Brussels approves CZK 180 billion in EU funds for Czech National Recovery Plan

Ursula von der Leyen, Andrej Babiš

The European Commission has approved the Czech Republic’s National Recovery Plan and will allocate CZK 180 billion to the country from the EU’s Resilience and Recovery Fund, Commission President Ursula von der Leyen and Czech Prime Minister Andrej Babiš said in Prague on Monday. However, the Czech Republic will have to ensure that there is no conflict of interest in allocating the money; otherwise it may have to send the funds back.

The Czech capital’s recently reconstructed State Opera House provided the thematic setting for Ursula von der Leyen’s meeting with Prime Minister Andrej Babiš. The Czech prime minister opened up the subsequent press conference with good news.

“The Czech Republic will receive CZK 180 billion from the EU’s Resilience and Recovery Fund over the next five years. This money will be invested into the much needed restart of our economy after the coronavirus pandemic as well as into the more wide ranging modernisation of EU industry and the quality of life of our citizens…Our country’s National Recovery Plan, the reason why we are here today, is the condition for receiving money from this EU programme. “

In total, the National Recovery Plan envisions the spending of CZK 208.9 billion in investment across a wide variety of sectors, of which CZK 180 billion will come from the EU.

Specifically, the investments will be split into six categories: Physical Infrastructure and Green Transition (CZK 85.2bn), Digital Transformation (CZK 27.8bn), Education and Labour Market (CZK 48.1bn), Post-Covid Institutional, regulatory and business support (CZK 10.8bn), Research and Innovation (CZK 13.2bn) and Health and Resilience (CZK 12.4bn).

Ursula von der Leyen | Photo: Vít Šimánek,  ČTK

Ursula von der Leyen highlighted the importance of environmental investments, something that was reportedly the subject of intense debate during negotiations, and praised the Czech Republic for allocating money to digitise its health system. However, the European Commission also set out its own conditions for approving the money transfer.

A part of these requirements is that the Czech Republic must spend at least 37 percent of the money on projects associated with climate protection and a further 20 percent on digitising its economy. The Czech plan fulfils these criteria, allocating 42 percent of the budget on the former and 22 percent on digitisation.

Furthermore, Czech government institutions will have to follow EU guidelines when allocating the money in order to avoid a possible conflict of interest, which was alluded to in a recent European Commission audit that found the Czech prime minister to be the principal beneficiary of funds received by Agrofert – the conglomerate he founded and placed into trust funds.

Agrofert and its affiliate companies will therefore not be able to access any of the money paid out from the union’s structural funds.  If Czech officials fail to follow these guidelines, the country will likely have to pay the money back, one Brussels official told the assembled journalists.

For his part, Andrej Babiš, who insists he has no conflict of interest, said that he knows nothing about any structural problems in the way funds are allocated in the Czech Republic.

The first batch of money, CZK 23 billion, should be sent to Prague this autumn if the plan also gets approved by EU member states.