Wednesday, August 4

Spain receives the last go-ahead from its European partners for the first 69.5 billion of recovery funds


Exactly a month ago the president of the European Commission, Ursula von der Leyen, exhibited the 10 outstanding and a notable that she had awarded to the Spanish recovery plan. It did so on the same day that the approved Portuguese also communicated, the first two plans that received the approval of Brussels, in a clear message that, in this crisis, unlike the previous ones, they want to prioritize the economic health of the south of Europe.

Brussels approves the Spanish plan for the first 69.5 billion of European funds

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And this Tuesday the last examination has arrived, that of the European partners meeting in Brussels in a Council of Ministers of Economy and Finance (Ecofin), in which, as planned after the approval of the European Commission, has been given way free to 69,500 million in transfers requested by Spain until 2023 – the other half, in the form of credits, has not yet been requested by Spain, and has until 2026 to do so – and, to begin with, to 9,000 million of pre-financing for plans that have begun in February 2020 that could arrive from July. Thanks to the adoption of the Council’s implementing decisions regarding the approval of the plans, Member States can sign grant and loan agreements that allow a pre-financing of up to 13%.

The Spanish plan has received the approval of the ministers along with 11 other national plans (Austria, Belgium, Denmark, France, Germany, Greece, Italy, Latvia, Luxembourg, Portugal and Slovakia). However, there are countries, such as the Netherlands, that would have liked to see “more definition” in some of Spain’s reforms, such as the labor market or pension reforms, which are pending social dialogue, diplomatic sources explained to Efe. However, there have been no obstacles to the approval of the plan in a meeting that was not attended by the economic vice president, Nadia Calviño, because she was in the first Council of Ministers after the remodeling addressed by the President of the Government, Pedro Sánchez, the last Saturday.

“The Spanish recovery plan has just been approved by Ecofin,” Vice President Calviño tweeted: “This decision gives way to the implementation of investments and reforms of the Next Generation EU, with a view to a solid, green, digital, inclusive recovery and fair in Europe. ”

Community debt issuance

In fact, the Community Executive has already raised 35,000 million in the markets in the first two issues of community debt issued in the markets in June (it is expected to issue up to 80,000 million in 2021).

“It is a historic day,” said the President of the Government, Pedro Sánchez, together with the president of the European Commission, Ursula von der Leyen: “The door is open to a new way of understanding the Union.”

In its calendar, the European Commission plans to deliver to Spain in 2021 a figure lower than that budgeted by the Government. The budgets for 2021 include 26.634 million transformation projects charged to community money. Of these, 2,436 million from the European Commission’s React-EU program that comes out of the Multiannual Financial Framework, and 24,198 million from the Recovery and Resilience Mechanism. However, instead of these 24,198 from funds linked to the plan approved this Wednesday, Brussels plans to deliver 19,000 million.

Those 9,000 million will arrive after the approval of the Council (the Governments) received this Tuesday in the Ecofin. Money that will be disbursed as each country meets the milestones and objectives to which it has committed: without objectives met, there is no money.

The Brussels analysis confirms that “the plan represents a balanced response to the economic and social situation in Spain”, and that “it contains measures aimed at improving the employability of young people and further reducing the rate of early school leaving. It also proposes a simplification of contracts to reduce abuse of temporary hiring “.

The European Commission stresses that “there are substantial investments to train workers and modernize the vocational education and training system. The plan also foresees concrete actions in the field of active labor market policies, including the reform of the system of incentives for employment. recruitment, the development of individual counseling pathways, the strengthening of the adult learning system and the modernization of public employment services. ”

In relation to the reforms, Brussels explains that “the Spanish plan includes a broad set of reforms and investments that are mutually reinforcing and that contribute to effectively address the economic and social challenges described in the country-specific recommendations addressed to Spain in the Semester European of 2019 and in 2020 “.

In this sense, “the plan addresses the recommendations in the areas of investment in the green and digital transitions, strategic sectors and research, development and innovation. The plan includes measures to improve the business climate, with important actions to improve regulation, reduction of delinquency and the reform of the bankruptcy framework “.

“The plan addresses country-specific recommendations in the field of public finances, including a reform of the spending review system, a reform to improve the fight against tax fraud, a reform of the public procurement framework and the tax system.” , Brussels lists: “The plan includes a reform of the pension system with the aim of preserving its adequacy and sustainability in the medium and long term and supporting a longer working life. The final design of the reform is subject to the outcome of the dialogue process Social”.

In addition, Brussels addresses the reform of the labor market: “It proposes several reforms of the labor market, including a stabilization and flexibility mechanism that would allow companies to cope with adjustments in the event of economic crises, based on the working day scheme. The plan also includes a set of measures envisaged to address the persistent problem related to the duality and precariousness of the labor market. The plan provides for actions to reduce temporary contracts in the public and private sectors. The final design of various reforms of the labor market is subject to the outcome of the social dialogue process. In addition, the plan includes measures to improve active labor market policies. ”

“The plan also contributes to social and territorial cohesion, with measures in health, education, professional skills and social policy,” adds the European Commission.

Ecological and digital transition

According to the evaluation of the European Commission, “the contribution to the green transition of the Spanish plan amounts to 40% of its allocation of 69,500 million”, which “exceeds the minimum of 37% required by the regulation of the recovery and resilience instrument” .

The Community Executive highlights that the measures to help ensure Spain’s green transition “include 3,900 million for the development of renewable energies and 3,400 million to support the renovation of more than half a million residential buildings to improve their energy efficiency.”

In addition, “it includes measures to promote sustainable mobility; decarbonize industry; reduce energy dependence and help mitigate the adverse effects of climate change by preserving coastal spaces, ecosystems and biodiversity.” Finally, Brussels details that the plan “promotes the circular economy by improving water and waste management in the country.”

In addition to meeting the ecological transition objectives, Brussels affirms that Spain’s recovery and resilience plan “contributes effectively to the digital transition.” Thus, it stands out that “the contribution of the Spanish plan to the digital transition amounts to 28% of its total allocation of 69,500 million euros, which exceeds the minimum of 20% required”.

Specifically, says the European Commission, the “measures to support the digital transition in Spain that 3,600 million for digital training and 4,300 million for the digital transformation of the systems of public administration, health, justice, employment, education and social services” .

“It also includes investments of 4.6 billion euros to promote the digitization of industry and SMEs, investments in artificial intelligence, digitization of tourism and cultural systems, and 4 billion euros to support fixed and 5G connectivity and the related ecosystem,” Brussels recounts.

Alert Spain about imbalances

Ecofin has also approved conclusions on Tuesday in which it alerts several countries, including Spain, about the debt and deficit imbalances caused by the economic, health and social crisis of the pandemic. The finance ministers of the LA state that “it is still difficult to assess all the consequences of the crisis, in particular its structural effects”; acknowledge “that the COVID-19 crisis has severely affected a wide variety of sectors” and that “opportunities and challenges posed by ecological and digital transitions.” Furthermore, they call for “close monitoring of existing imbalances and possible emerging imbalances, and the distinction between cyclical and structural factors.”

In this sense, Ecofin “agrees with the European Commission when it confirms that the 12 Member States analyzed in the comprehensive reviews (Germany, Cyprus, Croatia, Spain, France, Greece, Ireland, Italy, the Netherlands, Portugal, Romania and Sweden) they report macroeconomic imbalances of various kinds and varying degrees of intensity under the macroeconomic imbalance procedure, and agrees that there are excessive imbalances in three Member States (Cyprus, Greece and Italy) “.





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