Payment suspension methodology for the Recovery and Resilience Facility

Briefing 08-05-2023

The implementation of the Recovery and Resilience Facility (RRF) is well underway, with all EU Member States' national recovery and resilience plans in place and disbursements having reached over €150 billion so far. Except for pre-financing, the condition for disbursing RRF funds to Member States is the successful achievement of pre-defined milestones and targets, laid out in the annexes to the Council implementing decisions and linked to each payment request. The RRF Regulation envisages the possibility of suspending all or part of the financial contribution available to Member States if milestones and targets have not been satisfactorily achieved. Both the European Court of Auditors and the European Parliament have urged the Commission to develop a methodology that allows for estimating the impact of not meeting a milestone or target. To cater for eventual non-fulfilment of milestones and targets, which will interrupt the agreed schedule of payments and might in turn affect RRF implementation, in February 2023, the European Commission published a methodology for partial suspension of payments. The methodology aims to facilitate the continued implementation of investments and reforms, by taking into account the work that has already been done and disbursing the funds corresponding to it, while withholding part of the resources. It allows for an additional six-month period for Member States to deliver on the milestones and/or targets not yet achieved. Following the publication of the methodology, Lithuania became the first country subject to a possible partial suspension, owing to the fact that the Commission deemed two of the milestones from Lithuania's first payment request not to be satisfactorily achieved. The methodology described in this briefing is based on the Commission's communication. However, it may be reviewed and amended, as noted in the communication's final remarks. Moreover, in its discharge report for the implementation of the EU budget for the financial year 2021, expected to be voted in the May I plenary session, Parliament's Committee on Budgetary Control has asked for further clarifications, as it finds that the methodology is not sufficiently well explained and contains some subjective elements. This briefing will be updated to follow up on future developments.