European Commission transfers 632m euros from recovery fund to Belgium
The European Commission on Tuesday transferred a first tranche of 632 million euros from the European recovery fund to Belgium. The country had requested 658 million euros, but the Commission is withholding part of the amount until the financial sustainability of the Belgian pension system is improved.
Belgium is entitled to a total of 5 billion euros in grants and 264 million euros in loans from the EU's recovery fund - officially the Recovery and Resilience Facility (RRF). The fund was set up to help EU member states recover economically after the COVID-19 pandemic by boosting investment and reforms, especially in the green and digital transition.
This is not a blank cheque from the EU: Belgium must meet 20 pre-defined milestones and targets, such as rolling out a 5G network, greening company cars and facilitating electric vehicle charging infrastructure. After deducting pre-financing, Belgium believed it was entitled to a first payment of 658 million euros.
Pension reform deemed too risky
However, the Commission found that Belgium has failed to meet one of these milestones. The pension reform agreed by the De Croo government risks increasing Belgium's pension expenditure - which is set to rise to 0.35 per cent of GDP by 2030 - and thus increasing Belgium's debt ratio, according to the Commission.
As this particular milestone has not been met, the Commission has decided to suspend the payment of the corresponding amount. Taking into account the pre-financing already received by Belgium, a net amount of 26 million euros has been withheld.
In order for this amount to be released, Belgium has six months to implement a pension reform that meets the conditions agreed by the EU. If this deadline is not met, Belgium will have a further two months to explain the situation, after which the Commission will withhold the money permanently.
PHOTO © BELGA HANDOUT
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