The EU’s audit body has slammed the European Commission’s push to model the bloc’s regular seven-year budget on its pandemic recovery fund, warning that such a move could jeopardise the bloc’s economic interests and waste taxpayers’ money.
The European Court of Auditors (ECA) reported on Tuesday that the Recovery and Resilience Facility (RRF) – a €650 billion cash pot that came into effect in 2021 – is plagued by numerous “weaknesses” including insufficient supervisory controls, a lack of transparency, and deficiencies in planning how the payments will ultimately be financed.
The auditors also vehemently disputed Brussels’ description of the RRF as “performance-based”, arguing that the fund instead merely focuses on measures’ “implementation progress”.
“The RFF… has limited focus on results, no information on actual costs, [and] it is not clear what we got for the money,” said Ivana Maletić, one of the report’s co-authors.
The first-ever initiative to be financed through common European debt, the RRF is intended to boost EU countries’ post-pandemic economies by funding critical investments in exchange for targeted reforms. It is set to expire in 2026 and is not expected to be renewed.
The facility has been repeatedly marred by allegations of fraud and corruption as well as experts’ criticisms that its impact is negligible on the EU economy.
The Commission vehemently disputed the auditors’ conclusions, arguing that the contention that the fund is not performance-based “does not seem to be based on any findings”.
The facility is “clearly a performance-based financial instrument” as it links the disbursement of payments to member states’ achievement of specific milestones and targets, the Commission said.
The auditors’ warnings come amid Brussels’ growing push to model the bloc’s €1.2 trillion Multiannual Financial Framework (MFF), or regular budget, on the RRF.
Negotiations for the next MFF are set to begin later this year. The budget must be unanimously approved by all member states and will enter into force in 2028.
Brussels has repeatedly called for so-called “cohesion funds”, which aim to boost growth in the EU’s poorer regions and account for a third of the MFF, to be made more “performance-based”.
Maletić, however, said it is too early to say whether this move will lead to similar problems as the RRF.
“Changes are needed, and we are not against that,” Maletić said, noting that it was important for EU funds to be reallocated to new priorities like defence, housing, and water resilience.
“But if legislators are going in that direction, then they should take into account all the weaknesses we pointed out,” she added, noting that the ECA’s “red line is that with the public money, we cannot be non-transparent”.
Jorg Kristijan Petrovič, another of the report’s co-authors, said that he expected the European Parliament to pressure the Commission to heed the ECA’s advice.
“It’s not uncommon for the auditor and auditee to [hold] different positions,” he said, adding that the Parliament typically sides with the ECA “because they represent the people”.
“So we are still expecting… pressure from the Parliament for the executive to align more with our recommendations,” he said.