ECA President: "Under the pressure of the deadline for the implementation of the PNRR, the risk of defrauding European funds increases"

George Marinescu
English Section / 11 aprilie

Photo source: twitter / Tony Murphy

Photo source: twitter / Tony Murphy

Versiunea în limba română

Tony Murphy, president of the European Court of Auditors (ECA - European Court of Accounts), states that the deadline - December 31, 2026 - for the implementation of the NRDPs represents a factor that "contributes even more to the risk" of misappropriation of funds by amplifying "the pressure on the member states to quickly spend this money".

The ECA president said in an interview with "This (ed. - December 31, 2026 deadline) in itself inherently increases the risk of people being opportunistic and taking advantage of orders fast or whatever might be there'.

Tony Murphy shows that hundreds of millions of euros can be defrauded at any time from the PNRR and stated that the fraud of 600 million euros from the Italian PNRR was preceded by more warnings issued in recent years by the audit institution and said that a lack of central supervision increases the likelihood of misuse of funds.

The head of the ECA noted: "Due to the limited control, or the reduced control framework, compared to standard EU funding based on the multiannual budget (MFF), the risk of such incidents occurring is high."

We remind you that a week ago the European Public Prosecutor's Office claimed to have detained and prosecuted 22 people who were part of a cross-border network including criminal groups from Italy, Austria, Romania and Slovakia who allegedly defrauded Italy's PNRR with 600 million euros. The ECA chief says the action comes only two weeks after he warned the European Commission that funds allocated to national recovery and resilience plans are at increased risk of irregularity, fraud or even corruption.

The ECA president says the rapid rise in interest rates over the past two years will worsen debt repayments - due to start in 2028 - meaning the EU will soon face significant "budgetary pressures". While the loans will have to be repaid by the receiving Member States, the repayment of the Recovery and Resilience Facility grants will benefit from EU budget resources. According to Tony Murphy, interest on these is estimated to be "between euro17-27 billion [by 2027]". The head of the ECA stated that currently the EU does not have a dedicated source of financing for the payment of these interests.

Tony Murphy said: "The EU has funding aspirations in other areas as well, such as enlargement, Ukraine, defense and security, and they all cost money. So you have to get the money from somewhere or you have to increase the loan. I think people need to realize that debt has to be paid back. We're just kicking the road in a way. NextGenerationEU is the right name for the NRDP program because the next generation will have to pay for it."

The interview was given by Murphy to the quoted source on the same day that Paolo Gentiloni, the European commissioner for the economy, suggested turning the Recovery and Resilience Facility into a permanent mechanism of the European Union.

According to the data from last year's report of the European Public Prosecutor's Office, the prosecutors of the institution that oversees the legal spending of European funds have opened over 200 investigations related to the financing granted through the Resilience and Recovery Facility, the investigations targeting the fraud of 1.8 billion euros in 2023.

Established in December 2020, the Recovery and Resilience Facility consists of two components: loans worth 385.8 billion euros, financed by debts jointly subscribed by EU member states, and grants of 338 billion euros. The funds, which are the flagship component of the EU bloc's NextGenerationEU (NextGenEU) initiative, are intended to boost Europe's post-pandemic recovery by financing green, digital and other critical investments in return for specific reforms.

Although the Recovery and Resilience Facility has been used by all EU member states, so far according to European Commission data cited by and less than a third of the 723 billion euro amount has been paid by the Community Executive. Most of the payments came in the form of grants (144.88 billion euros), while only 80.51 billion euros represent loans drawn by the member states.

In these conditions and by the deadline - December 31, 2026, shows that the member states are asking the European Commission to reduce the red tape that prevents them from getting hold of their share of cash from the Recovery and Resilience Facility (RRF) and that discourages them to submit payment requests for fear of losing huge sums.

One of the sources cited by Politico states that the EU member states must go through a real audit procedure before the officials of the European Commission to access the money for PNRR. One member state's EU Council representative said governments were starting to think that applying for loans under the RRF was "not worth the effort".

Meanwhile, the EU Executive has already reduced the total amount available from euro723 billion to euro648 billion, after governments failed to apply for almost euro100 billion in loans before the interim deadline of the end of 2023.

The main reason for the deadlock identified by member states is that European Commission officials see the Recovery and Resilience Facility as a tool to force governments to carry out reforms in a number of areas, such as pensions and democratic standards, which have been penumbra for several years. For this, the member states must amend the legislation, and this translates into compliance with the achievement of the targets and milestones in the PNRR before the Community Executive approves the payment requests.

Or precisely on this point, the member states claim that there should be "more flexibility in the process of evaluating benchmarks and targets".

According to the estimates of some Brussels officials for the quoted source, the European Commission should release to the member states 54% of the total value of the Recovery and Resilience Facility by the end of 2024, and by the end of 2026 it should also pay the rest of 46%.

We remind you that the 3rd payment request from the PNRR, worth 2.7 billion euros, sent by the Ciolacu government on December 15, 2023, is still blocked for payment by the European Commission due to the failure to meet several targets and milestones. It is about the generalization of corporate governance to state companies and autonomous governments, about lowering the threshold for taxation of micro-enterprises and about appointing heads of companies under the Ministry of Energy.