GUARANTEES TO THE EUROPEAN COMMISSION ACT

CHAPTER 617

GUARANTEES TO THE EUROPEAN COMMISSION

ACT

AN ACT to authorise, regularise and to issue guarantees to the

European Commission in specific cases and to provide for matters

ancillary and incidental thereto.

14th July, 2020

ACT XXXIV of 2020.

The short title of this Act is the Guarantees to the European

Commission Act.

COUNCIL REGULATION (EU) 2020/672 of 19 May 2020

on the establishment of a European instrument for temporary support

to mitigate unemployment risks in an emergency (SURE) following

the COVID-19 outbreak

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European

Union, and in particular

Article 122 thereof, Having regard to the proposal from the

European Commission, Whereas

(1)

Article 122(1) of the Treaty on the Functioning of the

European Union (TFEU) allows the Council to decide, on a proposal

from the Commission and in a spirit of solidarity between Member

States, upon the measures appropriate to respond to the

socio‐economic situation following the COVID-19 outbreak.

(2)

Article 122(2) TFEU enables the Council to grant Union

financial assistance to a Member State that is in difficulties or is

seriously threatened with severe difficulties caused by exceptional

occurrences beyond its control.

(3)

The severe acute respiratory syndrome coronavirus-2

(SARS-CoV-2), which causes the coronavirus disease named COVID-

19 by the World Health Organization (WHO), is a new strain of

coronavirus not previously identified in humans. The global outbreak

of that disease is evolving rapidly and has been declared a pandemic

by the WHO. From the beginning of the COVID-19 outbreak in the

Union up until 30 March 2020, 334 396 cases and 22 209 deaths were

reported in the Member States.

(4)

Member States have implemented extraordinary measures to

contain the COVID‐19 outbreak and its impact. The probability of

further transmission of COVID‐19 in the Union is considered high. In

addition to public health impacts with substantial fatal outcomes, the

COVID‐19 outbreak has had a massive and disruptive impact on the

economic systems of the Member States, caused societal disruptions

and increased public expenditure in a growing number of Member

States.

(5)

That exceptional situation, which is beyond the control of

the Member States and which has immobilised a substantial part of

their labour force, has led to a sudden and severe increase in public

expenditure by the Member States on short-time work schemes for

employees and similar measures, in particular for the self-employed,

as well as expenditure on some health-related measures, in particular

in the workplace. In order to maintain the strong focus of the

i n s t r u m en t p r o v i d e d f o r i n t h i s R e g ul at i o n a n d t h e r e b y i t s

effectiveness, health-related measures for the purpose of that

instrument may consist of those aiming at reducing occupational

hazards and ensuring the protection of workers and the self‐employed

in the workplace, and, where appropriate, some other health‐related

measures. It is necessary to facilitate efforts by the Member States to

address the sudden and severe increase in public expenditure until the

COVID-19 outbreak and its impact on their labour force are under

control.

(6)

The creation of a European instrument for temporary

support to mitigate unemployment risks in an emergency (SURE) (the

‘Instrument’) following the COVID-19 outbreak should enable the

Union to respond to the crisis in the labour market in a coordinated,

rapid and effective manner and in a spirit of solidarity among Member

States, thereby alleviating the impact on employment for individuals

and the most affected economic sectors and mitigating the direct

effects of this exceptional situation on public expenditure by the

Member States.

(7)

Article 220(1) of Regulation (EU, Euratom) 2018/1046 of

the European Parliament and of the Council * states that financial

assistance by the Union to Member States can take the form of a loan.

Such loans should be granted to Member States where the COVID-19

outbreak has led to a sudden and severe increase, as from 1 February

2020, in actual and possibly also planned public expenditure due to

national measures. That date ensures equal treatment for all Member

States and allows for coverage of their actual and possibly also

planned increases in spending relating to the effects on the labour

markets of the Member States, irrespective of when the COVID-19

outbreak occurred in each specific Member State. The national

measures, which are understood to be in line with the relevant

* Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the

Council of 18 July 2018 on the financial rules applicable to the general budget of the

Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No

1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No

223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing

Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, p. 1).

fundamental rights principles, should be directly related to the creation

or extension of short-time work schemes and to similar measures,

including measures for self-employed persons, or to some health-

related measures. Short- time work schemes are public programmes

that in certain circumstances allow businesses experiencing economic

difficulties to temporarily reduce the hours worked by their

employees, who are provided with public income support for the hours

not worked.

Similar schemes exist for income replacement for the self-

employed. The Member State requesting financial assistance should

provide evidence of a sudden and severe increase in actual and

possibly also planned public expenditure for short-time work schemes

or similar measures. If financial assistance is granted for health-related

measures, the Member State requesting financial assistance should

also provide evidence of actual or planned expenditure related to the

relevant health-related measures.

(8)

In order to provide the affected Member States with

sufficient financial means under favourable terms to enable them to

deal with the impact of the COVID-19 outbreak on their labour

market, the Union’s borrowing and lending operations under the

Instrument should be sufficiently large. The financial assistance

granted by the Union in the form of loans should therefore be financed

by recourse to international capital markets.

(9)

The COVID-19 outbreak has had a massive and disruptive

impact on the economic system of each Member State. It therefore

calls for collective contributions by Member States in the form of

guarantees supporting the loans from the Union budget. Such

guarantees are necessary to enable the Union to grant loans of a

sufficient order of magnitude to Member States in order to support

labour market policies which are under the greatest strain. To ensure

that the contingent liability arising from such loans is compatible with

the applicable multiannual financial framework (‘MFF’) and

own‐resources ceilings, the guarantees provided by the Member States

should be irrevocable, unconditional and on demand, while additional

safeguards should enhance the robustness of the system. In line with

the complementary role of such guarantees, and without prejudice to

their irrevocable, unconditional and on- demand nature, the

Commission is expected, before calling on the guarantees provided by

M e m b e r St a t e s , t o d r a w o n t h e m a rg i n a v a i l a b l e un d e r t h e

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 Council Regulation (EC)

No 332/2002 * . In the relevant call on guarantees, the Commission

* Council Regulation (EC) No 332/2002 of 18 February 2002 establishing a facility

providing medium-term financial assistance for Member States’ balances of payments

(OJ L 53, 23.2.2002, p. 1).

should inform the Member States about the extent to which the

available margin has been drawn. The need for guarantees provided by

Member States may be reviewed if an agreement on a revised own-

resources ceiling is reached.

(10) The additional safeguards to enhance the robustness of the

system should consist of conservative financial management, a

maximum annual exposure and sufficient diversification of the loan

portfolio.

(11) The loans granted under the Instrument should constitute

financial assistance within the meaning of Article 220 of Regulation

(EU, Euratom) 2018/1046. In accordance with point (g) of Article

282(3) of that Regulation, Article 220 of that Regulation will apply to

the loans granted under the Instrument only as from the date of

application of the post‐2020 MFF. However, it is appropriate that the

requirements set out in Article 220(5) of Regulation (EU, Euratom)

2018/1046 apply to the borrowing and lending operations under the

Instrument as of the entry into force of this Regulation.

(12) In order to make the contingent liability arising from loans

granted under the Instrument compatible with the applicable MFF and

own-resources ceilings, it is necessary to lay down prudential rules,

including on the possibility of rolling over the borrowings contracted

on behalf of the Union.

(13) Given their particular financial implications, decisions to

grant financial assistance pursuant to this Regulation require the

exercise of implementing powers, which should be conferred on the

Council. When deciding upon the amount of a loan, the Council, on a

proposal from the Commission, should consider the 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, having regard to the

principles of equal treatment, solidarity, proportionality and

transparency, and in a manner that fully respects the competence of the

Member States.

(14) Article 143(1) of the Agreement on the withdrawal of the

United Kingdom of Great Britain and Northern Ireland from the

European Union and the European Atomic Energy Community (the

‘Withdrawal Agreement’) limits the liability of the United Kingdom

for its share of the contingent financial liabilities of the Union to those

contingent financial * liabilities of the Union arising from financial

operations taken by the Union before the date of entry into force of the

Withdrawal Agreement. Any contingent financial liability of the

Union arising from financial assistance under this Regulation would

be subsequent to the date of entry into force of the Withdrawal

Agreement. Therefore, the United Kingdom should not participate in

*

OJ L 29, 31.1.2020, p. 7.

the financial assistance under this Regulation.

(15) As the Instrument is of a temporary nature in order to

address the COVID‐19 outbreak, the Commission should assess every

six months whether the exceptional circumstances causing the severe

economic disturbances in Member States still exist and report to the

Council. Consistently with the legal basis for the adoption of this

Regulation, no financial assistance should be made available under

this Regulation once the COVID‐19 emergency has passed. To that

end, it is appropriate to limit the availability of the Instrument in time.

The Council sh ould be em powered, on a proposal f rom t he

Commission, to extend the period of availability of the Instrument

where the exceptional occurrences that justify the application of this

Regulation continue to exist.

(16)

The European Central Bank delivered its opinion on 8 May

2020. (17) Given the impact of the COVID-19 outbreak and the need

for an urgent response to the consequences of that outbreak, this

Regulation should enter into force on the date of its publication in the

Official Journal of the European Union,

HAS ADOPTED THIS REGULATION

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

o f C e n t r a l B a n k s 2 0 TA R G E T 2 b u s i n e s s d a y s p r i o r t o t h e

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.

In this Act, unless the context otherwise requires:-

"Guarantee Agreement" means the Voluntary Guarantee

Agreement which may be entered into pursuant to Article 11 of

Council Regulation (EU) 2020/672 of 19 May 2020 on the

establishment of a European instrument for temporary support

to mitigate unemployment risks in an emergency (SURE)

following the COVID-19 outbreak, reproduced in the Second

Schedule;

"Instrument" means the European instrument for

temporary support to mitigate unemployment risks in an

emergency (SURE), established by virtue of Council

Regulation (EU) 2020/672 of 19 May 2020 on the

establishment of a European instrument for temporary support

to mitigate unemployment risks in an emergency following the

COVID-19 outbreak, reproduced in the First Schedule.

"Malta" has the same meaning assigned to it by article

124 of the Constitution of Malta;

"Minister" means the Minister responsible for finance.

click here to view the Guarantee Agreement

Subject to the provisions of this Act, the Government of

Malta may issue unconditional, irrevocable and on-demand guarantees

to the European Union by entering into a voluntary guarantee

agreement with the European Commission pursuant to Article 11 of

C o un c i l R e g ul a ti o n (E U) 20 2 0/ 6 72 o f 1 9 M a y 2 02 0 o n th e

establishment of a European instrument for temporary support to

mitigate unemployment risks in an emergency (SURE) following the

COVID-19 outbreak to enable Malta to contribute to the Instrument.

(1)

Any guarantee issued in accordance with article 3

shall be subject to the terms incorporated in the voluntary guarantee

agreement

Provided that the guarantee issued by the Government of

Malta shall not exceed the aggregate amount of euro twenty-three

million, forty-four thousand two hundred and fifty euro (€23,044,250).

(2)

Any guarantee issued by the Government of Malta relating

to the Instrument beyond the purpose specified under sub-article (1)

may only be done in such manner and for such purpose as the House of

Representatives may by resolution determine.

The Annexes to this Act may be made in the English

language only.

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 * .

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.

* Definitive adoption (EU, Euratom) 2020/227 of the European Union’s general

budget for the financial year 2020 (OJ L 57, 27.2.2020, p. 1).

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.

GUARANTEES TO THE EUROPEAN COMMISSION

This Regulation shall be binding in its entirety and directly

applicable in all Member States.

Done at Brussels, 19 May 2020.

For the Council

The President

G. GRLIĆ RADMAN

2.2002, p. 1).

contingent financial * liabilities of the Union arising from financial

operations taken by the Union before the date of entry into force of the

Withdrawal Agreement. Any contingent financial liability of the

Union arising from financial assistance under this Regulation would

be subsequent to the date of entry into force of the Withdrawal

Agreement. Therefore, the United Kingdom should not participate in

the financial assistance under this Regulation.

(15) As the Instrument is of a temporary nature in order to

address the COVID‐19 outbreak, the Commission should assess every

six months whether the exceptional circumstances causing the severe

economic disturbances in Member States still exist and report to the

Council. Consistently with the legal basis for the adoption of this

Regulation, no financial assistance should be made available under

this Regulation once the COVID‐19 emergency has passed. To that

end, it is appropriate to limit the availability of the Instrument in time.

The Council sh ould be em powered, on a proposal f rom t he

Commission, to extend the period of availability of the Instrument

where the exceptional occurrences that justify the application of this

Regulation continue to exist.

(16)

The European Central Bank delivered its opinion on 8 May

2020. (17) Given the impact of the COVID-19 outbreak and the need

for an urgent response to the consequences of that outbreak, this

Regulation should enter into force on the date of its publication in the

Official Journal of the European Union,

HAS ADOPTED THIS REGULATION

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.

* OJ L 29, 31.1.2020, p. 7.

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

o f C e n t r a l B a n k s 2 0 TA R G E T 2 b u s i n e s s d a y s p r i o r t o t h e

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 * .

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

* Definitive adoption (EU, Euratom) 2020/227 of the European

Union’s general budget for the financial year 2020 (OJ L 57,

2.2020, p. 1).

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.

Done at Brussels, 19 May 2020.

For the Council

The President

G. GRLIĆ RADMAN