EU | Criticism of the EU’s recovery package from auditors

Brussels

European the auditor overseeing the use of the EU budget warns of significant problems in the implementation and supervision of the EU’s 700 billion euro recovery fund.

According to the auditor, the danger is that the member countries will not carry out all the reforms set as a condition for funding and that not all investments planned with the fund’s support will be realized.

The recovery fund of 724 billion euros, financed by the common debt of the EU countries, was established in the middle of the coronavirus pandemic in February 2021. It is intended to finance the member countries’ reforms and investments until the end of 2026.

However, the member states have progressed so slowly in the implementation of their recovery programs that a significant part of the fund’s assets risks not being used, warns the EU Court of Auditors in its recent report.

Recovery Fund reached the middle of its life cycle at the end of 2023, but by then the member countries had made use of less than a third of the fund’s grants and loans, 213 billion euros. Seven member countries, including Finland, have not received any funds from the recovery fund. Finland submitted its first payment request to the Commission in November.

According to the report, the most significant reason for the delays is inflation and supply chain problems, which have forced member countries to change their plans along the way. In addition, the original timetable estimates of the member countries have proven to be overoptimistic in many places.

If the implementation of the recovery plans and the use of funds do not accelerate substantially, some of the funds may remain unused when the payments end at the end of 2026.

“It can be expected that the impact of delays will accumulate over time and they will therefore pose a risk to the timely use of funds and the completion of measures as planned,” the report states.

The alternative is to extend the fund’s life cycle, as some member countries have already proposed.

With auditors nor is there a complete picture of how much of the recovery fund’s funds have ended up in the real economy, for example in household energy renovations or company investments.

About half of the 213 billion euros paid to the member countries has been paid forward to the so-called final beneficiaries, but the auditors noticed that the member countries define the final beneficiary in different ways. For some, it means, for example, the local government that distributes the money.

“Due to the definition of the final beneficiary, we do not know who will really benefit from the recovery fund”, says the member of the Court of Auditors responsible for the report Ivana Maletić.

The auditors also warn that member states may receive funding for reforms and investments that never materialize, but the Commission has no means of recovering the money.

In some in some cases, the member countries have received funding for investments after the end of the planning phase, but the implementation of the investment is still uncertain. For example, Italy has received funding for large hydrogen projects and Romania for the construction of flood defenses. Their realization is still uncertain.

“The commission has no tools to ask for the money back unless the regulation is changed,” says Maletić.

Maletić says that the Commission should ensure that the recovery package is implemented to its full extent. Only in this way will it be ensured that the reforms set as a condition for funding will be realized, which was the goal of the fund.

“This is about achieving the set goals. It is in danger.”