Three years have passed since the activation of the European Union’s post-coronavirus pandemic recovery fund. The multi-year budget, worth $897 billion or 5.2% of the bloc’s GDP in 2022, is financed through EU debt.

Funds are still being disbursed, making it difficult to measure the economic effect. Experts also have not reached a consensus on the fund’s intended purpose. Only short-term goals are highlighted: to prevent a repeat of the 2010-12 euro crisis.

At the start of 2020, the European Central Bank (ECB) had to intervene decisively to prevent interest rates on Italy’s massive debt from spiraling out of control, as Italy was severely impacted by the pandemic. In addition to the ECB’s actions, the EU agreed to pool budgetary resources to assist poorer countries and those heavily affected by the pandemic. Aid varied from 10.8% of GDP for Italy to 0.6% for the Netherlands. Markets learned that the ECB would do “whatever it takes” to preserve the euro and that, in times of crisis, wealthier EU countries would assist poorer ones. In this respect, the fund was successful.

Another aim of the fund was to facilitate recovery from the deep recession caused by Covid-19, with budget stimulus focused on consumption rather than investments.

The EU co-funded some expenditures: Italy’s subsidies for eco-friendly home renovations were co-financed with 14 billion euros from EU funds. Investments such as childcare facilities require ongoing staff. Most of the money has yet to be spent, but the results so far are mixed. “For Italy, it was too much money and too little time to ensure it was spent correctly,” claims Tito Boeri of Bocconi University.

The funds were also intended to help countries undertake politically challenging reforms to stimulate economic growth. The Greek government plans to redistribute the responsibilities of various government levels, the healthcare system, and territorial planning. In Italy, the government has begun reforming its judicial system. The money acts as an incentive for carrying out agreed reforms, which is especially important in a country with frequent government changes. However, Italy struggles to increase competition in its economy.

European federalists hope that collective debt “will become a national blessing and a powerful cement of the union.” With the fund’s resources nearing depletion, having spent 832 billion euros across 27 member states, the EU will need to justify the need for a budget increase and expanded powers anew.