Sun. Nov 24th, 2024

Background briefing on the EU EcoFin Council in Luxembourg on 12 April 2024

Apr 11, 2024 , , , , ,

Brussels, 11 April 2024

Chair: 

  • Vincent Van Peteghem, Belgian Deputy Prime Minister and Minister of Finance

European Commission’s representatives:

EU Commission Executive Vice-President Valdis Dombrovskis,

EU Commissioner Paolo Gentiloni

Starting time: 10:00

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The Council will exchange views and seek to adopt conclusions on the implementation of the

  • Recovery and Resilience Facility (RRF)
  • Ministers will proceed to exchange views on the economic and financial impact of Russia’s aggression against Ukraine.
  • The Council will seek to approve the EU’s mandate for the G20 finance ministers and central bank governors meeting of 18 April 2024. The Council will also aim to approve an EU statement for the International Monetary and Financial Committee.
  • Under any other business the European public prosecutors’ office (EPPO) will present its work, in particular in the field of VAT fraud.
  • Under items without discussion, the Council will aim to adopt a Council Decision for urgent short- term macro-financial assistance to Egypt for an overall amount of € 1 billion in loans.
  • The Council will also seek to adopt a decision increasing the capital of the European Bank for Reconstruction and Development (EBRD).

 

* * *

 

Recovery and Resilience Facility

Ministers will exchange views on the state of play of the implementation of the Recovery and Resilience Facility (RRF). The Council will seek to approve conclusions on implementation of the RRF.

The Commission presented a mid-term evaluation of the RRF on 21 February 2024, taking stock of progress achieved in implementing the RRF. The mid-term evaluation is a requirement under the RRF Regulation and will be followed by an ‘ex post evaluation’ in 2028, with a global assessment of the Facility and its impact, once the measures included in the recovery plans are fully implemented.

The RRF is the EU’s large-scale financial support programme in response to the challenges the pandemic has posed to the European economy. It is the centrepiece of NextGenerationEU, a temporary recovery instrument that allows the Commission to raise funds to help repair the immediate economic and social damage caused by the COVID-19 pandemic.

To benefit from the Facility, member states submit recovery and resilience plans (RRPs) to the Commission, setting out the reforms and investments they intend to implement by the end of 2026.

So far, €648 billion have been committed to this end. To date, all RRPs have been approved, 57 payment requests have been received and €225 billion have been disbursed.

Regulation 2023/241 as regards REPowerEU chapters, in force since 1 March 2023, increases the RRF financial envelope by €20 billion in new grants. In addition, member states are able to voluntarily transfer up to €5.4 billion from the Brexit Adjustment Reserve to the RRF to finance REPowerEU measures. This comes on top of the existing transfer possibilities of 5% from the cohesion policy funds (up to €17.9 billion).

 

Russia’s aggression against Ukraine

The Council will take note of the state of play of the economic and financial impact of Russia’s aggression against Ukraine. Ministers will receive an update from the Commission on the economic and budgetary situation in Ukraine.

The discussion will focus on the implementation of the Ukraine Facility. The Presidency will also inform the ministers on recent proposals for the use of windfall profits from the immobilised Russian assets.

 

 

G20

The Council will seek to approve the EU’s mandate for the G20 finance ministers and central bank governors meeting of 17-18 April 2024. The Council will also aim to approve an EU statement for the International Monetary and Financial Committee.

 

 

Any other business

The European public prosecutors’ office (EPPO) will present its work, in particular in the field of VAT fraud.

Macro-financial assistance to Egypt

The Council will seek to adopt a Council Decision for urgent short-term macro-financial assistance for an overall amount of € 1 billion to Egypt in loans. The decision is planned to be adopted as an item without discussion.

On 15 March 2024, the Commission proposed a macro-financial assistance operation to Egypt for an overall amount of € 5 billion in loans, following the request of Egypt on 12 March 2024.

The proposed macro-financial assistance would provide € 1 billion in the short-term and € 4 billion over the period 2024-2027. The differentiated approach aims to make it possible to disburse the first part of the aid before the end of the year to respond to Egypt’s urgent financing needs.

The proposed aid is meant to address the deteriorating macro-fiscal situation and financing needs of the country over recent months, notably after the outbreak of the Gaza war, the Houthi attacks in the Red Sea and the repercussions of Russia’s war on Ukraine.

According to the IMF, Egypt, which has never benefited from a macro-financial assistance operation in the past, is facing an external financing gap of around USD 17.7 billion over the period July 2024 – June 2027.

Commission proposal for a Council Decision on providing short-term macro-financial assistance to the Arab Republic of Egypt

Other items

Under items without discussion, the Council will seek to adopt a decision increasing the EU’s shares in the capital of the European Bank for Reconstruction and Development (EBRD).

On 22 January 2024, the Commission submitted to the Council and the European Parliament a proposal for the EU to subscribe to additional shares in the capital of the EBRD. This capital increase should ensure the Bank’s support for resilience and reconstruction in Ukraine beyond 2023 and the continued support in all of its countries of operations.

The proposal also intends to extend the geographic scope of EBRD operations to sub-Saharan Africa and Iraq in a limited and incremental manner. In addition, the Commission proposes to remove the statutory capital limitation on ordinary operations in order to entrust the EBRD Board of Directors to establish and maintain any appropriate limits with respect to capital adequacy metrics.

The Commission requested the European Parliament and the Council to apply the urgency procedure for this file. The European Parliament adopted the text without modifying the substance of the proposal on 14 March 2024 and the Council will seek to adopt the same text, thus closing the adoption procedure.

Commission proposal for a Decision concerning the subscription by the European Union to additional shares in the capital of the European Bank for Reconstruction and Development (EBRD)

Source – EU Council: Background brief – Economic and Financial Affairs Council of 12 April 2024

 

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