Legal provisions of COM(2020)139 - Establishment of a European instrument for temporary support to mitigate unemployment risks in an emergency (SURE) following the COVID-19 outbreak

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dossier COM(2020)139 - Establishment of a European instrument for temporary support to mitigate unemployment risks in an emergency (SURE) following ...
document COM(2020)139 EN
date May 19, 2020

Contents

Article 1 - Subject matter and scope

1. In order to address the impact of the COVID-19 outbreak and respond to its socio‐economic consequences, this Regulation establishes the European instrument for temporary support to mitigate unemployment risks in an emergency (SURE) (the ‘Instrument’).

2. This Regulation lays down the conditions and procedures enabling the Union to provide financial assistance to a Member State which is experiencing, or is seriously threatened with, a severe economic disturbance caused by the COVID-19 outbreak for the financing, primarily, of short-time work schemes or similar measures aimed at protecting employees and the self‐employed and thus reducing the incidence of unemployment and loss of income, as well as for the financing, as an ancillary, of some health-related measures, in particular in the workplace.

Article 2 - Complementary nature of the Instrument

The Instrument shall complement the national measures taken by affected Member States by providing financial assistance to help those Member States cope with the sudden and severe increase in actual and possibly also planned public expenditure intended to mitigate the direct economic, social and health-related effects of the exceptional occurrence caused by the COVID‐19 outbreak.

Article 3 - Conditions for using the Instrument

1. A Member State may request Union financial assistance under the Instrument (‘financial assistance’) where its actual and possibly also planned public expenditure has suddenly and severely increased as of 1 February 2020 due to national measures directly related to short‐time work schemes and similar measures to address the socio-economic effects of the exceptional occurrence caused by the COVID-19 outbreak.

2. Beneficiary Member States shall use financial assistance primarily in support of their national short-time work schemes or similar measures, and, where applicable, in support of relevant health-related measures.

Article 4 - Form of financial assistance

The financial assistance shall take the form of a loan granted by the Union to the Member State concerned. To that end, and in accordance with a Council implementing decision adopted pursuant to Article 6(1), the Commission shall be empowered to borrow on the capital markets or with financial institutions on behalf of the Union at the most appropriate time so as to optimise the cost of funding and preserve its reputation as the Union’s issuer in the markets.

Article 5 - Maximum amount of financial assistance

The maximum amount of financial assistance shall not exceed EUR 100 000 000 000 for all Member States.

Article 6 - Procedure for requesting financial assistance

1. Financial assistance shall be made available by means of a Council implementing decision adopted on the basis of a proposal from the Commission.

2. Before submitting a proposal to the Council, the Commission shall consult the Member State concerned without undue delay to verify the sudden and severe increase in actual and possibly also planned public expenditure directly related to short-time work schemes and similar measures, as well as, where appropriate, to relevant health-related measures, in the Member State requesting financial assistance which are linked to the exceptional occurrence caused by the COVID-19 outbreak. To that end, the Member State concerned shall provide the Commission with appropriate evidence. In addition, the Commission shall verify compliance with the prudential rules laid down in Article 9.

3. The Council implementing decision referred to in paragraph 1 shall contain:

(a)the amount of the loan, its maximum average maturity, its pricing formula, its maximum number of instalments, its availability period and the other detailed rules needed for the granting of the financial assistance;

(b)an assessment of the compliance by the Member State with the conditions set out in Article 3; and

(c)a description of the national short-time work schemes or similar measures, as well as, where appropriate, of the relevant health-related measures, that may be financed.

4. When adopting an implementing decision as referred to in paragraph 1, the Council shall consider existing and expected needs of the requesting Member State, as well as requests for financial assistance pursuant to this Regulation already submitted or planned to be submitted by other Member States, while applying the principles of equal treatment, solidarity, proportionality and transparency.

Article 7 - Disbursement of the loan granted under the Instrument

The loan granted under the Instrument (‘loan’) shall be disbursed in instalments.

Article 8 - Borrowing and lending operations

1. The borrowing and lending operations under the Instrument shall be carried out in euros.

2. The characteristics of the loan shall be agreed in a loan agreement between the beneficiary Member State and the Commission (the ‘loan agreement’). Such agreements shall contain the provisions set out in Article 220(5) of Regulation (EU, Euratom) 2018/1046.

3. At the request of the beneficiary Member State and where circumstances permit an improvement in the interest rate on the loan, the Commission may refinance all or part of its initial borrowing or restructure the corresponding financial conditions.

4. The Economic and Financial Committee shall be kept informed of a refinancing or restructuring as referred to in paragraph 3.

Article 9 - Prudential rules applicable to the portfolio of loans

1. The share of loans granted to the three Member States representing the largest share of the loans granted shall not exceed 60 per cent of the maximum amount referred to in Article 5.

2. The amounts due by the Union in a given year shall not exceed 10 per cent of the maximum amount referred to in Article 5.

3. Where necessary, the Commission may roll over the associated borrowings contracted on behalf of the Union.

Article 10 - Administration of the loans

1. The Commission shall establish the necessary arrangements for the administration of the loans with the European Central Bank.

2. The beneficiary Member State shall open a special account with its national central bank for the management of the financial assistance received. It shall also transfer the principal and the interest due under the loan agreement to an account with the European System of Central Banks 20 TARGET2 business days prior to the corresponding due date.

Article 11 - Contributions to the Instrument in the form of guarantees from Member States

1. Member States may contribute to the Instrument by counter-guaranteeing the risk borne by the Union.

2. Contributions from Member States shall be provided in the form of irrevocable, unconditional and on-demand guarantees.

3. The Commission shall conclude an agreement with a contributing Member State on the irrevocable, unconditional and on-demand guarantees referred to in paragraph 2. Such agreements shall set out the payment conditions.

4. Calls on guarantees provided by Member States shall be made pro rata to the relative share of each Member State in the gross national income of the Union as referred to in Article 12(1). Where a Member State fails, in full or in part, to honour a call in time, the Commission, in order to cover for the part corresponding to the Member State concerned, shall have the right to make additional calls on guarantees to other Member States. Such calls shall be made pro rata to the relative share of each of the other Member States in the gross national income of the Union as referred to in Article 12(1) and adapted without taking into account the relative share of the Member State concerned. The Member State which failed to honour the call shall remain liable to honour it. The other Member States shall be reimbursed for additional contributions from the amounts recovered by the Commission from the Member State concerned. The guarantee called from a Member State shall be limited, in all circumstances, by the overall amount of guarantee contributed by that Member State under the agreement referred to in paragraph 3.

5. Before calling on guarantees provided by the Member States, the Commission, at its sole discretion and responsibility as the Union institution entrusted with the implementation of the general budget of the Union in accordance with Article 317 TFEU, is expected to examine the scope for drawing on the margin available under the own-resources ceiling for payment appropriations to the extent that it is deemed sustainable by the Commission, having regard, inter alia, to the total contingent liabilities of the Union, including under the balance of payments facility established by Regulation (EC) No 332/2002, and the sustainability of the general budget of the Union. Such examination shall not affect the irrevocable, unconditional and on-demand nature of the guarantees provided pursuant to paragraph 2. In the call on guarantees, the Commission shall inform the Member States about the extent to which the margin has been drawn.

6. Amounts resulting from calls on guarantees referred to in paragraph 2 shall constitute external assigned revenue for the Instrument in accordance with Article 21(5) of Regulation (EU, Euratom) 2018/1046.

Article 12 - Availability of the Instrument

1. The Instrument shall only become available after all Member States have contributed to the Instrument in accordance with Article 11 for an amount representing at least 25 per cent of the maximum amount referred to in Article 5, provided that the relative shares of contributions of each Member State of the overall amount of Member States’ contributions correspond to the relative shares of Member States in the total gross national income of the Union, as resulting from column (1) of Table 3 of Part A (‘Introduction and financing of the general budget’) of the revenue part of the budget for 2020 set out in the general budget of the Union for the financial year 2020, as adopted on 27 November 2019 (4).

2. The Commission shall inform the Council when the Instrument becomes available.

3. The period of availability of the Instrument during which a decision referred to in Article 6(1) may be adopted shall end on 31 December 2022.

4. Where the Commission concludes in the report referred to in Article 14 that the severe economic disturbance caused by the COVID-19 outbreak affecting the financing of measures referred to in Article 1 continues to exist, the Council, on a proposal from the Commission, may decide to extend the period of availability of the Instrument, each time for an additional period of six months.

Article 13 - Control and audits

1. The loan agreement shall contain the necessary provisions regarding controls and audits as required by Article 220(5) of Regulation (EU, Euratom) 2018/1046.

2. Where a request for financial assistance submitted in accordance with Article 3(1) is, fully or in part, based on planned public expenditure, the beneficiary Member State shall, every six months, inform the Commission about the implementation of such planned public expenditure.

Article 14 - Reporting

1. Within six months of the day on which the Instrument becomes available in accordance with Article 12 and every six months thereafter in the context of Article 250 of Regulation (EU, Euratom) 2018/1046, the Commission shall forward to the European Parliament, the Council, the Economic and Financial Committee and the Employment Committee a report on the use of financial assistance, including outstanding amounts and the applicable repayment schedule under the Instrument, and on the continuation of the exceptional occurrences that justify the application of this Regulation.

2. Where appropriate, the report referred to in paragraph 1 shall be accompanied by a proposal for a Council implementing decision extending the period of availability of the Instrument.

Article 15 - Applicability

1. This Regulation shall not be applicable to or in the United Kingdom.

2. References to ‘Member States’ in this Regulation shall not be understood to include the United Kingdom.

Article 16 - Entry into force

This Regulation shall enter into force on the date of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.