EU member states need to look at the bigger picture when evaluating the proposed €750 billion COVID-19 recovery fund instead of focusing on how their contribution to the EU budget would be affected, the European Commissioner for Cohesion and Reforms, Elisa Ferreira, said on Tuesday.
“The budget is not supposed to give you back what you gave in, but it is a redistribution of wealth either through a taxation system which we do not have at European level or through a budget. If you put in as much as you receive, better stop having budget,” she said on Tuesday during a webinar for journalists.
Commissioner Ferreira made her comments when asked by Times of Malta for her reaction to the recent remark made by Finance Minister Edward Scicluna who compared the EU’s recovery fund to a “prickly pear”.
Scicluna had raised concerns that the EU might have to raise funds to sustain the programme through tax harmonisation – a move which Malta has vehemently resisted.
Commissioner Ferreira declined to comment directly on Scicluna's remarks, saying she needed to see the finance minister’s entire speech, but she noted that such “crazy” debates crop up whenever an EU budget is being debated.
“It becomes very difficult when members states instead of discussing how they would benefit from being an EU member, discuss how much they would give out and get back”, she remarked.
Unveiled last month by Commission President Ursula Von der Leyen, the recovery fund is made up of around €500 billion in grants and the rest in loans.
Under the Commission’s proposal Malta’s allocation would total €992 million comprising €350m in grants and €642m in loans payable by 2059.
EU leaders will discuss the proposal for the first time on Friday by video conference but they are only expected to engage in face-to-face negotiations at a special summit expected in late July.
Even if a political agreement is signed by next month, money would only be made available by the turn of next year as each member state will have to ratify the agreement, which in many cases requires parliamentary approval.
Scicluna has cautioned that Malta will oppose any attempt to raise the funds through tax harmonisation.
He outlined his position further during a finance ministers' meeting last week when he expressed his concerns on the formula based on the unemployment rate.
He argued that funding should be based on the economic shock COVID-19 had caused in each member state, not on countries’ pre-COVID economic situation. Using unemployment rates as the sole criteria for measuring impact would be wrong, he said.
According to the so-called Spring forecast issued last month by the European Commission Malta’s economy was already showing signs of cooling down before the outbreak. This year it is estimated to contract by 5.8 per cent but should rebound by 6 per cent in 2021. Compared to the EU average, the impact on the Maltese economy will be less severe.