Tuesday, 28 July 2020
Department of Finance
229. To ask the Minister for Finance his views on whether entering deeper into the EU debt is good for the financial health and sovereignty of Ireland; and if he will make a statement on the matter. [18374/20]
As the Deputy may be aware, on 25 March 2020, in response to the Covid-19 crisis, Ireland and 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 21stJuly, Heads of State and Government reached agreement on the Post-2020 Multiannual Financial Framework (MFF) and the recovery plan “Next Generation EU” (NGEU), totalling €1.82 trillion. Difficult discussions took place over four days. Council conclusions set out leaders’ agreement on the Post 2020 MFF from 2021 to 2027, totalling €1.074 trillion, and a further €750 billion, supporting Member States with €390 billion in grants and €360 billion in loans under NGEU.
NGEU 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).
€390 billion of Next Generation EU financing will be in the form of grants to Member States, with the remaining €360 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 €672.5 billion (€312.5 billion grants and €360 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.
The Government welcomes this agreement. It is a fair and balanced outcomeand demonstrates that Europe can work collectively to deal with this once-in-a-generation crisis. It is a good deal for Europe – an unprecedented response by the EU, including Ireland, to the impact of the Covid crisis. The agreement to borrow €750 billion is a strong signal that the EU is determined to chart the pathway to recovery together, showing Europe works for its citizens.