The European Commission announced on Tuesday 1 June that it would issue €80 billion of long-term EU bonds between June and December 2021 and several tens of billions of euros of short-term EU Bills from September onwards. These operations will enable it to start financing the Next Generation EU European Recovery Plan on behalf of the EU27.
This announcement takes the form of a decision on the maximum annual borrowing level, the ‘annual borrowing decision’. For 2021, this decision will be reviewed in September, when the ‘auction platform’ becomes operational.
“By issuing €80 billion in long-term securities and using additional short-term securities, we will be able to cover the most urgent budgetary needs of the Member States”, EU Budget Commissioner Johannes Hahn said in a statement.
Between 2022 and 2026, the Commission plans to issue around €150 billion. These operations will make the EU one of the largest issuers of euro-denominated securities. Some see it as an embryonic European Treasury, while others insist on the exceptional and temporary nature of the European Recovery Plan.
For the issuance of securities, the Commission will rely in particular on a primary dealer network of 39 banks which will be responsible for placing the securities issued with investors.
The launch in June of the financing operations of the European Recovery Plan is possible thanks to the finalisation, at the end of May, of the ratification process by the EU27 of the decision on own resources to the EU budget (see EUROPE 12729/20).
More information on the Next Generation EU’s funding strategy: https://bit.ly/34AMavJ
National recovery plans. On Monday, the European Commission announced that it had officially received Romania’s recovery plan, the 22nd country to have taken this step. The plan, which calls for €14.3 billion in grants and €15 billion in loans, aims to boost investment in the ecological and digital transitions, as well as in territorial and social cohesion.
National plans formally submitted by the end of April could be recommended for adoption by the end of June, with a view to formal adoption by the EU Council in July. The countries concerned could then receive the first tranches of aid also in July. (Original version in French by Mathieu Bion)