COVID Recovery Funds: Italy and another 11 EU Member States have their spending plans approved by the Council.

Recently, on July 13, Italy was among the first countries to receive the green light for the use of the EU recovery and resilience funds. On that day, the ECOFIN Council adopted the first batch of implementing decisions on the approval of twelve National Recovery and Resilience Plans (NRRP). As the European Commissioner for Economy, Paolo Gentiloni, recalled, this formal decision signed the “real start of the recovery plan”, which will bring the disbursement of €672.5 billion in loans and grants to EU Member States.

As well as Italy, on July 13, also Austria, Belgium, Denmark, France, Germany, Greece, Latvia, Luxembourg, Portugal, Slovakia and Spain received the Council’s approval. As of that day, these countries are allowed to sign bilateral financing agreements with the Commission, and to start receiving funds to be allocated to the projects and the reforms foreseen in their individual national plans.

Moreover, for those MSs that have asked for a pre-financing payment, the first instalment of recovery plan money could arrive already in the upcoming weeks, and surely within two months from the Council’s approval. The threshold for this first payment is set at 13% of the total amount of the funds allocated to each recovery plan. This initial tranche payment was conceived to allow for the recovery and resilient facility financing to reach as soon as possible those countries’ sectors that suffered the most because of the pandemic. Further disbursements will depend on the positive evaluation, by the Commission, of the implementation of the individual plans. Specifically, the Commission will consider if the results set out in the different recovery and resilience plans have been achieved, and if targets and deadlines have been met.

As per the required NRRP procedure, before being adopted by the Council, the plans have been assessed and approved by the Commission, which has been working closely with MSs on shaping them around six policy areas. Namely, the plans had to contain measures aimed at fostering: green transition; digital transformation; economic cohesion, productivity and competitiveness; social and territorial cohesion; health, economic, social and institutional resilience; and the creation of policies for the next generation. These six areas have been set out in the regulation providing for the recovery and resilient facility (RRF Regulation) and the relevant investments per area represented a key criterion for the plans’ approval. Indeed, conditional to the plans’ acceptation was the minimum expenditure of 37% of the fund for green transition and 20% for digital transition.

Italy, together with other Southern European economies such as Spain and Greece, will be one of the major beneficiaries of the recovery funds. The Italian plan amounts to €191.5 billion, with €25 billion of pre-financing payment from Next Generation EU. Specifically, the funds involve €68.9 billion in grants and €122.6 billion in loans. The challenge for MSs will be to allocate the funding efficiently, as per the Commission’s guidelines. It will be crucial, for EU countries, to take advantage of this unique opportunity to recover economically and socially from the consequences of the pandemic, and to become more resilient getting ready to face future challenges.

A further Economic and Financial Affairs Council meeting was held yesterday, July 26. Ministers approved four other recovery plans. Namely, those of Croatia, Cyprus, Lithuania, and Slovenia.