Proposal for a COUNCIL IMPLEMENTING DECISION on granting temporary support under Council Regulation (EU) 2020/672 to Bulgaria to mitigate unemployment risks in an emergency situation following the COVID-19 outbreak
Date: 2020-08-24
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: Bulgaria, EU loan, aid to undertakings, emergency aid, employment aid, epidemic, fight against unemployment, infectious disease, public expenditure

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   EUROPEAN COMMISSION  Brussels, 24.8.2020  COM(2020) 470 final 2020/0223 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION on granting temporary support under Council Regulation (EU) 2020/672 to Bulgaria to mitigate unemployment risks in an emergency situation following the COVID-19 outbreak  
 
EXPLANATORY MEMORANDUM 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

Council  Regulation  2020/672  (“SURE  Regulation”)  lays  down  the  legal  framework  for 
providing  Union  financial  assistance  to  Member  States,  which  are  experiencing,  or  are 
seriously threatened with, a severe economic disturbance caused by the COVID-19 outbreak. 
Support  under  SURE  serves  for  the  financing,  primarily,  of  short-time  work  schemes  or 
similar measures aimed at protecting employees and the self‐ employed and thus reducing the 
incidence of unemployment and loss of income, as well as for the financing, as an ancillary, 
of some health-related measures, in particular in the workplace. 

On  7  August  2020,  Bulgaria  requested  Union  financial  assistance  under  the  SURE 
Regulation.  In  accordance  with  Article  6(2)  of  the  SURE  Regulation,  the  Commission  has 
consulted  the  Bulgarian  authorities  to  verify  the  sudden  and  severe  increase  in  actual  and 
planned expenditure directly related to two wage subsidy measures adopted in response to the 
COVID-19 pandemic. In particular, the two measures provide wage subsidies to undertakings, 
which,  due  to  the  COVID-19  outbreak,  have  experienced  a  significant  reduction  in  their 
activity  or  revenue  and  in  the  absence  of  the  measures  they  would  not  be  able  to  preserve 
employment. The monthly wage subsidy to the eligible undertakings amounts to 60% of the 
monthly  gross  salary  (including  employer’s  social  security  contributions)  of  the  benefitting 
employees.  

Bulgaria provided the Commission with the relevant information.  

Taking into account the available evidence, the Commission proposes to the Council to adopt 
an  Implementing  Decision  to  grant  financial  assistance  to  Bulgaria  under  the  SURE 
Regulation in support of the above measures. 

• 

Consistency with existing policy provisions in the policy area 

The present proposal is fully consistent with  Council Regulation 2020/672, under which the 
proposal is made. 

The present proposal comes in addition to another Union law instrument to provide support to 
Member States in case of emergencies, namely Council Regulation (EC) No 2012/2002 of 11 
November 2002 establishing the European Union Solidarity Fund (EUSF) (“Regulation (EC) 
No 2012/2002”). Regulation (EU) 2020/461 of the European Parliament and of the Council, 
which amends that instrument to  extend its scope to  cover major public  health emergencies 
and to define specific operations eligible for financing, was adopted on 30 March.   

• 

Consistency with other Union policies 

The proposal is part of a range of measures developed in response to the current COVID-19 
pandemic  such  as  the  “Coronavirus  Response  Investment  Initiative”,  and  it  complements 
other  instruments  that  support  employment  such  as  the  European  Social  Fund  and  the 
European Fund for Strategic Investments (EFSI)/InvestEU. By making use of borrowing and 
lending in this particular case of the COVID-19 outbreak for supporting Member States, this 
proposal  acts  as  a  second  line  of  defence  to  finance  short-time  work  schemes  and  similar 
measures,  helping  protect  jobs  and  thus  employees  and  self-employed  against  the  risk  of 
unemployment.  

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2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The legal basis for this instrument is Council Regulation 2020/672.   

• 

Subsidiarity (for non-exclusive competence)  

The  proposal  follows  a  Member  State  request  and  shows  European  solidarity  by  providing 
Union financial assistance in the form of temporary loans to a Member State affected by the 
COVID-19  outbreak.  As  a  second  line  of  defence,  such  financial  assistance  supports  the 
government’s increased public expenditure on a temporary basis in respect of short-time work 
schemes  and  similar  measures  to  help  them  protect  jobs  and  thus  employees  and  self-
employed against the risk of unemployment and loss of income. 

Such  support  will  help  the  population  affected  and  helps  to  mitigate  the  direct  societal  and 
economic impact caused by the present COVID-19 crisis.  

• 

Proportionality 

The proposal respects the proportionality principle. It does not go beyond what is necessary to 
achieve the objectives sought by the instrument.  

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Stakeholder consultations 

Due to the urgency to prepare the proposal so that it can be adopted in a timely manner by the 
Council, a stakeholder consultation could not be carried out. 

• 

Impact assessment 

Due to the urgent nature of the proposal, no impact assessment was carried out. 

4. 

BUDGETARY IMPLICATIONS 

The  Commission  should  be  able  to  contract  borrowings  on  the  financial  markets  with  the 
purpose  of  on-lending  them  to  the  Member  State  requesting  financial  assistance  under  the 
SURE instrument.  

In  addition  to  the  provision  of  Member  State  guarantees,  other  safeguards  are  built  into  the 
framework in order to ensure the financial solidity of the scheme: 

 

 

A rigorous and conservative approach to financial management; 

A  construction  of  the  portfolio  of  loans  that  limits  concentration  risk,  annual 
exposure and excessive exposure to individual Member States whilst ensuring 
sufficient resources could be granted to Member States most in need; and 

 

Possibilities to roll over debt. 

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2020/0223 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

on granting temporary support under Council Regulation (EU) 2020/672 to Bulgaria to 
mitigate unemployment risks in an emergency situation following the COVID-19 
outbreak 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union,  

Having regard to Council Regulation (EU) 2020/672 of 19 May 2020 on the establishment of 
a  European  instrument  for  temporary  support  to  mitigate  unemployment  risks  in  an 
emergency (SURE) following the COVID-19 outbreak 1, and in particular Article 6(1) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

On 7 August 2020, Bulgaria requested financial assistance from the Union with a view 
to complementing its national efforts to address the impact of the COVID-19 outbreak 
and its socio-economic consequences for workers.  

The COVID-19 outbreak and the extraordinary measures implemented by Bulgaria to 
contain the outbreak and its socio-economic and health-related impact are expected to 
have  a  dramatic  impact  on  public  finances.  According  to  the  Commission’s  2020 
Spring forecast, Bulgaria was expected to have a general government deficit and debt 
of 2.8% and 25.5% of gross domestic product (GDP) respectively by the end of 2020. 
According  to  the  Commission’s  2020  Summer  interim  forecast,  Bulgaria’s  GDP  is 
projected to decrease by 7.1% in 2020.  

(3) 

The  COVID-19  outbreak  has  immobilised  a  substantial  part  of  the  labour  force  in 
Bulgaria.  This  has  led  to  a  sudden  and  severe  increase  in  public  expenditure  in 
Bulgaria in respect of two wage subsidy measures, as set out in recitals 4 and 5.  
(4)  More specifically, “Decree No. 55 from 30 March 2020 of the Council of Ministers”2, 
as it is referred to in Bulgaria’s request of 7 August 2020, introduced a measure that 
provides wage subsidies to undertakings, which, due to the COVID-19 outbreak, have 
voluntarily or by law reduced or stopped their activity. The employment of employees 
is  required  to  be  maintained  during  participation  in  the  measure  and  for  an  equal 
period afterwards. The monthly wage subsidy to the eligible undertakings amounts to 
60% of the monthly gross salary (including employer’s social security contributions) 
of the benefitting employees.  
Furthermore, “Decree No. 151 from 3 July 2020 of the Council of Ministers”3, as it is 
referred to in Bulgaria’s request of 7 August 2020, introduced a measure that provides 

(5) 

1 
2  Decree  No. 55  from  30  March  2020 of  the  Council  of  Ministers,  amended  by  Decree  No.  71  from  16  April 

OJ L 159, 20.5.2020, p.1. 

2020 and Decree 106 from 28 May 2020 (Official Journal No. 31 from 1 April 2020) 

3  Decree No. 151 from 3 July 2020 of the Council of Ministers (Official Journal No. 151 from 7 July 2020) 

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wage subsidies to undertakings, which, due to the COVID-19 outbreak, have suffered 
a revenue reduction of at least 20%. The employment of employees is required to be 
maintained during participation in the measure and for an equal period afterwards. The 
monthly  wage  subsidy  to  the  eligible  undertakings  amounts  to  60%  of  the  monthly 
gross  salary  (including  employer’s  social  security  contributions)  of  the  benefitting 
employees.  

Bulgaria fulfils the conditions for requesting financial assistance set out in Article 3 of 
Regulation  (EU)  2020/672.  Bulgaria  has  provided  the  Commission  with  appropriate 
evidence that the actual and planned public expenditure has increased by EUR 511 000 
000  as  of  1  February  2020  due  to  the  national  measures  taken  to  address  the  socio-
economic  effects  of  the  COVID-19  outbreak.  This  constitutes  a  sudden  and  severe 
increase  because  the  new  measures  cover  or  are  intended  to  cover  a  significant 
proportion of undertakings and of the labour force in Bulgaria. 

The Commission has consulted Bulgaria and verified the sudden and severe increase 
in  the  actual  and  planned  public  expenditure  directly  related  to  short-time  work 
schemes  and  similar  measures  referred  to  in  the  request  of  7  August  2020,  in 
accordance with Article 6 of Regulation (EU) 2020/672.  

Financial assistance should  therefore be provided with  a view to  helping Bulgaria to 
address the socio-economic effects of the severe economic disturbance caused by the 
COVID-19 outbreak. 

This decision should be without prejudice to the outcome of any procedures relating to 
distortions of the operation of the internal market that may be undertaken, in particular 
under Articles 107  and  108 TFEU.  It  does not  override the  requirement  for Member 
States to notify instances of potential State aid to the Commission under Article 108 
TFEU. 

(6) 

(7) 

(8) 

(9) 

(10)  Bulgaria  should  inform  the  Commission  on  a  regular  basis  of  the  implementation  of 
the planned public expenditure, in order to enable the Commission to assess the extent 
to which Bulgaria has implemented that expenditure. 

(11)  The  decision  to  provide  financial  assistance  has  been  taken  taking  into  account 
existing  and  expected  needs  of  Bulgaria,  as  well  as  requests  for  financial  assistance 
pursuant  to  Regulation  (EU)  2020/672  already  submitted  or  planned  to be  submitted 
by other Member States, while applying the principles of equal  treatment,  solidarity, 
proportionality and transparency, 

HAS ADOPTED THIS DECISION:  

Bulgaria fulfils the conditions set out in Article 3 of Regulation (EU) 2020/672.   

Article 1 

Article 2 

1. 

2. 

3. 

The Union shall make available to Bulgaria a loan amounting to a maximum of EUR 
511 000 000. The loan shall have a maximum average maturity of 15 years. 

The availability period for financial assistance  granted by this Decision shall be 18 
months starting from the first day after the entry into force of this Decision.  

The  Union  financial  assistance  shall  be  made  available  by  the  Commission  to 
Bulgaria in a maximum of eight instalments. An instalment may be disbursed in one 

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or several tranches. The maturities of the tranches under the first instalment may be 
longer than the maximum average maturity referred to in paragraph 1. In such cases, 
the maturities of further tranches shall be set so that the maximum average maturity 
referred to in paragraph 1 is respected once all instalments have been disbursed.  

The  first  instalment  shall  be  released  subject  to  the  entry  into  force  of  the  loan 
agreement provided for in Article 8(2) of Regulation (EU) 2020/672.  

Bulgaria  shall  pay  the  cost  of  funding  of  the  Union  referred  to  in  Article  4  of 
Regulation (EU) 2020/672 for each instalment plus any fees, costs and expenses  of 
the Union resulting from any funding.  

The Commission shall decide on the size and release of instalments, as well as on the 
size of the tranches.  

4. 

5. 

6. 

Bulgaria may finance the following measures: 

Article 3  

(a)  wage  subsidies  to  undertakings  as  provided  for  by  Decree  No.  55  from  30 

March 2020 of the Council of Ministers;   

(b)  wage subsidies to undertakings as provided for by Decree No. 151 from 3 July 

2020 of the Council of Ministers. 

Bulgaria shall inform the Commission by [DATE: 6 months after date of publication of this 
Decision],  and  every  6  months  thereafter  of  the  implementation  of  the  planned  public 
expenditure until such time as that planned public expenditure has been fully implemented. 

Article 4 

This Decision is addressed to the Republic of Bulgaria. 

Article 5 

This Decision shall be published in the Official Journal of the European Union.  

Done at Brussels, 

Article 6 

For the Council 
The President 

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