"Gaps" in the Spanish recovery plan pointed out by the EU Court of Auditors

The Recovery and Resilience Facility was created in 2021 to mitigate the economic and social repercussions of the COVID-19 pandemic. To receive a share of the more than €700 billion of EU financial support available under the Recovery and Resilience Facility, Member States have had to submit national recovery and resilience plans, which are scrutinized by the Commission. European.

According to the report published this Thursday by the European Court of Auditors, the Commission's assessment is "adequate in general", but "there are still risks for the effective implementation of national recovery and resilience plans, such as the lack of clarity of some milestones and goals.

“The Recovery and Resilience Facility is a unique instrument whose purpose is to support the reforms and investments of the Member States and thus their recovery and resilience”, says Ivana Maletić, a member of the Court who led the audit: “The availability Timely provision of aid plays a vital role, but not at the expense of sound financial management. Full transparency and effective controls must be in place to ensure that EU funds are used for their intended purpose and achieve their intended impact.”

The auditors examined the Commission's process for assessing national recovery and resilience plans and the guidance to Member States in this context. In the case of six Member States (Germany, Greece, Spain, France, Croatia and Italy), the auditors also verified whether the Commission's assessment guaranteed compliance with the conditions of the Recovery and Resilience Facility: they are the four with the highest subsidy allocation in absolute terms (Germany, Spain, France and Italy) and the two with the highest subsidy allocation relative to their 2020 gross domestic product (Greece and Croatia).

The auditors found that, in general, the evaluation was adequate: “The Commission's evaluations were based on extensive internal guidelines and checklists, but the evaluators did not use them in a systematic or uniform way for the qualitative evaluation, so in Sometimes it was difficult to follow up on the evaluation.”

According to the auditors, “Recovery and Resilience Plans are likely to contribute to the policy areas relevant to the Recovery and Resilience Facility, but the extent of their contributions varies, and their impact in practice remains to be seen.”

Similar to the Commission's conclusions in its own assessment, the auditors found that “no measure in the audit sample is likely to cause significant harm to the environment. However, measures to reduce environmental impact have not been systematically included as milestones or targets in recovery and resilience plans.”

The auditors found that the Commission's assessment “improved the quality of milestones and targets. However, some were not clear enough, did not cover key stages of implementation, and Member States did not always apply a harmonized approach. The Commission's assessment of estimated costs pointed to a lack of information for certain measures. It also reflected the fact that the disbursement profiles were obtained through negotiation, rather than based on underlying costs.”

Furthermore, the auditors examined whether the Commission's assessment “ensured that the recovery and resilience plans addressed all or a significant part of the country-specific recommendations made in the context of the European Semester (economic policy coordination cycle, fiscal, labor and social of the EU).

However, “they found that the evaluation of what constitutes a 'significant part' of the country-specific recommendations is not defined and, therefore, remains somewhat discretionary, especially in cases where the Commission identified gaps. The auditors also noted that some important aspects of the country-specific recommendations remain unaddressed in the Member States in the sample”.

“We found that the 2020 country recommendations were generally addressed in the sampled recovery and resilience plans,” the Court says: “However, some shortcomings remain in relation to certain elements of the country recommendations, such as the health system (Spain) or investments and the regulatory environment (France), which is expected to be addressed outside the recovery and resilience mechanism. Even so, it was not always clear why they were not included in the recovery plans instead, in particular in the case of important cross-border measures (for example, electricity interconnections between Spain and France), which by definition would be suitable for the Mechanism. Recovery and Resilience”.

“Most of the gaps identified relate to the 2019 country recommendations,” the auditors continue, “which largely represent recurring structural challenges that Member States have been facing for years. For example, the German Recovery and Resilience Plan does not contain any measures to strengthen competition in business services and regulated professions, which has been included in the recommendations for Germany since 2011. Furthermore, several Recovery and Resilience Plans did not address the elements of the recommendations related to the sustainability of pensions (Germany, France, Italy and partially Spain) or taxation (Germany and Italy)”.

The European Court of Auditors also points out that “not all Member States will use the Commission's risk scoring and data extraction tool to identify projects, beneficiaries and contractors at risk of fraud, conflict of interest and irregularities under the mechanism. of recovery. Five Member States in our audit sample (Greece, Spain, France, Croatia and Italy) will use the Commission's risk scoring and data extraction tool, the importance of which we highlighted in a previous audit. The use of the tool was not mandatory, as decided by the Council. However, a common data mining and risk scoring tool is a key element to protect the EU's financial interests and, more specifically, to prevent fraud, conflicts of interest and double financing, as well as to strengthen transparency and accountability."

The report also argues that “the process for determining disbursement profiles lacked transparency. Although not necessarily a problem for the evaluation of recovery and resilience plans, this option will be problematic during the implementation of the mechanism, since a partial achievement of milestones and objectives will have to be reflected in the payment to the Member State concerned. The fact that the amount of the payment in each tranche is the result of a negotiation rather than reflecting the underlying costs will make it difficult to determine what reduction would be appropriate. At the date of the audit, the Commission had not yet defined a methodology for calculating the partial reduction in payments. In practice, across the six Member States in the sample we see significant heterogeneity in disbursement profiles in terms of both the proportion of total funding in each tranche and the number of milestones and targets to be achieved in each tranche.”