European Court of Auditors criticizes the handling of the EU's post-COVID recovery fund

The European Court of Auditors (ERK) has issued more criticism on a fund for hundreds of millions of euros that the European Union set up for economic recovery after the coronavirus pandemic. The watchdog for European finance has said that it is doubtful whether the member states delivered the promised results in exchange for the money.

After the coronavirus pandemic and lockdowns had caused significant economic damage, the European Union developed a fund that gave member states 650 billion euros in loans and subsidies to help improve certain areas like digitization and sustainability. To qualify for the money, EU countries had to draw up plans with certain objectives that had to be met.

The amount of money that a country would receive from the fund was not linked to the costs of the projects. Instead of this method, the European Commission looked at whether certain targets had been reached and the progression of the projects when deciding the fees.

But the ERK thinks that it is still unclear whether the countries that were given the money actually achieved the targets set out and whether EU citizens are “really getting value for their money.”

The ERK also warned of the risks that come with unequal treatment of various member states. There was no clear method for determining the targets that countries had to achieve, making it difficult to compare the situations in different countries.

The court of auditors also expects the costs for the fund, which is officially called the Recovery and Resilience Facility (RRF), to rise. The EU took out joint loans on the capital market at a time when interest rates were low. "Interest rates have risen since then, and by 2026, borrowing costs could more than double initial estimates. Together with repayments, this will put significant pressure on future EU budgets," the institute said.

Despite this, the ERK does recognize that the fund played an important role in the economic recovery of the European Union. But they feel that in the future, the policy makers in the EU should gather information about the genuine costs before transferring money and do a better job of linking the financing to results, ERK member Ivan Maletic said.

In the past, ERK stated that it was impossible in some cases to check whether the money from the fund was handed out correctly. This was particularly a problem in government procurement.