ECOFIN: The implementation of the PNRR ends on December 31, 2026

The Ministers of Economy and Finance from the EU member states refused last week during the ECOFIN Council meeting to extend beyond December 31, 2026 the implementation of the Recovery and Resilience Mechanism of which the PNRR of our country is a part, announced in a post on the official page by Facebook, European deputy Corina Creţu, former European commissioner for regional policy.

"Rapid adoption of investments and reforms until August 2026 remains essential for a full implementation" of the recovery fund, according to the text of the conclusions of the ECOFIN Council meeting, according to the Spanish agency EFE.

Some countries, especially Italy and Poland, the latter having until this year the PNRR blocked by the European Commission following its dispute with the former conservative Polish government on the subject of the rule of law, requested the extension of the application of the NextGenerationEU financial instrument, since until currently only about 30% of its budget of 750 billion euros consisting of grants and loans has been spent. However, this idea is not accepted by the traditionally more austere states in the northern part of the EU, nor by the European Commission, according to the quoted source.

That is why the European Commissioner for the Economy, Paolo Gentiloni, recalled the difficulty that obtaining a unanimous agreement would entail for revising the end date of the post-pandemic recovery fund and, although he appreciated that it would not be impossible such an agreement, he urged all Ecofin members "to consider that its conclusion is in 2026".

However, the debate on the financing of common priorities starting from 2026 was initiated, which was also talked about by Commissioner Gentiloni, who showed himself several times in favor of continuing the issuance of common debt to finance through European programs the strengthening of defense and security or the green and digital transition , this transition is also at the heart of NextGenerationEU. But the idea of issuing common debt again, as was done to finance the NextGenerationEU fund, is rejected by the German finance minister, the liberal Christian Lindner, EFE also reports.

The non-prolongation of the MRR implementation means that our country will have to complete all the projects and carry out all the reforms assumed in the National Recovery and Resilience Plan by August 31, 2026, in order for the last payments to be approved on December 31, 2026.

Regarding the final deadline for the implementation of the PNRR, Corina Creţu says: "In 2022, when we were negotiating the Recovery and Resilience Mechanism in the European Parliament, we submitted amendments that would extend the deadline for implementing the money from the PNRR until 2026, the initial deadline proposed by the Commission being 2025. I did this because, from the time when I was managing European funds as a Commissioner, I knew the slow implementation of projects in certain member states, including Romania. I've said it before and I repeat it, the PNRR is a historic chance for Romania, and I hope from the bottom of my heart that we won't have to send it back to the Commission in 2026 for not using the allocated funds on time".

So far, the Bucharest authorities have submitted three payment requests for the amounts allocated from the PNRR, of which the European Commission honored only two, which together with the advance received from the grant and loan components means 9.4 billion euros that have already entered the our country, which represents a collection rate of 32% of the total allocation. The third payment request, in the amount of 2.7 billion euros, was submitted by the Ciolacu government in December 2023, but it has not yet been approved by the European Commission, although the term provided for in the regulation for the evaluation expired on February 15, 2024.

The payment was not approved because the authorities in Bucharest have not yet implemented all the reforms/milestones expected to be completed before the submission of payment request number three. The unfinished milestones concern the reform of institutions such as the Autonomous Regime of the State Protocol Heritage Administration (RA-APPS), the way of appointing the management of some state energy companies, including AMEPIP - the super agency for monitoring all state companies, established last year and a low tax threshold for micro-enterprises.

In the year 2024, among the investments and reforms that should take place are: equipping 75,000 classrooms with furniture, purchasing 1,200 electric buses to transport students, modernizing/equipping 10,000 science laboratories, modernizing the at least 25 public hospitals that will benefit from equipment and materials that will contribute to reducing the risk of nosocomial infections, investments in 25 intensive care units, and the completion of 50% of investments in railway infrastructure and roads infrastructure.

Our country initially had a total allocation of 29.1 billion euros through the PNRR, of which 14.2 billion euros was a grant component and 14.9 billion euros were loans. The allocation decreased by 2.1 billion euros at the beginning of 2023 due to the too high economic growth registered by our country in 2022.