Minister Donohoe welcomes receipt of Ireland’s SURE loan as part of EU support

2.492 billion used to support jobs and workers through TWSS in time of need

In the Budget 2021 speech, the Minister for Finance announced the Irish Government’s decision to make a formal application to the European Commission for funding under the Support to mitigate Unemployment Risks in an Emergency (SURE) Instrument.

The application was submitted on the 26th of October and following this, was assessed and accepted by the European Commission. On foot of this assessment, the EU Council adopted a decision granting SURE aid to Ireland on the 5th of December 2020.

The Commission included Ireland’s loan amount in their bond issuance calendar for the first quarter of 2021 and today Ireland draws down €2.492 billion.

Welcoming the SURE funds, the Minister for Finance said:

“The EU developed a number of crisis instruments to support Member States effected by Covid-19 and the Exchequer is getting the benefit of that today. This is a welcome development, which supports jobs and workers and demonstrates the benefits of acting together in a time of crisis. The focus now is ensuring we get a strong recovery underway”.

The SURE instrument provides financial assistance by the European Commission to Member States in the form of loans of up to €100 billion in total, and takes advantage of the Commission’s strong AAA credit rating.

To date, 19 countries, including Ireland, have applied for funding totalling €90.6 billion. €62.5 billion has already been disbursed to Italy, Spain, Poland, Greece, Croatia, Lithuania, Cyprus, Slovenia, Malta, Latvia, Belgium, Romania, Hungary, Portugal, Czechia and Slovakia. A further €13 billion is disbursed this week, including to Ireland.

The amount of the Irish application is based on costs already expended by the Government as part of the Covid-19 Temporary Wage Subsidy Scheme (TWSS), which satisfied the conditions for an application.

Background on SURE

The SURE instrument is intended primarily to support Member States with efforts to protect workers and jobs, and also support some health-related measures.

It is temporary in nature, with the duration and scope limited to tackling the consequences of the coronavirus pandemic. It was adopted at ECOFIN, and published in the Official Journal of the European Union on 19 May 2020.

Briefly, the Commission borrows on financial markets to finance loans to Member States, allowing Member States benefit from the EU’s strong credit rating (AAA) and low borrowing costs. Under the proposal, SURE will provide financial assistance to Member States of up to €100bn in total.

SURE comes with safeguards to ensure fair and equitable access to funding for Member States, with no more than €60 billion available to any three Member States under the proposal. The loans will be underpinned by a system of voluntary guarantees from Member States. For a lending volume of €100 billion under the SURE instrument, €25 billion in guarantee commitments are required from all Member States collectively. This guarantee mechanism ensures Member States do not have to pay any money upfront.

Each Member State contributes to the guarantee in proportion to its relative share in the total Gross National Income of the Union. For Ireland, this would be equivalent to €483m (1.9% of EU-27 GNI).

Background on Covid-19 Temporary Wage Subsidy Scheme (TWSS)

The TWSS was introduced on 26 March to support firm viability and preserve the relationship between the employer and employee insofar as is possible by subsidising a portion of the employer wage bill in circumstances where the employer’s business has been negatively impacted by the restrictions that have had to be introduced to stop the spread of the COVID-19 virus.

Nearly 70,000 employers registered for the scheme and over €2.7bn was spent when the scheme ended in August 2020, supporting over 600,000 individual employees over the life of the scheme. (Ends)

ENDS