The Recovery and Resilience Fund (RRF) was set up in February 2021 to help member states repair the economic and social damage done by Covid.
Expiring at the end of this year, it is an €800bn debt instrument, split between grants and loans, to be used for investment and reforms.
“On consideration of various factors, including Ireland’s budgetary, fiscal and debt position and the programme’s conditionality, Ireland chose not to include an EU loan under the RRF,” said a spokesperson for the Department of Finance.
“Consequently, Ireland’s National Recovery and Resilience Plans (NRRP), similar to 14 other member states, does not include a loan component. Our funding envelope of €1.15bn is 100pc grant funding.”
Each country had to draw up an NRRP setting out what reforms and investments it intended to make with the funds by next August.
The grants are performance-based and only handed over by the European Commission when certain targets are met.
While all EU member states got a grant allocation, taking a loan was optional. The grants do not have to be repaid.
“Ireland has been progressively drawing down its grant allocation as milestones and targets are met,” the Department said.
A third payment of €240m was received last November. This brought the total to €680m, or about 60pc of what was allocated.
Ireland updated its recovery plan, which includes 21 investment projects and 14 reform measures, in January. For example it amended a plan to electrify Cork commuter rail on the basis that it was no longer achievable because of high inflation in construction and building materials.
Overall, the EU has disbursed €393bn in Covid recovery funds, including €238bn in grants and €155bn in loans. Because a number of countries as well as Ireland passed on the opportunity to borrow, the RRF fund has been reduced from €650bn to €577bn.
Eight EU countries reduced their planned borrowing last month. Spain turned away over €60bn of €83bn it could have loaned. A total of €74bn was decommitted last month due to the member states downscaling their borrowing, reducing the committed loan support to €217bn.
Long-term EU borrowing is now more expensive than a year ago, and some individual countries can do better, and avoid Brussels red tape, by issuing their own debt.
In addition, a number of member states have found it difficult to organise projects that meet the strict RRF criteria for funding.
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