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Chapter 617

In short

This law authorizes the Government of Malta to provide financial guarantees to the European Commission for a European instrument designed to mitigate unemployment risks during the COVID-19 outbreak. It allows Malta to contribute to a collective effort to support Member States facing increased public expenditure due to the pandemic.

What it regulates

Who it concerns

Key points

Legal text

ACT AN ACT to authorise, regularise and to issue guarantees to the European Commission in specific cases and to provide for matters ancillary and incidental thereto. 14th July, 2020 ACT XXXIV of 2020.

Article 5. 2.

The amounts due by the Union in a given year shall not exceed 10 per cent of

Article 5. 3.

Where necessary, the Commission may roll over the associated borrowings contracted on behalf of the Union. Article 10 Administration of the loans

  1. The Commission shall establish the necessary arrangements for the administration of the loans with the European Central Bank.
  2. The beneficiary Member State shall open a special account with its national central bank for the management of the financial assistance received. It shall also transfer the principal and the interest due under the loan agreement to an account with the European System o f C e n t r a l B a n k s 2 0 TA R G E T 2 b u s i n e s s d a y s p r i o r t o t h e corresponding due date. Article 11 Contributions to the Instrument in the form of guarantees from Member States
  3. Member States may contribute to the Instrument by counterguaranteeing the risk borne by the Union.
  4. Contributions from Member States shall be provided in the form of irrevocable, unconditional and on-demand guarantees.
  5. The Commission shall conclude an agreement with a contributing Member State on the irrevocable, unconditional and ondemand guarantees referred to in paragraph
  6. Such agreements shall set out the payment conditions.
  7. Calls on guarantees provided by Member States shall be made pro rata to the relative share of each Member State in the gross national income of the Union as referred to in Article 12

(1). Where a Member State fails, in full or in part, to honour a call in time, the Commission, in order to cover for the part corresponding to the Member State concerned, shall have the right to make additional calls on guarantees to other Member States. Such calls shall be made pro rata to the relative share of each of the other Member States in the gross national income of the Union as referred to in Article 12
(1)and adapted without taking into account the relative share of the Member State concerned. The Member State which failed to honour the call GUARANTEES TO THE EUROPEAN COMMISSION shall remain liable to honour it. The other Member States shall be reimbursed for additional contributions from the amounts recovered by the Commission from the Member State concerned. The guarantee called from a Member State shall be limited, in all circumstances, by the overall amount of guarantee contributed by that Member State under the agreement referred to in paragraph
  2. Before calling on guarantees provided by the Member States, the Commission, at its sole discretion and responsibility as the Union institution entrusted with the implementation of the general budget of the Union in accordance with Article 317 TFEU, is expected to examine the scope for drawing on the margin available under the own-resources ceiling for payment appropriations to the extent that it is deemed sustainable by the Commission, having regard, inter alia, to the total contingent liabilities of the Union, including under the balance of payments facility established by Regulation (EC) No 332/ 2002, and the sustainability of the general budget of the Union. Such examination shall not affect the irrevocable, unconditional and ondemand nature of the guarantees provided pursuant to paragraph
  3. In the call on guarantees, the Commission shall inform the Member States about the extent to which the margin has been drawn.
  4. Amounts resulting from calls on guarantees referred to in paragraph 2 shall constitute external assigned revenue for the Instrument in accordance with Article 21
(5)of Regulation (EU, Euratom) 2018/
  1. Article 12 Availability of the Instrument
  2. The Instrument shall only become available after all Member States have contributed to the Instrument in accordance with Article 11 for an amount representing at least 25 per cent of

Article 5

, provided that the relative shares of contributions of each Member State of the overall amount of Member States’ contributions correspond to the relative shares of Member States in the total gross national income of the Union, as resulting from column

(1)of Table 3 of Part A (‘Introduction and financing of the general budget’) of the revenue part of the budget for 2020 set out in the general budget of the Union for the financial year 2020, as adopted on 27 November 2019*.
  1. The Commission shall inform the Council when the Instrument becomes available.
  2. The period of availability of the Instrument during which a decision referred to in Article 6
(1)may be adopted shall end on 31 December
  1. * Definitive adoption (EU, Euratom) 2020/227 of the European Union’s general budget for the financial year 2020 (OJ L 57, 27.2.2020, p. 1). GUARANTEES TO THE EUROPEAN COMMISSION
  2. Where the Commission concludes in the report referred to in Article 14 that the severe economic disturbance caused by the COVID19 outbreak affecting the financing of measures referred to in Article 1 continues to exist, the Council, on a proposal from the Commission, may decide to extend the period of availability of the Instrument, each time for an additional period of six months. Article 13 Control and audits
  3. The loan agreement shall contain the necessary provisions regarding controls and audits as required by Article 220
(5)of Regulation (EU, Euratom) 2018/
  2. Where a request for financial assistance submitted in accordance with Article 3
(1)is, fully or in part, based on planned public expenditure, the beneficiary Member State shall, every six months, inform the Commission about the implementation of such planned public expenditure. Article 14 Reporting
  1. Within six months of the day on which the Instrument becomes available in accordance with Article 12 and every six months thereafter in the context of Article 250 of Regulation (EU, Euratom) 2018/1046, the Commission shall forward to the European Parliament, the Council, the Economic and Financial Committee and the Employment Committee a report on the use of financial assistance, including outstanding amounts and the applicable repayment schedule under the Instrument, and on the continuation of the exceptional occurrences that justify the application of this Regulation.
  2. Where appropriate, the report referred to in paragraph 1 shall be accompanied by a proposal for a Council implementing decision extending the period of availability of the Instrument. Article 15 Applicability
  3. This Regulation shall not be applicable to or in the United Kingdom.
  4. References to ‘Member States’ in this Regulation shall not be understood to include the United Kingdom. Article 16 Entry into force This Regulation shall enter into force on the date of its publication in the Official Journal of the European Union. GUARANTEES TO THE EUROPEAN COMMISSION This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 19 May
  5. For the Council The President G. GRLIĆ RADMAN SECOND SCHEDULE click here to view the Guarantee Agreement

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