Slovenia chairs EU with challenge to get recovery plans on track

Slovenia takes over the presidency of the Council of the European Union this six-month period with the challenge of approving the national plans that will allow billions of euros to be injected into the continent's economy and also to channel the debate on the reform of fiscal rules.

The country, with a population of two million and led by the government of right-wing populist Janez Jansa, has set as its priority for the next six months the reconstruction after the pandemic of AIDS-19, which means first and foremost that the 800 billion euros from the recovery fund must reach the states that are resuming economic activity thanks to vaccination as soon as possible.

The European Commission has already approved 14 reform and investment plans, including Spain's, which will receive 69.5 billion in subsidies, and Slovenia's, for 2.5 billion; and the ministers of economy and finance plan to give the green light to the first 12 at their meeting on 13 July.

Slovenia, which will set the agenda and lead the ministerial meetings until the end of the year, will also convene a second council (Ecofin) on 26 July to approve the rest of the plans endorsed by the Commission until then.

Slovenian Finance Minister Andrej Sircelj confirmed on Friday that countries will stick to the positive assessment of the EU executive. "I do not expect any substantive comments or strong reservations from member states on the first 12 recovery plans," Sircelj said, referring to a batch that will include the Spanish plan.

With the final approval of their plans, the countries are entitled to an advance on their envelope, which would oblige Brussels to disburse almost 50 billion euros for these twelve countries.

So far, the Commission has raised 35 billion euros for the fund on the market and will make one more transaction before August. But if the proceeds are not enough to pay them all, it will have to make a pro rata payment and deliver the rest of the advance from September, when the financial markets reopen.

From then on, disbursements will depend on whether states implement their plans on schedule, a compliance that will be closely monitored by the Commission and the capitals and that could also influence the debate on the reform of fiscal rules, especially if there is the impression that Brussels raises its hand in the event of non-compliance.

The EU executive hopes to resume this review in the last quarter, after the September federal elections in Germany, a key player in a debate that strongly divides countries.

These rules, which in general set limits on public debt (60% of GDP) and deficit (3%), were suspended in 2020 to allow a forceful fiscal response to COVID-19 and will remain frozen until 2023, but some countries, including Spain, advocate modifying them before reactivating them.

Sircelj acknowledged that during his presidency he only hopes to start the general debate, but not to talk about "figures", and considered that if at the end of a "long discussion" there is no consensus to update them, they will revert to the status quo.

Slovenia believes that the rules "should go in the direction of the greatest possible stability of public finances", which "means having surpluses and not deficits, as little debt as possible, and that the inflation rate should be in a realistic range", he explained.

Ljubljana is, however, in favour of taking into account the specific circumstances of each country when asking them to address high debt levels.

On the other hand, Slovenia wants to focus on the digital and ecological transition, also from an economic point of view.

One of the crucial yet controversial issues on the table will be the proposal for an EU digital levy, which the European Commission hopes to present later this month if the G20 finance ministers endorse next week's OECD agreement on a new taxation of multinationals.

The debate, which the EU postponed for two years pending the international pact, is expected to be difficult as three members - Ireland, Estonia and Hungary - have not joined the agreement signed by 130 of the 139 countries participating in the OECD process and any rules on taxation in the EU need the support of all its partners.

"We will have to discuss the advantages and disadvantages, as well as the things that bother some OECD countries, and incorporate some of these changes," Sircelj told at a press conference.

Slovenia will also face an avalanche of climate proposals, many of them economic in nature, which the Commission will present this month as part of a package aimed at reducing pollutant emissions by 55% by 2030, dubbed "Fit for 55".

These include the revision of the energy taxation directive, aimed at eliminating favourable treatment for fossil fuels, and the new border carbon adjustment mechanism, which will tax imports from countries with higher emissions to prevent them from competing at an advantage over European producers, who must follow stricter climate standards.

Also on the table of the economy and finance ministers will be the proposal to create a European standard for green bonds, the new rules against money laundering, and the proposals for the cryptocurrency market.

The Slovenian minister hoped that "they will not limit themselves to discussions" and will be able to reach agreement on some dossiers.