Government asks for more flexible RRP investment periods

Portugal’s government said on Friday it defended the “understandable” request made to the European Commission to relax the deadlines for Recovery and Resilience Plan (RRP) investments, pointing out that it is not necessary “an immediate decision”, with Brussels defending the current schedule.

“This is not an issue that will be under debate today [in the Eurogroup], it is an issue that will have to be debated throughout the Czech presidency. It is a question that Portugal raised, and I think it is an understandable question,” said Finance Minister Fernando Medina, speaking on arrival at the informal meeting of euro area finance ministers in the Czech city of Prague.

Days after the government requested, in a letter sent to the European Commission, that the deadlines for completing RRP investments be made more flexible until after 2026, Fernando Medina put this into context: “We have very high inflation, with prices rising and if we rush, as requested, to speed up the completion of investments, many more resources are required to carry out the same works, which means that, in the end, the programmes will have less reach from the point of view of the ability to carry out works and that prices have risen.”

“Therefore, this consideration of not contracting at very high prices, of not contributing, through the investment instruments, to this dynamic of prices and not harming ourselves in the resolution of citizens’ problems, I believe to be justified,” he said.

Even so, Medina stressed that this “is an issue that does not need an immediate decision, it is not to have an immediate decision, [because] the PRRs have an extended period of validity and execution.”

“I do not doubt that this issue will be debated, […] it is not a topic that needs an urgent decision,” he said.

Asked about this position, also on arrival at the Eurogroup, European Commission Executive Vice-President Valdis Dombrovskis said that “there is still some time until 2026, and it is important that [countries] focus on the concrete implementation of the RRPs, not least because this money is there to facilitate post-Covid-19 recovery, but also given the new challenges caused by the Ukraine war.”

“It is important that this money is used quickly,” urged Valdis Dombrovskis.

Meanwhile, European Economy Commissioner Paolo Gentiloni spoke of an “exciting position”, which he has discussed with Prime Minister António Costa in statements made on arrival at the Eurogroup.

In the middle of this month, the government sent Brussels a document that “summarises national priorities” for the European Commission in 2023 and proposed easing the deadlines for completing RRP investments to after 2026.

In a written response sent to Lusa, the European Commission defended a “rapid implementation” of national RRP after the Portuguese proposal to relax investment deadlines, noting that changing the timetables would mean changing regulations and getting unanimous approval.

At stake is the Recovery and Resilience Facility, valued at €672.5 billion (at 2018 prices) and the central element of the “NextGenerationEU”, the €750 billion fund approved by EU leaders in July 2020 for the EU’s economic recovery from the crisis caused by the Covid-19 pandemic.

The Portuguese RRP includes investments and reforms in 20 thematic components, with €13.9 billion in grants and €2.7 billion in loans.