The European Council established and approved the Next Generation EU (NGEU) in February 2021. This new recovery plan has been endowed with 750 billion euro, divided into 390 billion euro in non-refundable funds and another 360 billion euro in loans. Belgium will receive 4.5 billion euro over the course of the mechanism.
What is the NGEU?
Next Generation EU (NGEU) is a temporary recovery instrument to help repair the immediate economic and social damage brought about by the coronavirus pandemic.
The Recovery and Resilience Facility (RRF) is the centerpiece of NGEU with loans and grants available to support reforms and investments undertaken by EU countries.
To access NGEU funds, each Member State is required to develop a National Recovery and Resilience Plan (NRRP), setting out a coherent package of reforms and investment for the period 2021-26.
Belgium receiving finances from the temporary mechanism
In order to address the economic crisis resulting from Covid 19 in a fair, equitable and environmentally conscious manner, the European Commission will support efforts at national level, in particular in the most affected countries through the Next Generation EU. The recovery plan will raise funds by temporarily raising the own resources ceiling to 2% of the EU’s gross national income, allowing it to borrow this 750 billion euros on the financial markets.
Belgium is one of the first countries receiving a pre-financing payment (770 milion euro) under the Recovery and Resilience Facility (RRF). It will help to kick-start the implementation of the crucial investment and reform measures outlined in Belgium’s recovery and resilience plan.
Of the 750 billion euro of European Next Generation EU aid, some 4.5 billion euro is earmarked for Belgium. 70% of the agreed plan budget will be disbursed between 2021 and 2022.
Next Generation EU program allocations
The Recovery and Resilience Mechanism will have 672.5 billion, 312.5 billion in transfers, of which Belgium will receive 4.5 billion euro. The Next Generation EU program will focus on areas such as the ecological transition, digital transformation, education and improved social protection. It is based on six main pillars, which are the following:
React-EU will have 47.5 billion euro, of which Belgium will receive 6 million euro. The remaining amount would come from the rest of the NGEU funding tools.
The Next Generation EU Fund would be distributed as follows:
The aim of the Recovery and Resilience Fund
The Recovery and Resilience Fund is included in the NextGenerationEU framework. The aim of the 672.5 billion euro fund is to support public investments, especially in digitalization and in the quest for a greener Europe, while making national economies more resilient and better prepared for the future.
The President of the European Commission, Ursula von der Leyen, announced that 37% of this fund will go directly to the Green Deal objectives. In addition, another 20% of the budget is to be earmarked for digitalization projects. She also announced that 30% of the NextGeneration 750 billion euro will be raised through green bonds.
What are the next steps?
In June 2021, the Commission had adopted a proposal for a decision to provide 5.9 billion euro in grants to Belgium under the RRF. The Council had four weeks to adopt the Commission’s proposal. In 2022, after an analysis of the Belgian economic recovery, it was decided that a budget of 4.5 billion euro would suffice.
The Council’s approval of the plan allowed for the disbursement of €770 million to Belgium in pre-financing. This represents 13% of the total allocated amount for Belgium.
The Belgian RRP, divided over three-country regions, includes a total of 140 reform or investment projects explaining how it will invest the first financial supports received between 2021and 2023.
The Commission will authorize further disbursements based on the satisfactory fulfillment of the milestones and targets outlined in the recovery and resilience plan, reflecting progress on the implementation of the investments and reforms. In March 2022, the first NGEU-report was launched analyzing its situation. It gives an overview of the current state of implementation according to the targets set in terms of climate and digitalization measures by 2026.
Finally, member states will have to commit 100% of the expenditure during the three-year period 2021-2023 and will be able to implement them until 2026.
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