(1)

In accordance with Articles 120 and 121 of the Treaty on the Functioning of the European Union (TFEU), Member States are required to conduct their economic policies with a view to contributing to the achievement of the objectives of the Union and in the context of the broad guidelines that the Council formulates. Article 148 TFEU provides that Member States are to implement employment policies that take into account the guidelines for employment. The coordination of the economic policies of the Member States is therefore a matter of common concern.

(2)

Article 175 TFEU provides, inter alia, that Member States are to coordinate their economic policies in such a way as to attain the objectives on economic, social and territorial cohesion set out in Article 174 TFEU.

(3)

Article 174 TFEU provides that, in order to promote its overall harmonious development, the Union is to develop and pursue actions that lead to the strengthening of its economic, social and territorial cohesion. It further provides that the Union shall, in particular, aim to reduce disparities between the levels of development of the various regions and the backwardness of the least favoured regions. Efforts to reduce disparities should in particular benefit islands and outermost regions. The different starting positions and specificities of regions should be taken into consideration in the implementation of Union policies.

(4)

At Union level, the European Semester for economic policy coordination (European Semester), including the principles of the European Pillar of Social Rights, is the framework to identify national reform priorities and monitor their implementation. In addition to measures that strengthen the competiveness, growth potential and sustainable public finances, reforms based on solidarity, integration, social justice and a fair distribution of wealth should also be introduced with the aim of creating quality employment and sustainable growth, ensuring equality of, and access to, opportunities and social protection, protecting vulnerable groups and improving the living standards of all Union citizens. Member States are to develop their own national multiannual investment strategies in support of those reforms, while bearing in mind the Paris Agreement adopted under the United Nations Framework Convention on Climate Change (4) (the ‘Paris Agreement’), the National Energy and Climate Plans adopted in the framework of the Governance of the Energy Union and Climate Action as established by Regulation (EU) 2018/1999 of the European Parliament and of the Council (5), the just transition plans and the Youth Guarantee implementation plans, as well as the UN Sustainable Development Goals. Those strategies should be presented, where relevant, alongside the yearly National Reform Programmes as a way to outline and coordinate priority investment projects to be supported by national and/or Union funding.

(5)

The Commission outlined in the Annual Sustainable Growth Strategy 2020 and the European Semester Spring and Summer Package 2020 that the European Semester should help achieve the implementation of the European Green Deal, the European Pillar of Social Rights and the UN Sustainable Development Goals.

(6)

The COVID-19 outbreak in early 2020 changed the economic, social and budgetary outlook in the Union and in the world, calling for an urgent and coordinated response both at Union and national level in order to cope with the enormous economic and social consequences as well as asymmetrical effects for Member States. The COVID-19 crisis as well as the previous economic and financial crisis have shown that developing sound, sustainable and resilient economies as well as financial and welfare systems built on strong economic and social structures helps Member States respond more effectively and in a fair and inclusive way to shocks and recover more swiftly from them. A lack of resilience can also lead to negative spill-over effects of shocks between Member States or within the Union as a whole, thereby posing challenges to convergence and cohesion in the Union. Reductions in spending on sectors, such as the education sector, cultural sector and creative sector, and on healthcare can prove counterproductive to achieving a swift recovery. The medium and long-term consequences of the COVID-19 crisis will critically depend on how quickly Member States’ economies and societies will recover from that crisis, which in turn depends on the available fiscal space of Member States to take measures to mitigate the social and economic impact of the crisis, and on the resilience of their economies and social structures. Sustainable and growth-enhancing reforms and investments that address structural weaknesses of Member State economies, and that strengthen the resilience, increase productivity and lead to higher competitiveness of Member States, will therefore be essential to set those economies back on track and reduce inequalities and divergences in the Union.

(7)

Past experiences have shown that investment is often drastically cut during crises. However, it is essential to support investment in this particular situation to speed up the recovery and strengthen long-term growth potential. A well-functioning internal market and investing in green and digital technologies, in innovation and research including in a knowledge-based economy, in the clean energy transition, and in boosting energy efficiency in housing and other key sectors of the economy are important to achieve fair, inclusive and sustainable growth, help create jobs, and reach EU climate neutrality by 2050.

(8)

In the context of the COVID-19 crisis, it is necessary to strengthen the current framework for the provision of support to Member States and provide direct financial support to Member States through an innovative tool. To that end, a recovery and resilience facility (the ‘Facility’) should be established to provide effective and significant financial support to step up the implementation of sustainable reforms and related public investments in the Member States. The Facility should be a dedicated instrument designed to tackle the adverse effects and consequences of the COVID-19 crisis in the Union. It should be comprehensive and should benefit from the experience gained by the Commission and the Member States from the use of the other instruments and programmes. Private investment could also be incentivised through public investment schemes, including financial instruments, subsidies and other instruments, provided State aid rules are complied with.

(9)

Reforms and investments under the Facility should help make the Union more resilient and less dependent by diversifying key supply chains and thereby strengthening the strategic autonomy of the Union alongside an open economy. Reforms and investments under the Facility should also generate European added value.

(10)

Recovery should be achieved, and the resilience of the Union and its Member States enhanced, through the support for measures that refer to the policy areas of European relevance structured in six pillars (the ‘six pillars’), namely: green transition; digital transformation; smart, sustainable and inclusive growth, including economic cohesion, jobs, productivity, competitiveness, research, development and innovation, and a well-functioning internal market with strong small and medium enterprises (SMEs); social and territorial cohesion; health, and economic, social and institutional resilience with the aim of, inter alia, increasing crisis preparedness and crisis response capacity; and policies for the next generation, children and the youth, such as education and skills.

(11)

The green transition should be supported by reforms and investments in green technologies and capacities, including in biodiversity, energy efficiency, building renovation and the circular economy, while contributing to the Union’s climate targets, fostering sustainable growth, creating jobs and preserving energy security.

(12)

Reforms and investments in digital technologies, infrastructure and processes will increase the Union’s competitiveness at global level and will also help make the Union more resilient, more innovative and less dependent by diversifying key supply chains. Reforms and investments should in particular promote the digitalisation of services, the development of digital and data infrastructure, clusters and digital innovation hubs and open digital solutions. The digital transition should also incentivise the digitalisation of SMEs. Investments in digital technologies should respect the principles of interoperability, energy efficiency and personal data protection, allow for the participation of SMEs and start-ups, and promote the use of open-source solutions.

(13)

Reforms and investments in smart, sustainable and inclusive growth, including economic cohesion, jobs, productivity, competitiveness, research, development and innovation, and a well-functioning internal market with strong SMEs should aim to enhance the growth potential and enable a sustainable recovery of the Union’s economy. Those reforms and investments should also promote entrepreneurship, social economy, the development of sustainable infrastructure and transport, and industrialisation and reindustrialisation, and mitigate the effect of the COVID-19 crisis on the economy.

(14)

Reforms and investments in social and territorial cohesion should also contribute to fighting poverty and tackling unemployment in order for Member State economies to rebound while leaving nobody behind. Those reforms and investments should lead to the creation of high-quality and stable jobs, the inclusion and integration of disadvantaged groups, and enable the strengthening of social dialogue, infrastructure and services, as well as of social protection and welfare systems.

(15)

The COVID-19 crisis has also highlighted the importance of reforms and investments in health, and economic, social and institutional resilience, that aim to, inter alia, increase crisis preparedness and crisis response capacity, in particular by improving business and public service continuity, the accessibility and capacity of health and care systems, the effectiveness of public administration and national systems, including minimising the administrative burden, and the effectiveness of judicial systems as well as fraud prevention and anti-money laundering supervision.

(16)

Reforms and investments in the next generation, children and the youth are essential to promote education and skills, including digital skills, upskilling, reskilling and requalification of the active labour force, integration programmes for the unemployed, policies of investing in access and opportunity for children and the youth related to education, health, nutrition, jobs and housing, and policies that bridge the generational gap in line with the objectives of the Child Guarantee and Youth Guarantee. Those actions should ensure that the next generation of Europeans is not permanently affected by the impact of the COVID-19 crisis and that the generational gap is not further deepened.

(17)

Currently, no instrument foresees direct financial support linked to the achievement of results and to the implementation of reforms and public investments of the Member States in response to challenges identified in the context of the European Semester, including the European Pillar of Social Rights and the UN Sustainable Development Goals, and with a view to having a lasting impact on the productivity and economic, social and institutional resilience of the Member States.

(18)

The types of financing and the methods of implementation under this Regulation should be chosen on the basis of their ability to achieve the specific objectives of the actions and to deliver results, taking into account, in particular, the costs of controls, the administrative burden, and the expected risk of non-compliance. Non-repayable financial support under the Facility should take the form of a sui generis Union contribution to be determined on the basis of a maximum financial contribution calculated for each Member State and taking into account the estimated total costs of the recovery and resilience plan, which should be paid based on the achievement of results by reference to milestones and targets of the recovery and resilience plans. Therefore, such contribution should be established in accordance with the sector-specific rules provided in this Regulation, pursuant to the rules on simplification relating to financing not linked to costs laid down in Article 125(1) of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (6) (the ‘Financial Regulation’). Specific rules and procedure should therefore be laid down in this Regulation, subject to the general principles of budgetary management under the Financial Regulation, concerning the allocation, implementation and control of non-repayable financial support under this Regulation. Financing not linked to costs should apply at the level of payments from the Commission to Member States as beneficiaries, irrespective of the reimbursement in any form of financial contributions from Member States to final recipients. Member States should be able to use all forms of financial contributions, including simplified cost options. Without prejudice to the right of the Commission to take action in the event of fraud, corruption, conflicts of interests or double funding from the Facility and other Union programmes, payments should not be subject to controls on the costs actually incurred by the beneficiary.

(19)

In accordance with Council Regulation (EU) 2020/2094 (7) and within the limits of resources allocated therein, recovery and resilience measures under the Facility should be carried out to address the unprecedented impact of the COVID-19 crisis. Those additional resources should be used in such a way as to ensure compliance with the time limits provided for in Regulation (EU) 2020/2094.

(20)

The Facility should support projects that respect the principle of additionality of Union funding. The Facility should not, unless in duly justified cases, be a substitute for recurring national expenditures.

(21)

Guaranteeing a high level of cybersecurity and trust in technologies is a pre-requisite for a successful digital transformation in the Union. In its conclusions of 1 and 2 October 2020, the European Council called on the Union and its Member States to make full use of the 5G cybersecurity toolbox adopted on 29 January 2020, and in particular to apply the relevant restrictions on high-risk suppliers for key assets defined as critical and sensitive in the Union coordinated risk assessments. The European Council underlined that potential 5G suppliers need to be assessed on the basis of common, objective criteria.

(22)

In order to foster synergies between the Facility, the InvestEU Programme established by a Regulation of the European Parliament and of the Council establishing the InvestEU Programme and amending Regulation (EU) 2015/1017 (the ‘InvestEU Regulation’) and the Technical Support Instrument established by Regulation (EU) 2021/240 of the European Parliament and of the Council (8), the recovery and resilience plans might include, within a certain ceiling, contributions to the Member State compartments under the InvestEU Programme and to the Technical Support Instrument, in compliance with this Regulation.

(23)

Reflecting the European Green Deal as Europe’s sustainable growth strategy and the importance of tackling climate change in line with the Union’s commitments to implement the Paris Agreement and the UN Sustainable Development Goals, the Facility is to contribute to the mainstreaming of climate action and environmental sustainability and to the achievement of an overall target of 30 % of Union budget expenditure supporting climate objectives. To that end, the measures supported by the Facility and included in recovery and resilience plans of the individual Member States should contribute to the green transition, including biodiversity, or to addressing the challenges resulting therefrom, and should account for an amount that represents at least 37 % of the recovery and resilience plan’s total allocation based on the methodology for climate tracking set out in an annex to this Regulation. That methodology should be used accordingly for measures that cannot be directly assigned to an intervention field listed in the annex to this Regulation. If the Member State concerned and the Commission agree, it should be possible to increase the coefficients for support for the climate objectives to 40 % or 100 % for individual investments, as explained in the recovery and resilience plan, to take account of accompanying reform measures that credibly increase their impact on the climate objectives. To that end, it should be possible to increase the coefficients for support for the climate objectives up to a total amount of 3 % of the allocation of the recovery and resilience plan for individual investments. The Facility should support activities that fully respect the climate and environmental standards and priorities of the Union and the principle of ‘do no significant harm’ within the meaning of Article 17 of Regulation (EU) 2020/852 of the European Parliament and of the Council (9) (the principle of ‘do no significant harm’).

(24)

Reflecting the importance of tackling the dramatic loss of biodiversity, this Regulation should contribute to the mainstreaming of biodiversity action in Union policies.

(25)

Member States should ensure that the measures included in their recovery and resilience plans comply with the principle of ‘do no significant harm’ within the meaning of Article 17 of Regulation (EU) 2020/852. The Commission should provide technical guidance to that effect. The entry into force of the delegated acts referred to in point (d) of Article 3 of Regulation (EU) 2020/852 should not affect that guidance.

(26)

The measures supported by the Facility and included in the recovery and resilience plans of the individual Member States should also account for an amount that represents at least 20 % of the recovery and resilience plan’s allocation for digital expenditure. To that end, Member States should calculate the coefficient for support for the digital objectives based on a methodology which reflects the extent to which support under the Facility makes a contribution to digital objectives. The coefficients for individual measures should be determined on the basis of the intervention fields established in an annex to this Regulation. The methodology should be used accordingly for measures that cannot be directly assigned to an intervention field. If the Member State concerned and the Commission agree, it should be possible to increase those coefficients to 40 % or 100 % for individual investments to take account of accompanying reforms that increase the impact of the measures on digital objectives.

(27)

For the purpose of determining the contribution of the relevant measures under the recovery and resilience plans to the climate and digital targets, it should be possible to count such measures under both objectives in accordance with their respective methodologies.

(28)

Women have been particularly affected by the COVID-19 crisis as they represent the majority of healthcare workers across the Union and balance unpaid care work with their employment responsibilities. The situation is especially difficult for single parents, 85 % of whom are women. Gender equality and equal opportunities for all, and the mainstreaming of those objectives should be taken into account and promoted throughout the preparation and implementation of recovery and resilience plans submitted pursuant to this Regulation. Investment in robust care infrastructure is also essential in order to ensure gender equality and the economic empowerment of women, in order to build resilient societies, combat precarious conditions in a female-dominated sector, boost job creation, prevent poverty and social exclusion, and in order to have a positive effect on Gross Domestic Product (GDP), as it allows more women to take part in paid work.

(29)

A mechanism to ensure the link between the Facility and sound economic governance should be established, allowing the Commission to make a proposal to the Council to suspend all or part of the commitments or payments under the Facility. The obligation of the Commission to propose a suspension should be suspended when and for as long as the so-called ‘general escape clause’ under the Stability and Growth Pact has been activated. In order to ensure uniform implementation and in view of the importance of the financial effects of the measures imposed, implementing powers should be conferred on the Council which should act on the basis of a Commission proposal. To facilitate the adoption of decisions which are required to ensure effective action in the context of the economic governance framework, reversed qualified majority voting should be used for the suspension of commitments. The competent committee of the European Parliament should be able to invite the Commission to discuss the application of that mechanism in the context of a structured dialogue to allow the European Parliament to express its views. In order for the Commission to give due consideration to the views expressed by the European Parliament, the structured dialogue should take place within four weeks after the Commission informing the European Parliament of the application of that mechanism.

(30)

The specific objective of the Facility should be to provide financial support with a view to achieving the milestones and targets of reforms and investments set out in recovery and resilience plans. That objective should be pursued in close cooperation with the Member States concerned.

(31)

By 31 July 2022, the Commission should present a review report on the implementation of the Facility to the European Parliament and to the Council. For that purpose, the Commission should take into account the common indicators and the recovery and resilience scoreboard provided under this Regulation as well as other available relevant information. The competent committee of the European Parliament might invite the Commission to present the main findings of its review report in the context of the recovery and resilience dialogue established under this Regulation.

(32)

To ensure their contribution to the objectives of the Facility, recovery and resilience plans should comprise measures for the implementation of reforms and public investment projects through a coherent package. Measures started from 1 February 2020 onwards should be eligible. Recovery and resilience plans should be consistent with the relevant country-specific challenges and priorities identified in the context of the European Semester, as well as challenges and priorities identified in the most recent Council recommendation on the economic policy of the euro area for Member States whose currency is the euro. Recovery and resilience plans should also be consistent with National Reform Programmes, National Energy and Climate Plans, just transition plans, the Youth Guarantee Implementation Plan and the partnership agreements and operational programmes adopted under the Union funds. To boost actions that fall within the priorities of the European Green Deal and the Digital Agenda, recovery and resilience plans should also set out measures that are relevant for the green and digital transitions. Such measures should enable a swift delivery of the targets, objectives and contributions set out in National Energy and Climate Plans and updates thereof. All supported activities should be pursued in full respect of the climate and environmental standards and priorities of the Union. Recovery and resilience plans should also respect the horizontal principles of the Facility.

(33)

Recovery and resilience plans should not affect the right to conclude or enforce collective agreements or to take collective action in accordance with the Charter of Fundamental Rights of the European Union, and Union and national law and practices.

(34)

Regional and local authorities can be important partners in the implementation of reforms and investments. In that regard, they should be appropriately consulted and involved, in accordance with the national legal framework.

(35)

Where a Member State is exempted from the monitoring and assessment in the context of the European Semester pursuant to Article 12 of Regulation (EU) No 472/2013 of the European Parliament and of the Council (10) or is subject to surveillance under Council Regulation (EC) No 332/2002 (11), it should be possible to apply this Regulation to the Member State concerned in relation to the challenges and priorities identified by those Regulations.

(36)

To inform the preparation and the implementation of the recovery and resilience plans by Member States, the Council should be able to discuss, in the context of the European Semester, the state of the recovery, resilience and adjustment capacity in the Union. That discussion should be based on the strategic and analytical information available to the Commission in the context of the European Semester and, if available, on the basis of the information on the implementation of the recovery and resilience plans in the preceding years.

(37)

In order to ensure a meaningful financial contribution commensurate to the actual needs of Member States to undertake and complete the reforms and investments included in the recovery and resilience plan, it is appropriate to establish a maximum financial contribution available to them under the Facility as non-repayable financial support. 70 % of that maximum financial contribution should be calculated on the basis of the population, the inverse of the GDP per capita and the relative unemployment rate of each Member State. 30 % of that maximum financial contribution should be calculated on the basis of the population, the inverse of the GDP per capita, and, in equal proportion, the change in real GDP in 2020 and the aggregated change in real GDP during the period 2020-2021 based on the Commission Autumn 2020 forecasts for data not available at the time of calculation, to be updated by 30 June 2022 with actual outturns.

(38)

It is necessary to establish a process for the submission of recovery and resilience plans by the Member States, and the content thereof. Member States should officially submit their recovery and resilience plans, as a rule, by 30 April, and could do so in a single integrated document together with their National Reform Programme. To ensure fast implementation of the Facility, Member States should be able to submit a draft recovery and resilience plan from 15 October of the preceding year.

(39)

In order to ensure the national ownership and a focus on relevant reforms and investments, Member States wishing to receive support should submit to the Commission a recovery and resilience plan that is duly reasoned and substantiated. That plan should detail how, taking into account the measures included therein, it represents a comprehensive and adequately balanced response to the economic and social situation of the Member State concerned, thereby contributing appropriately to the six pillars, taking into account the specific challenges of the Member State concerned. The recovery and resilience plan should set out the detailed set of measures for its monitoring and implementation, including targets and milestones and estimated costs, as well as the expected impact of the recovery and resilience plan on growth potential, job creation and economic, social and institutional resilience, including through the promotion of policies for children and the youth, and on the mitigation of the economic and social impact of the COVID-19 crisis, contributing to the implementation of the European Pillar of Social Rights, thereby enhancing the economic, social and territorial cohesion and convergence within the Union. It should also include measures that are relevant for the green transition, including biodiversity, and the digital transition. It should also include an explanation of how it contributes to effectively addressing the relevant country-specific challenges and priorities identified in the context of the European Semester, including fiscal aspects and recommendations made pursuant to Article 6 of Regulation (EU) No 1176/2011 of the European Parliament and of the Council (12). It should also include an explanation of how the recovery and resilience plan ensures that no measure for the implementation of reforms and investments included in that plan does significant harm to environmental objectives within the meaning of Article 17 of Regulation (EU) 2020/852 (the principle of ‘do no significant harm’).

The recovery and resilience plan should set out the expected contribution to gender equality and equal opportunities for all as well as a summary of the conducted consultation process with relevant national stakeholders. The recovery and resilience plan should contain an explanation of the Member State’s plans, systems and concrete measures to prevent, detect and correct conflicts of interest, corruption and fraud, and to avoid double funding from the Facility and other Union programmes. The recovery and resilience plan might also include cross-border or multi-country projects. Close cooperation between the Commission and the Member States should be sought and achieved throughout the process.

(40)

The implementation of the Facility should be carried out in line with the principle of sound financial management, including the effective prevention and prosecution of fraud, including tax fraud, tax evasion, corruption and conflicts of interest.

(41)

The Commission should assess the recovery and resilience plan proposed by each Member State and should act in close cooperation with the Member State concerned. The Commission should fully respect the national ownership of the plan and should therefore take into account the justifications and elements provided by the Member State concerned. The Commission should assess the relevance, effectiveness, efficiency and coherence of the recovery and resilience plan proposed by the Member State, based on the list of criteria set out in this Regulation. The Commission should assess the recovery and resilience plans proposed, and, where applicable, their updates, within two months of the official submission of the recovery and resilience plans. The Member State concerned and the Commission should be able to agree to extend that deadline by a reasonable period if necessary.

(42)

Appropriate guidelines should be set out in an annex to this Regulation to serve as a basis for the Commission to assess in a transparent and equitable manner the recovery and resilience plans and to determine the financial contribution in line with the objectives and any other relevant requirements laid down in this Regulation. In the interest of transparency and efficiency, a rating system for the assessment of the proposals for recovery and resilience plans should be established to that effect. The criteria related to the country-specific recommendations, to the strengthening of the growth potential, job creation and economic, social and institutional resilience, and to contributing to the implementation of the European Pillar of Social Rights, should require the highest score of the assessment. Effective contribution to the green and digital transitions should also be a prerequisite for a positive assessment.

(43)

In order to contribute to the preparation of high-quality recovery and resilience plans and assist the Commission in the assessment of the recovery and resilience plans submitted by the Member States and in the assessment of the degree of their achievement, provision should be made for the use of expert advice and, at the request of the Member State concerned, peer counselling and technical support. Member States might also request support under the Technical Support Instrument. Member States should be encouraged to foster synergies with recovery and resilience plans of other Member States.

(44)

For the purpose of simplification, the determination of the financial contribution should follow simple criteria. The financial contribution should be determined on the basis of the estimated total costs of the recovery and resilience plan proposed by the Member State concerned.

(45)

The Council should approve the assessment of the recovery and resilience plans by means of an implementing decision, based on a proposal by the Commission, which it should endeavour to adopt within four weeks of the adoption of that proposal. Provided that the recovery and resilience plan satisfactorily addresses the assessment criteria, the Member State concerned should be allocated the maximum financial contribution where the estimated total costs of the reform and investment included in the recovery and resilience plan is equal to, or higher than, the amount of the maximum financial contribution itself. The Member State concerned should instead be allocated an amount equal to the estimated total costs of the recovery and resilience plan where such estimated total costs are lower than the maximum financial contribution itself. No financial contribution should be awarded to the Member State if the recovery and resilience plan does not satisfactorily address the assessment criteria. The Council implementing decision should be amended, on a proposal by the Commission, to include the updated maximum financial contribution calculated on the basis of actual outturns in June 2022. The Council should adopt the relevant amending decision without undue delay.

(46)

To ensure that the financial support is frontloaded in the initial years after the COVID-19 crisis, and to ensure compatibility with the available funding for the Facility, the funds should be made available until 31 December 2023. To that end, it should be possible for 70 % of the amount available for non-repayable financial support to be legally committed by 31 December 2022 and 30 % between 1 January 2023 and 31 December 2023. By 31 December 2021, upon request of a Member State to be submitted together with the recovery and resilience plan, an amount of up to 13 % of the financial contribution and, where applicable, of up to 13 % of the loan of the Member State concerned can be paid in the form of a pre-financing within, to the extent possible, two months after the adoption by the Commission of the legal commitments.

(47)

Financial support for a Member State’s recovery and resilience plan should be possible in the form of a loan, subject to the conclusion of a loan agreement with the Commission, on the basis of a duly substantiated request by the Member State concerned. Loans supporting the implementation of national recovery and resilience plans should be provided until 31 December 2023 and should be provided at maturities that reflect the longer-term nature of such spending. Pursuant to Article 5(2) of Council Decision (EU, Euratom) 2020/2053 (13), repayments should be scheduled, in accordance with the principle of sound financial management, in a manner that ensures the steady and predictable reduction of liabilities. Those maturities might diverge from the maturities of the funds the Union borrows to finance the loans on capital markets. Therefore, it is necessary to provide for the possibility to derogate from the principle set out in Article 220(2) of the Financial Regulation, according to which maturities of loans for financial assistance should not be transformed.

(48)

The request for loan support should be justified by the higher financial needs linked to additional reforms and investments included in the recovery and resilience plan, relevant in particular for the green and digital transitions, and by a higher cost of the recovery and resilience plan than the maximum financial contribution allocated via the non-repayable contribution. It should be possible to submit the request for loan support together with the submission of the recovery and resilience plan. Where the request for loan support is made at a different moment in time, it should be accompanied by a revised recovery and resilience plan with additional milestones and targets. To ensure that resources are frontloaded, Member States should request loan support by 31 August 2023. For the purposes of sound financial management, the total amount of all loan support granted under this Regulation should be capped. In addition, the maximum volume of the loan for each Member State should not exceed 6,8 % of its 2019 Gross National Income (GNI), as per data from Eurostat with cut off date May 2020. An increase of the capped amount should be possible in exceptional circumstances subject to available resources. For the same reason, it should be possible to disburse the loan in instalments against the fulfilment of results. The Commission should assess the request for loan support within two months. Acting on a Commission proposal, the Council should be able to approve that assessment by qualified majority by means of an implementing decision which the Council should endeavour to adopt within four weeks of the adoption of that Commission proposal.

(49)

It should be possible for a Member State to make a reasoned request to amend the recovery and resilience plan within the period of implementation, where objective circumstances justify such a course of action. Where the Commission considers that the reasons put forward by the Member State concerned justify such an amendment it should assess the new recovery and resilience plan within two months. The Member State concerned and the Commission should be able to agree to extend that deadline by a reasonable period if necessary. The Council should approve the assessment of the new recovery and resilience plan by means of an implementing decision, based on a proposal by the Commission, and which it should endeavour to adopt within four weeks of the adoption of the proposal.

(50)

Union institutions should do their utmost to reduce processing time in order to ensure the smooth and rapid implementation of the Facility.

(51)

For reasons of efficiency and simplification in the financial management of the Facility, Union financial support for recovery and resilience plans should take the form of financing based on the achievement of results measured by reference to milestones and targets indicated in the approved recovery and resilience plans. To that end, additional loan support should be linked to additional milestones and targets compared to those relevant for the financial support (that is, the non-repayable financial support).

(52)

The release of funds under the Facility is contingent on the satisfactory fulfilment of the relevant milestones and targets by the Member States set out in the recovery and resilience plans, the assessment of such plans having been approved by the Council. Before a decision authorising the disbursement of the financial contribution and, where applicable, of the loan, is adopted by the Commission, it should ask the Economic and Financial Committee for its opinion on the satisfactory fulfilment of the relevant milestones and targets by the Member States on the basis of a preliminary assessment by the Commission. In order for the Commission to take the opinion of the Economic and Financial Committee into account for its assessment, it should be delivered within four weeks of receiving the preliminary assessment by the Commission. In its deliberations, the Economic and Financial Committee shall strive to reach consensus. If, exceptionally, one or more Member States consider that there are serious deviations from the satisfactory fulfilment of the relevant milestones and targets, they may request the President of the European Council to refer the matter to the next European Council. The respective Member States should also inform the Council without undue delay, and the Council should, in turn, without delay inform the European Parliament. In such exceptional circumstances, no decision authorising the disbursement of the financial contribution and, where applicable, of the loan should be taken until the next European Council has exhaustively discussed the matter. That process should, as a rule, not take longer than three months after the Commission has asked the Economic and Financial Committee for its opinion.

(53)

For the purposes of sound financial management, while respecting the performance-based nature of the Facility, specific rules should be laid down for budget commitments, payments, suspension, and recovery of funds as well as the termination of agreements related to financial support. To ensure predictability, it should be possible for Member States to submit requests for payments twice a year. Payments should be made in instalments and be based on a positive assessment by the Commission of the implementation of the recovery and resilience plan by the Member State concerned. The Member States should take appropriate measures to ensure that the use of funds in relation to measures supported by the Facility complies with applicable Union and national law. In particular, they should ensure that fraud, corruption and conflicts of interests are prevented, detected and corrected, and that double funding from the Facility and other Union programmes is avoided. Suspension and the termination of agreements related to financial support as well as reduction and recovery of the financial contribution should be possible when the recovery and resilience plan has not been implemented in a satisfactory manner by the Member State concerned, or in the case of serious irregularities, meaning fraud, corruption and conflicts of interest in relation to the measures supported by the Facility, or a serious breach of an obligation under the agreements related to financial support. Recovery should, where possible, be ensured through offsetting outstanding payments under the Facility. Appropriate contradictory procedures should be established to ensure that the decision by the Commission in relation to suspension and recovery of amounts paid as well as the termination of agreements related to financial support respects the right of Member States to submit observations. All payments of financial contributions to Member States should be made by 31 December 2026, with the exception of measures referred to in the second sentence of Article 1(3) of Regulation (EU) 2020/2094 and cases where, although the legal commitment has been entered, or the decision adopted, in compliance with the deadlines referred to in Article 3 of that Regulation, it is necessary for the Union to be able to honour its obligations towards the Member States, including as a result of a definitive judgment against the Union.

(54)

The Commission should ensure that the financial interests of the Union are effectively protected. While it is primarily the responsibility of the Member State itself to ensure that the Facility is implemented in compliance with relevant Union and national law, the Commission should be able to receive sufficient assurance from Member States in that regard. To that end, in implementing the Facility, the Member States should ensure the functioning of an effective and efficient internal control system and recover amounts unduly paid or misused. In that regard, Member States should be able to rely on their regular national budget management systems. Member States should collect standardised categories of data and information allowing the prevention, detection and correction of serious irregularities, meaning fraud, corruption and conflicts of interests, in relation to the measures supported by the Facility. The Commission should make available an information and monitoring system, including a single data-mining and risk-scoring tool, to access and analyse this data and information, with a view to a generalised application by the Member States.

(55)

The Commission, the European Anti-Fraud Office (OLAF), the Court of Auditors and, where applicable, the European Public Prosecutor’s Office (EPPO) should be able to use the information and monitoring system within their competences and rights.

(56)

In order to facilitate the implementation of Member State arrangements that aim to avoid double funding from the Facility and other Union programmes, the Commission should make available information on the recipients of funds financed from the Union budget, in accordance with Article 38(1) of the Financial Regulation.

(57)

The Member States and the Commission should be allowed to process personal data only where necessary for the purpose of ensuring discharge, audit and control of the use of funds in relation to measures for the implementation of reforms and investment projects under the recovery and resilience plan. The personal data should be processed in accordance with Regulation (EU) 2016/679 (14) or (EU) 2018/1725 (15) of the European Parliament and of the Council, whichever of the two Regulations is applicable.

(58)

For the effective monitoring of implementation, Member States should report twice a year in the context of the European Semester on the progress made in the achievement of the recovery and resilience plan. Such reports prepared by the Member States concerned should be appropriately reflected in the National Reform Programmes, which should be used as a tool for reporting on progress towards completion of recovery and resilience plans.

(59)

Member States should be encouraged to seek the opinion of their national productivity boards and independent fiscal institutions on their recovery and resilience plans, including possible validation of elements of their recovery and resilience plan.

(60)

In order to ensure transparency and accountability in the implementation of the Facility, the Commission should transmit, subject to clearance of sensitive or confidential information, or to appropriate confidentiality arrangements if necessary, relevant documents and information simultaneously and on equal terms to the European Parliament and to the Council, such as the recovery and resilience plans, or their amendments, as submitted by the Member States, and the proposals for Council implementing decisions as made public by the Commission.

(61)

The competent committee of the European Parliament might every two months invite the Commission to discuss in a recovery and resilience dialogue matters that concern the implementation of the Facility, such as the recovery and resilience plans of the Member States, the assessment by the Commission, the main findings of the review report, the status of fulfilment of the milestones and targets, procedures related to payment and suspension, and any other relevant information and documentation provided by the Commission in relation to the implementation of the Facility. The Commission should take into account elements arising from the views expressed through the recovery and resilience dialogue, including the resolutions from the European Parliament if provided.

(62)

In order to ensure an efficient and coherent allocation of funds and to respect the principle of sound financial management, actions under this Regulation should be consistent with and be complementary to ongoing Union programmes, whilst avoiding double funding from the Facility and other Union programmes for the same expenditure. In particular, the Commission and the Member State should ensure, in all stages of the process, effective coordination in order to safeguard the consistency, coherence, complementarity and synergy among sources of funding. To that effect, Member States should be required to present the relevant information on existing or planned Union financing when submitting their recovery and resilience plans to the Commission. Financial support under the Facility should be additional to the support provided under other Union programmes and instruments, including the InvestEU Programme. Reforms and investment projects financed under the Facility should be able to receive funding from other Union programmes and instruments provided that such support does not cover the same cost.

(63)

The Commission should monitor the implementation of the Facility and measure the achievement of the objectives under this Regulation in a targeted and proportionate manner. When monitoring the implementation of the Facility, the Commission should ensure that data for monitoring the implementation of the activities and results are collected efficiently, effectively and in a timely manner. To that end, proportionate reporting requirements should be imposed on recipients of Union funding. By way of delegated acts, the Commission should set out the common indicators to be used for reporting on progress and for the purpose of monitoring and evaluation of the Facility and define a methodology for reporting social expenditure, including on children and the youth, under the Facility.

(64)

Pursuant to paragraphs 22 and 23 of the Interinstitutional Agreement of 13 April 2016 on Better Law-Making (16), this Facility should be evaluated on the basis of information collected in accordance with specific monitoring requirements, while avoiding an administrative burden, in particular on Member States, and overregulation. Those requirements, where appropriate, should include measurable indicators as a basis for evaluating the effects of the Facility on the ground.

(65)

A dedicated scoreboard should be established by way of a delegated act to display the progress of the implementation of the recovery and resilience plans of the Member States in each of the six pillars and the progress made as regards the implementation of the recovery and resilience plans in respect of the common indicators of the Facility. The scoreboard should be operational by December 2021 and should be updated by the Commission twice a year.

(66)

In order to ensure appropriate performance reporting and monitoring of the implementation of the Facility, including on social expenditure, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of the dedicated scoreboard displaying the progress of the implementation and the common indicators to be used as well as the methodology for reporting social expenditure, including on children and the youth. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(67)

The Commission should provide an annual report to the European Parliament and to the Council on the implementation of the Facility. That report should include information on the progress made by Member States under the recovery and resilience plans approved. It should also include information on the implementation of the milestones and targets, payments and suspensions, as well as on the contribution of the Facility to the climate and digital targets, common indicators and expenditure financed under the six pillars.

(68)

An independent evaluation looking at the achievement of the objectives of the Facility, the efficiency of the use of its resources and its added value should be carried out. Where appropriate, the evaluation should be accompanied by a proposal for amendments to this Regulation. An independent ex-post evaluation should, in addition, deal with the long-term impact of the Facility.

(69)

The assessment of the recovery and resilience plans to be implemented by the Member States and the corresponding financial support should be adopted by the Council by means of an implementing decision, on a proposal from the Commission. To that end, and in order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Council. Those implementing powers relating to the payment of the financial support upon fulfilment of the relevant milestones and targets should be conferred on and be exercised by the Commission in accordance the examination procedure of Regulation (EU) No 182/2011 of the European Parliament and of the Council (17). Taking into account the possible need for a prompt payment of financial support under the Facility, in accordance with the relevant provisions of Regulation (EU) No 182/2011, the Chair of the committee within the meaning of that Regulation should consider the possibility, for any draft implementing act, of shortening the time limit for convening the committee and the time limit for the committee to deliver its opinion.

(70)

After the adoption of an implementing decision, it should be possible for the Member State concerned and the Commission to agree on certain operational arrangements of a technical nature, detailing aspects of the implementation with respect to timelines, indicators for the milestones and targets, and access to underlying data. To ensure the continuous relevance of the operational arrangements in respect of the prevailing circumstances during the implementation of the recovery and resilience plan, it should be possible that the elements of such operational arrangements be modified by mutual consent.

(71)

Horizontal financial rules adopted by the European Parliament and the Council pursuant to Article 322 TFEU apply to this Regulation. Those rules are laid down in the Financial Regulation and determine in particular the procedure for establishing and implementing the budget through grants, procurement, prizes, indirect implementation and provide for checks on the responsibility of financial actors. Rules adopted pursuant to Article 322 TFEU also include a general regime of conditionality for the protection of the Union’s budget.

(72)

In accordance with the Financial Regulation, Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council (18), Council Regulations (EC, Euratom) No 2988/95 (19), (Euratom, EC) No 2185/96 (20) and (EU) 2017/1939 (21), the financial interests of the Union are to be protected by means of proportionate measures, including measures relating to the prevention, detection, correction and investigation of fraud, corruption and conflicts of interests, and, where appropriate, the imposition of administrative penalties. In particular, in accordance with Regulations (Euratom, EC) No 2185/96 and (EU, Euratom) No 883/2013, OLAF has the power to carry out administrative investigations, including on-the-spot checks and inspections, with a view to establishing whether there has been fraud, corruption, conflicts of interests or any other illegal activity affecting the financial interests of the Union. EPPO is empowered, in accordance with Regulation (EU) 2017/1939, to investigate and prosecute fraud, corruption, conflicts of interests and other criminal offences affecting the financial interests of the Union as provided for in Directive (EU) 2017/1371 of the European Parliament and of the Council (22). In accordance with the Financial Regulation, any person or entity receiving Union funds is to fully cooperate in the protection of the Union’s financial interests, grant the necessary rights and access to the Commission, OLAF, the Court of Auditors and, in respect of those Member States participating in enhanced cooperation pursuant to Regulation (EU) 2017/1939, EPPO and ensure that any third parties involved in the implementation of Union funds grant equivalent rights.

(73)

It should be possible for the Commission to engage in communication activities to ensure the visibility of Union funding and, as appropriate, to ensure that support under the Facility is communicated and acknowledged through a funding statement.

(74)

Since the objectives of this Regulation cannot be sufficiently achieved by the Member States, but can rather be better achieved at Union level, the Union may adopt measures in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary to achieve those objectives.

(75)

In order to allow for the prompt application of the measures provided for in this Regulation, it should enter into force on the day following that of its publication in the Official Journal of the European Union,