The Government has finally decided forward to next year, 2022, the progressive request of the around 70,000 million euros in loans that correspond to Spain within the framework of the 140,000 million euros of European reconstruction funds that it will receive until 2026.
In this way, the request for credits will take place one year ahead of schedule in order to mobilize a greater number of investments and speed up the execution of the plan. This has been confirmed to Digital Economy in government sources, after the President of the Government, Pedro Sánchez, slipped the decision during his appearance before the Congress of Deputies to account for the Recovery, Transformation and Resilience Plan.
The Second Vice President of Economic Affairs and Digital Transformation, Nadia Calviño, established two parts in the schedule for the request for European funds, in such a way that it contemplated the request for non-refundable transfers in the first three years (2021-2023) alreadyThe request for the remaining 70,000 million in loans was placed as of fiscal year 2023, already in the next legislature.
The decision to anticipate the request for loans to Brussels, instead of only obtaining the subsidies until 2023, comes in a context in which the Government has lowered growth forecasts from 9.8% to 6.5% this year, admitting the one-trimester delay of recovery given the anticipation that the arrival of European funds and its impact will be delayed.
The President of the Government, Pedro Sánchez, maintained during his appearance in Congress that the plan will have an impact of of GDP points annually during the execution period, at the same level, potential growth in the medium and long term and will lead to the creation of 800,000 jobs in the period, with the estimate that the 27,000 million funds programmed in the Budgets for this year begin to flow from JuneAlthough Calviño has already admitted that the impact will be “a little less” this year and somewhat greater next year.
Transfers from this year
The Recovery Plan project shelled out by Sánchez indicates that, given the “uncertainty and the difficulty of inventorying actions in the longer term”, said plan focuses on the first phase of implementation. Thus, the reforms and investments that will be deployed in the 2021-2023 period are detailed, for a total close to 70,000 million euros.
In order to achieve an “anti-cyclical” effect and boost economic activity and employment already in the second part of 2021, the General State Budgets provide for a investment of 27,000 million euros aligned with the Recovery Plan, with 25,000 million corresponding to the Recovery and Resilience Mechanism and some 2,000 million
Euros from the Reat-EU instrument, to finance investment in health and education, which mainly corresponds to the autonomous communities.
To this will be added the payments corresponding to the structural funds of the multiannual financial framework, which includes the SURE mechanism by which Spain will receive 21,500 million to finance ERTE, the benefit for cessation of activity or temporary disability.
In accordance with the milestones reached from February 2020 until the approval of the Plan, it is expected that, in addition to the payment of the corresponding pre-financing, there will be in the second part of 2021 a first payment of transfers from the Recovery and Resilience Mechanism. This first disbursement would be about 10,000 million euros.
Loans since 2022: more conditionality and debt computation
Besides 69,528 million euros in direct non-refundable transfers that Spain will receive from European funds until 2023, the 70,000 million euros in credits provided for in said funds will be mobilized “progressively” finance investments starting in 2022. The European Commission allows you to apply for the loans until July 2023.
Specifically, the document explains that the credits provided for in the allocation to Spain of ‘Next
Generation EU ‘, for mainly finance investment financial instruments as of 2022 and also reinforce the financing of investment programs as of 2023.
In detail, the mobilization of credits will take place from next year to cover financial instruments such as, for example, the Cofides fund for capitalization of companies or the Next-Tech fund to scale startups, as well as reforms that involve investments of magnitude variable, such as the new permanent mechanism for job stability and support for transition processes. In addition, The credits will be mobilized to complete the investments foreseen in the Plan as of 2023.
The request for loans one year ahead of schedule will mean the establishment of requirements and conditions to the Government, so that Brussels will closely monitor certain measures and economic policies, such as labor reform, pension reform and comprehensive reform of the tax system.
It should also be taken into account that the credits of the European funds are computed to quantify the public debt, so that Spain’s commitments with creditors could increase beyond what was foreseen, after having closed the financial year 2020 in the 120% of PIB.
Delayed European funds: first advance in July
The Government has been forced to postpone sending the final document of the Recovery Plan in response to requests from the European Commission to Spain and other partner countries for more details on investment policies and reforms. The intention is to approve the Plan in the Council of Ministers next Tuesday, April 20, and send it to Brussels, rushing the deadline, which expires on April 30.
Doubts about the delay of European funds have been sustained in recent weeks, especially after the Constitutional Court of Germany the approval of European funds, known as Next Generation EU, with the consequent possible impact on all members of the European Union.
However, Calviño hopes that the German court will unblock the last procedure and the European Commission will definitively approve the EU Next Generation Plan in June, to start channeling resources to the Member States in the second half of the year.
The Budget Commissioner, Johannes Hahn, has specified that la CE is prepared to undertake the first disbursements of the Recovery Plan between July and September, as long as the Member States have done their “homework” by then. This is already one month behind the expected month of June.
The European Commission will use a diversified funding strategy to raise up to about 800,000 million euros at current prices in the debt markets until 2026, to finance the Reconstruction Mechanism through the issuance of some 150,000 million a year until 2026. All loans will be repaid no later than 2058.
The Bank of Spain it recently lowered the volume of aid that Spain will be able to implement from 70% that it foresaw in December to 55% reducing the contribution to one point and transferring three tenths to 2022. Along the same lines, AIReF lowered the impact of the Recovery Plan from 2.7 percentage points of GDP to 1.6 points, given the delay in their effective arrival, by estimating that they will arrive in the second half of the year and a good part of their impact on GDP will be transferred to 2022.
Anyway, the State has already spent about 2,000 million of the total investments of 27,000 million included in the Budgets linked to European funds, which will be financed with greater debt issuance by the Treasury.
The 2,000 million are derived from the 400 million European funds, expandable up to 800 million, from the Plan Moves III of direct aid to individuals, the self-employed and SMEs to buy more sustainable vehicles, another 581 million projects in the field of sanitation and purification of populations with less than 5,000 inhabitants, 60 million to correct power lines to avoid damage to birds and 688 million of funds EU to strengthen Active Employment Policies, in addition to distributing 2,111 million among the CCAA that were already included in their PGE.
212 reforms and investments
The Recovery Plan collects in total 212 measures, of which 110 are investments and 102 reforms pFor the period 2021-2023, although they do not start from scratch, but rather from the strategic lines followed since 2018. The almost 70,000 million euros in transfers until 2023 will have a significant concentration in the areas of green transformation (39.12%) and digital (29%), in education and training (10.5%), R & D & i (7%) and the reinforcement of social inclusion and cohesion throughout the territory.
The 20 main investments that will be developed in the first phase of the plan are the Strategy of Sustainable Mobility, Safe and Connected (more than 13,200 million euros); the program of Housing Rehabilitation and Urban Regeneration (6,820 million); the modernization of public administrations (4,315 million); the Pymes Digitization Plan (more than 4,060 million euros; the roadmap of the 5G (almost 4,000 million).
Also listed are the new Industrial Policy Spain 2030 and Circular Economy Strategy (3,780 million euros); the National Digital Skills Plan (3,590 million), the modernization and competitiveness of the tourism sector (3,400 million); the development of the National Science and Innovation System (3,380 million) and the deployment and integration of renewable energies (3,165 million) .a modernization and reinforcement of the National Health System
The main reforms include a new energy system and deployment of renewables, with a green hydrogen roadmap, the modernization of Justice, the new care economy, the Water Law and purification, sanitation, efficiency, saving and reuse plan, and the modernization and digitization of public administrations.
Also included are the waste policy and the promotion of circular economy, the strategy of sustainable and connected mobility and the reform of the national system of science and support for innovation A new housing policy, however the three that generate the most controversy due to their importance are the referred to labor market, pensions and the tax system.
Regarding the labor market, the Plan includes reducing to three types of contract (stable, temporary and training), consolidates internal flexibility models such as ERTE, updates active employment policies and subcontracting, while in the case of pension reforms a battery of measures are proposed, but still open to social dialogue .
Among other, link pensions to the CPI, penalize early retirement, encourage delay in retirement, extract improper Social Security expenses or promote pension plans.
Regarding the tax reform, it promises to recover the rise in diesel, raise more with Personal income tax, companies and indirect taxes, the new plastic tax, other tax on the deposit of waste in landfill and on incineration Y another that taxes non-reusable plastic containers, as well as the modification of the Tax on Fluorinated Greenhouse Gases and reforms in the field of sustainable mobility.
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