BRUSSELS (Reuters) - The European Commission is likely to tap financial markets in "late spring" to finance pre-payments for 27 national plans for recovery from the pandemic, seeking to borrow tens of billions of euros, European Economic Commissioner Paolo Gentiloni said.
Gentiloni said February and March would be key months for the Commission's assessment of how each of the 27 EU governments wants to spend its share of the EU's 750-billion-euro recovery fund, which will then be validated by EU finance ministers.
"At the end of this process, the country (that presented the plan) receives 13% of the overall plan that is presented," Gentiloni told Breakingviews in an interview on Thursday.
"This means that in late spring, the Commission will go to financial markets to raise this money... with the goal of disbursing the pre-financing of this 13% to each country with an approved plan," he said.
Only 70% of the 750 billion total recovery fund been allocated to each country now, with the remaining 30% to be allocated in 2022 once the impact of the pandemic on individual economies is better known.
The Commission can therefore seek to finance 13% of the already allocated total, officials said, which would amount to almost 70 billion euros, providing that governments bid for their full share of both loans and grants from the fund.
After the pre-financing, further disbursements would continue, possibly twice a year, over the coming years, as projects outlined in the national programmes reach agreed milestones and targets -- a condition that will be assessed by the Commission before each new payout, Gentiloni said.
To get the spending plans approved, governments have to make sure the money goes toward making their economies greener and more digitalised, to reduce administrative bottlenecks in general and to address country-specific problems that the Commission has pointed out in its individual recommendations.
So far, only 17 EU countries have sent the Commission their draft spending plans for discussion on how well they match the criteria, before they are formally submitted at the end of February or in March.
Gentiloni said there was "awareness" among EU governments of the need to make the plans compliant with EU criteria, but said: "We still have a lot of work ahead of us to translate that into goals, targets, milestones and commitments."
Italy is the greatest beneficiary of the recovery fund with a 209-billion-euro share of the total, but government turmoil in Rome has raised questions of how the country would be able to prepare a programme that would get EU approval.
"The Italian authorities are aware of the need to strengthen the proposal that was presented," Gentiloni said, when asked if the Italian scheme met the Commission's requirements.
"We need especially two things: the first is to have clear messages on reforms communicated by the Commission in the country specific recommendations issued in 2019 and the second is that we need details on the timing of the projects," he said.
The EU's 750 billion euro recovery fund consists of grants and loans. It will be jointly borrowed and repaid over 30 years, starting in 2026, with around 13-15 billion euros in servicing costs a year, Gentiloni said.