(Repeats to a wider audience)
AMSTERDAM, Oct 7 (Reuters) - The European Commission said on Wednesday its SURE unemployment scheme, one of the coronavirus recovery plans for EU members, would be financed in full by ‘social’ bonds, with around 30 billion in issuance expected for this year.
The funding of the up to 100-billion-euro SURE scheme is widely seen as a test run for the much bigger European Union recovery fund, issuance for which is expected to kick off next year.
Johannes Hahn, EU Commissioner for Budget and Administration, told Reuters that issuance of social bonds would start in the second half of October.
The commission expects around 30 billion euros or a little bit more of the SURE issuance to be completed in 2020, Hahn said, in line with market expectations.
Social bonds are a type of sustainable debt which channel proceeds to socially beneficial projects. Issuance surged this year after development banks used them to fund COVID expenditure.
“This is...reinforcing our political priorities,” Hahn said.
“I think this big chunk of social bonds can really influence, can really serve as a reference for social bonds on an international level,” he added. From next year, the EU is expected to launch a much bigger sustainable issuance spree when it starts financing its 750 billion euro recovery fund.
Some 30% of the fund -- or 225 billion euros - is expected to be financed via green bonds, which fund environmentally beneficial projects.
Hahn said the commission was working on finalizing its methodology for green bonds but the real challenge was member states ratifying the recovery fund. Hahn expects the process to be completed in the second quarter of 2021.
Asked whether divisions between member states on tying the distribution of EU monies to a rule of law scheme were of concern ahead of the funding, Hahn said he expects a compromise.
“Everybody understands we are in the midst of a crisis... in that respect I’m positive because of the huge external pressure.” (Reporting by Yoruk Bahceli; editing by Sujata Rao and Bernadette Baum)
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