I thank my colleagues, Deputies Flaherty, O'Callaghan and Crowe for their contributions this morning. I also thank all the Deputies who took part in this debate yesterday evening. In particular, I acknowledge the broad acceptance across the House of the need for measures that this legislation will facilitate. I would like to respond to a few of the specific points raised by Deputies. We may have the opportunity to follow up on them on Committee and Remaining Stages of the Bill.
Covid-19 is a symmetric shock that has hit all countries through no fault of their own, and one that requires a strong collective response to get our economies back on the path to recovery. I agree with the point Deputy O'Callaghan made about ensuring we have stimulus investment and that we invest in our communities. The stimulus package that is to be announced in the next week, as well as additional lines of funding, will ensure that. Some of the remarks in the debate yesterday referred to a decade ago and the fragmentation in a European context. This is an example of European solidarity where countries have come together to act on a collective basis in the context of this pandemic. That is a welcome development in the EU.
This Bill enables access to two EU pandemic response instruments, SURE and the EIB guarantee fund. The SURE scheme aims to support member states with efforts to protect workers and jobs specifically on short-term working arrangements such as Ireland's temporary wage subsidy scheme. To date, Ireland has spent €1.85 billion supporting workers and employers through the scheme. Under the proposal, the European Commission will borrow up to €100 billion on financial markets to provide loans to member states, allowing them to benefit from the EU's strong credit rating and low borrowing costs. Access to this facility is dependent on market rates and the maturity of loans offered by the Commission. The Government will make a decision at the appropriate time, having considered the advice of the NTMA.
The objective of the EIB guarantee fund is to respond to the economic impact of the Covid-19 pandemic outbreak by ensuring that SMEs, mid-caps, corporates and other eligible entities in the participating member states have sufficient liquidity available to weather this rapidly unfolding crisis. The EIB in managing this fund plans to deploy a broad mix of products, to include counter-guarantees, venture debt, venture capital and private equity through a range of financial intermediaries, including national promotional banks, commercial banks, guarantee societies, special purpose vehicles, leasing companies and any other financial intermediaries authorised to lend. While I note Deputy Boyd Barrett's concern that debt financing cannot go on forever, I am acutely aware of the need to support the SME sector to protect livelihoods. This fund is designed to provide assistance to the sector by supporting lending to high-risk operations that are viable but vulnerable due to the impact of the crisis. The primary focus will be on SMEs but there will also be a focus on public entities providing essential services, particularly in health, research and education sectors, which are also eligible for funding. The requirement of the health service in Ireland in respect of whether direct Exchequer funding or access to the guarantee fund would be the most cost-effective approach can only be considered in the context of overall public sector arrangements.
In response to Deputy Doherty, I wish to make clear that access to funding supported by the EIB guarantee in participating member states will be determined based on need and demand relative to the impact of Covid-19 and the related market situation. The EIB will make available additional financing in the context of the fund in all contributing member states, aiming for a geographic distribution that is proportionate to the economic impact of the crisis, the size of the economies and the available national and European support instruments. Deployment of funding will be subject to fund-specific concentration limits, including that the three member states that receive the most financing should not exceed 50% of the total fund financing. This excludes underlying financing structures that are, by their nature, multi-country, that is, covering two or more member states. The 15 member states that receive the least financing should exceed 10% of the total fund financing. These concentration limits will be reviewed and may be adjusted to reflect the evolving impact of the crisis and market needs in the various member states. Any change in the concentration limit will be subject to approval by the contributors' committee which will include a representative of each of the participating member states. There are no further economic conditions attached to an individual member state's membership of the guarantee fund.
Deputy Doherty and others referred to the need for the EIB guarantee to be aimed primarily at SMEs. This fund is so aimed. One of the specific provisions of the fund is that €130 billion, or 65% of funding, will be allocated to companies with less than 249 employees. The remaining funding will be allocated in the following manner: €46 billion or 23% will be available for companies with 250 employees or more, €10 billion or 5% will be available for public sector companies and entities active in the areas of health or health research or providing essential services related to the health crisis, and €14 billion or 7% will be available for larger companies with up to 2,999 employees.
I note Deputies' concerns regarding funding allocations to large corporations. I wish to assure them that this matter was given thorough consideration during all the negotiations involving member states. It was agreed that greater restrictions will apply on the amount and types of funding that can go to the largest companies, with additional safeguards in place regarding large corporates with more than 3,000 employees. The restrictions are that there will be no equity investments or asset-based securities operations, with support available only for working capital and supply chain finance. Financing will only be available through financial intermediaries with skin in the game and exposure to individual corporates will be limited to €250 million. In order to rule out strategic investment projects that could be interpreted as industrial policy, only loans in full alignment with the temporary state aid regime applicable for national schemes, including regarding short loan maturities, will be considered. Funding will only be available to sectors that are in line with the EIB long-term mission of innovation, the environment and SME support. There will be further involvement of participating member states represented on a contributors' committee on individual transactions, complemented with higher reporting requirements.
Deputies Verona Murphy, Fleming and Michael Collins referred to the difficulties that may be encountered by small and microenterprises in the context of meeting the cost of borrowing. One of the values of guarantee systems is that they reduce the levels of risk for lenders. This, combined with the triple A rating of the EIB, serves to increase the availability and reduce the cost of borrowing to small business. The SBCI will seek access to guaranteed capacity from the guarantee fund in order to continue to provide long-term unsecured lending to the SME market. The SBCI and the Department of Business, Enterprise and Innovation are monitoring the requirement for a working capital support scheme.
In response to the comments of Deputy Shortall regarding austerity, it is clear from the Bill and the programme for Government that the Government is committed to recovery through investment and will draw on all available resources to maximise opportunities and supports for Irish businesses.
Deputies raised concerns about the pace of the legislation. The Bill deals with an extremely urgent matter and we are seeking to expedite its enactment. It is the first legislation to be brought forward by the Department of Finance since the Government was formed. The SURE instrument cannot be accessed by any member state until all member states have signed the guarantee agreement. The Commission needs guarantees from all the member states in order to access the bond markets on the best possible terms. Ireland cannot participate in the EIB pan-European guarantee fund unless the Bill is enacted. A lack of participation would have a direct impact on Irish businesses and public sector bodies as they cannot apply for finance supported by the fund until Ireland has signed a contribution agreement with the EIB.
There is a risk that certain banks may refuse to sign up to loan schemes currently being developed by the SBCI to help SMEs deal with the Covid crisis due to an ambiguity regarding the circumstances in which the insurance Acts and regulations apply to the issuance of guarantees by the SBCI. The amendment in the Bill to the Strategic Banking Corporation of Ireland Act 2014 removes this ambiguity and brings greater certainty in that space.
Deputies queried the potential conditions of the loans and whether they will reflect similar conditions which applied to historic loans. As I stated, this situation is the complete opposite of that referred to by the Deputies. It is a matter of European solidarity. Article 9(2) of the Commission regulations sets a limit of 10% of the maximum amount of borrowings by the Union that can fall due in any one year. This will smooth the repayment profile and ensure that borrowing will be structured to ensure that it is over different maturities. This is an important risk mitigation, ensuring that there cannot be a large calling-in of guarantees and minimising any residual risk to the Union's budget. Nonetheless, the guarantee agreement notes that the full amount of the guarantee is reflected in Ireland's share of this process.
In regard to the amount that Ireland will draw down or whether we will draw it down, the SURE instrument offers a useful access stream to a pool of liquidity that has long-term maturity, which brings certainty for Ireland. However, it depends on the market rate and maturity of the loans offered by the Commission. That will be a matter with the NTMA over the coming period. The recovery strategy instruments announced later are designed to assist hard-hit economies to get back on their feet until after the Covid pandemic has passed.
I thank Deputies across the House for their contributions. I appreciate their input into the Bill. If the Bill is passed this week, it will allow access to a significant stream of funding that will support SMEs and employment and assist in getting our economy back on track as we continue to drive through this crisis.