From words to action. Analysing possible scenarios and political dynamics in the process of disbursing the European Recovery and Resilience Facility funds

Summary:

If 2021 will be remembered as the year in which the EU Recovery and Resilience Facility (RRF) was set in motion, 2022 will be the first full year of implementation of this programme, which is the centrepiece of NextGenerationEU (NGEU). At the moment of writing five countries have already sent their first RRF payment requests to the Commission but the volume of RRF payments will significantly increase in the coming months and the rhythm will not stop until the end of 2026. Unlike the 13% pre-financing paid in 2021, payments will now be conditioned upon fulfilment of “milestones” and “targets” reflecting intermediary and final steps towards the achievement of the objectives of the plan.

The RRF disbursements will take place whilst the idea of extending NGEU, or using it as a blueprint for future EU investment instruments, is gaining weight in the context of broader debates on the reform of the EU’s fiscal framework. Against this backdrop, the question of whether or not the RRF is a “success” will become politically relevant. Yet, how to judge this success at year+1 is not evident. The first evaluation is expected for 2024. In the meantime, the degree of fulfilment of milestones and targets and the pace and rhythm of payments will constitute the most important indicators of good or bad performance.

This paper examines the procedure for the disbursement of RRF funds. Its aim is to discuss possible scenarios and political dynamics that may arise when validating the fulfilment of milestones and targets, submitting payment requests and authorising RRF disbursements. The paper starts with a general discussion on conditionality and, particularly, the main factors to take into account when designing a performance-based conditionality regime. Section two then takes a closer look at the specificities of the RRF performance regime, distinguishing between three phases: (1) the definition of performance objectives (called “milestones” and “targets” in the case of the RRF), (2) the rules and procedures to submit payment requests, and (3) the rules and procedures for the approval and suspension of payments. The description of general rules, procedures and common patterns is complemented with specific examples drawn from the four largest National Recovery and Resilience Plans (NRRPs); that is, those of France, Greece, Italy and Spain. The paper then speculates on the possible dynamics and scenarios that may arise when the machinery of RRF disbursement will work at full speed. It concludes with some general reflections on the nature of the RRF conditionality regime.

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