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EU plans €672.5bn of grants and loans in Recovery and Resilience Facility

EUdebates Team by EUdebates Team
13/02/2021
in Economy
Reading Time: 5 mins read
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Recovery and Resilience Facility RRF
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The Recovery and Resilience Facility (RRF) is the biggest building block of €672.5 billion in grants and loans of the Next Generation EU recovery package. It comprises €672.5 billion in grants and loans and it will support key policy areas such as the green and digital transitions.

The formal signature of the Recovery and Resilience Facility (RRF)

EP President David Sassoli, European Commission President Ursula von der Leyen and Prime Minister Costa hold a press conference on measures to support the European social and economic recovery. The European Parliament adopted the plan on Wednesday, 9 February.

Ursula von der Leyen welcomes approval of Recovery and Resilience Facility RRF

The four dimensions of competitive sustainability, namely the environmental sustainability, productivity, fairness and macroeconomic stability identified in last year’s ASGS should remain the guiding principles for the implementation of the Facility.

The regulation on the objectives, financing and rules for accessing the Recovery and Resilience Facility (RRF) was adopted with 582 votes in favour, 40 against and 69 abstentions. The RRF is the biggest building block of the €750 billion Next Generation EU recovery package.

Curbing the effects of pandemic

€672.5 billion in grants and loans will be available to finance national measures designed to alleviate the economic and social consequences of the pandemic. Related projects that began on or after 1 February 2020 can be financed by the RRF, too. The funding will be available for three years and EU governments can request up to 13% pre-financing for their recovery and resilience plans.

How much funding will be provided under the Recovery and Resilience Facility?

The Recovery and Resilience Facility will provide a total of €672.5 billion to support investment and reforms. Grants worth a total of €312.5 billion will be provided to Member States under the Facility and the remaining €360 billion will be provided in loans.

Funding under the Facility will be made available in accordance with the estimated costs of the proposed reforms and investments contained in recovery and resilience plans to be submitted by the Member States. The estimated cost should be in line with the expected impact of the reforms and investments.

Eligibility to receive funding

To be eligible for financing, national recovery and resilience plans must focus on key EU policy areas – the green transition including biodiversity, digital transformation, economic cohesion and competitiveness, and social and territorial cohesion. Those that focus on how institutions react to crisis and supporting them to prepare for it, as well as policies for children and youth, including education and skills, are also eligible for financing.

Each plan has to dedicate at least 37% of its budget to climate and at least 20% to digital actions. They should have a lasting impact in both social and economic terms, include comprehensive reforms and a robust investment package, and must not significantly harm environmental objectives.

The regulation also stipulates that only member states committed to respecting the rule of law and the European Union’s fundamental values can receive money from the RRF.

Dialogue and transparency

To discuss the state of the EU recovery and how the targets and milestones have been implemented by member states, the European Commission, which is responsible for monitoring the implementation of the RRF, may be asked to appear before Parliament’s relevant committees every two months. The Commission will also make an integrated information and monitoring system available to the member states to provide comparable information on how funds are being used.

What are the flagship investment and reform projects the Commission is encouraging Member States to propose?

The Recovery and Resilience Facility is an opportunity to create European flagships with tangible benefits for the economy and citizens across the EU. These flagships should address issues that are common to all Member States, need significant investments, create jobs and growth and are needed for the twin transition.

The Commission therefore strongly encourages Member States to include in their recovery and resilience plans investment and reforms in the following areas:

  • Power up – The frontloading of future-proof clean technologies and acceleration of the development and use of renewables.
  • Renovate – The improvement of energy efficiency of public and private buildings.
  • Recharge and Refuel – The promotion of future-proof clean technologies to accelerate the use of sustainable, accessible and smart transport, charging and refuelling stations and extension of public transport.
  • Connect – The fast rollout of rapid broadband services to all regions and households, including fiber and 5G networks.
  • Modernise – The digitalisation of public administration and services, including judicial and healthcare systems.
  • Scale-up – The increase in European industrial data cloud capacities and the development of the most powerful, cutting edge, and sustainable processors..
  • Reskill and upskill – The adaption of education systems to support digital skills and educational and vocational training for all ages.

Recovery and Resilience Facility: EU guidelines on Recovery plans

Democratic scrutiny and oversight over the sound use of funds is essential. The use of the funds will be subject to annual reporting from the Commission to the European Parliament and the Council as foreseen by the regulation.

The Commission presented additional guidance and a template to help Member States prepare and present their recovery and resilience plans in a coherent way. The recovery and resilience plans need to reflect a substantive reform and investment effort; both aspects therefore must be coherent and adequately address the challenges in the individual Member State and the EU policy priorities mentioned earlier.

This guidance provides that an executive summary should outline the main narrative of the plan, enabling the European Parliament, the other Member States, the Commission and the public at large to have an overview of what the recovery and resilience plan will achieve. It also gives a detailed explanation of what the Member States will provide when submitting the plan and suggests a template for recovery.

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