Economic and Financial Affairs

The conclusion is set out in the 2022 Convergence Report issued on 1 June, which assesses the progress that Bulgaria, Czechia, Croatia, Hungary, Poland, Romania and Sweden have made towards joining the euro area. These are the seven non-euro area Member States that are legally committed to adopting the euro. The Report concludes that only Croatia and Sweden meet the price stability criterion; all Member States fulfil the criterion on public finances, except Romania which is the only Member State subject to an excessive deficit procedure; Bulgaria and Croatia are the two Member States fulfilling the exchange rate criterion; and Bulgaria, Croatia, Czechia and Sweden fulfil the long-term interest rate criterion. The Report also finds that Croatia fulfils the four nominal convergence criteria and its legislation is fully compatible with the requirements of the Treaty and the Statute of the European System of Central Banks/ECB. The Commission's assessment is complemented by the European Central Bank's (ECB) own Convergence Report, which was published on the same day. The Commission has adopted proposals for a Council Decision and a Council Regulation on euro introduction in Croatia.

This financing will support the implementation of the crucial investment and reform measures outlined in Poland's recovery and resilience plan. It will enable Poland to emerge stronger from the COVID-19 pandemic and progress with the green and digital transitions. The Commission assessed Poland's plan based on the criteria set out in the RRF Regulation. The Commission's analysis considered, in particular, whether the investments and reforms contained in Poland's plan support the green and digital transitions; contribute to effectively addressing challenges identified in the European Semester; and strengthen its growth potential, job creation and economic and social resilience. Poland's plan includes milestones related to important aspects of the independence of the judiciary, which are of particular importance to improve the investment climate and put in place the conditions for an effective implementation of the recovery and resilience plan. Poland needs to demonstrate that these milestones are fulfilled before any disbursement under the RRF can be made. The Council will now have, as a rule, four weeks to adopt the Commission's proposal.

The Spring 2022 Economic Forecast projects the EU economy to continue growing in 2022 and 2023, yet face headwinds to growth which were previously expected to subside. The country-specific recommendations adopted in the context of the European Semester this year include recommendations for reducing the dependency on fossil fuels through reforms and investments, in line with the REPowerEU priorities and the European Green Deal. In addition, policies to mitigate the impact of higher energy prices and support those fleeing Russia's military aggression against Ukraine will contribute to an expansionary fiscal stance in 2022 for the EU as a whole. The Commission also has concluded that the conditions to maintain the general escape clause of the Stability and Growth Pact in 2023 and to deactivate it as of 2024 are met. It has adopted a report under Article 126(3) of the Treaty on the Functioning of the EU (TFEU) for 18 Member States. The purpose of this report is to assess Member States' compliance with the deficit and debt criteria of the Treaty. The Commission has also assessed the existence of macroeconomic imbalances for the 12 Member States selected for in-depth reviews in the 2022 Alert Mechanism Report and issued opinions on the draft budgetary plans of Germany and Portugal. In addition, it has adopted the post-programme surveillance reports for Greece, Ireland, Spain, Cyprus, and Portugal.

Ministers also exchanged views on candidates for Managing Director of the European Stability Mechanism (ESM). They received a presentation from the Commission on its opinions concerning the updated Draft Budgetary Plans of Germany and Portugal, and issued a statement agreeing with the opinions. Meeting in inclusive format, ministers discussed the draft work plan for the completion of the Banking Union. During a meeting of the Economic and Financial Affairs Council (ECOFIN) on 24 May, ministers assessed the economic and financial consequences of Russia’s military aggression against Ukraine and exchanged views on the European response to Ukrainian financial needs. Ministers also took stock of the implementation of the €672.5 billion Recovery and Resilience Facility (RRF), following a presentation by the European Commission on the state of play.

Following Russia's unprovoked and unjustified invasion, this urgent financial support helps Ukraine address its acute financing gap related to its exceptional humanitarian and defence needs. The first instalment of €600 million from this emergency Macro-Financial Assistance operation was disbursed in two tranches on 11 and 18 March. The disbursement follows an assessment of the authorities' progress with implementing the structural policy measures agreed in the Memorandum of Understanding. The Commission has concluded that the authorities, overall, have taken action towards the implementation of the agreed conditionality. However, the current war circumstances constitute an event of force majeure that impedes the effective completion of the structural policy measures. As an exceptional response to the acute financing needs of Ukraine, and since the conditionality cannot be achieved at this stage for reasons of force majeure, the Commission decided to proceed with the disbursement of the second tranche as a matter of urgency. Since the Russian aggression started, the EU has significantly stepped up its support, mobilising around €4.1 billion to support Ukraine's overall economic, social and financial resilience.

This is the second and final disbursement to Tunisia under the package of macro-financial assistance measures approved to mitigate the economic impact of the COVID-19 pandemic and strengthen macroeconomic stability. The first tranche of €300 million was disbursed in June 2021, after the Tunisian Parliament ratified the agreement on macro-financial assistance. A total of €600 million in loans have been made available to the country during this year under this aid programme. These emergency funds will help improve Tunisia's balance of payments and fiscal situation, while supporting the implementation of fundamental economic reforms. In this exceptionally complex period, the EU remains determined to support the country on the path to economic reform and full respect for democratic achievements. This implies an inclusive and transparent political transition process, as well as the return to institutional normality, through respect for the separation of powers and the proper functioning of democratic institutions, including Parliament. With the disbursement to Tunisia, the European Union has now completed nine of the ten planned MFA programs under the €3 billion MFA envelope adopted due to COVID-19.

The Commission wants to gather stakeholders’ views on users’ needs and expectations for the digital euro and how to make it available for retail while preserving the legal tender status of euro csash.

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In November 2014 the European Commission inaugurated the ambitious Investment Plan for Europe. Now, the European Commission is launching a public consultation to assess its impact. Let us know what you think by filling up this survey!

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