Due to delays in the disbursement of European funds and in the implementation of projects, Member States may be unable to use these funds in time before the end of the Next Generation EU Recovery Plan in August 2026, according to the European Court of Auditors on Monday 2 September.
“We are flagging risks, as EU countries had drawn down less than a third of the planned funds at the halfway point and made less than 30% progress towards reaching their predefined milestones and targets” in their post-Covid-19 national recovery plans, Ivana Maletić, the member of the Court responsible for the audit, said in a statement.
The Court is of course positive about the possibility of pre-financing projects. But it is critical of the overall rate of disbursement of European aid. By the end of 2023, only €213 billion had been transferred to the national treasuries, including €56.5 billion in pre-financing, without this money necessarily having reached the final beneficiaries. This sum corresponds to 70% of the requests forecast at that date, for an amount of 16% lower than projected.
At the end of 2023, seven countries had not yet received any money in return for the satisfactory achievement of milestones and targets. According to the Court, Hungary and the Netherlands had not signed operational arrangements and were therefore unable to submit payment claims. Sweden had signed operational arrangements, but had not submitted a request for payment. Belgium, Finland, Ireland and Poland had submitted payment claims but had not received the corresponding funds, as their claims were still being assessed at the end of last year.
The most common reasons for these delays are external circumstances (inflation, supply shortages), underestimation of the time needed to implement the measures (public procurement, state aid procedures), uncertainties concerning certain specific rules for implementing the RRF (the ‘do no significant harm’ principle) and/or insufficient administrative capacity.
The European auditors also note that, by the end of 2023, less than 30% of the 6 000 progress indicators (milestones and targets) relating to the implementation of the national recovery plans had given rise to a payment request. This means that a considerable number of them - perhaps the most difficult - have to be achieved in the second half of the Next Generation EU’s lifespan, they warn.
In addition, most countries have focused on reform before investment. The auditors point out that the concentration of the latter at the end of the period risks increasing delays and further slowing down the absorption of funds.
However, the Court notes that measures have been taken to simplify the administrative burden of national recovery plans (see EUROPE 13422/15), “but it is too early to assess whether they are having a positive effect”.
And to note that the regulation establishing the Recovery and Resilience Facility (RRF) makes no provision for financial recovery if measures that have been disbursed are abandoned. There needs to be “more focus on the finalisation of measures (...) For me, it is better to prolong the deadline instead of non-finalising the projects. The most important thing is the value for money”, said Ms Maletić.
With regard to final beneficiaries, she noted that Member States have different interpretations of the final beneficiaries of aid. For example, when it comes to grants awarded to SMEs, some countries mention the EIB and intermediary national banks as final beneficiaries in addition to companies.
To view the European Court of Auditors’ report: https://aeur.eu/f/daj (Original version in French by Mathieu Bion)