The road map and obstacles
The European Commission may have followed suit, choosing a combination of subsidies and grants in the € 750 billion recovery package, but Brussels warns European countries not to wait for a “white check” and that support will be accompanied by conditions for reform.
A day after the Commission presented the brave “package” of 1.85 trillion. euros to help the EU economies to cope with the recession caused by the Covid-19 pandemic, Commission Vice President Valdis Dobrovskis and Finance Commissioner Paolo Gentiloni set the terms under which the 17 member states will be able to use the available funds. .
At the heart of the plan is the 560 billion-euro Rehabilitation and Resilience Fund, designed to finance investments and reforms that will help European finances recover. But to access this money, EU governments will have to submit national plans for the reform and investment agenda by 2024.
Once approved, the Commission will disburse grants and loans in instalments even after the completion of specific objectives proposed by the countries themselves.
For some European capitals, linking financial aid to prerequisites brings back memories of the era of memoranda. Commissioner Gentiloni stressed that the process does not involve the strict conditions that accompanied the rescue packages during the European debt crisis, with the imposition of strict austerity measures, such as the memoranda signed by Greece.
“I want to make it clear that this is not a condition of aid and intervention from Brussels,” he said. “It is more up to the member states to take the path of developing and strengthening the social fabric themselves, in proportion to our priorities, primarily the digital transition and ‘green’ development,” he said.
The Commission’s recovery plan needs the approval of all EU member states. The fact that subsidies and loans are accompanied by certain conditions may be the key parameter for countries such as Austria, the Netherlands, Sundia and Denmark, to give their consent.
What does the TAA mean for the Greek economy
Our country will gain an additional NSRF, as the Vice President of the European Commission, Margaritis Schinas, stated yesterday, from the Commission’s proposal for the Rehabilitation Fund, amounting to 750 billion euros.
Of course, the recovery package still has a long way to go before it is fully implemented and according to estimates by Finance Minister Christos Staikouras, this will happen in early 2021, although he wished it to be accelerated and the money available in the last months of the year. .
According to the Commission’s proposal, Greece will receive 22.5 billion euros in grants and 9.4 billion euros in loans. Christos Staikouras described the Commission’s proposal as “ambitious”, arguing that it was a “brave” plan which mainly concerned subsidies and resulted “from a common European loan”.
According to the minister, the money will be used on the one hand to deal with the financial consequences of the health crisis (strengthening the health system and supporting businesses and disposing of workers’ income) and on the other hand to European priorities, such as climate change, new technologies and more. a. However, he hastened to clarify that approval from the European institutions will be needed, while according to other sources, both this amount and the terms that will accompany it will go through forty waves until we reach the final stage.
The text published by the Commission contains several blurred spots and gray areas as it is not clear:
If the total share of 32 billion euros allocated to Greece (22.5 billion euros in grants and 9.5 billion euros in loans) includes the funds of the NSRF in the period 2021-2027 estimated at 19 billion euros. Based on the “key” to the distribution of 750 billion euros per state mentioned in the Commission’s articles, Greece could receive an additional 43.5 billion euros gross or 33.4 billion euros net if the national subscription is deducted. (10.1 billion euros).
Although the money from the 750 billion euro package will start to be disbursed from 2021, the Commission is proposing to strengthen this year’s budget by 55 billion euros in combination with the redistribution of budget credits (11.5 billion euros) in all states. without giving more details about the benefit that each country will have and therefore Greece.
There is a reference to disbursement of money in installments if certain milestones of reforms are fulfilled and for the European Semester, which refers to the application of the rules of the Stability Pact. That is, control of national budgets by the Commission on the basis of fiscal consolidation, the fulfillment of specific commitments and the use of funds.
The sectors and expenditures to be financed by the Fund are not specified. Just three support pillars.
The repayment period of the package from the countries is not clarified, except that it will start in 2028. One of the scenarios predicts that it will “spread” in 30 years.
Where will the money go?
The planning of the financial staff stipulates that the Fund’s resources will be prioritized in key sectors affected by the pandemic, such as tourism, catering, transportation and retail and small and medium-sized enterprises.