Portugal wants EU Recovery Fund to become permanent investment tool

FILE PHOTO: Portugal's Finance Minister Fernando Medina in an interview with Reuters

By Sergio Goncalves

LISBON (Reuters) - The European Union must transform its pandemic recovery fund into a permanent instrument for structural investments to face competitiveness challenges that can only be overcome on an EU scale, Portugal's finance minister said on Monday.

However, Fernando Medina said that starting a debate now on extending the 800 billion euro ($860 billion) temporary support programme beyond 2026 could give countries a wrong idea that making use of the investments by that deadline is no longer a priority.

"This is the year to speed up (investment). The more countries advance in implementing their recovery plans, the stronger will their arguments be regarding the deadline extension and the need for additional investment resources," he told Reuters.

By the end of 2024 or early 2025, EU finance ministers could begin discussions on extending the fund's time frame, Medina said.

After allocating the investments, the EU should transform the programme into a permanent scheme "with a relevant dimension", he added.

To achieve that, the bloc needs to beef up its own coffers through, for example, taxes on technology giants or more taxation on carbon emissions.

"This issue has to be put on the table, clearly," he said, acknowledging though that the topic is "very sensitive" and could be exploited by far-right parties and other Eurosceptics.

Regarding a free trade deal between the EU and the Mercosur bloc of South American countries, Medina said an upcoming European Parliament election in June was stymieing progress in talks, "not least because France's resistance to this agreement continues or has even increased".

Any approaching election, "as a rule, is not conducive to great understandings on structural transformation", he added, specifying though that he is not directly involved in the negotiations.

Recent farmers' protests across the European Union were triggered by high taxes, rising costs and cheap imports, among other grievances. Renewed negotiations to conclude a trade deal between the EU and Mercosur fanned discontent about unfair competition in sugar, grain and meat.

(Editing by Andrei Khalip; Editing by Nick Macfie)