EU finance ministers on Tuesday approved a coronavirus recovery plan for 12 of its members that would provide grants and loans for countries including Germany, France and Italy.

Austria, Belgium, Denmark, Greece, Latvia, Spain, Luxembourg, Portugal and Slovakia will also benefit from the national recovery programs presented by finance ministers.

The €672.5 billion (roughly $800 billion) Recovery and Resilience Facility aims to "power the European economic recovery by supporting member states' reforms and investment projects," the European Council said in a statement on Tuesday.

Financed by joint borrowing, an EU first

This is the first batch of national investment programs under the coronavirus EU recovery plan which the European Commission approved the measures in June.

In a new development for the EU, the funds are financed by joint borrowing on behalf of all member states coordinated by the Commission. Countries like Germany had staunchly resisted such suggestions when dealing with the so-called sovereign debt crisis of the past decade.

All 12 member states asked for prefinancing from the funds they receive; they will receive 13% of the funds in that form.

Andrej Sircelj, Slovenia's finance minister, said these 12 green lights amounted to "almost half of the [27] national plans" and "a big step forward in the European economic recovery."

"The adopted Council decisions will allow the member states to use the funds not only to recover from the COVID-19 crisis but also to create a resilient, greener and more digital, innovative and competitive Europe for the next EU generations," Sircelj said.

What other goals does the plan have?

The Recovery and Resilience Facility has been made a part of the Next Generation EU package, also designed to fight climate change as well as rescue economies hurt by the pandemic.

The financial assistance aims to recreate economies around "smart, sustainable and inclusive growth, social and territorial cohesion," according to the European Commission.

It plans to encourage and enable countries in the bloc to move away from fossil fuels, renovate buildings, digitize public administration and to retrain workers.

How are the funds distributed?

In order to apply for the funds, each member state needs to provide their recovery and resilience plans to the European Commission, which then assesses them based on a series of criteria.

The Commission will take two months to examine each proposal which it then passes over to the European Council for approval.

An initial payment of 13% will be followed up by the rest of the funding once there is evidence that key targets and milestones of each plan have been met.

The pandemic has driven up unemployment, slowed spending and hit the tourism industry the hardest, severely impairing southern European economies.

jc/msh (AFP, Reuters)