Recovery and Resilience Facility: Questions and Answers
Schuman Associates will dedicate a series of articles to present this new EU funding tool and its impact in EU countries. We begin the series with key Questions and Answers on the Recovery and Resilience Facility.
1. What is the Recovery and Resilience Facility?
The Recovery and Resilience Facility (RRF) is the central pillar of the Recovery Plan for Europe and the key instrument at the heart of Next Generation EU. The Commission proposed Next Generation EU as an emergency temporary instrument to support the recovery in the aftermath of the COVID-19 pandemic.
The Recovery and Resilience Facility has a temporary character: funds will be available throughout 2021-2023 and can be spent by 2026. RRF will provide large-scale financial support to reforms and investments in order to mitigate the social and economic impacts of the crisis, support the green and digital transition and make the EU more resilient. The RRF will also reflect country-specific challenges that have been identified in the European Semester country-specific recommendations.
2. Is the RRF a substitute for the European Structural Funds?
The Recovery and Resilience Facility is not a substitute for the European Structural Funds going to the countries. It will provide new money to help the Member states address country-specific challenges and finance reforms and investment in order to eliminate the social and economic impact of the current crisis.
3. How much funding will be provided under the Recovery and Resilience Facility?
The Recovery and Resilience Facility will provide a total of €672.5 billion to support reforms and investments across the 27 EU Member States. Out of this, €312.5 billion will be grants (70% to be committed in 2021 and 2022 and 30% by the end of 2023); the remaining €360 billion can be accessed as loans by the Member States, on a voluntary basis.
4. How will grants be allocated by Member State?
Each country will have a maximum grants envelope, determined based on a pre-defined allocation key, which takes into account population, GDP per capita and unemployment. This means that countries most affected by the pandemic and those with low per capita income and high unemployment will receive a larger envelope of funding.In addition to grants, Member states can request a loan to implement their reforms and investments. The maximum size of the loan for each Member state cannot exceed 6.8% of its Gross National Income.
5. What are the National Recovery and Resilience Plans?
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 for the years 2021-2023, including targets, milestones, estimated costs and an indicative timetable for the implementation of the reforms and investments.Member States are expected to submit their plans by 30 April 2021. However, the Commission encourages Member states to submit their preliminary draft plans as early as October 2020.
6. How will the Recovery and Resilience Facility support the green transition and digital?
Each National Recovery and Resilience plan will have to dedicate a minimum of 37% of expenditure to climate action and environmental sustainability. At least 20% of the Plan's resources must contribute to the digital transition.
7. What are the flagship initiatives and how is the RRF connected to them?
The European Commission has identified 7 flagship areas that are common to all Member States and require significant investments, while at the same time have a significant potential to create jobs and growth and reap the benefits from the green and digital transition.
The Commission encourages Member states to include in their National Recovery and Resilience plans investments and public reforms in these areas:
|Power Up||Frontloading of future-proof clean technologies and acceleration of the development and use of renewables|
|Renovate||Improvement of energy efficiency of public and private buildings|
|Recharge and Refuel||Promotion of future-proof clean technologies to accelerate the use of sustainable, accessible, and smart transport, charging and refuelling stations and extension of public transport|
|Connect||Fast rollout of rapid broadband services to all regions and households, including fibre and 5G networks|
|Modernise||Digitalization of public administration and services, including judicial and healthcare|
|Scale-Up||Increase in European industrial data cloud capacities and the development of the most powerful, cutting edge, and sustainable processors|
|Reskill and Upskill||Adaptation of education systems to support digital skills and educational and vocational training for all ages|