Changes from report parliamentary committee draft to plenary report

Added249. Expresses concern about the cases reported to the EPPO after the first year of implementation of the RRF, namely 15 active cases as reported in the EPPO Annual Report 2022; calls on the Commission to cooperate with OLAF and the EPPO in order to identify patterns of fraud, corruption and money laundering related to RRF and calls on the Commission to act in such situations; calls on the Commission to draw consequences for Member States with too many cases of fraud;

Added250. Notes with concern, that EPPO’s responsibility in investigating crimes involving RRF funds is being put into question in 9 cases in a Member State; notes that the European Court of Justice was asked via a preliminary question to give an opinion in one of these cases;

Implementation and impact

251. Notes that in 2022, the Commission made 13 payments to 11 Member States amounting to a total of EUR 72,2 billion, following the satisfactory fulfilment of 366 M&Ts (328 milestones and 38 targets); notes that as of the date of publication of the second implementation report in September 2023, the Commission has received 32 payment requests from 20 Member States and disbursed a total amount of EUR 153,4 billion (EUR 106,3 billion in grants and EUR 47,1 billion in loans);

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Changed161.252. Notes that the Commission reports that the achievement of M&Ts is broadly on track, after the first year of the RRF's functioning was more focused on the necessary reforms to build the framework for subsequent investment projects to have a higher impact; notes that the Commission reports delays compared to the indicative calendar of payments, due to the process of revising the RRPs in the context of the REPowerEU Plan and implementation challenges Member States are facing, such as administrative capacity issues, investment bottlenecks, and consequences of the RussianRussia’s war of aggression against Ukraine, including the energy crisis, unexpected price shocks, shortages of certain materials and high inflation; notes that the Commission is supporting all Member States in accelerating the implementation and revision of their plans, including through the Technical Support Instrument; is concerned that according to the Commission’s RRF 2023 implementation report, 8 Member States have not yet submitted any payment request to the Commission;

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Added253. Notes that Member States may be overwhelmed administratively with the transfers of large RRF funds and cohesion funds at the same time, thus delaying implementation and potentially threatening transparency; notes the risk of double funding between the RRF and the European Structural and Investment Funds and encourages the Commission to actively check, including the relevant databases, and to communicate with Member States about their administrative capacities to ensure double funding does not occur;

Added254. Notes that several Member States have proposed to use RRF funds through financial instruments implemented by the EIB and other national investment banks to incentivise private investments under certain conditions; is concerned about the possible use of these instruments with the goal of extending the use of RRF funds beyond 2026; recalls that the RRF is a crisis instrument and that funding should be implemented within its lifetime;

Added255. Notes that the Commission is supporting all Member States in accelerating the implementation and revision of their plans, including through the Technical Support Instrument; stresses the importance of the Commission’s proactive role in supporting the Member States to best avoid the delays and under-implementation problem, as well as to ensure that Member States protect the financial interests of the Union and that EU taxpayers’ money is adequately spent; points out that, in particular, the countering of serious irregularities and double funding should receive appropriate resources and attention; notes concerns, as brought to the attention of the discharge authority, about the administrative capacity of the Member States to absorb the funds and the implementation of high quality projects, especially towards the end of the RRF period;

Added256. Is concerned that according to the Commission’s RRF scoreboard, 3 Member States have not submitted any payment request to the Commission by end December 2023; calls for speedy implementation of RRPs, including an evaluation by the Commission regarding barriers and results; is concerned that under-implementation, unless swiftly mitigated, might result in a payment crisis;

Added257. Criticises that in contradiction to the main goals of the facility the definition of “resilience” is insufficient to ameliorate the preparadeness of future crisis situations;notes that very little emphasis is placed on resilience or added-value in contributing to resilience when milestones and targets are emphasised; urges the Commission to create a ‘contribution to resilience’ indicator for the RRF scoreboard and to present the impact in the area of resilience in a table; further urges the Commission to consider contribution to resilience when considering new milestones and targets that are introduced into revised national recovery and resilience plans; encourages the Court to look more closely at RRF impact of resilience in all the pillars in a future study;

Added258. Emphasises that when reviewing revised national recovery plans, the Commission should still diligently apply the ‘Assessment guidelines for the Facility’ as outlined in Annex V of the RRF Regulation, which requires the Commission to assess and rate national recovery and resilience plans under the criteria of relevance, effectiveness, efficiency and coherence (article 19(3)), as well as coverage of the six pillars, namely a) green transition, b) digital transformation, c) smart, sustainable and inclusive growth, d) social and territorial cohesion, e) health and economic, social and institutional resilience, f) policies for the next generation (Article 3); asserts that this is an important process to avoid revised national recovery plans that are much weaker than the original plans or that no longer fulfil the criteria;

Added259. Notes that the RRF should create synergies and measures implemented should lead to structural reforms that have added-value; is concerned that some countries have repackaged old national reforms into the national RRPs;

Added260. Emphasises that there should be a better co-governance approach in all Member States so that local and regional authorities, civil society organisations, social partners, academia or other relevant stakeholders are adequately involved in the design and the implementation of the national RRPs; calls for their involvement based on clear, fair, transparent and non-politicised principles, in the implementation of the national RRPs to the maximum extent possible under the national legislative framework;

Added261. Calls on the Commission to ensure that Member States apply a zero-tolerance approach to corruption and fraud, including embezzlement, without any exception;

262. Welcomes the RRF's crucial contribution to preventing a severe economic downturn and social crisis following the COVID-19 pandemic, and the fact that it enabled an unprecedented wave of reforms and investments across the Union that will have an important long-lasting effect on the Gross domestic product( GDP); points out that the European added value of the RRF has long been proven by the fact that its innovative and flexible nature allows Member States to achieve common Union policy objectives; notes that, at the same time, the RRF enables Member States to address country specific challenges through the design of the RRPs while a single assessment framework is applied equally for all Member States and payments requests;

263. Welcomes that reforms and investments proposed by the Member States in support of the green and digital transitions have exceeded the objectives set in the RRF Regulation, as the estimated climate expenditure amounts to about 40 % and the digital expenditure to 26 %, while the objectives were set at lower percentages of 37 % and 20 % respectively;

264. Notes the progress reported on the six pillars of the RRF and, in particular, on the implementation of country-specific recommendations (CSRs), with at least some progress having been made for 68 % and substantial progress in 12 % of 2019-2020 CSRs, which shows the incentives provided by the RRF; notes that progress in the implementation of the 2022 CSRs has also been substantial, with at least some progress in almost 52 % of the recommendations addressed to Member States in July 2022;

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Added265. Recalls that the COVID-19 pandemic revealed structural weaknesses in health systems across the Union, such as lack of resilience and crisis response capacity; highlights that health is a policy area within one of the six pillars of the RRF, which make possible reforms and investments to strengthen their capacity, quality and resilience; notes that 531 M&Ts and 223 measures, as well as 48 % of the estimated contribution to this pillar is related to healthcare but regrets that some national RRPs have a health-related milestones or targets that do not contribute to strengthening the national health system; notes that an estimated 45 million people can use or be served by new or modernised health care facilities thanks to the RRF; urges the Commission to strengthen M&Ts related to preparedness and resilience in the health sector where possible when revising national RRPs and to report to the discharge authority;

266. Notes from Special Report 26/2023 that, despite the little time available to design the performance model of the RRF, the Commission and Member States managed to set up a monitoring system, including an IT-system, that allows implementation progress to be measured; welcomes the Commission’s commitment to work on the identified issues and implement the related recommendations;

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Added267. Stresses that the mere completion of projects financed by the RRF funds does not guarantee a positive economic and social impact as well as quality and sustainability; notes the Court’s observations highlighting some of the drawbacks of using a performance-based framework, in particular trying to quantify results as M&Ts rather measure outputs; urges the Commission to apply the lessons learned and the Court’s observations, and to ensure that the design of future performance-based instruments also measure results and not only outputs;

268. Welcomes the considerable progress shown by the common indicators and across all policy pillars by December 2022, such as 22 million Megawatt (‘MWh’) of savings in annual energy consumption achieved, 1,43 million enterprises helped either through monetary or in-kind support, 4 million people trained, and support provided to 4 115 196 young people aged 15-29 years;

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Added269. Recalls that on 15 December 2022, the Council adopted an Implementing Decision on the approval of the assessment of the RRP for Hungary based on the Commission’s positive evaluation; recalls that 27 ‘super milestones’ were added to the national RRP with remedial and audit and control measures; notes that on 7 December 2023, the Council adopted the Implementing Decision approving Hungary’s amended RRP, including a REPowerEU chapter, which allows Hungary to receive EUR 0,9 billion in pre-financing of the REPowerEU funds; regrets that the mentioned pre-financing is not subject to the ongoing procedure under the rule of law conditionality mechanism;

Added270. Notes that the RRF Scoreboard provides real-time information on the disbursements and progress made by Member States, as well as additional data, indicators and thematic analysis and welcomes the launch of the Union-wide interactive map showing RRF projects by geographical location and providing information on the state of play; is concerned, however, that the Court concluded that presented performance lacks transparency as regards inclusion of estimates and that aggregated information is not comparable, as well as that the information on the progress under the six pillars is misleading, i.e. when a measure is assigned to a primary and a secondary policy area belonging to the same pillar, the contribution of each measure is counted twice; highlights that transparency about limitations is of the utmost importance as it affects the (perceived) reliability of all presented information; calls on the Commission to immediately remedy the detected shortcomings and to proactively inform on the limitations of the data presented on the RRF Scoreboard;

Added271. Notes that many purely national projects are listed as cross-border projects as soon as they have energy saving or energy reducing elements; criticises the overestimation of the published number of cross-border projects as misleading;

Added272. Notes that the Court found that, concerning reporting on the common indicators, quality and underlying methodologies are not checked by national audit authorities in any visited Member State; is astonished that in a Member State, for expenditure under MFF heading 3, the indicated planting of trees did not exist when the Court made an on-the-spot check; notes that the Commission does not require supporting evidence or explanations on the reported data, except in cases where estimates are reported; notes that the Court concludes that this poses a risk to data reliability and comparability across member states; concludes that data reliability in the absence of audits might affect the performance information reported on common indicators to a larger extent than information based on milestones and targets; considers this, given the issues identified in the milestones and targets by the Court, a worrying situation and calls on the Commission to improve its assurance on the reporting on common indicators; notes the differing practices among audit authorities regarding the timing of the checks on the fulfilment of targets and reforms; believes that such checks should be better harmonised and should include a compulsory check on the reliability and accuracy of the data on milestones and targets before those milestones and targets are included in a payment request; points out the risks of an approach that uses mostly ex-post checks and calls on Member States to avoid such practices;

Transparency

273. Notes that the Ombudsman acknowledges that progress has been made in pro-active transparency, specifically through the RRF Scoreboard and the publication of the 100 largest recipients; notes however the points for improvement indicated by the Ombudsman and supports its recommendations to ensure greater transparency and accountability with regard to the RRF;

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Changed168.274. Notes that, following an explicit demand of the Parliament, the amended RRF Regulation requires Member States to publish information on the 100 final recipients receiving the highest amount of funding under the RRF; regrets the late publication of the lists by Member States and notes that all Member States but one have published the required list on the RRF Scoreboard andby December 2023; observes a large variety of the size of the payments both across the Member States and within each country, which is explained by the heterogeneous nature of RRPs; expresses concern over the interpretation of the Commission of the concept of “final recipient” under the RRF, as often they are listed only at the ministry level, and that the descriptions are extremely vague, with many examples available in almost all lists provided by Member States; reiterates its demand that the list of 100 largest final recipients provides the factual natural person or entity that is the last in a chain of money transfers; is concerned that otherwise it will be problematic to measure the impact and guarantee visibility of the RRF funds to the citizens;

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Changed169.275. WelcomesRecalls that transparency and accountability in the implementation of the Union budget are crucial and stresses, in this context, the need for further efforts by both the Commission and the Member States; welcomes the other initiatives undertaken by the Commission to increase transparency on the implementation of the RRF; notes that key documents governing the implementation, such as RRPs, Operational Arrangements, methodologies for assessment, and documents supporting or containing key decisions concerning Member States’ implementation are publicly available and easily accessible;

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Added276. Is concerned about reports from the Court regarding difficulties in accessing RRF data to perform its duties; urges the Commission to ensure full access to the Court to the relevant databases of the Member States and the Union; urges the Commission to guarantee that data in the FENIX database are updated in a timely manner for the purposes of audit and control; underlines that data should be accurate and transmitted in a standardised format;

Added277. Recommends when implementing performance-based instruments in the future, that milestones and targets are clearly defined and linked in a timely manner to avoid accountability gaps and that the measuring of outputs and results is possible; recommends for performance based instruments to create a clear and precise verification mechanism from the beginning; notes that this is crucial in the context of transparency and accountability to the Union taxpayer;

Added278. Is concerned about transparency and accountability towards the public; urges that the Commission communicates with Member States about appropriate labelling of projects including reference that a project received Recovery and Resilience Funds; regrets following the Court’s annual report 2022 that even at the Commission level there is no clear oversight what specific projects RRF funds are supporting; underlines that the European taxpayer has the right to see what projects EU funds are supporting, where the projects are occurring, and what their added value is; calls on the Commission to increase visibility to insist on clear labelling of projects whether in the form of plaques for physical buildings or renovations, notifications on websites, announcements at conferences or trainings, or labelled on printed documents;

Recommendations

279. Supports the Court’s recommendations in its Annual Report as well as in related special reports, and welcomes that the Commission accepts a majority of them; calls on the Commission to implement them and to keep the discharge authority informed on the progress of the implementation;

280. Furthermore, calls on the Commission to:

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Removed(i) map different options to address the reversal of milestones after the end of the implementation period of the RRF and the relevant legal basis;

Added(i) improve the ex-post monitoring of the continued satisfactory fulfilment of M&Ts, including in the area of the Rule of Law, and strictly apply the provisions of the RRF and the adopted guidelines to address concrete instances of reversal resorting to clear financial measures, including suspension of payments and recovery of funds when reversal of M&Ts occurs in accordance with the RRF Regulation and methodologies;

Removed(ii) keep improving the clarity of the measures and the related M&Ts when the Member State submits a revision of the national plan;

Added(ii) work in close cooperation with the discharge authority to map different options, and the relevant legal base, to address the reversal of milestones after the end of the implementation period of the the RRF;

Added(iii) keep improving the clarity of the measures and the related M&Ts, as well as ensure that they fully respect the horizontal principles of the Regulation, when the Member State submits a revision of the national RRP;

Added(iv) include clear verification mechanisms in the operational arrangement for M&Ts to allow for an unambiguous assessment of their fulfilment and to better outline its purpose in future performance-based instruments, as well as taking into account the verification mechanism when analysing the satisfactory fulfilment of M&Ts to contribute to the accuracy of measurements;

Added(v) continue to undertake Member States’ system audits in order to check their adequacy, as well as to obtain reasonable assurance on the compliance with Union and national rules, particularly public procurement, and work closely with the Court to find ways to remove its concerns about the assurance gap;

Added(vi) look not just into the adequacy of the set-up, but also into the actual functioning of the Member States’ audit and control systems for future performance-based instruments;

Added(vii) help Member States to implement the RRF projects in the foreseen timeline and to change the methodology of categorisation of cross-border projects so only a real geographical cross-border component is considered;

Added(viii) further support Member States to increase their administrative capacity to handle the simultaneous implementation of funds and help them reduce unnecessary administrative burdens, particularly for SMEs, simplify tenders and provide for more targeted information;

Added(ix) pay special attention and maintain an ongoing dialogue with the Member States so that reforms and investments meet the climate targets of the RRF Regulation and fully respect the “do no significant harm” principle;

(x) address reported delays at an early stage by providing, inter alia, technical assistance to Member States;

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Changed(iv)(xi) keep working with the Court in order to bring the interpretation of M&Ts as close together as possible; and

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Added(xii) improve the transparency and presentation of the RRF Scoreboard by eliminating any possibility of misinterpretation of figures and to measure the contribution to resilience more accurately as part of the RRF’s ex-post evaluation;

Added(xiii) consistently and accurately apply the provisions related to the “final recipients” of the RRF Regulation and to communicate with Member States on the correct application of the definition of “final recipients”;

Added(xiv) grant the Court, OLAF and EPPO access to the RRF related data, including to FENIX, within the exercise of their respective competences;

Added(xv) communicate actively with Member States on EPPO’s competence for criminal cases related to RRF funds since corruption or fraud using RRF funds constitutes a crime against the financial interests of the European Union;

Added(xvi) to communicate more actively with Member States regarding fraud prevention and to encourage them to align the reporting on fraud in a digital standardised way and to make use of the Irregularity Management System;

Added(xvii) report to OLAF at an aggregated level on the cases of suspected fraud, corruption, and conflict of interests detected in its own audits and by the Member States as reported in the management declarations, and to evaluate the information received to offer guidance to Member States if necessary;

Added(xviii) address the interaction between Cohesion and RRF funds and, in particular, those requirements that may facilitate using one fund rather than the other, and as well as to work with and guide Member States to select funds according to what is most fitting and efficient for the project in question; encourages the Commission to actively cross-check between databases to ensure double funding does not occur;

Added(xix) encourage Member States to put more emphasis on the involvement of local and regional authorities needs by requesting Member States to work more actively in a co-governance approach;

Added(xx) keep the goal of resilience and recovery in mind, in particular with regard to sectors that are critical in case of crisis, such as the health and the good sectors;

(xxi) use the recommendations of the Court from its work on the RRF and the experience gained in the implementation for the design and implementation of future Union performance-based instruments when relevant;

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Added(xxii) ensure a comparable and proportionate level of precision in the assessment of milestones and targets and keep ensuring equal treatment to Member States when evaluating the satisfactory fulfilment of M&Ts;

Added(xxiii) be more proactive in publishing documents and statistics regarding how they handle document access requests, as such information would help with assessing the institutions’ proactive approach to document access; calls that an application for access to a document must be handled promptly;