EU Recovery fund: Commission insists on 2026 deadline as Poland causes headaches

Despite several challenges member states such as Poland face in implementing projects on time under the EU Recovery Fund, the European Commission insists on the agreed 2026 deadline, stressing the fund’s “temporary” nature.

“The Recovery and Resilience (RRF) Regulation states that recovery and resilience plans can include measures whose implementation takes place from 1 February 2020. It also establishes that milestones and targets must be achieved by 31 August 2026, and any payment under the RRF must be executed by 31 December 2026”, an EU spokesperson told Euractiv.

“The RRF is a temporary instrument”, the spokesperson added.

Euractiv contacted the Commission in light of an analysis conducted by business consultancy CRIDO suggesting that 43 out of 56 investments under the Polish recovery plan may not be implemented before the end of August 2026, which would result in them not being financed with EU funds.

The European Commission has no legislative basis to make payments after this date.

Adopted in 2020, the EU Recovery Fund aimed to support member states in recovering from the COVID-19 pandemic and simultaneously encourage them to carry out specific reforms.

However, there have been delays in implementation, while in some cases, such as in Poland, political circumstances have made things more complex.

Due to the European Commission’s concerns about the rule of law in Poland under the previous nationalist Law and Justice (PiS, ECR) government, recovery and cohesion funds for Poland had been frozen, causing a delay in the plan’s implementation.

However, since Donald Tusk became Poland’s prime minister and announced long-awaited judicial reforms to restore the rule of law and democratic order, relations with Brussels have improved.

The EU Commission even officially approved on Thursday (29 February) the release of EU funds of up to €137 billion, as Commission President Ursula von der Leyen announced last week.

However, given the delays imputable to the former government, the country could end up with few projects funded that way.

Centre-right MEP: ‘We should be open’

Siegfried Mureșan, Vice-Chair of the Group of the centre-right European People’s Party (EPP), told Euractiv that currently, the main focus should be on implementing projects and investments as the regulation suggests.

“Our priority now needs to be the implementation, not the discussion about the prolongation. Time is short”, the Romanian MEP noted.

Mureșan admitted, however, that the likelihood is high that by the end of 2026, not all reforms will be implemented, not all investments will be finalised, and not everything will be paid.

“I think the likelihood of this is high. So I would expect us – not now, is too early – but next year, in 2025, to have an honest assessment and evaluation. And if the conclusion is that the projects that started need a bit more time to be finalised, I think we should be open to this”, he said.

Belgian ECR MEP and chairman of the Committee on Budgets Johan Van Overtveldt was also open to an extension.

“If there is a need for a longer period because countries have a problem fulfilling the conditionality – which means that if you spent the money earlier, you would not have sufficient guarantees that the money is well spent – then of course, I’m in favour of taking more time to be able to spend in an efficient and productive way”, he told Euractiv.

Orbán opened the door

Meanwhile, it seems that not only Poland faces implementation challenges.

According to Christopher Glück, an expert from the Forefront Advisers consultancy, the EU can no longer ignore the pressing question of a Recovery Fund extension.

“Viktor Orbán was the first to address the elephant in the room, but too many member states have too much to lose if the issue isn’t solved”, he told Euractiv.

Budapest’s recovery funds remain frozen, and during the Ukrainian aid negotiations, Hungary requested, among others, to extend the programme’s life by two years until 2028.

A diplomat representing a southern EU member state had told Euractiv back then that Hungarian Prime Minister Viktor Orbán’s request “did please” some EU partners struggling with the Recovery Fund.

Possible solutions

Glück has two possible solutions: “First, the ambitious option of extending the deadline for new net issuance (currently at the end of 2026). Or second, ending net issuance as planned but extending the deadline for pay-out requests by another year or two”, he said.

He explained that the latter option is significantly easier to agree to as it wouldn’t require the consent of national parliaments.

It does, however, raise questions over the sound financial management of EU debt and could face opposition from the German constitutional court, he said.

The German constitutional court ruled in December 2022 that the EU Recovery Fund, particularly the Commission’s borrowing, was lawful.

However, it set conditions such as to be time-limited and capped.

Read more: German constitutional court: EU debt lawful as a crisis response

“It’s very difficult for Germany to agree to an extension, not least because of the conditions set by the German constitutional court for EU borrowing […] It would need to be well justified and part of a bigger political deal”, the expert noted.

He also estimated that political pressure for an extension of the Recovery Fund will continue to pile on and become one of the leading negotiation points for the next Commission mandate beginning after the June EU elections.

According to data from Forefront Advisers consultancy, the frontrunners in the Recovery Fund implementation are the ones “in need,” such as Italy, Spain, Greece, and France.

On the contrary, the expert noted that so-called “Frugal” countries such as the Netherlands are lagging, as the Recovery Plan represents only a tiny percentage of their GDP, which likely explains why they have no urgency to act.

(Sarantis Michalopoulos, Charles Szumski, Jonathan Packroff | Euractiv.com)

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