Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697805628012.pdf (Ireland)
Report of the Department of Finance to the Oireachtas Under Section 2(5) of the European Union (Scrutiny) Act, 2002: July – December 2022 Prepared by the Banking Division, Department of Finance www.gov.ie/finance —— 2 Contents Introduction Part 1 Overview of the Czech Presidency (July - December 2022) 1.

The European Semester & EU Economic Governance 2.

Financial Services 3.

Taxation 4.

EU Budget 5.

EU Banking 4 5 5 5 8 10 13 14 6.


Climate Action and the European Financial Architecture for Development 15 Part 2 Summary of significant draft EU legislative proposals submitted by the Department of Finance to the Oireachtas (July - December 2022) 18 18 —— 3 Introduction The Report of the Department of Finance to the Oireachtas under Section 2 (5) of the European Union (Scrutiny) Act, 2002: July to December 2022 consists of two parts.
Part 1 sets out the principal developments in the policy areas that fell within the functional responsibility of the Department at EU level during the Czech Presidency of the Council of the European Union (H2 2022), with the following topics covered: the European Semester and EU Economic Governance; Financial Services; Taxation; the EU Budget; EU Banking; Climate Change and European Financial Architecture for Development.
Part 2 sets out, in tabular form, details of significant European Commission legislative proposals for which Scrutiny Notes have been submitted to the Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach’s by the Department over the course of the reporting period.

—— 4 Part 1 Overview of the Czech Presidency (July - December 2022) The Czech Presidency commenced in July 2022 as the second Member State of the Presidency Trio that includes France and Sweden.
Under the motto “Europe as a Task: Rethink, Rework, Repower”, the Presidency focused its work on five main overarching priority areas, namely – Managing the refugee crisis and Ukraine’s post-war recovery; Energy security; Strengthening Europe’s defence capabilities and cyberspace security; Strategic resilience of the European economy; and Resilience of democratic institutions.
The Czech Presidency progressed work on the implementation of the Recovery and Resilience Facility and on the RePowerEU file leading to agreement on the file in December.

Agreement was finalised at technical level with the European Parliament on the Markets in Crypto Assets Regulation (MICA), and the Transfer of Funds (recast) regulation.
Agreement was found on the European Long-Term investment funds regulation review [ELTIF] and the Presidency secured agreement on the Pillar 2 Directive setting a Minimum Effective Tax in the EU.

Council general approaches were found on a number of files including the Capital Requirements Directive/Capital Requirements Regulation, the Insurance Recovery and Resolution Directive (IRRD), Markets in Financial Instruments Regulation (MiFIR), and the Anti-Money Laundering Regulation and Directive.
The Presidency also made progress on the Carbon Border Adjustment Mechanism (CBAM).

During their term, the Presidency also made progress on issues relating to the Russian invasion of Ukraine, such as the seventh, eighth and ninth sanctions packages, the Macro-Financial Assistance funding for Ukraine, and measures to alleviate the energy crisis.

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The European Semester & EU Economic Governance 1.1 European Semester (including implementation of the Recovery and Resilience Facility) European Semester 2023 In November 2022 the European Commission published the Autumn Package.

This officially launched the 2023 cycle of the European Semester.

The Package included important documents such as the Annual Sustainable Growth Survey, the Alert Mechanism Report, and the draft Euro Area Recommendations.
Each year, the ECOFIN Council responds to the Autumn Package by adopting Conclusions on the Annual Sustainable Growth Survey and the Alert Mechanism Report.

The ECOFIN Council also agrees the final Euro Area Recommendations.

The preparation of these files took place at ECOFIN and its preparatory committees under the Czech Presidency in November-December 2022.

—— 5 Also in November 2022, the Commission published a Communication on the Economic Governance Review.
This included proposals for reforming the EU’s economic governance framework.

If implemented, these reforms would have a significant impact on the annual Semester process.

Discussions in the Council started under the Czech Presidency during November-December 2022, but will continue under the Swedish Presidency in the first half of 2023.

Recovery and Resilience Facility The implementation of the Recovery and Resilience Facility (RRF) was a key priority of the Czech Presidency.
By end 2022 the Council of the EU had approved Recovery and Resilience Plans (RRPs) for all 27 Member States.

Implementation of the RRPs was well underway in the second half of 2022.

15 requests for payment, from 11 different Member States, were fully processed by the end of 2022.

Up to 50 payment requests are expected during 2023.

Ireland has supported all 27 RRPs approved by the Council and has supported all payment requests considered to date.
The priority is for a swift and full implementation of the RRPs over the period up to 2026.

RePowerEU – Impact on the RRF On 18 May 2022 the European Commission launched REPowerEU.

This €270 billion plan is the EU’s response to the global energy market disruption caused by Russia's invasion of Ukraine.

The plan aims to rapidly phase out EU dependency on Russian fossil fuel imports and boost the independence and security of the Union’s energy supply.
The RRF was chosen as the best vehicle for delivering on the REPowerEU plan.

Member States will be invited to add a ‘RePowerEU chapter’ to their existing RRPs, setting out the package of investments and reforms for which they are seeking RePowerEU funding.

Legislative changes to the RRF Regulation (February 2021) were required to facilitate the implementation and financing of RePowerEU.

Legislative negotiations began in the ECOFIN Council filière under the French Presidency in June 2022.
Intensive negotiations continued under the Czech Presidency and a political agreement on the legislation was reached on 20 December 2022.

1.2 EU Economic Governance – Deepening Economic and Monetary Union (EMU) Following the relaunch of public debate on the review of the EU’s Economic Governance Framework (EGF) in October 2021, the European Commission published a Communication on orientations for a reform of the EU EGF on November 9th 2022.
This Communication provides a detailed overview of the reformed framework proposed by the Commission, supplying a basis for —— 6 technical discussions on general and specific elements of the proposals, which have been ongoing.

In general, Ireland supports the Commission’s efforts to move away from the current framework, which suffers from a number of limitations.
Ireland has therefore welcomed discussions on the reform of the framework and has been constructively engaged in these technical discussions, with a view to finding agreement on a reformed Economic Governance Framework.

Eurogroup The Eurogroup has been monitoring the impact of Russia’s war on Ukraine, in particular related to inflation developments and energy support measures, and continued its close coordination of policies.
In these turbulent times, the euro currency has offered an anchor of stability for the euro area and the EU as a whole, demonstrated by both Greece’s exit from enhanced surveillance in August 2022, and Croatia’s successful accession to the euro area on schedule (1 January 2023).

The Eurogroup worked closely with the Czech Presidency to make progress on Economic and Monetary Union issues, and to address the long-term challenges of the digital and green transition.
Work continued on the political dimensions of the investigative phase of the digital euro project.

The Eurogroup in inclusive format met with US Treasury Secretary Janet Yellen on 14 October, for a first of its kind meeting on the margins of the IMF/World Bank Annual Meetings in Washington DC, to discussing the transatlantic macroeconomic outlook and risks, and shared EU/US commitments including support for Ukraine and a lower carbon future.
Minister Donohoe was re-elected as the President of the Eurogroup on 5 December for a second term of 2.5 years.
ESM Treaty Reform Following the signature of amending agreements to the European Stability Mechanism (ESM) Treaty and Single Resolution Fund (SRF) Intergovernmental Agreement in early 2021, euro area Member States were invited to complete national ratification procedures in order to implement the agreement, reached in the Eurogroup on 30 November 2020, regarding the reform of the ESM and the early introduction of the Common Backstop to the SRF.
Ireland deposited its instruments of ratification in December 2021, following the enactment of the Finance (European Stability Mechanism and Single Resolution) Act 2021.

This legislation provided the necessary approval of the Oireachtas for the ratification of the terms of both amending agreements.

By the end of December 2022, national ratification procedures had been completed in the majority but not all euro area Member States.

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—— 7 2.

Financial Services Under the prior French Presidency in H1 2022, a General Approach for a Directive to amend the Solvency II Directive was brought to ECOFIN on 17 June which was agreed.

During the Czech Presidency, Solvency II was not examined by the Council as Parliament continued to consider the Commission proposals and had not yet given its First Reading on the proposals by the end of the year.
The implementation of a European insurance resolution framework continued under the Czech Presidency, with six Council Working Party meetings held between July and end-December 2022.

The Presidency progressed discussions on a number of technical elements considered essential to create a robust recovery and resolution framework for insurance undertakings.

This resulted in the adoption of a General Approach on 20 December 2022.

We expect trilogues to commence in the coming months.
In December 2022 the European Commission adopted new Capital Markets Union (CMU) legislative proposals relating to clearing, insolvency and listing.

These proposals contain measures to further develop the CMU through helping to make EU clearing services more attractive and resilient, harmonising certain corporate insolvency rules across the EU, and alleviating the administrative burden for companies wishing to access public funding by listing on stock exchanges.
AML/CFT Package Progress on the proposed legislation in the EU’s Anti-Money Laundering (AML) legislative package is continuing.

The package consists of four elements - 6th AML Directive and a new regulation to collectively replace the current 5th AML Directive, a revised Funds Transfer Regulation to replace Regulation (EU) 2015/847 and a regulation establishing a new central supervisor for AML matters at EU level, this supervisor will be known as Anti-Money Laundering Authority (AMLA).
A large number of working parties took place under the Czech Presidency on the directive and regulation between July and end of December 2022.

Trilogue meetings for the Funds Transfer Regulation successfully concluded on 29 June 2022, the regulation requires confirmation from both the EU Council and Parliament.
In relation to the regulation regarding AMLA, the European Council agreed a partial position on 29 June 2022 but the final location of the Authority has not yet been decided however several Member States have announced bids to host the Authority.

AMLAR A key element of this AML/CFT package is the creation of a new Anti-money Laundering Authority (AMLA) at EU level.
One of the main aims of the Authority is to harmonise and coordinate AML/CFT activity, by both directly supervising some entities and providing harmonised guidance —— 8 for others.

The Authority will also establish a support and co-ordination mechanism for Financial Intelligence Units (FIU).
The Authority will be staffed by experts from all Member States and will directly supervise up to 40 entities, made up of at least one entity from each Member State (27) with the remaining entities to be chosen based upon specific risk-based criteria.

Initial figures anticipate 250 staff, however it is expected this will increase once AMLA commences supervision.

It is hoped that the Authority will be established in 2024 and be fully operational by 2026/2027.
The location for AMLA has not yet been decided.

The selection process will hopefully be finalised by mid-2023.

10 EU Member States (including Ireland) have expressed interest in hosting AMLA.

Transfer of Funds Regulation (TFR) The Transfer of Funds Regulation was originally adopted in 2015 and provides for payment transactions.

In the intervening years, crypto currencies have grown in use and thus this Regulation has been recast to also capture transactions in crypto currencies.
The revised Regulation will extend the obligation of payment service providers to accompany transfers of crypto assets, with information on the payer and payee.

This new regulation will give effect to FATF’s recommendation 16 on wire transfers and Recommendation 15 on virtual assets.

Trilogue meetings concluded on 29 June 2022, On 10 October 2022, ECON and LIBE voted overwhelmingly in favour of the provisional agreement resulting from the inter-institutional negotiations.
Agreement of Council is required before the provisional agreement can be adopted.

Also, it was agreed that to ensure traceability of crypto-asset transfers, the timetable for the application of measures in this regulation should be aligned with that of the measures in the markets in crypto assets (MiCA) regulation.
AMLR and AMLD6 This Regulation and Directive are commonly known as the “rulebook” for AML/CFT as they collectively set out the AML/CFT rules that apply to supervisors, obliged entities and enforcement agencies.

The rulebook is currently being discussed by the relevant EU Parliament committees.

The new Regulation will introduce directly applicable EU-wide rules in areas such as customer due diligence and beneficial ownership.
The new Directive, 6AMLD, will require transposition into national law once completed.

The Directive contains provisions on beneficial ownership registers, national risk assessments, FIU information exchange and powers of national supervisors.

Expert level discussions on the rulebook concluded in December 2022 with the final EU Council draft being published on 7 December.
The EU Parliament committees for Economic and Monetary Affairs (ECON) and on Civil Liberties, Justice and Home Affairs (LIBE) began to examine the —— 9 rulebook during the term of the Czech Presidency and both the regulation and directive will proceed to trilogue discussions under the Swedish Presidency in 2023.

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3.

Taxation The Czech Presidency continued discussions on key tax files, including OECD/G20 Inclusive Framework, “Fit for 55” package, Energy Tax Directive, revisions to Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC 8), the Carbon Border Adjustment Mechanism (CBAM) and the Unshell proposal.

1.1 Direct Taxation OECD/G20 Inclusive Framework In the area of International tax, the EU Minimum Tax Directive was agreed in December 2022.
The Directive will implement Pillar Two of the agreement reached at the OECD/G20 Inclusive Framework on BEPS to address the tax challenges posed by digitalisation in the EU and ensure multinational enterprises are subject to a minimum effective tax rate of 15% across the bloc.

The Directive is required in order to ensure that the implementation of the relevant “GloBE” Model Rules are consistent and compatible with EU law.

The Directive broadly reflects these rules, with certain adaptations to EU law.
The Directive requires implementation by 31 December 2023 in order to be in effect during 2024.

Work is underway domestically to include legislation transposing the Minimum Tax Directive into Irish legislation via Finance Bill 2023.

UnShell The European Commission published a proposed Council Directive laying down rules to prevent the misuse of shell entities for tax purposes known as the UnShell proposal in December 2021.
The French and Czech Presidencies held a number of working party meetings on the proposal, covering technical discussions on compromise proposals.

The December 2022 Ecofin council conclusions noted that progress was made on exploring the way forward as regards tax consequences and compromise texts were submitted on parts of the proposal.

In principle, most delegations supported the objectives of the proposal, but further important technical work will be necessary before an agreement will be feasible.
DAC 8 The Directive on Administrative Cooperation (DAC), which was first agreed in 2011, provides tax authorities in the EU a vehicle for exchanging relevant taxpayer information.

The European Commission published a proposal for a further amendment to the Directive (DAC 8) in December 2022, which seeks to extend the cross-border exchange of information to cover crypto-assets and e-money.
The changes to the DAC are intended to enhance tax compliance in the digital economy —— 10 and to assist tax authorities in identifying circumstances where tax may be due.

DEBRA The European Commission proposed a Council Directive on a Debt Equity Bias Reduction Allowance, known as the DEBRA proposal.

The aim of the proposal is to counter the tax incentive for companies to finance investments through debt rather than equity.
The Czech Presidency held a number of working party meetings on the proposal, after which it was agreed by the December ECOFIN Council that in light of the interlinkages with other corporate tax files, including the expected proposal on BEFIT that the examination of the DEBRA proposal will be suspended and, if appropriate, it would be reassessed only after other proposals in the area of corporate income taxation have been put forward.
The Code of Conduct Group (business taxation) Ireland supported the Czech Presidency to reach a compromise on the revision of the Code of Conduct Group mandate, the agreed text was approved by ECOFIN Council on 08 November 2022.

The revision expands the scope of the Code from preferential measures (such as special regimes or exemptions from the general taxation system) to cover tax features of general application.
The Code of Conduct Group continued its work on the various matters falling within its mandate, including on the EU list of non-cooperative jurisdictions for tax purposes.

1.2 Indirect Taxation Progress Update on Negotiation of Fit for 55 Files in the Indirect Taxation Area On 14 July 2021, the Commission launched a suite of proposals as part of the “Fit for 55” package.
This package aims at implementing the ambitious EU targets to reduce emissions by at least 55% by 2030, as compared to 1990 levels, and to achieve climate neutrality by 2050.

The Department of Finance is the lead Department on negotiations for the Proposal to Revise the Energy Tax Directive (ETD) and the Regulation for a Carbon Border Adjustment Mechanism (CBAM).

Energy Tax Directive The ETD sets the legislative framework for the taxation of fuels and electricity used as propellants and for heating.
The current ETD was implemented in 2003 and is considered outdated with regard to the current climate action ambition of the EU.

The recast proposal seeks to better align the ETD with current climate action goals by basing minimum rates of taxation on energy content and environmental performance rather than volume, by removing fossil fuel subsides which encourage heavy consumption of fossil fuels and by extending the scope of the ETD.
—— 11 The ETD has been negotiated at working party level since September 2021 and has been considered in the ECOFIN Councils of June and December 2022.

As the file is technically complex and subject to unanimity voting, the file is progressing slowly.

While Member States have been supportive of the change to basing minimum rates on environmental performance rather than volume, there are a number of issues on which further work is required to progress the file.
In particular the proposed removal of the current exemption on taxation of commercial aviation and maritime fuel uses are politically sensitive.

Carbon Border Adjustment Mechanism (CBAM) The CBAM proposal seeks to address the risk of carbon leakage from the EU by putting a price on third country imports of certain high-polluting goods based on their embedded emissions.
The proposal is for the regulation to apply to imports of cement, iron and steel, aluminium, fertilisers and electricity as these sectors have a high risk of carbon leakage and high carbon emissions with a transitional phase in period where no financial transaction will apply until 2026.

While this file is ultimately a climate file, it has been negotiated through DG TAXUD.

However, it is subject to the ordinary procedure and qualified majority voting rather than unanimity.
A General Approach was reached in March 2022 in the ECOFIN council.

Following this, the file was considered by the European Parliament, who after initially rejecting the combined package of the linked FF55 files of the ETS revision, Social Climate Fund and CBAM, proposed a more ambitious scope for the CBAM along with a fully centralised operation of the mechanism.
Following extensive negotiation of the file at working party level, provisional agreement was reached with the Council and European Parliament on compromise text in December 2022.

This compromise involves extension of the scope to hydrogen as well as some precursors (use of intermediate products as part of the value chain) and a limited number of downstream products but not the full scope initially sought by the European Parliament.
It is proposed that the CBAM will begin operating in October 2023 on a “dry run” basis whereby no financial transaction applies.

VAT Directive On 08 December 2022, the European Commission published its VAT in the Digital Age proposal.

This is a set of proposals intended to modernize the EU’s VAT system for technological advances, reduce VAT compliance burdens, and help combat VAT fraud.
The file consists of three pillars, the introduction of digital reporting and e-invoicing, updating VAT rules to account for the impact of digital platforms on the economy and the introduction of a single VAT registration system.

Due to the broad scope of the proposal, discussions are expected to last at least a year before any agreement.

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—— 12 4.

EU Budget Annual EU Budget 2023 On 14th November 2022, agreement was reached between the Council and the European Parliament on the 2023 EU budget following weeks of discussions and intensive negotiations.

The 2023 EU budget provides for an overall level of commitments of €186.6bn and an overall level of payments of €168.6bn.

This leaves a margin under the commitment and payments ceilings of €3.6bn and €0.4bn respectively, for unforeseen needs.
Despite many Member States not being fully satisfied with the final outcome, with a number indicating they would abstain, no Member State voted against the budget.

However, a number of Member States were displeased at how the Budget negotiations transpired, and in particular at the Parliament’s unwillingness to compromise on issues relating its own budget, with particular focus on staffing.
Macro Financial Assistance for Ukraine Since the outbreak of war, the European Commission has proposed and implemented a number of Macro Financial Assistance (MFA) programmes to help finance Ukraine's immediate funding needs.

In addition to previous MFA disbursements in the first half of 2022, in June, the European Council endorsed up to €9 billion of exceptional MFA for Ukraine.

The first phase of €1 billion was disbursed on 01 and 02 August.
On 07 September 2022, the Commission proposed a new MFA operation of €5 billion in loans under this exceptional MFA package.

The MFA Decision was adopted by the European Parliament and Council on 20 September 2022.

After the entry into force of the Memorandum of Understanding on 04 October, a first instalment of €2 billion was disbursed to Ukraine on 18 October.
The second disbursement of €2.5 billion followed on 22 November 2022 and on 14 December, the third and final tranche of €500 million was disbursed.

The remaining €3 billion from the 2022 €9 billion package was not disbursed in 2022 and is to be included in the 2023 EU MFA+ Package for Ukraine.
This follows the European Council meeting of 20-21 October 2022, where the European Commission proposed an unprecedented MFA+ package for Ukraine of up to €18 billion for 2023, which will come in the form of highly concessional loans, disbursed in regular instalments as of 2023.

This funding comes on the back of the Ukrainian government and the International Monetary Fund estimating Ukraine’s funding needs will amount to around USD $38-40 billion to cover the estimated budget deficit in 2023.
This equates to circa €3 billion financing gap per month in 2023, and will require approximately €1.5 billion of this per month from the EU.

Due to difficulties which arose from the ad hoc approaches taken to the design of MFA assistance to Ukraine in 2022, the European Commission and Member States devised a more structured approach to the loans that will be granted in 2023.
In terms of volume and approach to —— 13 guarantees, the EU will provide €18 billion in loans to Ukraine in 2023, which will be guaranteed by the EU Budget Headroom, which is the margin of safety been the Own Resources Ceiling (provisions for funding the EU budget) and the Expenditure Ceilings in the current Multiannual Financial Framework (MFF) which spans the years 2021 to 2027.
In a further expression of solidarity to Ukraine, the EU also proposes to cover the interest rate costs in relation to the 2023 MFA loans, to the extent possible by the EU Budget, and where the funds available in the Budget are insufficient, directly by the Member States.

In this regard, the Regulation provides for an interest rate subsidy to be paid by Member States contributions, the terms of which will be set out in a Contribution Agreement between the European Union and the Member States.

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EU Banking In October 2021, the European Commission published legislative proposals (the EU Banking Package) to bring the European banking regulatory framework in line with Basel requirements.

The EU was the first key jurisdiction to do so.

The proposals are broad ranging and voluminous, although many of them are uncontentious.
Following the conclusion of discussions at Working Party level on 26 October 2022, the Czech Presidency achieved agreement on a Council general approach at the ECOFIN meeting on 8 November 2022.

The European Parliament adopted its negotiation position on 24 January 2023.

The trilogue negotiation process on the banking package commenced on 9 March between the co-legislators.

The trilogue negotiations are expected to continue through 2023.
In September 2020 the European Commission published a Digital Finance Package.

This included a digital finance strategy and legislative proposals on crypto-assets and digital resilience.

The package aims to boost competitiveness in the EU financial sector and to give consumers access to innovative financial products, while ensuring consumer protection and financial stability.

The package also supports the EU’s ambition for a recovery that embraces the digital transition.
Trilogues between the co-legislators on the Digital Operational Resilience Act (DORA) started on 25 January 2022 and ended in a provisional agreement in May 2022.

The Regulation (EU 2022/2554) was published in the Official Journal of the European Union on 27 December 2022 and will apply from 17 January 2025.

The Council presidency and the European Parliament reached a provisional agreement on the markets in crypto-assets (MiCA) on June 30th 2022.
No further significant developments occurred in this file between July 2022 and December 2022.

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Climate Action and the European Financial Architecture for Development Fit for 55 files The Czech Presidency saw progress on a number of Fit for 55 proposals.

In December the Council and Parliament reached provisional agreement on the revision of the EU emissions trading system (EU ETS), the establishment of the Social Climate Fund, and the establishment of the Carbon Border Adjustment Mechanism.
Regarding the EU ETS it was agreed to further increase the overall ambition of emissions reductions by 2030 in the sectors covered by the EU Emissions Trading System to 62%, and it was also agreed to a new, separate emissions trading system for the buildings and road transport sectors.

Energy Crisis The Czech Presidency saw the adoption of a number of regulations aimed at addressing high gas prices and ensuring security of supply.
This included the regulation on an emergency intervention to address high energy prices (EU 2022/1854) which was adopted on 6 October 2022, and which includes measures to reduce electricity demand to help lower the electricity costs for consumers and suggests a temporary revenue cap on electricity producers using technologies with lower costs, as well as a temporary solidarity contribution on excess profits made in fossil fuel sectors.
Council Regulation (EU) 2022/2576 was proposed in October as a new emergency regulation to address high gas prices in the EU and ensure security of supply.

The proposal sought the aggregation of EU demand and joint gas purchasing, advancing of work to create a new LNG pricing benchmark and to default solidarity rules between Member States in case of supply shortages.

It was formally adopted on 19 December.


EU energy ministers also reached a political agreement a Market Correction Mechanism (MCM) on 19 December, which aims to limit episodes of excessive gas prices in the EU that do not reflect world market prices, while ensuring security of energy supply and the stability of financial markets.

European Green Bond standard Trilogues took place during the Czech Presidency in order to find consensus on several areas of disagreement on this standard.
Progress was made towards the end of the Presidency but negotiations continued into the Swedish Presidency.

Ireland worked to support the Czech Presidency to protect Council’s position while being constructive in order to find a workable but ambitious solution.
Taxonomy for sustainable activities In order to further expand the activities and sectors covered by the Taxonomy, work continued on developing requirements for the remaining climate goals of the sustainable use and protection of water and marine resources, the transition to a circular economy, pollution prevention and —— 15 control, and the protection and restoration of biodiversity and ecosystems.

Ireland fed in coordinated views on the topics in question.
European Financial Architecture for Development (EFAD) Between July and December 2022, the main actors within the EFAD process (the European Investment Bank, the European Bank for Reconstruction and Development and the European Commission) have continued to implement strategies to enhance coordination and delivery of development finance.
The EIB and EBRD continue to operate under the Framework Cooperation Agreement signed in 2021 and have both taken strategic decisions that should lead to enhancements in European financial architecture for development.

European Investment Bank (EIB) EIB Global is the EIB’s response to the European Council’s EFAD Conclusions.
Established in 2021 as a branch within the wider EIB Group, its role is to allow the EIB to contribute to the EU global agenda and deploy its unique expertise in financing EU priority areas internationally, especially the green and digital transition.

In 2022, EIB Global invested €10.8 billion in projects outside the EU, targeting the Southern Neighbourhood, Eastern Neighbourhood, Enlargement countries, Africa, Pacific countries, Americas and the Caribbean, and Asia.
Investments sought to benefit countries in the areas of support for SME’s, health, gender and climate change and energy sustainability.

EIB’s projects outside the EU have been backed by the NDICI - Global Europe, the EU’s main financing tool to contribute to eradicating poverty and promoting sustainable development, prosperity, peace and stability.
European Bank for Reconstruction and Development (EBRD) During 2022, the EBRD invested €2.4 billion in 50 projects in the southern and eastern Mediterranean (SEMED) region.

The EBRD has been considering expansion beyond the SEMED region to Sub-Saharan Africa and Iraq.
Following the adoption of a resolution by Governors at the 2022 Annual meeting on a limited and incremental expansion to SSA and Iraq, the Bank agreed to undertake a financial and operational impact analysis of its ability to proceed with this expansion while maintaining support for its existing countries of operations and AAA credit rating.
The analysis was completed in 2022 and will be considered by Governors in advance of the EBRD Annual meeting in May 2023 where a decision on geographic expansion is expected to be made.

This decision is likely to be linked to the discussion on the Bank’s activity in supporting resilience and reconstruction in Ukraine, a current country of operation.
—— 16 EIB’s continued response to the Russian war of aggression in Ukraine On 25 July 2022, the EIB approved a second relief package of support to Ukraine, namely a disbursement for a total of over EUR 1.59 billion.

The EIB are in discussions with the Commission and Member States about the role it can play in the wider EU response, through a new EIB Ukraine Support Package.
EU & International Division Department of Finance 28 April 2023 —— 17 Part 2 Summary of significant draft EU legislative proposals submitted by the Department of Finance to the Oireachtas (July - December 2022) Commission Proposal Number COM(22)450 COM(22)557 Proposal Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL Providing exceptional macro-financial assistance to Ukraine Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL providing exceptional macro-financial assistance to Ukraine, reinforcing the Common Provisioning Fund by guarantees by the Member States and by specific provisioning for some financial liabilities related to Ukraine guaranteed under Decision No 466/2014/EU, and amending Decision (EU) 2022/1201 Date Submitted for Review by Department & Outcome of Committee’s Deliberations1 27/07/22 No further scrutiny required 22/09/22 No further scrutiny required Update In addition to previous MFA disbursements this adopted proposal enabled in the first half of 2022, in June 2022, the European Council endorsement of up to €9 billion of exceptional MFA for Ukraine.
The first phase of €1 billion adopted on 12 July 2022 was disbursed on 1 and 2 August.

The MFA Decision was adopted by the European Parliament and Council on 20 September 2022.

After the entry into force of the Memorandum of Understanding on 4 October, a first instalment of €2 billion was disbursed to Ukraine on 18 October.
The second disbursement of €2.5 billion followed on 22 November 2022 and on 14 December, the third and final tranche of €500 million was disbursed, after the €1 billion MFA loan adopted on 12 July 2022.

This proposal meant the exceptional MFA loans of an overall amount of up to €6 billion to Ukraine would benefit from a 70% coverage composed by paid-in provisioning of 9% and callable guarantees from Member States of 61%.
1 These legislative proposals are considered the most significant out of 14 submitted to the Joint Oireachtas Committee on Finance, Public Expenditure and Reform and Taoiseach’s over the period of July to December 2022.
—— 18 COM(22)351 DRAFT AMENDING BUDGET No 5 TO THE GENERAL BUDGET 2022 Additional measures to address the consequences of the Russian war in Ukraine Union Civil reinforcement Reduction in payment appropriations and update of revenues Other adjustments and technical updates Protection Mechanism 03/11/22 No further scrutiny required COM(22)597 Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing an Instrument for providing support to Ukraine for 2023 (macro-financial assistance +) 05/12/22 No further scrutiny required COM(22)595 Proposal for a COUNCIL REGULATION amending Council Regulation (EU, Euratom) 2020/2093 of 17 December 2020 laying down the multiannual financial framework for the years 2021 to 2027 07/12/22 No further scrutiny required —— 19 This DRAFT AMENDING BUDGET No 5 (DAB5) was negotiated and agreed as part of the final agreement on the 2023 EU budget on Monday 14 November 2022.
DAB5 was then approved as a Roman I-point at COREPER II on 16 November 2022, and as an A-point at the AGRIFISH Council on 21 November 2022.

The approved proposal was subsequently adopted by the European Parliament on 23 November 2022.

The €18 billion in loans to Ukraine will be guaranteed by the EU Budget headroom.

In the event that Ukraine defaults on repayment of the loans Member States will be required to cover the losses on a pro-rata GNI basis.
It is proposed that the interest costs of the loans would be subsided to the extent possible the EU Budget and if required by contributions from the Member States which will also be calculated on a pro rata GNI basis.

In this regard, the Regulation provides for an interest rate subsidy to be paid by Member States contributions, the terms of which will be set out in a Contribution Agreement between the European Union and the Member States.
Negotiations concluded in December 2022 to enable the EU to provide €18 billion in loans to Ukraine in 2023, which will be guaranteed by the EU Budget Headroom, which is the margin of safety been the Own Resources Ceiling (provisions for funding the EU budget) and the Expenditure Ceilings in the current Multiannual Financial Framework (MFF) which spans the years 2021 to 2027.
The Amending Letter was taken as a starting point in the Conciliation Committee for the EU Budget 2023 on 14 November 2022 in which the Parliament indicated they had a majority to support the compromise; a view which was supported by Council.

The final compromise on the EU Budget for 2023, was formally approved as A-point by the General Affairs Council/Cohesion Council on Tuesday 22 November 2022, with the European Parliament giving its approval at the plenary of Wednesday 23 November 2022.
At the 25 October 2022 Budget Committee Presidency concluded that budget committee had no objections to the proposal, which was later approved by COREPER II as a Roman I-point on 4 November 2022, and by the ECOFIN Council as an A-item on the 8 November 2022.

Currently in the early stages of negotiation in Council.
COM(22)670 AMENDING LETTER No 1 TO THE DRAFT GENERAL BUDGET 2023 Additional measures to address the consequences of the Russian war in Ukraine Union Civil Protection Mechanism reinforcement Updated estimated needs for agricultural expenditure Other adjustments and technical updates 03/11/22 No further scrutiny required COM(22)665 COM(22)697 Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the mobilisation of the European Union Solidarity Fund to provide assistance to Germany, Belgium, the Netherlands, Austria, Luxembourg, Spain and Greece further to natural disasters that took place in these countries in the course of 2021 Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Regulations (EU) No 648/2012, (EU) No 575/2013 and (EU) 2017/1131 as regards measures to mitigate excessive exposures third-country central to counterparties and improve the efficiency of Union clearing markets 15/11/22 No further scrutiny required 19/12/22 No further scrutiny required —— 20 Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directives 2009/65/EU, 2013/36/EU and (EU) 2019/2034 treatment of regards concentration risk towards central counterparties and the counterparty risk on centrally cleared derivative transactions the as 19/12/22 Currently in the early stages of negotiation in Council.
No further scrutiny required COM(22)698 —— 21 —— 22 Tithe an Rialtas.

Sráid Mhuirfean Uacht, Baile Átha Cliath 2, D02 R583, Éire Government Buildings, Upper Merrion Street, Dublin 2, D02 R583, Ireland T:+353 1 676 7571 @IRLDeptFinance www.gov.ie/finance —— 23