EU's Covid-19 recovery fund gets final approval

The European Union's 672.5-billion-euro (815-billion-dollar) economic recovery fund received its final approval on Friday as the heads of the European Parliament and the EU Council inked the document.

A large chunk of this money - 312.5 billion euros - is to be distributed in grants for investments and reforms in the 27 countries of the bloc. To access the funds, governments have to submit their spending plans by 30 April. The remainder can be handed out as loans.

After the parliament gave the green light for the instrument earlier this week, the EU governments approved it on Thursday evening.

Flying in for the occasion, Portuguese Prime Minister Antonio Costa, whose country holds the rotating EU Council presidency, signed the document on behalf of the countries in Brussels - as did European Parliament President David Sassoli, in the presence of European Commission President Ursula von der Leyen.

This final step enables the Recovery and Resilience Facility to enter into force.

It will likely take several months, however, until the money starts flowing. The commission will review each spending plan, after which the EU countries still need to approve each plan.

Reform

In a press conference following the signatures, von der Leyen said 19 member states had submitted detailed plans so far, whereas seven were in discussions with the commission "at the level of principle."

The reform plans covered a wide net of issues, she said, ranging from sustainability of public finances to taxation, social safety, and public procurement rules.

"It's humongous work to do," von der Leyen said.

Countries will also have to spend at least 37% of their allocated funds to support environmental purposes, and 20 per cent for digitalization - something that a significant number of plans were still lacking, according to an EU official.

Environmental objectives

As a precondition for receiving money, all spending has to abide by the "do no significant harm" principle, according to which no investment and reform should harm the EU's environmental objectives.

Also on Friday, the commission adopted technical guidelines for member states to assess whether a suggested measure would significantly harm the environment.

But whether the commission actually has money available to disperse hinges on a proposed "Own Resources Decision." If ratified, this would allow the EU to borrow money on the markets to raise funds for the package.

Portugal's Costa called on EU countries to swiftly ratify the decision to make the full recovery package available.

"It's time to deliver," he said.