Protecting the EU’s Financial Interests under the Recovery and Resilience Facility: Practical Challenges and Risks

Aleksandar Sht. Shterionov

Economic Thought journal, 2026, issue 2, 275-299

Abstract: The Recovery and Resilience Facility (RRF) constitutes a qualitative leap in European fiscal integration. For the first time, the European Union (EU) issues common debt in such an amount and channels the resulting resources through a direct-management, performance-based delivery model grounded in “financing not linked to costs.” This federative-style architecture entails a systemic recalibration of the balance between national autonomy and Union-level responsibility and, in doing so, generates novel challenges for the protection of the EU’s financial interests (PIF). This paper assesses the implications of the RRF’s delivery model considering the protection of the financial interests of the Union. It argues that the innovative approach relying on milestone-and-target verification changes what can be monitored, audited, and credibly enforced. Drawing on recent audit findings and the evolving anti-fraud framework, the analysis identifies both cross-cutting and RRF-specific practical challenges. Monitoring tools are stretched by methodological constraints: common indicators may capture implementation progress yet remain insufficient for measuring performance, and deriving an objective “overall error rate” is difficult when payments are detached from declared expenditure. Moreover, the combination of broadly drafted key indicators and administrative discretion can facilitate “formal compliance”, whereby reporting appears procedurally sound while implementation remains substantively incomplete. Finally, the RRF introduces the operationalization of the concept of “serious irregularities”, which raises questions as to legal certainty, evidentiary thresholds, and enforceability in practice. The paper concludes that the RRF confirms the Union’s capacity to deepen integration in times of crisis, and that this process always brings with it new types of risks and challenges. It also produces new categories of risk that demand calibrated safeguards.

JEL-codes: F36 H11 H81 H83 K42 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:bas:econth:y:2026:i:2:p:275-299

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