The pandemic has hit the economy in all European countries hard. To mitigate the consequences and generate new growth, EU countries agreed on a unique recovery financing model (ARF), in which up to 338 billion euros can be made available in the form of financial aid and up to 385.8 billion euros in loans. The EU Court of Auditors has now examined the use of the funds and concluded that there have been some delays that could jeopardize the achievement of the goals – the ARF is due to expire in August 2026, but so far not even a third of the funds have been used, meaning only 30 percent of the milestones have been reached.
According to the auditors, it is positive that the EU countries received pre-financing of up to 13% of the amount they were entitled to. This enabled a quick disbursement at the beginning – in keeping with the intended crisis response. Since then, however, the funds have largely flowed too slowly, criticize the auditors. By the end of 2023, the Commission had only transferred 213 billion euros to national budgets. And even these funds have often not yet reached the final recipients – including private companies, public energy companies and schools.
Delays also in Austria
According to the Court of Auditors, almost all countries have submitted their payment requests to the Commission with delays. The reasons for this were inflation, supply bottlenecks, uncertainties regarding environmental regulations or insufficient administrative capacity. Seven countries (Hungary, the Netherlands, Sweden, Belgium, Finland, Ireland and Poland) have not yet received any funds for various reasons. There are also delays in the absorption of ARF funds in Austria, although Austria is one of the Member States with the fastest signing of the operational agreement after Spain and France. According to the report, Austria had only submitted one payment request by the end of 2023 (in December 2022) and received around 700 million euros. This means that only half of the payment requests planned in the provisional schedule had been submitted (EU average: 70%): the second payment request planned for 2023 is still pending.. This means that by the end of 2023, only 23% (EU average: 37%) of the allocated ARF funds had been disbursed and 44 out of a total of 171 milestones and targets had been satisfactorily met.
Looking ahead to the final year of the ARF, Austria plans to use 34 percent of the funds and meet 15 percent of the targets and milestones. Half of all investments will also be finalized in 2026. Overall, this also shows for Austria that in the second half of the ARF’s term, the number of targets and milestones to be achieved and the transition from reforms to investments represent “additional challenges for the timely use of funds.”
EU Commission reacts
The EU Commission reacted immediately to the individual recommendations of the Court of Auditors and welcomed, among other things, the proposal to provide additional advice to the member states and to quickly identify those projects that are most at risk due to the delay. The Commission rejected the recommendation to work together with the countries to mitigate the risk (because, according to the argument, specific targets have to be achieved anyway) and to demand the repayment of funds if projects are not completed. On the one hand, because such options already exist in the ARF, and on the other hand, because such decisions also have to be made at the political level.
