The End of the RRF: Trade Adjustment and Financing Challenge

The European Union’s (EU) Recovery and Resilience Facility (RRF), launched in 2021, has funded reforms and investments across a broad range of sectors. RRF absorption has contributed to an investment-led import impulse, raising demand for imported capital goods, energy-transition and digital equipment, services, and construction inputs. This dynamic may have widened deficits or moderated surpluses. As the programme winds down in 2026, this source of import impulse should gradually fade, all else equal, although broader external developments could offset the effect.

The wind-down also raises a financing question. Sovereigns seeking to continue investment projects and structural reforms initiated under the RRF will need to secure alternative financing sources. Depending on country circumstances, these may include sources such as EU programmes, inward foreign direct investment (FDI), or additional public borrowing. While stronger productive FDI could represent a positive medium-term…