September 25, 2020

Brussels grants Spain 21.3 billion in loans to finance ERTE

It is not yet known when it will arrive. But there is less and less. The European Commission has approved this Monday the requests of the countries to finance their temporary employment systems, the ERTE in Spain. And Brussels has given the go-ahead to Spanish request, which amounts to more than 21,300 million euros –21,324,820,444, specifically–, a figure close to the between 23,019 and 25,871 million that are costing the treasury, according to AIReF (Independent Authority for Fiscal Responsibility) calculations.

Spain requests more than 20,000 million from the European fund to finance ERTE and the benefit to the self-employed

Spain requests more than 20,000 million from the European fund to finance ERTE

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The SURE program has been requested by 17 EU countries –15 of which have already received a response– for 81,400 million, close to the total € 100,000 million of the program, which will be financed with debt issues from the European Union in the market. Member States contribute to the instrument by providing guarantees for European Union emissions.

The problem? That there is still some Member State to provide guarantees, and without the guarantees of the 27 the program will not start.

“We do not know when the money will begin to arrive to the countries,” they acknowledge in the European Commission, “because there is still a country to deliver the guarantees, which we hope will occur in the next few days. In addition, the proposal that the European Commission still needs approval from the Council [los gobiernos de la UE]”.

No surprises are expected from governments in relation to the European Commission’s decision on the distribution of the money.

Once these proposals are approved by the Council, financial support will be provided in the form of loans granted under EU preferential terms to Member States. “These loans will help Member States to tackle surges in public spending to preserve employment. In particular, they will help Member States to cover costs directly related to financing national short-time work schemes and other measures. similar that have been launched in response to the coronavirus pandemic, particularly for the self-employed, “explains Brussels.

This instrument allows financing up to 70% of programs such as the Temporary Employment Regulation Records (ERTE), both with regard to the benefit received by the worker and the social contributions that the employer saves. But it can also be used to finance the extraordinary benefit for cessation of activity for the self-employed, as well as the benefit for temporary disability for people who have been on sick leave as a result of Covid-19 or support for permanent discontinuous workers, particularly in the tourism sector .

The credit will be disbursed in several tranches; in a maximum of 10 installments: the first of them could be received in the autumn of 2020 and, the rest, from 2021. The maximum duration of the credit will be 15 years.

Proposals submitted by the Commission to the Council for decisions to grant financial assistance amount to € 81.4 billion and cover 15 Member States: Portugal and Hungary have already submitted formal applications which are being assessed. Member States that have not yet submitted formal applications can still do so.

Loans granted to Member States under the SURE instrument will be backed by a system of voluntary guarantees from Member States. The Commission expects that the process for Member States finalizing their guarantee agreements with the Commission will be completed shortly.


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