuel Macron.
The compromise struck in the early hours of Thursday marks an effort to balance the fiscal restraint of the EU’s hawkish North against the South’s calls for spending to stimulate the economy.
"Agreement tonight on the main pillars of the euro area budget: allocation and use of budgetary resources, decision-making modalities, modulation according to the economic situation," French Finance Minister Bruno Le Maire said on Twitter. "It is a solid basis for finalizing the euro zone budget in 2020."
The agreed budget would create a pot of about 20 billion euros ($22 billion) to facilitate investments and reforms and help give a boost to poorer nations, rather than help support economies in a downturn, as was initially intended. The exact sum will be determined at a later stage next year, but estimates are far off what was originally envisioned by the instrument’s advocates.
Still, proponents argue that the pared-down instrument could be a foot in the door that could evolve into something more powerful in times of crisis. Skeptics of the plan say it’s a toothless tool that could nonetheless help incentivize laggards to reform.
The details of the agreement will be unveiled on Thursday morning in Luxembourg.
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