The money was not transferred to countries as a lump sum. Each government submitted a national plan setting out reforms and investments, which was first assessed by the European Commission and then approved by the Council.
Individual measures were broken down into qualitative milestones and quantitative targets. A milestone could be the entry into force of a law, while a target might be the renovation of a certain number of buildings or the installation of a specified number of charging stations.
After the initial pre-financing, countries had to apply for further tranches. The Commission assessed whether the agreed requirements had been met and released the money only afterward. Unlike traditional EU funding programs, payments are not based on submitted invoices. What matters is the verified fulfillment of the milestones. Many measures are therefore initially financed from national budgets, with countries receiving the money from Brussels later.
What Germany Bought with €30bn
Germany was allocated €30.3bn ($35.1bn) in grants under the fund. Berlin did not take out any loans. The German plan comprises 28 investments and 17 reforms. In March, the Commission approved Germany’s third payment request, worth €4.6bn ($5.3bn). That brought total payments to €24.4bn ($28.3bn), with 79% of the agreed targets met. For the final tranche of €5.95bn ($6.9bn), Germany had to meet a further 27 requirements.
Almost half of the German plan is officially earmarked for climate action, with a similarly large share devoted to digitalization. The categories overlap, which is why the two shares can add up to more than 90%. They represent policy objectives rather than separate pots of money.
Around €7bn ($8.1bn) is going toward greener mobility. It has supported purchases of electric vehicles, clean buses, charging points and rail transport. Another €6.2bn ($7.2bn) is earmarked for energy-efficient renovations of residential buildings. Germany also allocated €3.7bn ($4.3bn) to decarbonizing the economy, including €1.5bn ($1.7bn) for hydrogen projects ranging from production to industrial use.
Programs that are barely recognizable as a direct response to the pandemic are also part of the fund. €1.5bn ($1.7bn) is earmarked for European microelectronics and communication technologies and €750m ($870m) for cloud infrastructure. Another €2.5bn ($2.9bn) was intended to make more than 115 federal services and 100 important state-level administrative services available digitally. Additional funding went to interconnected registers and a national online education platform.
The clearest link to the pandemic is in health care. €3bn ($3.5bn) is being used to digitize hospitals and €684m ($793m) to modernize the public health service. Another €500m ($580m) is going toward 90,000 additional childcare places, alongside programs for apprentices and pupils who had fallen behind during the lockdowns.
Germany incorporated some measures from its already adopted Covid stimulus program into the European plan. The fund therefore did not finance only additional projects that would never have been launched without Brussels. In many cases, it reimbursed the federal budget for spending on programs Berlin had already introduced. The Finance Ministry explicitly states that funding initially comes from the national budget and that EU payments follow only after the agreed results have been demonstrated.
Other countries chose different priorities. Spain put more than €12bn ($13.9bn) into building renovations and social housing and €13.2bn ($15.3bn) into rail lines, low-emission urban zones, electric buses and charging infrastructure. Poland used more than €5bn ($5.8bn) for offshore wind farms and port facilities. Portugal financed social housing, student accommodation, digital health services and technical training centers. The fund thus became a European investment program spanning everything from judicial reforms and kindergartens to hydrogen facilities.
The Final Bill Comes Later
Governments now have until 30 September to submit their final payment requests, together with audit reports and supporting evidence. The Commission will then assess which requirements had actually been met by 31 August. All transfers must be made by 31 December. There is no extra year to complete unfinished work: measures not adopted or completed until September no longer count.
Romania shows what this means in practice. The government had promised Brussels a reform of public-sector pay and changes at loss-making state-owned companies. The new pay framework was intended to reduce disparities in the state wage system and curb privileges granted on political grounds. Romania spends around €30bn ($34.8bn) a year on civil-service pay.
After the governing coalition collapsed, the parties failed to agree on the reform in time. That puts at least €770m ($893m) from the final payment at risk. The Commission will determine the final reduction only after assessing Romania’s request. Portugal, by contrast, reports having completed all 44 reforms agreed in its plan and expects to receive the full €16.3bn ($18.9bn) in grants.
As the final payments bring the facility to an end, its financing is only now entering its long-term phase. The Commission raised the money by issuing common EU bonds on the capital markets. Countries that took out loans from the fund must repay them to the EU. The grants, by contrast, are paid for by the EU budget.
Repayment begins in 2028 and runs until 2058 under the current schedule. The Commission has proposed creating new sources of EU revenue for this purpose. If those revenues prove insufficient, repayments must be financed from the regular budget and therefore ultimately from member-state contributions. An earlier Commission estimate put the potential annual cost of interest and principal under the next budget framework at €25bn–€30bn ($29bn–$34.8bn).
From 2028, the recovery fund will place an annual burden on the EU budget even though the program itself will have long since ended. Until 2058, billions will go toward interest and principal instead of being available for infrastructure, research or other priorities.
The Covid aid was distributed over six years. Europe’s taxpayers will be paying for it for decades.
