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22nd Oct 2021

Commission to approve first Covid-recovery plans next week

  • EU Commission president Ursula von der Leyen was in Strasbourg for the parliament's first plenary meeting there since the start of the pandemic (Photo: European Commission)

Ursula von der Leyen said on Tuesday (8 June) the EU Commission will start approving next week the first national plans submitted by member state governments to secure money from the bloc's coronavirus pandemic recovery fund.

It means the commission will put forward the legislative proposals for the council of member states to be able to unlock the funds allocated from the €800bn fund.

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From the council's side, Portuguese EU affairs minister Ana Paula Zacarias told MEPs that member states will adopt the proposals "as soon as possible".

This means that following council approval, and after the financing agreement has been signed with EU governments, the first countries can receive pre-financing from the recovery fund, of up to 13 percent of their allocated funds.

"After less than a year, we are there. Our recovery is about to begin, the plans show the way, the money will start flowing in the coming weeks," Commission president von der Leyen said.

EU leaders agreed on the mechanism last June to finance an unprecedented recovery fund to mitigate Europe's sharpest economic downturn since the second world war caused by the pandemic.

Von der Leyen did not reveal which countries are first in line to get funding.

So far 23 countries out of 27 have submitted their national plans to the commission on how they intend to use the money allocated to them under the recovery fund.

At least 37 percent of the spending needs to be focused on climate, and 20 percent on digital objectives.

They countries that have submitted their plans are Belgium, Czech Republic, Denmark, Germany, Greece, Ireland, Spain, France, Croatia, Italy, Cyprus, Latvia, Lithuania, Luxembourg, Hungary, Austria, Poland, Portugal, Romania, Slovenia, Slovakia, Finland, and Sweden.

Von der Leyen said "part of the pre-financing can start flowing this summer".

For the commission to start unlocking the money, it also needs to raise funds on the capital markets. After all the member states have ratified the necessary legislation, the commission can go to the markets in June.

EU budget commissioner Johannes Hahn said he was confident the EU executive can raise enough money during the summer to be able to have the pre-financing ready for member states that get over the line first.

"We can start going to capital markets in June, have another issuance in July, and [with potentially three issuances] ... guarantee that we can definitely serve the advance payments defined by law, the 13 percent of the overall amount, this should be achievable," he said.

The Austrian commissioner said the commission plans to raise €150-200bn annually.

Several MEPs called on the commission to demand reform from EU governments and not rubber-stamp national pans - and not to allow countries to use the money for "national pet projects".

Others urged the commission and member states to approve the plans fast.

"The council has to approve the first package in July, because there is also a big risk and that is delay. Because delay could flame the ashes of populism if part of the population feels it is abandoned in the recovery," Socialist group leader MEP Iratxe Garcia warned in parliament.

First recovery euros could be paid out in July

Economy commissioner Paolo Gentoloni said the real challenge is whether member states can stick to their national plans and timelines. However, more than a dozen EU countries still need to ratify legislation to start the funding.

Agenda

Biden in Brussels, recovery package underway This WEEK

The EU Commission is expected to approve the first recovery plans submitted by national capitals on how they will use funds available from the EU's €800bn recovery fund. Spain, Portugal, Greece, Denmark, Luxembourg seem to be first crossing the line.

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