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Portugal, first Member State to present its recovery plan to the European Commission




Antonio Costa, Portuguese Prime Minister, and his Minister of Planning Nelson de Souza officially submitted their recovery and resilience plan to the European Commission via the dedicated IT platform (photo: Portuguese Government)
Antonio Costa, Portuguese Prime Minister, and his Minister of Planning Nelson de Souza officially submitted their recovery and resilience plan to the European Commission via the dedicated IT platform (photo: Portuguese Government)
PORTUGAL. Portugal is the first European Union member state to have officially submitted the final version of its Recovery and Resilience Plan (RRP) to the European Commission on Thursday, April 22, 2021, via the dedicated IT platform. It had already been submitted to Brussels on October 15, 2020 in a version now modified.
Lisbon is leading by example, as it holds the rotating presidency of the European Union since January 1, 2021 and until June 30, 2021. "This marks the beginning of a new phase in the implementation process of the Recovery and Resilience Facility," welcomed Ursula von der Leyen on Thursday, April 22, 2021. The President of the European Commission "looks forward to assessing the Portuguese plan, which focuses on resilience, climate and digital transition and includes projects in almost all European flagship areas." She says she wants to "continue to actively cooperate with Member States to help them develop high quality plans. "

Ursula von der Leyen adds that "for the first payments to be made, we need all Member States to have approved the own resources decision. I am confident that everything will be in place by the summer." They have until April 30, 2021 to do so, and ten are still missing.

This clarification by the president of the European Commission was intended as a message to Emmanuel Macron and Mario Draghi. The French President and the Italian Prime Minister, in a telephone conversation on Wednesday 21 April 2021, affirmed "the same desire to see the ratification of the European recovery plan concluded rapidly", as indicated in a statement from the Élysée Palace.

750 bn, including 312.5 bn in direct subsidies

Called NextGenerationEU and adopted in November 2020 in the multiannual financial framework (€1,100 billion from 2021 to 2027) by the European Parliament and the European Council on the proposal of the European Commission, the European plan involves €750 billion. To date, it has only been ratified by 17 of the 27 EU countries. The plan provides for an unprecedented European community debt mechanism involving all member states.

The majority of this sum, i.e. €672.5 billion, will be dedicated to the Recovery and Resilience Facility (RRF), which will redistribute it in the form of direct subsidies (€312.5 billion in total) - mainly intended for investments in the green transition (37% of the sums) and digital development (at least 20%) - and loans repayable over thirty years (€360 billion). To reach the €750 billion, we must include the envelopes allocated to six programs: ReactEU (€47.5 billion), Horizon Europe (€5 billion), InvestEU (€5.6 billion), Rural Development (€7.5 billion), Just Transition Fund (FTJ - €10 billion) and rescUE (€1.9 billion).

NextGenerationEU is intended to support national recovery and resilience programs. The main beneficiary will be Italy (€191 bn, of which €68.9 bn in grants), followed by Spain (€140 bn/€69.5 bn) and France (€40 bn/€39.4 bn). These funds will be disbursed up to 70% in the first two years and the remaining 30% in 2023 according to different criteria.

Madrid has chosen not to wait for this transfer of money, deciding to allocate €27 billion to several specific projects. A plan to support the purchase of electric vehicles was thus adopted on Tuesday, April 13, 2021. "We are going to finance ourselves until these economic resources arrive from Brussels (...) No matter how long it takes the European Commission to resort to the financial markets to get into debt or how long it takes some countries to ratify definitively," commented Pedro Sánchez, head of the Spanish government, on Tuesday 13 April 2021.
 

13.9 billion in grants for Portugal

With a total amount of €16.644 billion, the Portuguese plan includes thirty-six reforms and seventy-seven investments in the areas of resilience (€11.125 billion), climate transition (€3.059 billion) and digital transition (€2.46 billion).

Of the €13.9 billion in planned subsidies, 37% are for the green transition (47% allocated to climate transition objectives). "So what is the challenge we have? To identify projects that are feasible by 2026 and that, simultaneously, can have an immediate impact on the recovery of our economy and employment, but also have the potential to structurally reform our country, solving the problems we have been living with for too long," recalls António Costa, the Portuguese Prime Minister.

At the same time, Lisbon could borrow €2.7 billion under NextGenerationEU for housing, business capitalization and transport.

the european executive now has two months to validate the portuguese plan. it will then be submitted to the european Council, via the economic and financial Affairs Council (ecofIn), which brings together the economy and finance ministers of all member states.
 

Frédéric Dubessy


Thursday, April 22nd 2021



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