EU countries can use 225 billion euros in EU loans for the energy crisis

BRUSSELS (Reuters) – European Union countries can use 225 billion euros ($227.57 billion) in unused loans from the EU recovery fund to tackle energy problems and other challenges stemming from the war in Ukraine, a senior EU official said on Monday.

The European Union launched an unprecedented €800 billion joint borrowing program last year to help its 27 members recover from the COVID-19 pandemic and green their economies.

But instead of the pandemic, governments are now grappling with a cost of living crisis caused by soaring energy prices after Russia halted much of its gas supplies to the EU in retaliation for the bloc’s support for Ukraine.

“Member states can apply for loans to finance additional investments and reforms – including those whose plans have already been adopted,” European Commission Vice-President Valdis Dombrovskis told the European Parliament’s Economics Committee.

He added that these loans can be used to respond to Russian aggression as well as fund reforms under REPowerEU, a plan to reduce dependence on Russian oil.

Dombrovskis said governments could also modify previously approved spending plans because the war in Ukraine has changed the circumstances under which initial plans were made.

Russia calls its actions in Ukraine “a special military operation”.

Dombrovskis said EU governments could request changes to plans if they cannot make planned investments due to extreme market volatility or lack of materials.

They could also make changes as the amounts each country must get were adjusted slightly after the release of 2021 data on gross domestic product growth.

“Any proposed revision must be targeted and well justified. It must not undermine the continued implementation and overall ambition of the plan,” he said.

(Reporting by Jan Strupczewski; Editing by Josie Kao)

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James V. Hayes