December 01
2020
Daniel Sarmiento
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12th October 2020
Banking & Finance Covid-19 Institutional law Internal Market Tax

Council position on the Recovery and Resilience Facility agreed

On Friday 9 October 2020, member states’ EU ambassadors formally agreed the Council’s position on the Recovery and Resilience Facility. The text of the draft Regulation is available here.

The facility will support public investments and reforms and contribute to economic, social and territorial cohesion within the EU. The proposal will have to be negotiated now between the European Parliament and the Council. The Parliament’s position is yet to be voted on.

The Recovery and Resilience Facility will offer member states €312.5 billion in grants (in 2018 prices), of which 70% would be committed in 2021 and 2022 and 30% by the end of 2023.

The allocation key for the years 2021-2022 would take into account for each member state its population, the inverse of its per capita GDP and its relative unemployment rate over the past 5 years. In the allocation key for the year 2023, the unemployment criterion is replaced, in equal proportion, by the percentage fall in real GDP in 2020 and the aggregated percentage change in real GDP over the period 2020-2021, based on a preliminary basis on the Commission Autumn 2020 forecasts and then to be updated by 30 June 2022 with the latest statistical figures.

In addition, €360 billion of loans will be made available to member states until the end of 2023 to provide additional financing for their reforms and investments. As a rule, the maximum volume of such loans would not exceed 6.8% of the GNI of each member state.

In order to receive support from the Recovery and Resilience Facility, member states must prepare national recovery and resilience plans setting out their reform and investment agendas until 2026, including targets, milestones and estimated costs.

According to the Council’s mandate, measures started from 1 February 2020 onwards would be eligible. The Council’s mandate provides that pre-financing for the facility would be paid to member states upon request in 2021.

The funds are released to member states upon satisfactory fulfilment of the relevant milestones and targets included in their recovery and resilience plans. The Council position also reflects the emergency brake mechanism agreed at European Council level, according to which if, exceptionally, one or more member states consider that there are serious deviations from the satisfactory fulfilment of the relevant milestones and targets.

Read the Council’s press release here.

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