It is optimistic to expect recovery funds by mid-2021, says EU official

European Commission President Ursula von der Leyen and German Chancellor Angela Merkel at the start of the second day of an EU summit in Brussels, Belgium, 18 July 2020. [Pool/EPA/EFE]

The approval process for the EU’s €750 billion recovery funds may take longer than foreseen, and it would be optimistic to expect the first disbursements by mid-2021, an EU official said on Thursday (17 September).

Member states, especially those more affected by the COVID-19, hoped to receive the EU funds by spring next year. 

But the European Parliament and the Council, which brings together the member states, have yet to agree on the own resources that would allow for increasing the EU budgetary threshold and borrow the €750 billion from the markets. Their agreement must be ratified afterwards by the member states’ national parliament.

The EU official said that expecting the first disbursements “towards the end of the first half of 2021 is optimistic, but realistic”, as long as the Parliament, the Council and national parliaments “make necessary efforts to get there.”

Parliament wants to top up EU budget with €110 billion

The European Parliament on Monday (7 September) requested a €110 billion increase to the EU’s seven-year budget and legally binding commitments on the introduction of new levies to finance the bloc’s €750 billion stimulus against the COVID-19 crisis, EURACTIV has learnt.

The same official added that there’s “a lot of good will” among MEPs and member states to adopt the own resources decision “as quickly as possible”. And given that member states are the beneficiaries of these funds, “we are hopeful that the ratification can take place very swiftly”.

Still, only a small portion of the recovery funds would be paid by mid-2021 in the best-case scenario.

EU leaders agreed in July to fast-track 10% of the funds assigned to member states as a pre-financing before they start implementing their investment and reform plans. But in order to channel the funds, the Recovery and Resilience Facility must be ready, as it will mobilise the bulk of the recovery fund, a total of €672.5 billion.

The Commission hopes that the Facility will be ready by 1 January.

That would allow for some procedural steps needed for the member states to access the funds, primarily the approval of their national reform and investment plans. 

National governments must submit their plans by the end of April next year at the latest, although they could hand them in already by 15 October, together with their draft budgetary plans for 2021.

Governments will prepare their plans with the Commission, which must approve them within two months. EU officials admitt that their preparation, including the milestones member states must achieve to unlock the funds, will be a “very tedious work that will take some time”.

For that reason, almost all member states have already contacted the Commission in order to start preparing their investment and reform proposals.

The national plans must be also approved by the EU finance ministers by qualified majority.

National plans could be ready and approved by spring next year. The Commission hopes to have concluded the own resources ratification by then so it could borrow from the markets and transfer the money to the member states swiftly.

The Commission will disburse the recovery and resilience funds twice per year. However, it is unclear whether next year there will be also a second transfer to member states, following the first pre-financing payment.

Council brokers historic stimulus pact as budget cuts, rule of law retreat plague deal

Leaders of the 27 EU countries finally compromised on a €1,074 billion long-term budget and recovery fund instrument early on Tuesday (21 July) morning, but it took one of the longest-lasting summits in European Council history and the final deal cut funding for some of the bloc’s key priorities.

The Commission issued on Thursday some guidance to member states to help them prepare their national plans. 

An EU official stressed that the Commission’s country-specific recommendations addressed to the capitals annually will be the starting point for the elaboration of the national plans. 

In addition, the Commission will also take into account to what extent the national plans contribute to the progress on the EU’s ‘green’ and digital objectives, support sustainable growth, create jobs, and mobilise investment.

The EU executive has listed seven flagship areas that should be the focus of member states’ plans in the green and digital agendas.

They include future-proof clean and renewal energies; energy efficiency in buildings; clean and smart transport; rapid broadband services (including 5G); the digitalisation of public administration; industrial data cloud capacity and cutting-edge processors; and the adaptation of the education systems for the digital age.

[Edited by Zora Radosavljevic]

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