Brussels/Prague – The European Commission (EC) has approved the fourth payment request from the Czech Republic amounting to 1.83 billion euros (45 billion CZK) from the fund to mitigate the effects of the economic crisis. The Commission announced this today in a press release. The fourth payment from the so-called Recovery and Resilience Facility will mainly focus on projects related to digital transformation, the environment, transport infrastructure, energy, and the social sector. The Czech Republic is expected to receive the funds in September.
“The Commission has preliminarily concluded that the Czech Republic has satisfactorily met 32 milestones and 26 targets,” said the EU executive. “The reforms and investments associated with this payment request will bring positive changes to citizens and businesses in the Czech Republic, especially in the areas of energy production, savings and storage, clean mobility, water management, digitalization, justice, and health,” it added.
The approval of the fourth request means that the Czech Republic is successfully presenting meaningful projects, said UniCredit Bank analyst Pavel Sobíšek to ČTK. Funds from the Recovery Fund support the creation of fixed capital in the public sector, which contributes to the overall growth of gross domestic product (GDP). According to him, this is particularly important for the Czech Republic in the current economically uncertain times, when private investors are more hesitant about long-term projects. “If the Czech Republic manages to utilize all allocated funds by 2026, its GDP will increase by about 2.5 percent over the four years of the fund’s existence compared to a situation of zero utilization,” Sobíšek estimated.
If these funds are appropriately invested and their impact on the economy can be multiplied, it could be a significant impulse for economic growth, according to Deloitte analyst David Marek. Natland Analyst Petr Bartoň believes that immediate growth in the Czech economy will not be triggered by these funds. The state has already accounted for their expenditure, so there will be no reassessment of macroeconomic forecasts for future growth, Bartoň believes. However, in the longer term, these funds could help with economic growth, according to him.
In total, the Czech Republic can obtain up to 209 billion CZK in grants and 10.6 billion CZK in loans from the National Recovery Plan if it meets predefined milestones. The National Recovery Plan is intended to serve as a basis for drawing funds from the extraordinary fund that the EU has prepared in connection with the coronavirus pandemic. It is meant to help EU member states address the economic and social impacts of the pandemic and ensure the ecological and digital transformation of the economy. (July 30)
