EXPLAINER: The EU’s COVID-19 Recovery Package And How Malta Will Benefit
Member States have finally come to a deal after five days of intense talks on how to finance COVID-19 recovery measures – but what exactly have Member States agreed to, and how will Malta be benefitting if the budget is passed next Thursday?
So what does the €1.8 trillion budget entail?
The total €1.8 trillion budget will be split between Next Generation EU (NGEU), a recovery instrument to help boost the EU budget, and a long-term budget for 2021-2027. These are worth €750 billion and €1,100 billion respectively.
The NGEU is further divided into seven individual programmes. The most notable of these programmes is the Recovery and Resilience Facility (RRF), which will see €672.5 billion worth of grants and loans allocated between the 27 Member States. The grants will have to be spent during the period 2021-23, while the volume of loans for each Member State cannot exceed 6.8% of its GNI.
This means Malta could receive up to €932 million worth of low-interest loans alone.
Member states will have to draw up recovery and resilience plans for 2021-23, and these plans have to be in line with any country-specific recommendations made by the Commission.
Malta will also be benefiting from additional allocations from other programmes within the NGEU.
We will see an additional €50 million to be spent on economic recovery through the ReactEU programme, and another €50 million for rural development support.
In terms of Structural Funds we will gain another €50 million to invest in jobs and economic growth and a further €25 million through the Asylum and Migration Fund.
On top of this, Malta and Cyprus will receive an additional envelope of €100 million to help alleviate challenges such as remoteness due to being small island states. We will also be receiving additional funds through the EU core budget.
How will we benefit?
The extent to which we will benefit from this budget ultimately depends on how the Maltese government will use these funds.
What we know for sure is that these funds offer a golden opportunity to tackle key issues in our economy. For example, the government could invest in green employment opportunities or integration programs for refugees and asylum seekers.
This is also a perfect time for the government to consider developing a “slow” tourism model that offers long-run sustainability. With a budget of this size, the possibilities for innovation are endless.