First tranche of EU recovery funds amounts to €50 billion. €2.2 billion goes to Portugal
The first tranche of the EU "bazooka", the name given to the European recovery fund, is almost here.
One year after the preliminary agreement to create the EU “bazooka” as a response to the pandemic crisis, the “shot” will be fired this month, and will amount to €50 billion, of which €2.2 billion will go to Portugal. After ECOFIN’s approval of the 12 Recovery and Resilience Plans (RRP), all that remains is for the countries to sign the financing agreements with the European Commission and then receive the first tranche disbursement at once.
An official source from the European Commission told ECO that it has “already prepared the documents” necessary to complete the financing (grant) and loan agreements and will “immediately start the signature process” as soon as it receives the “official notification” of the decision taken this Tuesday by ECOFIN, which will enter into force in the coming days.
“The Commission is determined to rapidly complete the signature of these agreements to facilitate the rapid disbursement of pre-financing payments once member states have completed all necessary steps on their side, in line with their national procedures,” says an official source in the Ursula Von der Leyen-led executive, revealing that these payments from the 12 approved RRPs amount to €50 billion.
The country that will receive the largest sum (and has the largest RRP) is Italy, with a first tranche of €24.9 billion, followed by Spain (9 billion), France (5.1 billion), Greece (3.9 billion), Germany (2.3 billion) and Portugal (2.2 billion). In the remaining countries, the figure is below 1 billion.
These figures correspond to 13% of the total amount, which is mainly the result of the formula agreed between European leaders for distributing the sums but is also influenced by the loans requested by the countries.
The order in which countries will receive this first tranche, “will depend on the order in which they complete their financing and loan agreements”, notes the European Commission, placing the onus on member states since it is “entirely in their hands” how quickly they complete national procedures.
In total, the European “bazooka” will mean that the European Commission – on behalf of the European Union – will have to borrow around €800 billion (around four times Portugal’s GDP) at current prices between 2021 and the end of 2026, which will have to be repaid (or refinanced) by the EU over the coming decades. €421.1 billion will be made available as grants (through the RRP and other European instruments) and 385.5 billion for loans. On average, the Commission will have to go to the markets for €50 billion per year.
