The NextGenerationEU (“NGEU”) represents the largest package of economic stimulus measures launched by the European Union to boost the recovery of the European economies after the Covid-19 outbreak.
The key instrument of this package is the Recovery and Resilience Facility (“RRF”), which involves 750 billion euros –390 billion in grants and 360 billion in loans– aimed at repairing the immediate economic and social damage brought about by the pandemic, by building a greener, more digital and more resilient Europe.
The general framework created by the European institutions has been translated into different national recovery plans, such as the Belgian “National Recovery and Resilience Plan” (the “Recovery Plan”), which was approved by the European Council on 13 July 2021.
The Council's decision approves the Commission's proposal to grant 5.9 billion euros to Belgium from the RRF. The decision also allows for a first disbursement of 770 million euros to Belgium in pre-financing. This represents 13% of the total allocated amount for Belgium and will help kick-start the implementation of the investment and reform measures included in Belgium's Recovery Plan. Further disbursements will be authorised by the Commission based on the satisfactory fulfilment of milestones and targets outlined in the Recovery Plan, reflecting progress on the implementation of the investments and reforms.
Outline of the Belgian Recovery Plan
The Recovery Plan embraces the EU's priorities and main challenges in response to the COVID-19 crisis. With its plan, Belgium aims to accelerate transition towards a more sustainable, smart and inclusive economy, while also enhancing social, economic and climate resilience.
The Recovery Plan is structured around six strategic pillars: (i) climate, sustainability and innovation; (ii) digital transformation; (iii) mobility; (iv) social and inclusiveness; (v) economy of the future and productivity; and (vi) public finances.
In total, around 50% of the Recovery Plan's expenditure contributes to climate objectives, while 27% of spending is allocated to the digital transition. This exceeds the minimum requirements set by the EU that at least 37% should be spent on sustainability and 20% on digital transition.
Belgium's Recovery Plan was presented to the European Commission on 30 April 2021 following consultations held between Belgium's federal government, regional and community governments. Belgium aims to achieve the Recovery Plan's objectives through pre-identified investment and reform projects.
While the funds covered by the Recovery Plan relate to Belgium as a whole, the implementation, monitoring and control of these projects rests with one of Belgium's six governmental entities – Federal State, Flemish Region, Walloon Region, Brussels-Capital Region, French Community and German-speaking Community. The Recovery Plan describes in detail how funds will be implemented and how each entity will monitor the implementation. The plan also outlines how each entity plans to control and tackle serious irregularities such as fraud, corruption and double funding.
Distribution of the funds under Belgium's Recovery Plan
Belgium's governments have pre-identified 87 investments projects and 34 reform projects. On the one hand, the 34 reform projects aim to amend and improve existing measures, such as tax and pension schemes, in view of the Recovery Plan's objectives. The 87 investment projects will, on the other hand, will introduce new measures meant, such as investment in new public infrastructure and technology. No other projects than those pre-identified in the Recovery Plan will be able to benefit from the 5.9 billion euros grant to Belgium.
The Recovery Plan provides an overview of each project, including the expected expenditure per project. The Recovery Plan also provides for an individual assessment to justify whether the grants for each pre-identified investment and reform project constitutes State aid.
Each project is sorted and described in detail under one of the plan's six strategic pillars. Highlights from Belgium's key measures for each pillar are:
(i) Climate, sustainability and innovation – investments and reforms supporting climate objectives such as the energy-efficient renovation of residential and public buildings, social housing and residential buildings across Belgium's regions (1 billion euros); investments in novel low-carbon energy technologies such as the financing of hydrogen projects and the construction of a multi-functional energy platform in the North Sea to generate additional offshore wind electricity (540 million euros).
(ii) Digital transformation – investments and reforms supporting digital objectives such as raising awareness of SMEs on management of cyber risks and investing in Belgium's response capabilities to cyber-attacks (80 million euros); accelerating the digital transformation of public administration, the justice system and health care system (585 million euros).
(iii) Mobility – the financing of sustainable transport such as a fleet of 356 green buses for public transport, the deployment of 78,000 electric car charging stations, improving railway infrastructure and intermodal platforms in ports, and further investments in cycling routes across the country (920 million euros). Another measure under this pillar is the review and greening of Belgium's company car tax scheme.
(iv) Social and inclusiveness – introducing a future-proof education system across communities and investing in further access to digital tools and technology (480 million euros); various reforms and investments meant to better support vulnerable groups in society (low-skilled people, women, immigrants, people with disabilities).
(v) Economy of the future and productivity – various measures meant to increase the employment rate while ensuring an inclusive labour market; investments in research and innovation meant to implement efficient production processes based on emerging technologies; accelerated transition towards a circular economy.
(vi) Public finances – investments and reforms meant to calibrate and improve Belgium's public spending on the various objectives of the Recovery Plan, in particular climate and digital objectives.
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