Brussels – The Recovery Fund, established to address the economic fallout from the COVID-19 pandemic, is facing scrutiny from the EU Court of Auditors regarding its management by the European Commission.

The fund, set up to finance member states’ recovery plans, has been described by the auditors as being utilized too leniently in a report that has sparked an institutional clash within the EU.

The Court of Auditors has raised concerns about the Commission’s approach, asserting that the Recovery Fund lacks a performance-based framework.

The auditors criticized the assertion that the fund is “an instrument that is not based on performance,” indicating it does not adequately measure the quality, speed, or effectiveness of national reforms.

In response, EU Executive Vice President Raffaele Fitto, who oversees reforms, defended the Recovery Fund's structure, stating it aligns financial aid with tangible performance outcomes.

He outlined that disbursement of funds is contingent upon measurable progress in implementing the proposed reforms, asserting that evaluations occur at each funding tranche.

The European Commission emphasizes the importance of preventive controls — requiring adherence to set objectives before further disbursements are authorized.

A comprehensive portal has been launched to monitor and publicize the achievements linked to the fund's utilization.

However, the Court of Auditors has highlighted significant flaws in the regulatory framework governing the Recovery Fund, noting it does not provide a concrete definition of “performance.” This gap, according to the auditors, undermines the clarity on what constitutes a successful outcome derived from EU-financed actions.

Moreover, the auditors underscored critical issues surrounding performance, accountability, and transparency, suggesting that while the Recovery Fund, which constitutes a substantial portion of the 750 billion Euro NextGenerationEU recovery programme, has been integral to the EU’s economic revival, there is a marked lack of information regarding the results achieved and actual expenditures.

The auditors pointed out that without clear data on outcomes, it is challenging to ascertain the tangible benefits of the funds to European citizens.

Commissioner Raffaele Fitto contested these claims, stating that the Recovery Facility has motivated member states to confront systemic challenges, significantly accelerating essential reforms across various sectors, such as employment and education.

The disagreement extends to how progress is assessed, with the Court of Auditors asserting the Commission's focus is skewed towards outputs—technical data reflecting implementation—rather than outcomes, or the real-world impact of those measures.

This criticism echoes prior warnings from the European Central Bank about ensuring effective utilization over mere timely execution of spending.

The Court of Auditors, within its report released after nearly a year of deliberation, has implied a cautionary note on the potential for inefficiencies in the Recovery Fund's deployment.