Spain requests €90 billion in loans from EU for pandemic recovery

MADRID, June 6 (Reuters) – Spain has asked the European Commission for 84 billion euros ($90 billion) in loans from the bloc’s pandemic recovery package, a quarter of which will be managed by the European Investment Bank, Economy Minister Nadia Calviño said on Tuesday.

The EIB will manage some 20 billion euros of loans earmarked for the governments of Spain’s autonomous communities, Calviño told a news conference, meaning the funds will not be directly controlled by the Spanish government.

The rest of the loans will be managed by the next central government that emerges from the early general elections called by the Prime Minister, Pedro Sánchez, for July 23, after his Socialist Party was defeated in the municipal and regional votes of the May 28.

As many as six regional administrations — which enjoy a large degree of autonomy in the semi-federal Spanish system — are set to move into coalitions between the main opposition Popular Party (PP) and the far-right group VOX, bringing 12 of the 17 regions of the country could remain under the control of the PP.

Although the Commission has two months to formally approve the loans, Madrid and Brussels have already reached an informal agreement on the terms and conditions after several months of negotiations, a person close to the talks told Reuters.

Spain was initially hesitant to apply for the loans, since at that time it could borrow on the market at very low interest rates. But the subsequent rate hike meant he was able to get them on better terms than on the market, according to a second source with direct knowledge of the plan.

In addition to the loans, Madrid is going to receive 7,700 million euros in direct aid after an upward revision of the 77,000 million euros initially allocated to Spain in subsidies, for being one of the economies in the bloc that suffered the most from the effects of the pandemic. .

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(Reporting by David Latona and Belén Carreño; Editing by Emelia Sithole-Matarise; Editing in Spanish by Tomás Cobos)