The European Recovery and Resilience Fund was set up by the European Union to meet the economic and social leveling caused by the implementation of measures to tackle the Covid-19 pandemic. The aim of the Fund’s action is:
• To drastically reduce the social and economic hardship and inequality caused by the implementation measures of the pandemic.
• To create the necessary security cushion (liquidity) to make the economies of the member countries more resilient, to maintain their momentum but also more sustainable in terms of their new adaptation to a green economy.
by Thanos S. Chonthrogiannis
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To achieve these goals, member countries will need to be financially supported by the fund to support the necessary reforms and investments.
The funds provided will be directed to two actions:
• In projects for the green transition.
• In projects to enhance the digital transformation of member countries.
A key element of the Plan is the participation of the private sector using public-private partnerships and energy service companies utilizing the loans of the Recovery Fund.
The loans will be given through commercial banks, international financial institutions (EIB, EBRD) with purchase criteria (50% government financing, 30% lending, 20% equity).
• It can lead to full fiscal integration and European integration. German Finance Minister Olaf Soltz compares the EU decision to set up a European Recovery and Resilience Fund with the US agreement between Hamilton and Thomas Jefferson (1790) on federal debt the US a real political, fiscal, and economic federation.
• Politically, the Plan is a new proposal of an example for the functioning of the modern state and occupies all aspects of the economy to establish and prolong social prosperity through the elimination of the pathogenesis of the member countries, their economies, and societies.
• Obliges the achievement of the objectives of the partnership and not the competitiveness between the public and private sector to maximize the use of available investment resources and activities. In this scheme, the banking sector will be distinguished, which will have a dual role. The lender financier and the investment plan preparation and evaluation consultant.
• Forms positive expectations and a positive investment climate both now and in the future. The creation of a climate of trust for the correct implementation of the Plan creates at the present time a positive climate in the economy.
At EU level, the failure of the European Fund for Recovery and Resilience will be the cornerstone of a full-fledged fiscal EU between Member States and that will mean new spheres of influence.
At member-country level, there should be equal development in the individual sectors of each member-country economy to avoid creating an economy with different speeds and different sizes.