NextGenerationEU: Commission makes first payments of EUR 800 million to promote crisis management and resilience

Brussels, 28 June 2021: The Commission today disbursed € 800 million under NextGenerationEU, the temporary building tool to fund Europe’s recovery from the pandemic and promote a greener, more digital and more resilient economy.

The payments made today will go to 41 national and regional programs in 16 Member States (France, Greece, Czech Republic, Germany, Poland, Lithuania, Netherlands, Slovakia, Estonia, Austria, Denmark, Finland, Bulgaria, Sweden, Portugal, Croatia). They come from the development aid for cohesion and the territories of Europe (REACT-EU), from which the member states receive aid to finance crisis response and remedial measures after the coronavirus pandemic. The funds from REACT-EU are added to the resources of the existing cohesion policy programs.

Measures under REACT-EU close the gap between emergency response measures and long-term investments and aim to strengthen the resilience of health systems, create and maintain jobs especially for young people, support the most vulnerable in our society and provide working capital and investment support for small and medium-sized enterprises.

REACT-EU is funding targeted measures for green and digital change so that the negative consequences of the pandemic can be overcome quickly, for example by investing in energy efficiency, greener cities and digitization.

The payout follows the first successful bond transaction as part of NextGenerationEU. The 10-year EUR 20 billion bond is the largest institutional bond issue in Europe to date and the largest amount raised by the EU in a single transaction. The Commission intends to raise around EUR 80 billion in long-term funding by the end of the year, to which short-term EU bills will be added.

Voices from the college of commissions:

Elisa Ferreira, EU Commissioner for Cohesion and Reforms said: “I am delighted that cohesion policy remains at the forefront of crisis response and recovery. REACT-EU was the first tool to be finalized by NextGenerationEU, its programs were the first to be adopted, and now it is the first to provide support for our economy, our companies and our workers. REACT-EU gives existing cohesion policy programs the extra investment power that is badly needed to continue fueling a robust, equitable and cohesive recovery. ”

EU Commissioner Johannes Hahn, responsible for budget and administration, said: “I am very pleased that we were able to initiate the NextGenerationEU emissions as planned. Starting today, NextGenerationEU funds will be used through REACT-EU to help our regions and cities recover from the pandemic and create a greener, more digital and more resilient Europe. “

Funds for the economy

The additional funding will primarily come from the European Regional Development Fund (ERDF) and the European Social Fund (ESF), including the Youth Employment Initiative. Some of the new resources will be used to top up the Fund for European Aid to the Most Deprived for the 2014-2020 period.

In order to provide the Member States with the maximum possible support, the conditions for using these additional funds have been simplified:

  • National co-financing is not mandatory – that is, the EU can cover 100% of the costs if Member States deem it necessary.
  • Immediate liquidity in the form of pre-financing of 11% will help to provide support quickly and avoid bottlenecks.
  • There are neither ex ante conditionalities nor requirements for thematic concentration or an allocation according to regional category. The scope of support is broad and transfers between ERDF and ESF are possible.
  • Projects can be funded retrospectively until February 1, 2020.

Transparency and accountability

At the same time as these first payments, a new REACT-EU dashboard was set up on the Commission’s open data platform for cohesion policy, providing up-to-date information on the use of REACT-EU resources in the EU. In addition to data on special investment areas by fund, overarching topics such as the environment, digitization and climate protection measures are highlighted. The dashboard was set up to facilitate access to public data and to ensure transparency and accountability.

Background

NextGenerationEU is a temporary development tool with a volume of around EUR 800 billion at current prices, which is intended to support Europe’s recovery from the coronavirus pandemic and at the same time contribute to building a greener, more digital and more resilient Europe. To finance NextGenerationEU, the European Commission will raise up to EUR 800 billion on the capital markets on behalf of the EU by the end of 2026: EUR 407.5 billion for grants (under the Development and Resilience Facility, REACT-EU and other programs of the EU budget) and EUR 386 billion for loans. Overall, this results in a credit volume averaging around EUR 150 billion per year.

REACT-EU is part of NextGenerationEU and provides additional funding of EUR 50.6 billion (at current prices) for the cohesion policy programs in 2021 and 2022. The measures primarily serve to promote more resilient labor markets, employment, SMEs and low-income families and are intended to help create a sustainable basis for green and digital change and sustainable economic and social recovery.

Additional Information

REACT-EU: Promotion of crisis management and resilience on the open data platform (in English)
Development plan for Europe
Press release: First NGEU issues
Press release on the Commission’s first financing plan
Questions and answers about the diversified financing strategy
Factsheet – NextGenerationEU – Financing Strategy (in English)
Website on the EU as a borrower (in English)
Primary Dealer Network (in English)

European Consulting Group