Multiannual Financial Framework 2021-2027 and the EU Recovery Instrument

Multiannual Financial Framework (MFF)

The MFF is a long-term EU budget that sets limits for a seven-year period regarding EU spending as a whole and in different areas of activity.

It represents an investment budget that pools member states’ resources to fund activities that they can more effectively finance jointly. The EU budget is never in deficit, debt is never created, and amount spent can only be as much as is collected. The EU budget is used to finance a wide range of activities for the benefit of all EU citizens; for example in the fields of energy, transport, information and communication technologies, climate change and research, etc.

The budget is divided into “headings” that correspond to the priorities and areas of action of the EU. MFF 2021-2027 consists of 7 budget headings covering a total of 17 policy areas.

Cohesion Policy is placed under Heading 2; Cohesion, resilience and values, and the envelope amounts to € 377 768 million (€ 330 235 million for economic, social and territorial cohesion).

Funds allocated to the Republic of Croatia from the Multiannual Financial Framework amount to over € 14 billion. Allocated funds are distributed to Cohesion policy (European Fund for Regional Development, European Social Fund + and Cohesion Fund), Just Transition Fund (JTF), European Maritime, Fisheries and Aquaculture Fund (EMFAF), Asylum, Migration and Integration Fund (AMIF), Internal Security Fund (ISF), Instrument for Financial Support for Border Management and Visa Policy (BMVI), European Agricultural Fund for Rural Development (EAFRD) and European Agricultural Guarantee Fund (EAGF).

 

EU Recovery Instrument (Next Generation EU; NGEU)

European Commission published on 27 and 28 May 2020, as a part of the recovery plan, a series of documents which, in addition to the MFF for the period 2021-2027, include a new instrument: the European Union’s Recovery Instrument (Next Generation EU – NGEU) aimed at helping member states to recover from the economic and social damage caused by the outbreak of the COVID-19 pandemic, and upgrading the budget and the future MFF.

The value of NGEU is € 750 billion (in 2018 prices), but the distribution includes € 390 billion in grants (more precisely € 384.4 billion in grants and € 5.6 billion in guarantees) and € 360 billion in loans.

The funds raised will be repaid through future EU budgets by 31 December 2058 at the latest. The annual amounts for the repayment of the principal shall not exceed 7.5% of the amount of € 390 billion (total debt). Interest payments shall be made by 31 December 2026.

In line with one of the European Union’s top priorities, at least 30% of total MFF and NGEU expenditure will support climate targets, with a focus on reducing greenhouse gas emissions by 55% by 2030. From 2024, 7.5% of spending will focus on biodiversity targets, and from 2026 the percentage will increase to 10%.

Greater focus will also be on gender equality and gender mainstreaming when spending budget funds, and the European Commission shall develop a methodology for measuring relevant costs to be tested at MFF 2021-2027 programme level.

For the Republic of Croatia, slightly over € 11 billion is available from the EU Recovery Instrument New Generation Recovery EU, the majority of which is disbursed from the Recovery and Resilience Facility. The distribution includes € 6.31 billion in grants and € 3.61 billion in loans.  The rest of the funding is distributed to REACT-EU, European Agricultural Fund for Rural Development (EAFRD) and Just Transition Fund (JTF).

 

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