Austria, Denmark, the Netherlands, and Sweden put forward a counter-proposal to France and Germany's recently submitted €500 billion ($545 billion) coronavirus economic recovery plan, a source reported on Saturday.

Many saw  Chancellor Angela Merkel and French President Emmanuel Macron's initiative as an important step towards stronger European Union (EU) financial relations. However, the four fiscally conservative states – already reputed in the bloc as the "frugal four" – are seeking a unique emergency fund to re-strengthen the EU's economy.

Read more: Germany, France lobby hard for EU recovery plan

The four countries also indicated that they will neither agree to a mutualization of debt nor an increase in the EU budget. Their draft proposal was seen by the German Press Agency (DPA) on Saturday.

"Our objective is to provide temporary, dedicated funding through 
the EU budgetû and to offer favorable loans to those who have been most severely affected by the crisis," it says.

Where will the money come from?

The counter-proposal stated that the European Commission (EC) should raise the money for the emergency aid on the financial markets and give it to member states as cheap loans.

According to the draft, the money should be used for rebuilding Europe's economy and health sector, bullet-proofing them for future crises.   

The draft did not determine a maximum amount for the emergency fund. 

Austria seeks time cap on emergency fund

In a statement, the Austrian Chancellery said that it was crucial that all EU countries limit this emergency fund to two years. Chancellor Sebastian Kurz has consistently criticized Macron and Merkel's initiative over the past few days.

Read more:  Coronavirus costs won't blow hole in German budget, minister says

"We clearly say yes to coronavirus emergency aid, but what we reject is a debt union through the back door," he said on Friday during an online conference for Bavaria's conservative Christian Social Union (CSU) party.

Merkel and Macron urge EU solidarity

Worried about the future of the EU following the coronavirus pandemic, Merkel and Macron had presented a plan that would help keep badly-hit member states like Italy and Spain afloat.

Read more: Coronavirus: EU considers solvency aid for companies

France and Germany maintained that the money should be raised by the EC as loans on the capital market and handed out as grants via the EU budget to weaker economies and affected sectors. 

However, for the plan to materialize, all 27 EU countries would have to agree. 

mvb/rc (dpa, AP)

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