The view that after the Recovery Fund (NextGenerationEU) which expires in 2026, the EU needs a new financial instrument of joint borrowing that will respond to the new common European objectives, such as defence, cutting edge technologies and clean technology, is expressed by Finance CommissionerPaolo Gentiloni, in an interview he gave to APE-MPE and three other European media in Brussels.

A few days before the European Commission presents its interim report on the implementation of the recovery and resilience plans of the member states, P. Gentiloni says that “we are halfway there».

He points out that the majority of investments have come in the last three years and expresses his satisfaction that the recovery plans have already succeeded in reducing the growth gap between member states.

Regarding the new fiscal rules, the Italian Commissioner emphasizes that if they are approved, their implementation will start in 2025, which means that in the autumn the member states will have to submit their multiannual adjustment plans.

QUESTION: In its winter economic forecasts, the European Commission sees the Greek economy growing at one of the fastest rates in Europe. What is the new challenge for Greece?

ANSWER: Greece is one of the countries with a high level of growth according to our forecast for 2024, which is not a coincidence, I think, if you look at the whole path and the difficult situation ten years ago. After the pandemic came a fairly strong growth that continues until the horizon of our economic forecasts, 2025.

Now Greece, like all member states, has before it to implement the difficult, second half of the recovery and resilience plan, during which most of the investments are made. The level of implementation of the Greek recovery and resilience plan so far is good. The third payment was disbursed at the end of December. Also, last year, especially after the fires, we worked hard to redirect part of the funds to deal with the climate crisis. I think that after this reorientation of funds, we can expect a quick and smooth development in the implementation of the Greek recovery plan.

QUESTION: Next week the Commission will present the interim report on the implementation of the recovery and resilience plans financed by the Recovery Fund (Next Generation EU). What are your conclusions?

ANSWER: We are about halfway there. The big challenge is the effort that must be made to implement the programs in the next two and a half years remaining, until June 2026. We have already spent about 224 billion. euros and the large volume of investments must be made in the last three years.

Note that in the first three years, efforts in several member states had to be focused on reforms. Also in 2023 a redesign was to be done to add the funds for REPowerEU, to reduce fossil fuels. But the bulk of the investment has come in the last three years. And this is reason for both concern and optimism. The effort to be made in the remaining 2.5 years is very important. The success of NextGenerationEU is important to be able to discuss what the next step will be.

The NGEU was essentially designed for two reasons: for solidarity (in the midst of a pandemic this joint borrowing was decided) but also to avoid the risk of divergence in development between member states. And frankly, from this point of view, we can already say that the recovery plans have succeeded in narrowing the divergence in growth between Member States. The countries that receive the largest amount of funding through the RRF as a percentage of their GDP are the countries with the lowest level of development. In my opinion, this is no accident. The release of these funds also sent a positive message to the financial markets.

QUESTION: Can the NGEU be extended beyond 2026, as some countries have requested?

ANSWER: There is a deadline. Legally, part of the decision taken then cannot be extended and especially as regards the decision to raise common money from the financial markets, this has a clear deadline. To change this deadline, the approval of 27 or 29 national parliaments must be sought. I personally would not invest political capital in this, but I fully share the view that after the NGEU we need to discuss as soon as possible – before 1 January 2027 – what comes next.

QUESTION: A new financial instrument of joint borrowing therefore?

ANSWER: This will be discussed in the next legislative cycle. It is clear that we have some common European goals and this would deserve at least some common funding. For example defense, cutting edge technologies, clean green technology. You know that President Ursula von der Leyen proposed something similar a year ago, she proposed a European sovereign fund, which today is limited and is the STEP programme, but it could be a first step.

This is a strategic debate and it is right that it should be addressed by the new political cycle of the Commission, Parliament and Council. Strategically, economically, politically, the method we used with NGEU cannot be a parenthesis. Because otherwise we will either completely change our state aid rules mechanisms or run out of tools for joint programs. Therefore, the question of what will be after the NGEU is crucial and I think the discussion should start already next year. The global fight for clean technology continues and this cannot be tackled by each member state alone.

QUESTION: A week ago, EU Member States and the European Parliament reached an agreement on the reform of the EU’s financial rules. When will the new rules be implemented and what are the next steps?

ANSWER: The process is very clear. The new rules will have to be approved by a vote by the European Parliament in mid-April and the following day by the Council (Coreper). After that, we will confirm with Member States the implementation of the new rules from 2025. The majority of Member States agree to start implementing the new rules as early as 2025, with four- or seven-year adaptation plans. This means that this summer and autumn we will have a lot of work with the negotiations between the Member States and the Commission on the multiannual plans. It has not been decided when the Member States will have to submit their medium-term plans, because the rules have not yet entered into force, but presumably in the autumn (September-November), after the summer break, we will receive the plans.

QUESTION: Regarding the 50 billion euros planned by the EU for Ukraine over the next four years, do we perhaps have an idea of ​​how the Community control of the transparent management of these funds by the Ukrainian authorities will take place?

ANSWER: Of course, and you know of course that we are building on the experience we have had for so many years in managing our Macroeconomic aid programs. It may not be exactly the same process in this case, but we already have a series of Memoranda of Understanding with the Ukrainian Authorities, with targets that they will have to achieve, most of which have to do with Public Procurement mechanisms and the ways in which their national economy should work against corruption. In the last two years, Ukraine has responded positively to this process.

This framework should now also be adapted to the start of the accession negotiations which require additional reforms, alignment of Law rules, etc. So we should now be clear. After all, I underlined this during my recent visit to Washington. Because we are all united because of our common principles and ideals, but we also ask Ukrainians to take concrete steps. After all, they are already taking these steps and that is why they received a positive response from the International Monetary Fund (IMF). This was not a simple automation. It was a right decision. But the IMF also sets its own conditions. So now Ukraine has to face terms and conditions set simultaneously by the EU, the IMF and possibly the USA, where the relevant process is still pending, as you know.