How EU recovery fund will work
July 22, 2020 - The EU’s green light to a temporary €750 billion recovery fund financed for the first time by joint debt will allow the 27-nation bloc to channel grants -- via the EU budget -- to boost an economic rebound.
Each country will draw up their recovery plans with proposals of how they’re going to use the grant. Brussels will try and avoid the gruelling economic demands that poisoned relations between the EU and Greece during its debt crisis.
A formula that balances each member states population and jobless rate with the economic damage directly caused by the pandemic will calculate payments. Grants will apply to the years 2021-23.
Fifteen of the 27 EU members must approve requests for grants -- this represents 65 per cent of the total EU population. If one member state questions the commitment to reforms, it can delay disbursements for up to three months and take the issue to EU leaders for debate.
A roadmap to new environmental levies and digital taxes -- dubbed Own Resources -- will be laid out to payback all liabilities by the end of December 2058.
The EU currently has around €54 billion in outstanding euro-denominated bonds -- having borrowed nothing last year and just €5 billion in 2018. The EU also will borrow nearly €100 billion to fund its SURE jobless scheme. With the recovery fund, this debt pile will soar to more than €900 billion.
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