12 July 2021

Last week, the European Commission has given a positive assessment of the National Recovery and Resilience Plan submitted by the Belgian federal government and the federated entities at the end of April. The €5.9 billion disbursed in grants under the Recovery and Resilience Facility – at the heart of NextGenerationEU – will support the implementation by 2026 of crucial investment and reform measures put forward by Belgium to emerge stronger from the COVID-19 pandemic.

Belgium’s national plan addresses the European Union’s priorities and main challenges on climate change, digital transition digital, research and innovation, and structural reforms.

A booster to Belgium’s digital and green transition

Where the EU expected at least 37% of the funds allocated to climate objectives, Belgium will dedicate no less than 50% of its budget to these objectives. This will be achieved through renovation projects and energy performance of public and private buildings (social housing among others), the deployment of greener energy technologies such as low carbon hydrogen production, and reforms accelerating the transition to green mobility.

Allocated budgets include €1.3 billion for sustainable transport (electric buses, charging stations, cycle paths) including the transition to a fleet of “zero-emission” company cars, €1 billion for a wave in the renovation of buildings, €600 million for the production and transportation of hydrogen, energy islands and the capture and transport of CO2, and €400 million for biodiversity and climate adaptation. No measures in the Belgian plan undermine environmental objectives, according to the Commission.

Digital transition, comprises 27% of funds (20% were required), in particular for the development of a 5G network and fiber (in the Walloon Region specifically), but also the digitization of schools, administrations, Justice, and of Health Services (585 million), digital training and inclusion (277 million), and cybersecurity (79 million).

At the social level, 52% of the investments of the Belgian plan are likely to have a positive impact on gender equality, while 27% of the investments focus on the social dimension. “The focus on improving digital skills and access to the labour market for vulnerable groups should have a positive impact on employment and contribute to the implementation of the European pillar of social rights,” notes the Commission.

Strenghtening Belgium’s economic and social resilience

The economic and social challenges that the Commission underlined the past two years are largely taken into account, in particular through measures to control public expenditure, budgetary and social sustainability of pensions, etc.

Another particularity of the Belgian plan: thanks to the great openness of its economy, the country will benefit greatly from the fallout from the Next Generation EU stimulus package (NGEU, 750 billion euros) from other EU countries. By capturing a share of the economic output of the Member States that receive more subsidies, the Belgian economy will grow more than its share of subsidies would suggest. Thus, if the direct impact of NGEU is expected to reach 0.4% of Belgian GDP in 2025 and 2026, the additional effects increase this impact to 0.9% and this, without including the impact of structural reforms, according to the Commission.

How will it work ?

The Member States (through the European Council) must now validate the plan within a month, which will allow the Commission to quickly disburse 770 million euros allocated to Belgium in pre-financing for the launch of the plan as a whole.

Belgium will then be able to request new installments, in accordance with the guidelines and objectives agreed with the Commission.

If the first assessments are positive, the country can consider receiving another 847 million as early as the second quarter of 2022. And, since it has so far only requested grants, it can also still call on loans from the recovery and resilience facility (RRF) as part of Next Generation EU.

To access the funds allocated to Belgium under the RRF, public and private entities must design, develop and implement projects in line with the priorities of the Belgian National Recovery and Resilience Plan as well as priorities set out by its governments, at both the regional and federal level.

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