BRUSSELS (Reuters) -The European Union’s 650 billion euro ($736.58 billion) facility designed to promote recovery after the pandemic is not fully transparent and the money it disburses is not linked to project costs, the European Court of Auditors said on Tuesday.
The ECA, the European Union’s supreme audit institution, has been reviewing the implementation of the Recovery and Resilience Facility set up in 2021 using jointly borrowed money to pay for reforms and investments for all EU countries until 2026.
“The EU’s COVID recovery fund … suffers from several weaknesses in terms of performance, accountability and transparency,” the ECA said in its review.
“Although the RRF has played a crucial role in the EU’s post-pandemic recovery, information on results is scarce, and there is no information on actual costs. As a result, it is not clear what citizens actually get for their money.”
The facility was created to make the EU economy greener, more digitalised and resilient to shocks. Payouts are made twice a year when governments reach reform and investment milestones and targets agreed with the Commission.
The ECA said the executive European Commission can make full payments from the facility despite any public procurement irregularities, as long as the milestones and targets are reached.
Because of the way these markers have been set, some EU countries receive considerable funds before they complete the projects, the ECA said.
While 42% of the funds have been disbursed, only 28% of the milestones and targets have been fulfilled by the end of 2024, the ECA said, with the rest due to be attained by August 2026.
“This poses a risk to the EU’s financial interests, as member states could end up keeping the money without completing the projects,” the ECA said.
Many EU policy makers have said chances of any new joint borrowing by the 27-nation EU would depend on how successful the recovery fund is in helping the EU economy.
“EU policymakers must draw lessons from the RRF, and not allow any future similar instrument without having information on actual costs, final recipients and a clear answer to the question of what the citizens actually get for their money,” said ECA’s Ivana Maletic, a co-author of the review.
“For future performance-based budgets, funding must be better linked to results and clearly defined rules, otherwise such a system should not be used,” Jorg Kristijan Petrovic, the other co-author, said.
($1 = 0.8825 euros)
(Reporting by Jan Strupczewski; Editing by Richard Chang)
By Jan Strupczewski
