MNI SOURCES: EU Officials Fear Politics To Delay Covid Funds

The crisis within Italy's ruling coalition and the resignation of the Dutch government at the weekend are raising concerns among EU officials of delays in what they had hoped would be a tight timetable of ratifications of a key element of Europe's EUR672.5 billion Covid Recovery and Resilience Facility by the European and national parliaments.

Ratification before the summer of an agreed increase in the EU's own resources, which is key to the bloc's bond issuance for the RRF and disbursement of the 13% pre-financing element of the fund, is essential for timely issuance and disbursement in coming months, officials told MNI.

But some countries' plans for ratification of the increase have alarmed officials with their seeming lack of urgency.

"A few countries are talking about March or April, or even simply "Q2" which we think is of course too slow," one official said, adding, "I think we would hope to have the vast bulk of these concluded in Q1, certainly not drag too far into Q2. As soon as the decision is ratified by all 27, we can start raising the funds."

EU officials worry that a significant delay to the own resources approval process will put its RRF project, which has become something of a totem of EU integration - under a cloud and tarnish the reputation which EU policymakers have won for prompt policy action during the crisis

The RRF regulation comes into force in the coming weeks, following agreement between the European Commission and European Parliament in December, and member states can then begin the formal process of submitting their national recovery plans. Eleven states have already submitted draft NRPs, although it is clear from comments by Commission officials that the quality of these varies widely.

Spain and Italy are leading in terms of drafting NRPs, unsurprisingly maybe as they are among the biggest net beneficiaries of RRF funds.

SPAIN TOP OF THE CLASS

But Italy has received requests from the Commission for amendments, due to concerns that the current draft does not yet represent an optimal balance between needed structural reforms and investment plans, as well as clear commitments to robust milestones and targets for these, officials say. There are also concerns over accountability and transparency in the current process of drafting the plan.

In contrast, the decision of the Eurogroup to invite Spanish Finance Minister Nadia Calvino to present key elements of her draft NRP on Monday reflected the view that Spain's programme is one of the best so far, representing a good balance between needed growth-enhancing structural reforms and investment plans, conformity with standing EU economic policy advice and furtherance of the EU's green and digital agendas.

The Commission is also said to be closely vetting draft NRPs to ensure that they do not include items that should be paid for in national budgets.

Once recovery plans have been formally submitted, the Commission has two months to assess and approve them and the member states have a further month to give them a green light.