On December 16th, 2020, the European Union (EU) reached an interinstitutional agreement on budgetary cooperation. This agreement is significant for the EU`s budgetary processes and for member states` contributions to the EU`s budget.
The agreement was reached between the European Parliament, the Council of the European Union, and the European Commission. It sets out the framework for how the EU`s budget will be managed in the coming years, including the introduction of a new system of own resources.
One key element of the agreement is the establishment of the Recovery and Resilience Facility (RRF). This new fund will provide financial support to member states to help them recover from the economic impact of the COVID-19 pandemic. The RRF will be funded by borrowing on the financial markets, which will be repaid by the EU budget over time.
The agreement also includes provisions for the next long-term EU budget (2021-2027), which will be worth €1.07 trillion. This budget will be used to fund various EU programs and policies, including research and innovation, regional development, and agriculture.
One of the most significant changes introduced by the agreement is the introduction of a new system of own resources. Under this system, the EU will be able to generate revenue from new sources, such as a plastic tax, a digital tax, and revenues from the EU Emissions Trading System. This will reduce member states` reliance on national contributions to the EU budget.
Overall, the interinstitutional agreement on budgetary cooperation of December 16th, 2020 is an important milestone for the EU`s budgetary processes. It sets out the framework for how the EU`s budget will be managed in the coming years, including the establishment of the Recovery and Resilience Facility and new system of own resources. These measures will help the EU to recover from the economic impact of the COVID-19 pandemic and ensure the long-term sustainability of the EU`s budget.