New bonds instead of debt repayment? France is pushing for changes in the EU budget

The European Commission, asked about the proposal to delay the repayment of the debt incurred for the so-called Reconstruction Fund, presented at the weekend by French President Emmanuel Macron, replied that a political decision was needed on this matter. She added that the fund was created as a “one-time tool.”

Marcon announced during Saturday's visit to Greece that there is a need to delay the repayment of the debt incurred for the so-called Reconstruction Fund, which was created in response to the Covid-19 pandemic.

Last year, the Commission proposed that in the next EU budget for 2028-34, which is approximately EUR 2 trillion, approximately EUR 160 billion should be allocated to repay this debt.

– We went into debt during the Covid-19 crisis and now we are being told we have to pay it back quickly. This is idiotic, Macron said at a press conference with Greek Prime Minister Kyriakos Mitsotakis, as quoted by Euractiv. According to Macron, there is an “appetite for European debt” among global investors. – Let's divide the debt into installments and issue new bonds – he proposed.

The European Commission was asked about this proposal on Monday. EC spokesman Balazs Ujvari replied that the Commission had from the beginning treated the Reconstruction Fund as a “one-time tool” and still viewed it that way.

He added that the architecture of the Reconstruction Fund and the debt incurred towards it were created in 2020 as a result of a political decision by EU countries. Ujvari suggested that a “political decision” would have to be made again for this solution to be changed.

In the draft budget for 2028-34, the EC proposed new own resources to enable debt repayment and at the same time find funds for new priorities, including defense and competitiveness of the Community.

These include: carbon border tax (CBAM), a new tax on companies operating in the single market, a tax on tobacco products and new waste-related fees.

However, some countries are against this because they fear losing control over fiscal policy.

The starting point for the talks is the draft budget presented by the European Commission in 2025. It assumes that the EU's multiannual financial framework for the next seven years will amount to approximately EUR 2 trillion, i.e. the highest amount in the history of the EU. More funds are to be allocated to the competitiveness of the EU economy, defence, research and new technologies.

Budget negotiations are always a complicated and time-consuming element of the functioning of the European Union. In the case of the last budget, leaders addressed this topic several times at EU summits. The talks formally began in 2018 and ended in July 2020 at a summit that lasted four days and four nights and was one of the longest meetings of the European Council in history.

From Brussels Łukasz Osiński (PAP)

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