MNI: EU Commission To Decide On Rolling Over Some NGEU Debt
MNI (BRUSSELS ) - The European Commission would be able to roll over some of the debt used to provide more than EUR338 billion in grants under its NextGenerationEU pandemic recovery programme from 2028 but no decision to do so has yet been taken and the EU remains committed to repaying all its NGEU borrowings by 2058, EU officials told MNI.
"Repayment of principal amounts borrowed for non-repayable support will start as of 2028 onwards and will take place over a long time horizon - until 2058. The exact profile of the repayment will be determined at a later stage," an official said.
The clarification follows an aside made by Bundesbank President Joachim Nagel on Monday suggesting that issuance under the programme could continue beyond 2028 when repayments of the debt are expected to start. (See MNI POLICY: Repaying NGEU Stays Top Priority Despite Draghi)
At a Deutsche Boerse-Eurex event to mark the EU Commission joining the European repo market, Nagel said that NGEU issuance "maybe" might continue "a little beyond 2028.
The Commission noted that rollovers of debt associated with the grant element of NGEU could be an option under the Own Resources Decision (ORD) taken by EU leaders when it agreed the post-pandemic recovery instrument in 2021.
In the context of the Commission's proposal for the EU's next long-term 2028-2034 budget due in mid-2025, debt rollovers could be a politically easier alternative to raising national contributions to the EU budget.
POLITICALLY EASIER
The Commission will make a proposal for the next Multiannual Financial Framework next summer, which will be followed by a long round of talks between the Commission, the European Parliament and EU states.
In his report on EU competitiveness former ECB President Mario Draghi estimated that EUR800 billion a year in additional investment would be needed to address the bloc's competitive gap with major global competitors, with up to EUR400 billion needing to come from the public sector.
Economy Commissioner Paolo Gentiloni played down Nagel’s comments on Monday.
"Of course there is a technical possibility but there is no political decision at the moment," he told reporters
But while in public the Commission insists that repaying NGEU remains its top priority, a source close to the discussions suggested that the comments might eventually open the door to something more significant, given the calls in the Draghi Report for joint EU funding for “European public goods.”
"Among all the possible but difficult options, it's the least difficult,” the source said.
The issue is likely to come more into focus in early November when the European Parliament starts hearings of key nominees to the Commission, such as Valdis Dombrovskis and Piotr Serafin, who have been proposed for the Economy and Budget roles.