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Strong increase in EU funds inflows in 2020-23

26.02.2021

Economics in a picture: Strong increase in EU funds inflows in 2020-23

 

With the COVID-19 pandemic, supranational policies gained additional importance, with emphasis on the role of EU funds. Over the next years, the 2021-27 Multiannual Financial Framework (MFF) and the Next Generation EU (NGEU) lie at the heart of the European policy toolkit for the economic recovery from the pandemic crisis and for addressing the long-term challenges. The amount allocated to Portugal under the 2021-27 MFF is about €30 billion, which must be used by 2029. Regarding the NGEU, the grants allocated to Portugal are estimated to be around €16 billion, covering the Recovery and Resilience Facility (approximately €14 billion) and the reinforcement of three shared management instruments, namely the REACT-EU, the Rural Development and the Just Transition Fund. These amounts must be used by the end of 2026. Additionally, Portugal will keep receiving funds regarding the Portugal 2020 Partnership Agreement until 2023.

According to the projections of the December 2020 Economic Bulletin, the final beneficiaries will receive 3.4% of GDP per year, on average, of European grants in the period 2020-23, being about 30% of this amount associated with the NGEU. These inflows are above the historical average and are estimated to peak in 2022 and 2023. 

 

 

For further details, see Box 2 of the March 2019 Economic Bulletin, “Impact of EU funds on the current and capital account: Portugal 2020 in perspective”, and Box 2 of the December 2020 Economic Bulletin, “EU funds in 2020-23”.

 

Prepared by Cláudia Duarte and Carlos Melo Gouveia. The analysis, opinions and results expressed herein are those of the authors and do not necessarily coincide with those of Banco de Portugal or the Eurosystem. 

 

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