EU unveils conditions for gigantic recovery fund disbursements

[BRUSSELS] European Union governments hoping to receive a slice of the hundreds of billions of euros in jointly raised recovery funds will need to put forward plans of specific reforms and commit to spend the cash on digital infrastructure projects and the transition to a low-carbon economy.

That's according to set of guidelines published by the EU's executive arm on Thursday, clarifying what kind of spending is eligible from the gigantic rescue package agreed between the bloc's leaders over the summer. The list includes investments ranging from high-speed broadband to electric-vehicle charging stations, boosting digital skills and financing building renovations, as well as the funding of structural reforms recommended by the European Commission.

The guidelines follow the agreement by EU leaders of an unprecedented stimulus package, which will be financed by jointly backed debt. Part of the package, known as the Recovery and Resilience Facility, will be pre-allocated to member states, giving out 312.5 billion euros (S$501.4 billion) of grants and 360 billion euros of low-interest loans.

If governments comply and submit credible draft plans next month, then the recovery funds can start flowing to Europe's cash-strapped economies sometime in the second quarter.

"Each recovery and resilience plan will have to include a minimum of 37 per cent of expenditure related to climate," the commission said. The plans "should include a minimum level of 20 per cent of expenditure related to digital." BLOOMBERG