Economic and Financial Affairs

The Commission found that, notwithstanding steps taken, there is still a continued risk to the EU budget given that the remedial measures that still need to be fulfilled are of a structural and horizontal nature. While several reforms have been undertaken or are underway, Hungary has failed to adequately implement central aspects of the necessary 17 remedial measures by the deadline of 19 November, as agreed under the general conditionality mechanism. The measures relate to the effectiveness of the newly established Integrity Authority and the procedure for the judicial review of prosecutorial decisions. Based on its assessment, the Commission has decided to maintain its initial proposal of 18 September to suspend 65% of the commitments for three operational programmes under cohesion policy, amounting to €7.5 billion. The Commission is also maintaining its proposal that no legal commitments may be entered into with any public interest trust. The Council will now have until 19 December to vote on the matter, requiring a qualified majority for the suspension of funds to enter into force.

The survey finds that 77% of respondents believe that having the euro is a good thing for the EU and 69% believe it is a good thing for their own country. In addition, the results show a high level of support for the Recovery and Resilience Facility, the instrument at the heart of NextGenerationEU: 75% of respondents back the idea of a recovery plan supporting all Member States, on the condition that they make green, digital and social investments and reforms. The results also show strong support for SURE, the €100 billion instrument designed to protect jobs and incomes affected by the COVID-19 pandemic. The vast majority of respondents (80%) believe that it was good to provide EU loans to help interested Member States keep people in employment in such a context. The survey also sought citizens’ views on certain questions related to euro coins and banknotes. It found that 64% of respondents are in favour of abolishing 1- and 2-euro cent coins, reflecting a high and stable level of support with absolute majorities in all euro area countries.

The payment completed on 2 December was made possible by the achievement by Cyprus of the 14 milestones related to the first instalment. These milestones cover key reforms and investments in the electricity market, financial sector, and public administration, as well as in the areas of energy efficiency, circular economy, anti-corruption and transparency, digital skills and budget audit and control. On 28 July 2022, Cyprus submitted an initial request for €85 million to the Commission, based on the achievement of the 14 milestones set in the Council Implementing Decision. On October 25, 2022, the Commission approved a positive preliminary assessment of this application. The favourable opinion of the Economic and Financial Committee paved the way for the adoption by the Commission of a final decision on the disbursement of funds. Overall, the Cyprus Recovery and Resilience Plan will be funded with €1.1 billion (€916 million in grants and €200 million in loans). Payments under the Recovery and Resilience Facility (RRF) are performance-based and conditional on Cyprus implementing the investments and reforms outlined in its Recovery and Resilience Plan.

This is Lithuania’s first payment request and relates to 33 milestones covering reforms and investments in the areas of education and social policy, innovation, taxation and sustainable mobility. The milestones also cover sustainable sources of energy, public data management and open data, as well as broadband infrastructure. Lithuania’s overall recovery and resilience plan will be financed by €2.22 billion in grants. Payments under the RRF are performance-based and are contingent on Lithuania implementing the investments and reforms outlined in its recovery and resilience plan. The Commission will now assess the request. It will then send its preliminary assessment of Lithuania's fulfilment of the milestones and targets required for this payment to the Economic and Financial Committee (EFC).

The request received on 25 November is Czechia's first payment request and relates to 37 milestones and targets covering investments in railway infrastructure and in digital tools for education, as well as reforms of school curricula and eHealth. The request includes a milestone on audit and control and conflicts of interest, aimed at protecting the Union’s financial interests. Czechia’s recovery and resilience plan is financed by €7.04 billion in grants, with €640 million in additional grants still available for request. As with all Member States, payments under the RRF are performance-based and contingent on Czechia implementing the investments and reforms outlined in its recovery and resilience plan. The Commission will now assess the request and will then send its preliminary assessment to the Council’s Economic and Financial Committee.

This makes the CEB an InvestEU implementing partner and will mobilise around €500 million in additional loans for social projects. It represents an important milestone, as this is the first time InvestEU is supporting the investments of a multilateral development bank with an exclusively social mandate. The guarantee agreement will unlock significant investments under the InvestEU “social investment and skills” and “sustainable infrastructure” windows. This includes social, affordable and student housing; education, employment, and skills; health care, long-term care and social care; as well as clean and smart urban mobility, water and wastewater services, and flood protection. The portfolio of projects covered by this InvestEU guarantee will also support cross-cutting objectives such as gender equality and the social and economic inclusion of vulnerable groups, including persons with disabilities. The first operations under the agreement are expected to be approved over the course of 2023.

Ministers also exchanged initial views on the Commission recommendation for a Council recommendation on the economic policy in the euro area which was published with the autumn package on 22 November. Based on a discussion of the first post programme surveillance report on Greece, the Eurogroup concluded that the necessary conditions were in place to confirm the release of the eighth and final tranche of policy-contingent debt measures as well as the abolition of the step-up interest rate margin from 2023. Ministers re-elected the incumbent President of the Eurogroup Paschal Donohoe for a second term, which will start from 13 January 2023 and adopted the work programme for the first half of 2023. At a meeting on 6 December, the Economic and Financial Affairs Council (ECOFIN) discussed a legislative package of €18 billion in financial support to Ukraine and adopted one of the three pieces of legislation which aim to provide a structural solution to financially support Ukraine in 2023. Ministers shared their initial views on the economic governance review presented by the Commission, reviewed implementation of the Recovery and Resilience Facility, and held a policy debate on revision of the energy taxation directive.