Brussels (Brussels Morning) The European Commission announced plans to borrow roughly 150 billion euro annually until 2026 for its green push and digitalisation, which would make it the largest debt issuer in euro, Reuters reported on Wednesday.
The economic plan was originally agreed at some 750 billion euro, but now stands at approximately 807 billion due to inflation.
The plan is made up of 386 billion euro in loans and 338 billion in grants, to be split between 27 EU member states, with the remainder allocated to joint programmes.
Pre-financing to start this year
The money is to be distributed over five years, with roughly one third assigned for the green push. EU member states can receive 13% of their respective shares in pre-financing this year.
The European Commissioner for Budget and Administration, Johannes Hahn, pointed out that the EU could borrow approximately 45 billion euro in the third quarter this year if member states opt to focus on grants in pre-financing.
The EC announced plans to issue bonds with maturities between 3 and 30 years as well as bills with maturity below one year. Borrowing can start once all EU member states have ratified the Own Resources Decision, which establishes how EU budget is financed.
“Our structures will be ready by June and theoretically we could start borrowing then, but it depends on how quickly member states complete the ratification process”, Hahn observed.
New taxes to repay new debt
The borrowing will be repaid through new taxes that the EU is to impose in the coming years. Repayments should start in 2028 and end in 2058, with EU member states to repay the loans they raised and grants to be repaid from the EU budget.The new taxes, which have yet to be agreed on, should include taxation of goods imported from countries less dedicated to curbing CO2 emissions, a digital tax and new CO2 taxes.