Greta Ilekytė. Money rain is coming: what does Lithuania promise?

The funds provided for in the Recovery Fund should not be divided between left and right for Member States, but should be directed towards specific objectives. For example, progress in the fight against climate change or the digitization of the country. Furthermore, for the first time in history, countries wishing to benefit from these funds will have to meet certain conditions of the rule of law and democracy.

It is likely that the prime ministers of Hungary and Poland initially threatened rather than delay and vetoed the EU budget in anticipation of looming concerns. However, even the most skeptical agree that compromises will be found and the EU budget will soon be approved by the European Parliament.

What will these looming money rain clouds mean for Lithuania and help steer our country in the right direction?

Lithuania – 2 billion. annual euros

The EU recovery fund amounts to 750 billion euros, or around 5%. the total GDP of the European Union last year. And while all the funds in the fund are borrowed, the money will come to the country in the form of grants or soft loans.

Lithuania is expected to receive approximately 2.4 billion from this fund. € 1 billion in grants and a few billion more in concessional loans. It is estimated that in the period 2021-2027, along with EU subsidies, Lithuania can expect about 14 billion. 2 billion euros of aid. annual euros.

Representatives of the European Central Bank have recently declared that the Recovery Fund will be a crucial instrument to help countries get out of the pitfalls caused by the pandemic. Furthermore, it is envisaged that the Recovery Fund, which was to be an exceptional rescue instrument, could become a long-term instrument to stabilize the economies of the Community in the face of unexpected and deep crises.

Money, not for short-term consumption

Unlike the summer social benefits paid in Lithuania, which were intended directly for the short-term promotion of household consumption, the recovery fund is expected to increase long-term potential and implement major structural reforms.

And while the goal of the latter fund is to help countries recover from a recession caused by a pandemic, the money should not arrive in the country before next summer, at a time when community economies should already be in a slowdown. rapid recovery phase. And this, of course, will happen slowly, so recovery may take more than a year.

It is estimated that a third of the total recovery fund should go to projects to combat climate change. This would help reduce carbon emissions and save energy, for example by heating buildings. A large part of the funding should also go towards digitization and projects such as the development of 5G or 6G connectivity and artificial intelligence.

In addition, a separate program is also foreseen for the prevention and preparedness for future crises and for the provision of necessary medicines and health care.

The parties will decide for themselves

The governments of the countries will be obliged to present to Brussels the planned plans where the support funds received will be invested. However, deciding where to use the money specifically will be a matter for the countries themselves.

So the success of spending money in the planned areas is far from guaranteed. Be that as it may, if national governments choose to invest in projects that generate short-term economic benefits, but not much-needed structural reforms, the fund’s skeptics are unlikely to repeat themselves in similar experiments in the future.

The impending rain of money can help develop new talent, reforms and important and long-needed innovations. Lithuania has the opportunity to make the most of this support not only in quantitative but also qualitative terms.

However, not only a strong government and a general consensus of politicians are very important here, but also our own vision of what kind of Lithuania we want to have in the future.