EU recovery fund: Pre-financing disbursed to 7 Member States, rule-of-law mechanism delayed
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EU recovery fund: Pre-financing disbursed to 7 Member States, rule-of-law mechanism delayed

Commission president Ursula von der Leyen in Madrid presenting the assessment of the recovery plan to Spanish Prime Minister Pedro Sánchez, credit: EU 2021

The European Commission disbursed this week €289 million to Lithuania and €9 billion to Spain in pre-financing, equivalent to 13% of their financial allocation under the Recovery and Resilience Facility (RRF).

According to the Commission, the pre-financing payment will help to kick-start the implementation of the investment and reform measures outlined in their recovery and resilience plan.

The disbursements follow the recent implementation of the first borrowing operations under NextGenerationEU or the recovery fund. By the end of the year, the Commission intends to raise up to a total of €80 billion in long-term funding, to be complemented by short-term EU-Bills, to fund the first planned disbursements to Member States under NextGenerationEU.

By the two latest disbursements of pre-financing, a total of more than €41 billion has been paid out to 7 EU Member States: Italy, Greece, Belgium, Luxembourg, Portugal, and now Lithuania and Spain.

Asked at a press conference on Tuesday (17 August) about the status of the rule-of-law conditionality mechanism, a Commission spokesperson said that it is still in the middle of a consultation process with the European Parliament and the Member States to finalise guidelines on how to apply the mechanism. The consultation is running for 10 weeks and is expected to be finalised by early September.

The mechanism is part of the post-Coronavirus crisis recovery package and was introduced to allow for the suspension or reduction of EU funding to Member States with focus on financial irregularities. However, according to a Council decision, further legal clarification by the European Court of Justice (ECJ) was required.

The spokesperson declined to answer questions as to whether the Commission has already started to investigate suspected cases of irregularities that could trigger the mechanism.

According to a recent legal assessment, the mechanism can already be applied by issuing a notification letter. The regulation explicitly demands the Commission to take a proactive, risk-based approach to protect the EU budget. This does not require the Commission to wait until specific instances of fraud or abuse of EU funds under the new budget can be documented.

Update: On Thursday, the European Commission announced that it has disbursed €5.1 billion to France in pre-financing, equivalent to 13% of the country’s financial allocation under the Recovery and Resilience Facility (RRF).

M. Apelblat
The Brussels Times