Friday

27th May 2022

First recovery euros could be paid out in July

  • EU Commission vice-president Valdis Dombrovskis briefed MEPs remotely on the pandemic recovery fund (Photo: European Parliament)

The first payments from the EU's Covid-19 recovery fund could come in July if all goes to plan, top EU Commission officials said on Monday (10 May) in the European Parliament.

Currently, 14 of the 27 member states have submitted their plans on how they will use the funds, and commission vice-president Valdis Dombrovskis told MEPs that most plans are close to completion and are expected to be submitted by early June.

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The commission has two months to assess thOSE plans, and transpose them into legal recommendations to the council of member states, which has one month to sign them off.

Dombrovskis said the first commission proposals could be presented to the council in the second half of June.

"If everything goes according to the plans, first payments can reach member states during the summer, presumable in July," he told MEPs in the budget and economy committee.

The disbursement of funds is conditional on national parliaments ratifying legislation that increases the EU budget guarantees and allows the EU Commission to raise money on the markets to finance the fund.

Dombrovskis said the ratification of the so-called 'own resources' decision is still ongoing in eight member states and called on them to ratify it before 1 June.

The commission can only go to the markets the month after all member states ratify the legislation. The 14 that have put forward their programmes so far are: Belgium, Denmark, Germany, Greece, Spain, France, Italy, Latvia, Luxembourg, Austria, Poland, Portugal, Slovakia, and Slovenia.

All 27 governments can get 13-percent of their share of the money this year in pre-financing - before projects paid for by the scheme reach agreed milestones and targets.

Dombrovskis did not comment on plans specifically but said that there is "overall a good balance of reforms and investments", and that green and digital targets will be met.

The national plans need to include a minimum of 37 percent of expenditure on climate action, and at least 20 percent on digitalisation.

Economy commissioner Paolo Gentoloni told MEPs that it remains to be seen if member states can stick to their reform and investment plans.

"The real challenge is will it happen, what is written there," he said referring to the national plans.

Permanent?

The EU's €800bn recovery fund was agreed in principle by EU leaders almost a year ago.

Gentiloni defended the EU saying the crisis response was fast, arguing that the commission already lifted the bloc's budgetary requirements in March for member states so that they can respond fast to the pandemic's economic impact.

Gentiloni spoke of an "extraordinary fiscal response from member states", adding that as a result, 2020 showed the lowest level of bankruptcies for many years.

The two commissioners also did not rule out that the recovery fund could be a template for future financing tools.

"The more successful we are in the implementation of this facility the more scope there will be for discussions on having a permanent instrument, probably of a similar nature," Dombrovskis said.

"If this instrument works and we are able to agree on the new own resources to repay this common debt, I think we can have a serious discussion on further initiatives," Gentiloni said.

"But what is crucial for these further initiatives, is to make this one work and be repaid with new own resources," he added.

The EU is considering new levies on the digital economy, on CO2 emissions, or on imports of goods made using emission-heavy technologies to finance the debt.

The aim is to agree on these new taxes to repay the borrowing over a period of 30 years.

Orbán and von der Leyen to tussle on EU recovery funds

Viktor Orbán has one key card in his hands: Hungary has still not approved the legislation necessary for the EU Commission to raise money on the markets. However, it will be difficult to hold out on this.

Commission waiting on 10 states for recovery bonds

Budget commissioner Johannes Hahn said Germany, Estonia, Austria, Poland, Hungary, Finland, the Netherlands, Romania, Ireland, and Lithuania have not yet ratified the necessary domestic legislation.

EU suspends deficit rule to end of 2022 to help with crisis

"The overall message is that we should continue to support the economy, so fiscal policy should be supportive both this year and next, and we should avoid premature withdrawal of the fiscal support," EU Commission vice-president Valdis Dombrovskis said.

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