President Duda ratifies EU recovery plan

Poland's upper house of parliament, the Senate, on Thursday approved the Own Resources Decision - a legislation needed first in order for the EU recovery fund's ratification.

President Andrzej Duda signed the legislation into law on Friday, which allowed him to ratify the EU recovery plan on Monday.

The plan assumes Poland to receive approximately 23 billion euro in subsidies and over 34 billion in loans from the EU's COVID-19 recovery fund.

EU member states in December gave the green light for the bloc to borrow EUR 750 billion and provide cash boost for economies left staggered by the pandemic.

For the ambitious plan to be put into action, all 27 EU member states needed to ratify a decision to increase the bloc's resources.

The EU legislation raises the upper limit for national contributions to the EU budget by 0.6 percentage point to 2.0% of gross national income to safeguard the repayment of borrowing for the plan in case there is not enough money from taxes planned for that purpose.

But the plan is to repay the hundreds of billions of euros in AAA EU bonds over 30 years with yet-to-be-agreed new taxes that would include levies on the digital economy, on CO2 emissions and imports of goods made using dirty technologies.

The ratification of the EU law will enable the European Commission to go to the markets in mid-June to start borrowing cash it will then disburse in grants and cheap loans to all EU countries over the coming years.

To get the EU cash each government must submit a plan on how it wants to spend it, which must conform with EU-agreed rules that it should be mainly on investment and reforms to make economies ready for the digital age and without CO2 emissions.

EU officials said that before the first debt issuance can be made the Commission still needed to set up a primary dealers network and adopt an annual funding decision, which could take at least a couple of weeks.

"Most probably the first issuance can be done in mid-June, if everything goes well," one official said.

Among the biggest beneficiaries of the scheme are Italy and Spain, which have been among the hardest hit by the pandemic.

Each EU country can get an up-front payment of 13% of its share of the money, once the national spending scheme is approved. For the whole of the EU, that means around 45 billion euros this year.

While the borrowing for that may start in mid-June, first disbursements to governments are not expected until late July because the national spending plans need to get the approval of both the Commission and other EU governments in a process that can take up to three months.