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Financing EU's recovery

The Recovery and Resilience Facility (RRF) is the centrepiece of NextGeneration EU, the EU's recovery plan. It supports the way out of the Covid-19 crisis and aims at making Europe more resilient and better prepared for the challenges and opportunities of the green and digital transitions.

To achieve these objectives, the RRF makes grants and loans for more than EUR 700 billion available to the Member States. The funds will finance reforms and investments, which should be implemented by 2026.

The European Parliament played a key role as co-legislator in defining how the RRF functions. By exercising parliamentary oversight, Members also make sure that the money is spent wisely.

National recovery and resilience plans

To receive financing, Member States have to prepare plans that set out the reforms and investments to be funded with the RRF. Such plans, called "national recovery and resilience plans", have to be assessed by the European Commission and approved by the Council.

The plans must address policy areas of European relevance structured in six pillars, namely:

• green transition;
  
• digital transformation;
• smart, sustainable and inclusive growth;
  
• social and territorial cohesion;
• health, and economic, social and institutional resilience;
  
• policies for the next generation i.e. children and youth.

Each plan should effectively address challenges identified in the European Semester, which is the annual cycle of economic and social policy coordination in the EU. Plans should also advance the green and digital transitions (with spending targets of respectively 37% and 20%) and make the economy and society more resilient to handle future crisis. Moreover, measures in the national plans should not harm the environment.

Following the entry into force of the REPowerEU Regulation on 1 March 2023, Member States applying to receive additional funds through an amended recovery and resilience plan will be required to include specific REPowerEU chapters with measures to save energy, produce clean energy and diversify energy supplies, as foreseen in the EU's REPowerEU plan.

The national recovery and resilience plans set out the milestones and targets that Member States have to achieve to receive payments. This is because the RRF is a so called "performance based instrument", where payments are linked to concrete results on the ground. Member States can submit up to two payment requests per year, which need to be evaluated and approved by the European Commission.

To finance NextGenerationEU and the RRF, the European Commission borrows funds on behalf of the EU on the capital markets.

The role of the European Parliament

As co-legislator, the European Parliament defined how RRF funds can be spent. By exercising its control function, the European Parliament has a key role in overseeing the RRF implementation, from the evaluation of the national plans to the assessment of payment requests by Member States.

The European Parliament monitors the implementation of national plans and verifies that the RRF delivers results through regular dialogues with and written questions to the European Commission, commissioning external studies and producing internal research papers. Keeping the European Parliament informed is a mandatory provision and obligation of the European Commission.

The European Parliament can express its views on the RRF implementation via resolutions. The European Commission should take these views into account. In addition, the European Parliament also holds the European Commission politically accountable for the implementation of the RRF through the discharge procedure.