EU chief to launch recovery fund in Lisbon, Madrid

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European Commission chief Ursula von der Leyen visits Lisbon and Madrid Wednesday where she will begin approving recovery plans submitted by nations seeking funding from the bloc’s coronavirus recovery fund.

“This is a historic achievement,” von der Leyen told the European Parliament last week in announcing the imminent activation of the landmark 750-billion-euro ($910-billion) recovery plan which was drawn up nearly a year ago.

The choice to start in Portugal and Spain is symbolic.

Portugal, which currently holds the EU’s six-month rotating presidency, has made the rapid adoption of these recovery plans a priority following their recommendation by the Commission.

And the government of Socialist Prime Minister Antonio Costa set a good precedent by being the first country to submit its own plan in April.

Spain is also a significant choice in that it will be the second-largest beneficiary of the rescue fund after Italy, with Madrid set to receive 140 billion euros ($170 billion), half of which will take the form of direct grants and loans.

The European Commision said it raised the first cash for its post-pandemic recovery and transformation scheme in a heavily oversubscribed bond sale on Tuesday and vowed the money would be spent in line with the about-to-be-approved national plans.

In Lisbon, von der Leyen will head to a science exhibition centre to meet Costa, whose country is to receive 16 billion euros in funding.

She then flies to Madrid to meet Socialist Prime Minister Pedro Sanchez at the headquarters of the national electricity board with Spain to drive the bulk of its funding into the green transition.

On Thursday, von der Leyen will head to Greece and Denmark, and then on to Luxembourg the next day on a tour that will take her to most member states.

Since the end of April, 23 governments have submitted investment and reform plans to Brussels for approval. The Commission has two months from the date of submission to give its opinion after which the European Council must give its approval within a month.

EU Commission head von der Leyen confirmed the EU executive arm sold 20 billion euros worth of 10-year bonds in a syndicated sale that was more than seven times oversubscribed.

The Commission said in a statement that it was the largest ever institutional bond issuance in Europe, the largest institutional single tranche transaction and the largest amount the EU has raised in a single transaction.

Money from the bond sale, and from two others that will take place in June and July, will be transferred as pre-financing to governments whose plans to rebuild their economies after the pandemic greener and more digitalised are approved.

The Commission is to issue its assessments of the plans of Spain and Portugal on Wednesday, Greece and Denmark on Thursday and Luxembourg on Friday, with more to follow next week, von der Leyen said, adding she would travel to the countries concerned.

The Commission intends to borrow 80 billion euros in bonds and more in bills in 2021 to finance the economic transformation scheme that is to help Europe not emit any CO2 by 2050 and become more fit for the digital age.

“We need to invest this money well to make the best out of it… We have to make sure that the plans are in line with European priorities,” von der Leyen told a news conference.

“We know that on paper they are now, (but) we have to make sure that the implementation of these ambitious goals takes place and we will be very vigilant to make sure that this implementation is rigorous,” she said.

EU Budget Commissioner Johannes Hahn, who was also present, said more than 50% of the AAA-rated bonds sold on Tuesday went to investors in the 27-nation EU, and around 13% to Asia and the Americas.

He said around 25% of the investors were central banks, 37% were bought by fund managers and 11% by insurance funds.

“We managed really to interest and attract long term investors, which clearly has been our goal, and I’m happy about this structure of investors,” Hahn said.

Photo: EC Audiovisual Service

Via Reuters/AFP/France 24