The EU is now in the process of launching, and will do in June, the historic process of issuing a common debt to finance the project in order to overcome the economic impact of the new coronavirus pandemic, the European Council announced last night.
The institution, which represents the Member States, said it had "received formal notification of approval from all 27, which allows the (European) Commission to place bonds on behalf of the EU on capital markets".
The recovery plan, or "Next Generation EU", as it is called in the announcement, "starts tomorrow!" "The European Union is now in a position to secure the necessary funding," said Antonio Costa, the Prime Minister of Portugal, whose country holds the rotating EU presidency since in January.
In total, € 672 billion in aid or loans are expected to be disbursed to EU Member States under the € 750 billion broader recovery plan. The Recovery Fund will be financed by issuing a common debt, an unprecedented event, which is called the embodiment of European solidarity in dealing with the crisis caused by the pandemic.
"Specifically, the (European) Commission will start the debt issuance process on June 1st (today, Tuesday) with the participation of major international and European banks, and the securities will be available within the month," the Frenchman said on Monday. Undersecretary of State for European Affairs Clement Bonn in an interview with Echos.
The amount of the first issue is expected to be "around 10 billion euros", he clarified and added that "the market appetite is expected to be high and interest rates very favorable".
Last Thursday, the Austrian and Polish parliaments approved the joint debt issuance mechanism, completing the ratification process.
The implementation of the plan, agreed in July 2020 after difficult negotiations, has been repeatedly criticized for its slowness.
The first disbursements, which are expected to finance Member States' investment programs in the digital transformation and green transition sectors, are expected to take place at best by the end of July. These will be pre-financing which will represent 13% of the total aid. Their disbursement will take several years.
EU countries began submitting their national investment plans, linked to structural reforms, in late April to secure funding.
Now 22 of the 27 members have submitted their plans to the Commission, which has a two-month deadline to study and approve them. The European Council will then have a month to give its own green light.
Spain and Italy are expected to be the countries that will benefit the most, with loans of around € 70 billion each, followed by France (around € 40 billion).
Among other things, these funds will allow programs such as the renovation of buildings to become more energy efficient, the creation of networks of fast chargers and chargers for electric cars, the development of high-speed telecommunications networks, data storage infrastructure, and so on.