Filenews 7 May 2025
The weaknesses of the EU Recovery Fund (RRF) and the shortcomings in terms of the performance of funds and measures promoted, accountability and transparency, are highlighted in a report by the European Court of Auditors (ECA), warning of how it may affect the EU budget.
As the ECA points out, the RRF has played a key role in the EU's post-pandemic recovery effort, but there is little information on the results of financing and loans, as well as on the actual costs.
The Recovery Fund, which was created amid the coronavirus pandemic crisis in 2021, finances reforms and investments in areas such as the green or digital transition.
Disbursement is made only after the achievement of pre-defined milestones and targets recorded in the national plans of each Member State in consultation with the Commission.
However, as the auditors point out, this is the first time that the EU has provided such large-scale and amounts of funding that is not linked to the cost of a project.
According to Ivana Maletic, co-responsible for the EU policy review of the RRF, EU policymakers should learn as such future programmes cannot work without information "on the real costs, the final recipients and a clear answer to the question of what citizens are really getting for their money".
«Funding from performance-based budgets should be better linked to results and with clearly defined rules, otherwise such a system should not be used," said Jörg Christian Petrović, who co-signed the review.
The auditors highlight several issues with the RRF in the context of the debate on the EU's long-term budget after 2027.
According to the review, the ECA does not consider the RRF to be a true performance-based financing mechanism, as it places more emphasis on the progress of implementation. In addition, cost-effectiveness and value for money cannot be measured, as the European Commission does not collect data on actual costs and information on results is scarce.
The auditors underline the importance of planning and executing future spending programmes in a way that does not compromise accountability. As they report, although there have been recent improvements, the safeguards for the RRF are not yet strong enough.
For example, the Commission mainly relies on Member States to detect and correct serious irregularities and ensure compliance with EU rules and national rules, but its systems have weaknesses.
In addition, the Commission cannot impose measures such as the recovery of funds for individual breaches of public procurement rules, except in cases of serious irregularities, such as fraud.
This means that the Commission can make payments in full even when there have been irregularities in public procurement, provided that the agreed milestones and targets have been achieved .
In addition, due to the way in which milestones and targets have been set, some EU countries receive significant funds before completing projects. This poses a risk to the EU's financial interests, as member states could eventually keep the money without completing the projects, as it is stressed.
The auditors also note that despite the progress in the implementation of the RRF, there are delays that risk not meeting the targets, as most of the measures have not yet been completed, which must be done by August 2026 and the end of the programme.
At the same time, it is pointed out that the disbursement of EU funds into national budgets does not mean that the money has reached the final recipients and the real economy.
The auditors note that the RRF is financed almost entirely by borrowing from the markets, and that the Commission raised the funds quickly in these early years at historically low interest rates. However, interest rates have since risen and by 2026 the cost of financing could end up more than double the initial estimates, putting significant pressure on future EU budgets.
With regard to any future borrowing, the auditors believe that it is important for the EU to adequately mitigate interest rate risks and to discourage a loan repayment plan in advance, which was not the case with the RRF.
