Eighteen EU Member States have already submitted a draft European recovery plan to the European Commission at this stage, six others have sent elements of it, and three have not yet contacted the institution.
The Commission disagrees with criticism that the procedure has been slow, despite the fact that the Interinstitutional Agreement on the Regulation establishing the Recovery and Resilience Facility, the budgetary instrument at the heart of the Next Generation EU Recovery Plan, is currently being voted on in the European Parliament (see EUROPE 12626/1).
The aim of the European Recovery Plan is to ensure that Member States emerge stronger from the economic crisis caused by the Covid-19 pandemic, in particular by tackling “the major challenges identified in the country-by-country socioeconomic policy recommendations”, said a European official on Monday 8 February.
The Commission is thus of the opinion that the national plans should, in general, seek a better balance between investing in the environmental and digital transitions and implementing structural reforms (see EUROPE 12639/2).
In order to obtain a tranche of financial aid, each State will have to respect pre-established milestones linked to measures to be undertaken until 2026, even though the European Recovery Plan will run for 3 years. Not all the reforms will be able to be implemented in the final phase of a national plan, a second source warned.
Reforms put forward by some countries include: a comprehensive review of public expenditures, the fight against labour market segmentation, tax reforms, the fight against money laundering, the consolidation of social protection, and the modernisation of public administration.
Strengthening the ‘Climate’ dimension
The Facility requires that 37% and 20% of the national budget allocation be devoted to the environmental and digital transitions, respectively.
On the basis of the projects that have been consulted, the Commission notes that the national plans are correctly in line with these two thresholds. Nevertheless, “additional efforts” are needed in terms of compliance of plans with climate objectives, so that the plans give greater priority “to investments that reflect the climate objective”, said a second European official.
Among the plans addressed to the Commission, a handful reportedly do not provide enough “green investments”, such as “cleaner” investments in energy efficiency and include too many investments in “traditional infrastructure” such as “roads”.
In addition, the institution believes that improvements are also needed in the methodology used to ensure that the plans respect the ‘do no harm principle’ of the EU’s climate neutrality target for 2050. According to this second European official, none of the planned investments in the national plans should compromise this objective, while emphasising the role that the future European taxonomy will play in this respect.
Asked about the place of fossil fuels in national plans, the Commission said that all investments in coal are prohibited. For gas investments, on the other hand, Member States have more flexibility. According to the second European official, these investments will have to comply with certain conditions, such as the possibility for planned infrastructure to operate with cleaner gas and/or accompanying measures for the production of renewable energy.
In the digital field, Member States are focusing on skills acquisition, the digitalisation of public administration, and connectivity, including on a cross-border basis.
In addition, plans should be improved in terms of auditing and control of expenditures to avoid double funding, says the Commission.
The Facility will be endowed with €312.5 billion in the form of grants (including €63.4 billion for Italy and €31.6 billion for Spain) and €360 billion in the form of loans (2018 prices).
The Commission will borrow these sums on the markets on behalf of the Member States. For this purpose, the ‘Own Resources’ Decision in the EU budget has been amended and will have to be ratified by the EU-27. At this stage, six countries have finalised their national ratification procedures.
States will have to signal their intention to use the loan component of the Facility at the outset. On this point, they are still in the reflection phase, noted the first source. Countries that can refinance themselves at a lower cost than the Commission should not use the ‘loan’ component of the facility, the source said.
States have until the end of April to submit their national plans. After this deadline, the Commission has a maximum of 2 months to assess a plan before the EU Council approves it within 1 month. The Portuguese Presidency of the EU Council has said it wants the EU Council to adopt the plans as a package, probably in May or June (see EUROPE 12648/12).
See the rules: http://bit.ly/2YUd12S (Original version in French by Mathieu Bion with Damien Genicot)