Bernard Durkan (Kildare North, Fine Gael)
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68. To ask the Minister for Finance the extent to which he expects the proposed European Covid-19 rescue fund to be applied across the European Union; if it will be proportional to the extent to which each country has been affected by the virus in terms of economic and financial cost or by another mechanism; the degree to which this is likely to affect the case of Ireland; and if he will make a statement on the matter. [16429/20]

Bernard Durkan (Kildare North, Fine Gael)
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70. To ask the Minister for Finance the extent to which he expects to be in a position to improve the case of Ireland in the context of likely benefit from the multibillion euro Covid-19 related rescue fund of the European Commission; and if he will make a statement on the matter. [16431/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 68 and 70 together.

As the Deputy will be aware, on 10 July 2020, the President of the European Council (PEC), Charles Michel, published revised proposals for the next Multiannual Financial Framework (MFF) to run from 2021-2027 to be supplemented by a proposed temporary European recovery instrument “Next Generation EU”.

The total amount being proposed for the period 2021-2027 is €1.824 trillion in commitments (2018 prices) - €1.074 trillion for the MFF and €750 billion for Next Generation EU.

Initial assessment of the Next Generation EU package and the national allocations announced suggest that Ireland, with an allocation of 0.4% may receive just over €1.5 billion between 2021 and 2024 in grants topped up by a potential further €1bn in loans from the facility should Ireland wish to apply. Ireland’s grant allocation between 2021 and 2024 would include:

€354 million for rural development to support the European Green Deal, Farm to Fork (F2F), and Biodiversity Strategies;

€215 million from ReactEU (essentially Cohesion Programmes)

€132 million additional to the Just Transition Fund;

€846 million from the new Recovery and Resilience Facility.

The proposed Recovery and Resilience Facility (RRF) is the largest single instrument in the Commission’s Next Generation EU proposal, with a budget of €560 billion (€310 billion in grants and €250 billion in loans) and is targeted at investment and reform in Member States. The Facility aims to mitigate the economic and social impact of the crisis and support the recovery, while fostering green and digital transitions.

As outlined above, it is estimated that Ireland will receive €846 million from the proposed Recovery and Resilience Facility (RRF) to support investments and reforms, including in relation to the green and digital transitions and the resilience of the economy. This is only 70% of the allocated amounts, as the remaining 30% will be committed in 2023, taking the 2020 and 2021 fall in GDP into account.

The allocation of RRF funding to Member States has been calculated by the European Commission on the basis of the population, the inverse of the per capita Gross Domestic Product (GDP) and the relative unemployment of each Member State.

An application for support under the RRF will be based on the additional financial needs linked to the recovery and resilience plans put forward by Member States. Grants and loans will be paid in instalments on the basis of achieved agreed milestones. No national co-financing will be required. The maximum amount of loans for each Member State will not exceed 4.7% of its Gross National Income.

Further receipts should be available to Ireland under competitively awarded programmes under the “Next Generation EU” package, but this is difficult to estimate at this point.

There is now considerable time pressure on European Council to reach political agreement (requiring unanimity) on the revised package of both MFF and recovery fund before the end of July to facilitate negotiation with and consent from the European Parliament in time to ensure that the next MFF can come into operation from 1 January 2021.

Heads of State and Governments will discuss the revised MFF and “Next Generation EU” proposals at European Council on 17 and 18 July, with the aim of reaching an agreement. The Taoiseach will be attending the Council summit to negotiate on behalf of Ireland. It would not be appropriate for me to comment further in advance of the upcoming European Council negotiations.

Bernard Durkan (Kildare North, Fine Gael)
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69. To ask the Minister for Finance the extent to which the mutualisation of debt arising from the Covid-19 crisis is likely to occur throughout Europe; and if he will make a statement on the matter. [16430/20]

Paschal Donohoe (Dublin Central, Fine Gael)
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On 25 March 2020, Ireland, in response to the Covid-19 crisis, and along with eight other countries (Belgium, France, Greece, Italy, Luxembourg, Portugal, Slovenia, and Spain) signed a public letter to the President of the European Council (PEC) Charles Michel, calling for “a common debt instrument issued by a European institution to raise funds on the market on the same basis and to the benefits of all Member States, thus ensuring stable long term financing for the policies required to counter the damages caused by this pandemic”.

The letter continued, stating that the case for such a common instrument is strong, since all Member States are facing a symmetric external shock from the Covid-19 crisis, for which no country bears responsibility, but whose negative consequences are endured by all.

On 10 July, PEC Charles Michel published revised proposals for the next Multiannual Financial Framework (MFF) to run from 2021-2027 to be supplemented by a proposed temporary European recovery instrument “Next Generation EU”.

The total amount being proposed for the period 2021-2027 is €1.824 trillion in commitments (2018 prices) - €1.074 trillion for the MFF and €750 billion for Next Generation EU. This recovery instrument will be embedded in the EU Budget and is split into three pillars, and is in addition to the strengthening the existing programmes in the EU Budget.

Next Generation EU financing will be raised by “temporarily” increasing the Own Resources ceiling to 2.00% of EU Gross National Income (GNI) allowing the Commission to borrow €750 billion on the financial markets to fund measures over the period 2021 – 2023 (commitments).

€500 billion of Next Generation EU financing will be in the form of grants to Member States, with the remaining €250 billion as loans.

This additional funding, to be channelled through EU Budget programmes, will be repaid between 2026 and 2058 drawing on future EU Budget contributions from Member States or the Own Resources of the Union.

The centrepiece of the package, the “Recovery and Resilience Facility” (RRF), is the largest single instrument within the Commission’s Next Generation EU proposal, with a budget of €560 billion (€310 billion grants and €250 billion loans), and is targeted at investment and reform in Member States. The Recovery and Resilience Facility will be embedded in the European Semester of economic governance. The Facility aims to mitigate the economic and social impact of the crisis and support the recovery, while fostering green and digital transitions.

There is now considerable time pressure on European Council to reach political agreement (requiring unanimity) on the revised package of both MFF and recovery fund before the end of July to facilitate negotiation with and consent from the European Parliament in time to ensure that the next MFF can come into operation from 1 January 2021.

Heads of State and Government will discuss the revised MFF and Next Generation EU proposals at European Council on 17 and 18 July, with the aim of reaching an agreement. The Taoiseach will be attending the Council summit to negotiate on behalf of Ireland. It would not be appropriate for me to comment further in advance of the upcoming European Council negotiations.