Brussels approves recovery plan for Spain

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Brussels approved the recovery plan submitted by the Spanish government to mitigate the damaging effects of the corona crisis  on Wednesday. Spain could claim €140billion but only applied for €69.5billion.

The government will unblock payments every 6 months by meeting the targets and milestones agreed with the European Commission. The first payment of €9billion in July is expected to receive approval from Ecofin.  

€19billion by end of the year

El Economista writes the first €9billion will be paid to Spain in the form of an deposit. With that, the EC approves the reform and investment plan submitted by Spain at the end of April.

By the end of the year, Brussels will be able to approve a new disbursement of €10billion. This will bring the aid received by Spain to €19billion by the end of the year. Unlike the advance, the expected payout by the end of the year therefore depends on meeting the targets. Specifically, community authorities will need to validate some 50 targets in order to approve it.

Many of these objectives have already been achieved. Yet, Brussels sources point out there are some “pending problems”. In particular they refer to reducing the temporary nature of the public sector, the entry into force of the Climate Change Act and the deployment of charging points for electric cars.

Receiving less

The amount finally approved in the recovery plan is less than the €27 billion the government estimated to receive when preparing this year’s general budgets. Asked about this difference on Wednesday, Prime Minister Sánchez assured “it is perfectly acceptable to the government of Spain.”

In addition, Sánchez explained the difference between the budgeted and approved amounts is due to the complexity of the plan’s approval process.

Payout schedule for Spain

In total, the disbursement of the €69,500 million in non-refundable transfers for Spain is dependent on 416 milestones and targets. The country must achieve these every six months to receive new instalments.

The largest disbursement of €12billion is due in June 2022. Many of the goals the government will have to meet for this refer to labour market reforms.

Then comes a payment of €6billion at the end of 2022 and €10 billion euros in mid-2023. Following are €7 billion in December 2023, €8billion in mid-2024 and around €3billion a year later. Another payment of €4 billion occurs in June 2025.

Spain becoming “greener and more digital”

In its analysis of Spain’s recovery plan, the European Commission emphasises the program allocates 68% of its resources to reforms and programmes related to the energy transition and digital transformation.

“The Commission’s evaluation finds that Spain’s plan encompasses a wide range of mutually reinforcing reforms and investments that contribute to fully addressing or significantly reducing the economic and social challenges highlighted in the country-specific recommendations for Spain” , reads the statement on the approval of the Spanish plan.

“Ambitious and future-oriented”

“This plan will fundamentally change Spain’s economy, making it greener, more digital and more resilient. We supported this plan because it is ambitious, forward-looking and will help build a better future for Spaniards,” said Ursula von der Leyen , President of the European Commission.

In total, Spain could claim €140 billion of the €800 billion recovery fund the EU will use to lift European economies out of the crisis caused by the pandemic, while accelerating green and digital transitions at the same time. At the moment, the government has only requested the €69.5billion.

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