October 23, 2020

The EU activates the mechanism to finance ERTEs that foresees 21,300 million in loans for Spain



There is less left for the 21.3 billion euros to start arriving in Spain in the form of loans to help finance ERTE. The European Commission approved on August 24, a month ago, the requests of the countries to finance their temporary employment systems. And Brussels gave the go-ahead to Spanish request, amounting to more than 21.3 billion 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.

But there are still some procedures. Now what has been covered is the term of the bilateral guarantees (worth 25,000 million), “so the #SURE instrument is now available and ready to be implemented in the coming weeks. It is 100,000 million euros in support of EU workers, “said Finance Commissioner Paolo Gentiloni. However, it is still necessary for the Council of the EU (the governments) to give the final approval to the economic distribution of the European Commission and for the Commission itself to finance those 100,000 million with debt issues in the financial markets and then distribute them as a loans to applicants.

“The Commission has already presented its proposals to the Council to grant financial assistance of 87.3 billion euros to 16 Member States under the SURE instrument”, explained the economic spokesperson for the Community Executive, Marta Wieczorek: “Once the Council adopt these proposals, financial support will be provided in the form of concessional loans by the EU to Member States. These loans will help Member States tackle increases in public spending to preserve employment in the context of the pandemic. ” .

“Specifically,” says Wieczorek, “they will help Member States to cover costs directly related to financing national short-time work plans and other similar measures that they have put in place in response to the coronavirus pandemic, in particularly for the self-employed. SURE could also finance some measures related to health, particularly in the workplace, used to guarantee a safe return to normal economic activity. ”

“For the Commission to start issuing bonds under the SURE program,” explains the community spokesperson, “it is necessary to complete a series of legal and administrative procedures. They are currently being finalized with the aim of carrying out the first SURE issuance in early October” .

The loan is expected to be disbursed in several tranches; in a maximum of 10 installments: the first of them could be received in the next few weeks and the rest, as of 2021. The maximum duration of the credit will be 15 years.

The SURE was one of the three new mechanisms launched by the EU in April, together with the health ESM of 240,000 million – which only Cyprus has requested so far – and the 200,000 million in guarantees from the European Investment Bank (EIB) for respond to the effects of the COVID-19 pandemic.

Later, at an extraordinary five-day European summit in mid-July, EU leaders agreed to a recovery fund of 750,000 million – 390,000 in grants and 360,000 in loans – financed with a debt issue by the European Commission and linked to the EU’s multi-annual budget of 1.074 trillion for 2021-2027.

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