The Recovery and Resilience Facility –an instrument built for performance
In view of the size, coverage and specific set-up of the Recovery and Resilience Facility (RRF), the European Commission set up the Recovery and Resilience Task Force (RECOVER) in August 2020. Céline Gauer, a Director‑General at the European Commission, is Head of RECOVER, and below she covers its focus on performance, its rollout, the respective roles of the Commission, the Member States and other authorities, also as regards compliance with EU rules, and how the RRF could serve as a model of performance for EU policies.
A performance-based instrument unlike any other previous EU instrument
The Recovery and Resilience Facility (RRF) was adopted in February 2021 to help the EU recover from the economic crisis resulting from the COVID‑19 pandemic. The EU has the ability to borrow up to €723 billion to grant Member States up to €338 billion, or lend up to €385 billion. This is unprecedented in the EU’s history.
The RRF was conceived as a performance‑based instrument implemented by the European Commission under direct management, whereby payments are made to the Member States on the basis of results achieved in terms of reforms and investments, with no link to the costs actually incurred by the Member States. Member States are the beneficiaries of the RRF funds, which, once disbursed, enter into the national budget (see Figure 1). This necessarily means that Member States have primary responsibility for ensuring that the RRF is implemented in compliance with relevant EU and national law, in particular regarding the prevention, detection and correction of fraud, corruption, conflicts of interest, and the avoidance of double funding, as explicitly laid out in Article 22 of the RRF Regulation.
Figure 1 — RRF fund allocation per Member State
Notes: This map displays the funding allocated to each endorsed recovery and resilience plan (RRP) to date, and what this represents as a share of each Member State’s GDP (yellow pie charts). For those Member States whose RRPs have not yet been endorsed, the amount displayed is the maximum allocation in grants according to the RRF Regulation. GDP information is based on 2021 data.
The RRF is rooted in decades‑long lessons that the EU has learnt from its spending, the aim being to deliver results effectively while protecting the EU’s financial interests. The successful roll‑out of the RRF owes much to the work of the European Court of Auditors, which has advocated linking the disbursement of EU funds more closely to actual results, as well as the need to establish closer links between the country‑specific recommendations of the European Semester and the EU funds.
Implementation of Recovery and Resilience Plans is now in full swing, as Member States have quickly seized the unique opportunity that the RRF offers. Following the Commission’s assessment of the plans that were submitted, the Council has now adopted 26 Council Implementing Decisions approving national plans.
In addition, 16 payment requests have already been submitted by the Member States, and eight of them have now been fully processed. This shows that Member States are implementing their planned milestones and targets, thereby creating the necessary conditions for a positive assessment by the Commission. Overall, including the 13 % pre‑financing for 21 Member States, this has enabled the Commission to pay out €113 billion to the Member States under the RRF. See Figure 2 for the RRF implementation cycle.
Figure 2 — The RRF: from plans to implementation
Opportunities and challenges linked to the performance-based nature of the instrument
One of the main novelties of the RRF compared to other EU instruments is that investments are combined with reforms. As such, the RRF provides a unique opportunity for Member States to deliver on long‑standing reform needs, in particular those highlighted as part of the European Semester. Thanks to the political momentum offered by the RRF, those reforms not only make the Member States more resilient in the long term, but also create the right conditions for the successful delivery of investments.
The RRF is a multi‑policy instrument that contributes to the six pillars established by the Regulation: green and digital transitions, smart, sustainable and inclusive growth, territorial and social cohesion, health, and youth (see Figure 3). As such, the RRF is not only one of the main instruments which supports the delivery of the Fit‑for‑55 and the Digital Decade objectives, but also an instrument which enhances social and territorial cohesion across Europe.
Figure 3 — The six policy pillars of the RRF
The way the RRF is delivered gives Member States flexibility in designing and implementing the measures in a way that best suits their national circumstances. Milestones and targets are designed individually to fit the specific investments and reforms which the Member States commit to implement; this gives them full ownership to ensure successful delivery. In contrast with most EU programmes, the RRF is characterised by the absence of co‑financing requirements, therefore limiting its budgetary impact.
Given these many features, and also the strong emphasis which existing recovery and resilience plans place on measures contributing to the accelerated decarbonisation of Europe, in May 2022 the Commission proposed that the RRF should be used to implement the objectives of REPowerEU, a national‑level plan to rapidly reduce dependence on Russian fossil fuels. This recognises not only the RRF’s flexibility, but also its ability to deliver EU support in an efficient way.
The fast delivery of support under the RRF (see Figure 4 ) necessarily comes with increased pressure on Member States. Milestones and targets under the RRF have to be implemented by 2026, whereas Member States have more time to implement investments under cohesion policy. This more ambitious timeframe has repercussions for how the instrument is implemented, a point well illustrated in Gert‑Jan Koopman’s recent article in the ECA Journal: Cohesion policy and the Recovery and Resilience Facility: not just two sides of the same coin.
Figure 4 — The RRF in numbers
The Commission provides Member States with support for implementing the milestones and targets (see Box 1), but ownership ultimately has to remain with the Member States. Given the major impact of the RRF, this creates additional strains on the administrative capacity of the Member States, which have had to adjust to the different nature of the RRF which is itself different from the other EU instruments they were more familiar with. All of this comes in a fast‑changing economic environment with soaring energy and construction prices, which has an impact on the Member States’ ability to implement the milestones and targets as initially planned.
EU assessment of the achievement of milestones and targets
The RRF is a performance‑based instrument where all disbursements depend on the satisfactory fulfilment of milestones and targets, as set out in the Council Implementing Decisions approving each Member State’s plan. For instance, assessing the satisfactory fulfilment of milestones and targets is not about checking the actual costs of each measure. The Commission assessed the reasonableness and plausibility of costing when each plan was submitted, and Member States receive the benefits of more cost‑effective implementation, as well as bearing the burden of possibly higher costs. This is an incentive for efficiency and effective implementation.
Furthermore, assessing milestones and targets is not about checking compliance with EU law — e.g. on public procurement or state aid — and national law. According to the RRF Regulation, Member States have primary responsibility for ensuring that their measures comply with applicable EU and national law. This needs to be confirmed as part of each payment request, by submitting a management declaration certifying that Member States’ internal checks provide sufficient assurances that RRF funds have been managed in accordance with the rules. The Commission will check compliance with EU or national law only to the extent that this is included in the conditions attached to the milestone or target. This will then be reflected in the Commission’s assessment of satisfactory fulfilment.
The milestones and targets represent a commitment entered into by the Member States towards the EU in exchange for receiving the RRF funds. Assessment of these commitments is based on clear conditions, and also requires a degree of judgment in order to conclude that the actions taken by the Member States meet these conditions. As set out in the RRF Regulation, this is the role of the Commission, which also relies on the opinions of the Member States as expressed by the Economic and Financial Committee. We have deliberately chosen to be transparent and open about our assessment, and publish our detailed preliminary assessment.
The RRF Regulation stipulates that responsibility for protecting the EU’s financial interests lies primarily with the Member States. Member States must therefore take appropriate measures to prevent, detect and correct fraud, corruption, conflicts of interest, and double funding. They must also establish an effective and efficient internal control system, and recover amounts that have been wrongly disbursed or incorrectly used. This is why it was essential for the recovery and resilience plans submitted by the Member States to include sufficient assurances about their respective control and audit systems. In many cases, the Commission insisted on improving the proposed control systems, with relevant aspects captured in dedicated audit and control milestones which must be fulfilled and verified as part of the first payment request.
During the implementation process, Member States must take corrective action if they detect any irregularities. If they do not take action themselves, then the Commission will recover funds from the Member State concerned. To ensure that this is the case, the Commission carries out system audits focusing on the anti‑fraud measures the national authorities have put in place to prevent, detect and correct potential fraud when the RRF is being implemented, and performs targeted audits where there is suspicion of fraud.
Ensuring transparency and accountability
Successful implementation of the RRF will only be possible by involving all relevant stakeholders. This goes well beyond the national authorities, and involves regional and local authorities, both sides of industry, and other stakeholders. The Commission insists on such outreach with the Member States on every possible occasion, and also organises dedicated events to exchange views with the largest possible audience. In the same vein, transparency towards citizens is also essential to demonstrate the added‑value generated by the EU. This means not only displaying the EU logo on projects, but also providing a comprehensive overview of RRF implementation on the Recovery and Resilience Scoreboard. To this end, continuous dialogue, reporting and exchanges of information with the European Parliament are essential; the RRF will succeed only if EU institutions and Member States share a common goal.
The role of the European Court of Auditors
In this connection, the European Court of Auditors plays a central role in the success of the RRF. The ECA has become a vital partner in the RRF family, showing how the RRF has become a central component of EU funding. The RRF was an important topic in the discussions between Commissioners and ECA Members. On various occasions, my colleague Maarten Verwey and I have had the pleasure of exchanging views with ECA Members about the implementation of the RRF. Together with the ECA, we have an important responsibility in laying the foundations of robust performance‑based instruments to deliver EU investment and reform policies. This performance‑based aspect has already been instrumental in setting up the proposed Social Climate Fund, and has also been proposed for implementing the REPowerEU objectives. If performance‑based instruments are well designed, they will then be used elsewhere.
We are at the beginning of a long journey. The Commission and the ECA will work closely together on the RFF in the years to come. As for any major project, time is short and administrative resources are scarce. We should collectively make the best use of both. There is no doubt that we will also be counting on the ECA to help make the RRF a real success for European citizens.
This article was first published on the 2/2022 issue of the ECA Journal. The contents of the interviews and the articles are the sole responsibility of the interviewees and authors and do not necessarily reflect the opinion of the European Court of Auditors.