The Recovery and Resilience Facility: one year on

The Recovery and Resilience Facility: one year on

Published on: 30/03/2022
News
 

Abstract

One year on from the creation of the Recovery and Resilience Facility, this article takes a step back to re-examine the major milestones of this substantial undertaking, from the initial implementation of the Facility, the submission of the Plans by the Member States and the pre-financing phase, to the operational arrangements between Member States and the Commission, and the first wave of payments. After tracing this path, the article concludes with an introduction to the Recovery and Resilience Scoreboard, a new tool to monitor the Facility, and a description of how the Scoreboard complements the report ‘Digital path to recovery and resilience in the EU’ written under NIFO.

 

The implementation of the Recovery and Resilience Facility

In March 2020, the onset of the COVID-19 pandemic and subsequent public health crisis shook the world and led to drastic economic, political, and social disruption. To help Member States weather the storm, the European Commission introduced a temporary recovery instrument, the NextGenerationEU, to support the Recovery and Resilience Facility (RRF), a cornerstone initiative which entered into force on 19 February 2021. The RRF was created  to help Member States fund the implementation of reforms and investments outlined in their Recovery and Resilience Plans until 2026. In addition to describing how the economic and social effects of the crisis on their economy would be mitigated, the national Plans also had to detail concrete climate and digital goals to support the EU on its path towards the twin transition [1]. Each Plan was also required to effectively address challenges identified in the European Semester, particularly the country-specific recommendations of 2019 and 2020. By no means was this an easy feat for the Member States!

Submissions, approvals, and pre-financing payments

Following the introduction of the RRF, Member States were invited to notify the Commission regarding the completion of their Plans by the end of April 2021, although they are still allowed to submit it until mid-2022. Despite this lengthy timeline, 24 countries had already submitted their Plans to the Commission at the end of June 2021 [2], paving the way for the second stage of their “RRF journey” to begin: the assessment of their Plan by the Commission and the Council.

RRF

                                                                      Source: Recovery and Resilience Facility, European Commission

The Commission’s assessments are based on the evaluation of 11 criteria built on the six pillars of the Regulation (EU) 2021/241 establishing the RRF [3]. These include, among others, the need for the proposed initiatives to have a lasting impact, the description of monitorable milestones and targets, and minimal percentages of expenditure targets for both digital (20%) and green (37%) investments and reforms. In addition to assessing the national Plans, the Commission was also tasked with translating the content of each Plan into legally binding acts, and drafting operational and financial documents detailing the technical agreements between the Commission and the Member States.     

Once the assessment was finalised by the Commission, the Council had four weeks to review the proposal and share an Implementing Decision [4]. As soon as the proposal was accepted by the Council, Member States could request a 13% pre-financing payment from the Commission, to be received in the next two months, allowing them to kick-start their recovery. By late July 2021, 15 Plans had been approved by the Council, with Portugal being the first Member State to receive RRF funds. Eight months later, all Member States whose Plan was accepted had received their pre-financing payment (unless they had not requested it), representing a total amount of EUR 73.956 billion of the RRF.     

Operational arrangements and first wave of payments

While the initial 13% payment was only dependent on the Commission and Council’s approval, the next payments will be subject to stricter conditions. Indeed, for additional funds to be released, Member States will need to fulfill all the relevant milestones, targets and indicators laid down in the Council Implementing Decision, and their Operational Arrangement established in direct collaboration with the Commission. A country’s progress will be assessed by the Commission using these two documents. If a positive assessment is made, funds will be unlocked, allowing Member States to submit a payment request twice per year between now and the end of 2026. As of early March 2022, eight Member States had signed Operational Arrangements with the Commission and five of them had requested their first payment [5].

Do you want to learn more and be up to date on the latest news related to the RRF?

To allow citizens to keep up with this complex process, a new Recovery and Resilience Scoreboard has been developed and published in December 2021 by the Commission. It provides a transparent overview of progress made in the implementation of the RRF and the Recovery and Resilience Plans. The Scoreboard provides both qualitative and quantitative data on financing, the implementation of the Plans, as well as national and global thematic analyses linked to specific policy areas.

To complement the Recovery and Resilience Scoreboard, a new report titled ‘Digital path to recovery and resilience in the European Union’ was recently published by the European Commission through the Interoperable Europe initiave, whose main objective was to anlyse and assess the importance of digital within each National Recovery and Resilience Plan. To do so, a screening of these Plans was performed, in order to identify and provide an overview of the main investments, and when available, of the overarching reforms, that the Member States are set to undertake with regard to digital transformation. While analysing the specificities of each Member State’s Plan, the goal of the report was also to identify and highlight the main upcoming trends in the digital sphere.

The data analysis showcased that many Member States are heavily investing in connectivity with the development and deployment of high-speed networks and 5G , as well as in the digitalisation of their public administrations through the modernisation of internal administrative processes and procedures, the promotion of interoperability and the Once-Only principle, among others. Investments in human capital also appear as a clear investment priority for many Member States, which are investing in the upskilling and reskilling of their citizens, as well as the moderisation of the education system through the digitalisation of its infrastructures and tools. The digitalisation of businesses also appears as an evident priority for Member States who are particularly focused on fostering the digitalisation of their SMEs, through the promotion of advanced digital technologies, as well as the improvement of their production processes through digitalisation and new digital services and products.

   

 

Cover Report

 

 

 

New report

Digital path to recovery and resilience in the European Union

What you will be able to find in the report:

  • Context and creation of the RRF
  • Screening of the national Recovery and Resilience Plans
  • Overview of the main digital investments, and when available, of the overarching reforms
  • Main upcoming trends in the digital sphere

 

                                                          -> MORE INFO

 

[1] The twin transition refers to the green and digital transition, directed towards climate neutrality and digital leadership in the EU.

[2] At the end of June 2021, only the Netherlands, Malta and Bulgaria had not submitted their Plan. Malta submitted its Plan on 13 July 2021 and Bulgaria on 15 October 2021. As of March 2022, the Netherlands has not yet submitted its Plan to the Commission.

[3] The Regulation was published on 12 February 2021.

[4] The Council Implementing Decision is a document gathering the Council approval of the Commission assessment, as well as details on the financial contribution of the Commission to the national Plan and on the loan support.

[5] Spain, France, Portugal, Greece and Italy. On 27 December 2021, Spain was the first EU country to receive their first payment of EUR 10 billion, followed by France, who received its first EUR 7.4 billion payment on 4 March 2022.