Recovery and Resilience Facility funds

Recovery and Resilience Facility funds

On 4 December 2020, Slovak member of the European Parliament (MEP) Ivan Štefanec of the Group of the European People’s Party (Christian Democrats) posed a written parliamentary question to the European Commission:

“Can funds from the Recovery and Resilience Facility be used for non-capital expenditure?”

On 3 February 2021, Economy Commissioner Paolo Gentiloni responded on behalf of the European Commission stating: “The Recovery and Resilience Facility (RRF) can support non-capital expenditure provided it is within the scope of the RRF Regulation. The RRF aims at promoting measures that bring about a structural change and have a lasting impact on economic and social resilience, sustainability and long-term competitiveness and employment.

The support provided through the RRF is therefore consistent with enhancing a broad concept of investment in terms of capital formation in areas such as fixed capital, human capital and natural capital. This could also cover, for instance, intangible assets such as research and development, data, intellectual property and skills.

While fixed capital is broadly equivalent to the concept of ‘gross fixed capital formation’ used in national accounts, other categories of investments covered by the RRF are not always classified as capital expenditure under national accounts.

Human capital is accumulated by means of spending on health, social protection, education and training. Natural capital is enhanced by actions aiming at increasing resource efficiency and the share of renewable natural resources, protecting or restoring the environment, or by mitigating/adapting to climate change.

However, the RRF is primarily designed to cover costs that are of a non-recurrent nature. Exceptionally, expenses of a recurrent nature may be financed to the extent that the Member State is able to demonstrate that these investments will produce longer-term effects in line with the objectives of the RRF, that their financing will be sustainably ensured after the duration of the RRF and that the negative effect on the government balance is only temporary.”

Source: https://www.europarl.europa.eu/doceo/document/E-9-2020-006632_EN.html

Photo Credit : https://pixabay.com/photos/tree-protection-environment-protect-4968689/

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