Sweden has finally applied for its first disbursement from the EU’s COVID-19 Recovery and Resilience Facility (RRF), requesting €1.6 billion. This initial payment is a fraction of the total €3.5 billion (approximately SEK 40 billion) allocated to Sweden from the massive €648 billion fund designed to bolster member states’ economies in the wake of the pandemic. Sweden’s application comes significantly later than other EU nations, with countries like Italy already having received seven disbursements, and Poland and Latvia receiving their third. This delay highlights the unique challenges Sweden faced in meeting the fund’s eligibility criteria.
Sweden’s access to the RRF funds was contingent upon the approval of a revised recovery plan submitted by the Swedish government. The initial plan had been stalled due to concerns surrounding Sweden’s compliance with EU climate commitments. The controversy stemmed from the governing coalition’s decision to reduce the country’s ”reduction obligation,” a policy mandating the blending of biofuels into transportation fuels. Lowering the reduction obligation led to an increase in Sweden’s carbon dioxide emissions, putting the country at odds with its EU obligations and jeopardizing its access to the much-needed recovery funds.
The impasse was finally resolved after the Swedish government reconsidered its stance on the reduction obligation. Following negotiations, the government agreed to partially restore the reduction obligation starting July 1, 2024. Simultaneously, a reduction in gasoline taxes was implemented to mitigate the anticipated price increase at the pump. This compromise allowed the EU member states to finally approve Sweden’s revised recovery plan, paving the way for the disbursement of the allocated funds. The government projects that these changes will result in a net reduction of two million tons of carbon dioxide emissions by 2030.
The €1.6 billion requested by Sweden will cover expenditures incurred by the state, regional, and municipal governments between 2020 and 2022. These expenditures encompass a range of projects aimed at modernizing infrastructure and boosting economic resilience. Key areas of investment include upgrading the railway network, increasing housing availability, and expanding broadband access. These projects are aligned with the RRF’s broader objectives of promoting digitalization, green initiatives, and economic recovery.
Sweden’s delayed entry into the RRF disbursement process underscores the complexities of balancing national policy decisions with broader EU commitments. The case also highlights the significant financial resources made available by the EU to support its member states in navigating the economic fallout of the pandemic. The RRF, funded through joint borrowing by the 27 EU member states, represents an unprecedented effort to stimulate economic recovery and foster long-term resilience. By targeting investments in critical areas like digitalization and climate action, the RRF aims to not only address immediate economic challenges but also lay the groundwork for a more sustainable and competitive future.
While Sweden finally secured its initial RRF disbursement, another EU member state, Hungary, faces its own set of challenges in accessing the full extent of its allocated funds. While Hungary received an advance payment of over €900 million in early 2024, a substantial portion of its €10 billion allocation (comprising both grants and loans) remains frozen. The release of these funds is conditional on the Hungarian government implementing reforms to address concerns regarding judicial independence and other rule-of-law issues. This highlights the EU’s commitment to upholding its core values and principles while distributing recovery funds. The cases of both Sweden and Hungary demonstrate the intricate interplay of national policy, EU regulations, and the broader goals of economic recovery and resilience in the post-pandemic era.
