Each country will have a maximum grants envelope, determined based on a pre-defined allocation key, which takes into account population, GDP per capita and unemployment. This means that countries most affected by the pandemic and those with low per capita income and high unemployment will receive a larger envelope of funding.
In addition to grants, Member states can request a loan to implement their reforms and investments. The maximum size of the loan for each Member state cannot exceed 6.8% of its Gross National Income.
The Recovery and Resilience Facility will provide Member States with €312.5 billion in grants. The remaining €360 billion will be available in loans, on a voluntary basis. Member States are expected to submit their plans by 30 April 2021. However, the Commission encourages Member states to submit their preliminary draft plans as early as October 2020.
Total €672.5 billion of loans and grants
The Recovery and Resilience Facility will provide an unprecedented €672.5 billion of loans and grants. This is the front-loaded financial support for the crucial first years of the recovery. It is a temporary instrument (2021-2023 commitments) that will provide large-scale financial support to reforms and investments. Member States will mitigate the social and economic impacts of the crisis. They will also have the opportunity to advance the green and digital transition and make the EU more resilient.
In order to receive support, Member states must prepare National Recovery and Resilience Plans. They will all set out their reform and investment agendas for the years 2021-2023. They including targets, milestones, estimated costs and an indicative timetable for the implementation of the reforms and investments.
How will grants be allocated by Member State?
An allocation key will fix a maximum possible amount for the grant component of the Recovery and Resilience Facility per Member State.
For 70% of the total of €312.5 billion available in grants, the allocation key will take into account the Member State’s population, the inverse of its GDP per capita, and its average unemployment rate over the past 5 years (2015-2019), always compared to the EU average. For the remaining 30%, the formula will replace the 2015-2019 unemployment rate indicator by the observed loss in real GDP over 2020 and the observed cumulative loss in real GDP over the period 2020-2021.
Member States may also request a loan under the Facility. The maximum volume of loans for each Member State will not exceed 6.8% of its Gross National Income. However, an increase will be possible in exceptional circumstances subject to available resources.
Key countries
Each country will have a maximum grants envelope, determined based on a pre-defined allocation key. This algorithm takes into account population, GDP per capita and unemployment. This means that countries most affected by the pandemic and those with low per capita income and high unemployment will receive a larger envelope of funding.
Italy, Spain, France, Poland and Germany will most benefit from the new instrument.
Green and Digital priorities
The EU has expressed a strong intention to make Europe’s economic recovery consistent with the achievement of the bloc’s longer-term climate and digital objectives. The Recovery and Resilience Facility brings a unique opportunity to mitigate the social and economic impacts of the crisis and to speed up the recovery in Europe.
The National Recovery and Resilience Plans will reflect the twin green and digital dimensions:
- 37% of expenditure should be allocated to green investments and reforms
- 20% of expenditure will be dedicated to digital investments and reforms
Grants and loans: What the Recovery EU money will be invested in
Considering the grants envelopes alone, at least €115 bn will be invested in green priorities and €62.5 bn will support the digital transition across the EU in the next three years.
What are the Recovery and Resilience Plans?
Member States can prepare recovery and resilience plans. Countries prepare a coherent package of reforms and public investment projects for implementation up to 2026. All recovery plans will get support from the Recovery and Resilience Facility.
The plans should demonstrate how the investments and reforms would effectively address challenges identified in the context of the European Semester, particularly the country-specific recommendations adopted by the Council. The plans should also include measures aimed at addressing the challenges faced by the Member States regarding their green and digital transitions.
When should Member States present their Recovery and Resilience Plans?
Member States can formally submit their recovery and resilience plans for assessment from the moment the Facility is legally in force. The Commission is expecting that the legislation will enter into force on 1 January 2021. The deadline for the submission of the plans is 30 April 2021. However, the Commission encourages Member States to submit their preliminary draft plans from 15 October 2020. Member States may finalise their plans following the initial presentation of the drafts to the Commission.
Deadline: 30 April 2021
The Commission is already available at all levels to engage with Member States on the preparation of their plans.
