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POLAND: EC's Recovery Plan

On Wednesday the European Commission presented its proposal of an updated Multiannual Financial Framework, which was adjusted to account for the COVID-19 outbreak, and embeds the Next Generation EU instrument. The new instrument will be funded by raising the resources ceiling to 2.0% of EU Gross National Income. This way, the EC will be able to use its credit rating to borrow EUR 750 billion on the financial markets.

According to the proposal’s assumptions, the Next Generation EU will be divided into three pillars:

Investments and reforms, including:

a new Recovery and Resilience Facility of EUR 560 billion;
a EUR 55 billion top-up of the current cohesion policy programmes;
a strengthened Just Transition Fund up to EUR 40 billion;
the MFF proposal has retained the dual structure of funding – grants and loans;
a EUR 15 billion reinforcement for the European Agricultural Fund for Rural Development.
Private investment incentives, including:

a new Solvency Support Instrument with EUR 31 billion budget
an upgraded InvestEU with a raised budget up to EUR 15.3 billion
a new Strategic Investment Facility with a EUR 150 billion pool.
Addressing issues made clear by the crisis:

a new EUR 9.4 billion health programme, EU4Health
a EUR 2 billion reinforcement of rescEU
EUR 94.4 billion for Horizon Europe (research)
EUR 16.5billion for the EU’s external action

The European Council is expected to greenlight the proposal by July, allowing for a quick response to the looming crisis. This, however, means that there is little time for any necessary negotiations. Furthermore, these could be affected by a general focus of member state leaders on domestic politics.

Nevertheless, the Polish government appears to be content with the EC’s proposal. Poland will be one of the primary beneficiaries of the recovery budget – approximately EUR 64 billion will be allocated to Poland. Agriculture Commissioner Janusz Wojciechowski also underlined that the new Multiannual Financial Framework proposal provides Poland with an additional EUR 24 billion for agriculture than previously assumed. During a press conference, PM Morawiecki boasted that the EC’s proposal is a success of the Polish government. Most importantly, Poland’s appeal for a substantial recovery budget – a new Marshal Plan – was understood and supported by the EC and other EU states, proving Poland’s growing influence in the bloc. PM Morawiecki further underlined that the European Commission accommodated Poland’s asks. He specifically highlighted the enlarged Just Transition Fund and additional funds for cohesion and agriculture.