The European Commission (EC) on May 27 proposed a major recovery fund worth EUR 750 billion to help the European Union's countries tackle the "unprecedented crisis" caused by the COVID-19 pandemic.

Romania would get an allocation of EUR 33 bln, representing 4.4% of the total value of this fund, according to an official document presented by the EC. However, Romania will also have to contribute about EUR 12 bln to the new fund. Thus, the net sum Romania could receive through this instrument would amount to EUR 21 billion, the fifth-highest of all EU member states. Only Spain (EUR 82.2 bln), Italy (EUR 56.7 bln), Poland (EUR 36 bln), and Greece (EUR 33.4 bln), will get higher net allocations than Romania.

In terms of gross allocations, Italy and Spain, the countries most severely hit by the COVID-19 pandemic, will get the highest shares of the EUR 750 bln budget, some 20% each.

The fund's allocations and the contributions to this fund are separate from the allocations and contributions under the 2021-2027 EU budget.

"Next Generation EU will raise money by temporarily lifting the own resources ceiling to 2.00% of EU Gross National Income, allowing the Commission to use its strong credit rating to borrow EUR 750 billion on the financial markets. This additional funding will be channeled through EU programmes and repaid over a long period of time throughout future EU budgets – not before 2028 and not after 2058," the EC said.

The EUR 750 bln Next Generation EU fund will come on top of the long-term EU budget for 2021-2027 (EUR 1.1 trillion), bringing the total financial firepower of the EU budget to EUR 1.85 trillion, according to the Commission.

"The recovery plan turns the immense challenge we face into an opportunity, not only by supporting the recovery but also by investing in our future: the European Green Deal and digitalization will boost jobs and growth, the resilience of our societies and the health of our environment. This is Europe's moment. Our willingness to act must live up to the challenges we are all facing. With Next Generation EU we are providing an ambitious answer," said European Commission president Ursula von der Leyen as she unveiled the new plan.

However, for this ambitious recovery plan to be implemented, all member-states must endorse it. Four EU countries (Austria, Netherlands, Denmark, and Sweden) have been opposing the idea of issuing EU bonds.

More details about the program can be found here.

editor@romania-insider.com

(Photo source: European Commission Facebook page)