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Questions and Answers on the EU budget for recovery: Recovery and Resilience Facility

What is the Recovery and Resilience Facility?

The new Recovery and Resilience Facility will provide large-scale financial support to reforms and investments undertaken by Member States, with the aims of mitigating the economic and social impact of the coronavirus pandemic and of making the EU economies more sustainable, resilient and better prepared for the challenges posed by the green and digital transitions.

It will help Member States to address the challenges identified in the European Semester, in areas such ascompetitiveness, productivity, environmental sustainability, education and skills, health, employment, and economic, social and territorial cohesion. It will also ensure adequate focus of these investments and reforms based on the green and digital transitions, to help create jobs and sustainable growth and make the Union more resilient.

How much money will it make available?

Most of the funding will be provided through grants, with possible top-ups via loans. The total amount of grants available will be €310 billion (in constant prices; 335 billion in current prices), while an additional €250 billion in loans (in constant prices; 268 billion in current prices).

Regarding grants, a maximum amount per Member State will be determined based on a pre-defined allocation key, which takes into account population, GDP per capita and unemployment. The key will be particularly beneficial to the countries most affected by the crisis, notably those with low per capita income and high unemployment.

In addition to grants, Member States may request a loan for implementing their reforms and public investments. Loans need to be justified by the higher financial needs linked to the recovery and resilience plans put forward by Member States. The maximum volume of loans for each Member State will not exceed 4.7% of its Gross National Income. However, an increase will be possible in exceptional circumstances subject to available resources.

What types of reforms and investment will the Facility finance?

To access the facility, Member States should prepare recovery and resilience plans setting out their reform and investment agendas for the subsequent four years, until 2024. These plans should comprise both reforms and public investment projects through a coherent package.

The plans should set out reforms and investments for addressing the challenges identified in the context of the European Semester, in particular those related to the green and digital transitions. They should, among others, explain how they contribute to strengthening the growth potential, resilience and cohesion of the Member State concerned. The grants and loans will be disbursed in instalments upon completion of milestones and targets as defined by Member States in their recovery and resilience plans.

How will this Facility be integrated into the European Semester and in line with the Energy Union?

The plans are presented by Member States and should be consistent with the challenges and priorities identified in the European Semester, with the national reform programmes, the national energy and climate plans, the just transition plans, and the partnership agreements and operational programmes adopted under the Union funds. Furthermore, the plans will constitute an annex to the respective National Reform Programme. Member States will report on their progress in implementing the plans in the context of the European Semester.

What is the value added of a loan in addition to a grant?

Loans will complement the grants and will provide additional financing for Member States that have higher financing needs due to more significant reforms and investments to be undertaken. The loan will finance additional reforms and investments beyond those that already benefit from the grant. The loans will benefit from the long maturities and favourable interest rates that the Union enjoys. They will therefore be of particular interest and benefit to Member States that face higher borrowing costs.

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Original article link: https://ec.europa.eu/commission/presscorner/detail/en/QANDA_20_949

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