Italy, Spain and Poland are at risk due to the European Union's intention to stop funding the COVID recovery fund. The European Commission is preparing to dispel the hopes of the governments of the bloc's member states that its €650 billion pandemic recovery fund will be extended beyond 2026. This is reported by Politico, UNN reports.
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The decision is expected to be announced on June 4 and will disappoint the fund's main beneficiaries, including Italy, Spain, Portugal and Poland, which have been pushing for its continued funding.
Some countries are still trying to make the most of the free grants from the Recovery and Resilience Facility. The budget of the fund, created in 2021 to finance Europe's recovery from COVID, is EUR 650 billion.
However, the Commission will say that there is no legal basis to extend its term, Politico was told by several officials on condition of anonymity.
The EU executive allocates funds only after assessing countries' compliance with a number of requirements and targets. However, many countries have found it difficult to meet them, which has contributed to delays.
The energy crisis and the surge in inflation following Russia's full-scale invasion of Ukraine in February 2022 have prompted many countries to adjust their plans in a process that has further delayed payment requests.
To maximise utilisation, the EU executive may now focus on helping countries pass the necessary milestones before the deadline.
Member states should urgently review their plans and cancel any measures that are no longer feasible
He oversees the Recovery Fund together with Commissioner for Cohesion Raffaele Fitto. The Italian government is particularly keen to extend the post-COVID scheme.
Despite the pressure, the EU's legal service recently rejected attempts to postpone the fund's expiry date without formally amending the scheme's rules agreed in 2021, several officials familiar with the process said.
Changing the rules would require unanimity among EU countries, which would be difficult to achieve given the long-standing resistance of northern countries such as Germany and the Netherlands.
Under the current rules, countries must submit a request for payments by the deadline of 31 August 2026. This is enough time for the Commission to give the green light to the requests and allocate the funds by 31 December 2026.
So far, the European Commission has already allocated around EUR 315 billion out of EUR 648 billion in the form of grants and loans.
However, faced with the real risk of losing EU funding, countries are developing workarounds to ensure that funds are received before the deadline.
In particular, the European Commission has already approved this week Poland's request to reallocate almost EUR 6 billion from loans to 'green' projects, where demand is low, to more popular defence initiatives.