Financing The Recovery Of The Eu Member States Economies And Implications For Romania In The New Pandemic Context

At the request of the Heads of State or Government, the EC presented, on 27 May 2020, in response to the challenges of the pandemic crisis, a "Recovery Plan for Europe" [1a], [1b]. Based on the President of the European Council’s consultation with all member states, the EU leaders have agreed to a comprehensive package of 1824.3 billion euro, which combines the long term multiannual financial framework(MFF 2021-2027) amounting 1074 billion euros with an extraordinary short and medium recovery effort under ‘the next Generation EU’ (NGEU) instrument of 750 billion euros [2]. The MFF 2021-2027, reinforced by the ‘Next Generation EU, will be the key instruments to tackle the socio-economic consequences of the COVID-19 pandemic towards three clear targets: convergence (for sustainable recovery), resilience (for improving economic structures) and, transformation (for the green and digital transition). Simultaneously, it is hoped that the NGEU’s three crucial innovations will vastly increase the flexibility of EU fiscal policy and generate the long-awaited fiscal union effect through: (i) financing the recovery fund with bonds issued directly by the EU in its own name and guaranteed by its own revenues; (ii) promoting pan-European taxes by increasing the EC’s budget from 1.2% to 2% of EU gross national income and (iii) permitting the EU to leverage its activities with borrowing, instead of just using the EU budget as a pass-through mechanism from pan-European taxes to current spending [6].