Wednesday, August 17

Spain requests the first tranche of European recovery funds: 10 billion euros

Spain was one of the first countries to deliver the reform plan to the European Commission on April 30. It was one of the first countries to receive the approval of the plan, last June, and the pre-financing part: 9,000 million in August. And, now, it has become the first EU country to request the first tranche of the remaining bulk, in this case 10 billion, which it hopes will arrive before the end of the year, although the maximum terms – up to three months – could make them take a little longer.

The Government and Brussels publish the agreement on European funds that Casado called “secret”

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“A new milestone in the launch of our Next Generation EU recovery plan”, the president of the European Commission, Ursula von der Leyen, tweeted: “We received the first payment request from a Member State. From Spain, worth 10,000 million euros, to finance energy efficiency projects, sustainable mobility and training projects. Now we will evaluate and decide quickly “.

What the European Commission has to evaluate is the fulfillment of 52 milestones, developed until mid-2021, so the Government expects the ratification to be smooth. The Commission has up to two months, and then the Council – the 27 governments – up to one month.

This Monday it was already announced that the petition was about to take place. “In these very days”, The European Finance Commissioner, Paolo Gentiloni, said: “We will receive in these same days the agreements with Spain that finalize the disbursement schedule that we call an operating agreement. It will be finalized in the same next few days.”

The agreement –Operational arrangement– These are operational provisions for the 27 that detail the mechanism for monitoring compliance with the milestones and objectives of the reforms. The Minister of Finance, María Jesús Montero, signed it on November 4; Gentiloni himself, number 9; and the Commission and the Government made it public on November 10.

As indicated in the Regulation of the Next Generation EU approved last February by the governments and the European Parliament, the operational provisions must be signed by all countries as a preliminary step to receive disbursements, which in the case of Spain are 140,000 million, between transfers and credits. However, Spain, to date, has only requested the part of transfers, 69,500 million euros, of which 19,000 are expected before the end of the year. Another 70,500 million in soft loans are still pending.

“We hope they will arrive before the end of the year”, said this Monday the economic vice president, Nadia Calviño: “Spain will be the first country to request the payment corresponding to the recovery plan, thanks to the fact that we have already effectively met the milestones and objectives required for this first semi-annual payment “.

Calviño added: “It is expected that between now and the end of the year we will meet another set of objectives, among which is the labor reform, and other milestones from the point of view of investments that will correspond to the payment of the first semester of 2022 “.

The request comes 24 hours after Brussels cut Spain’s growth expectations in 2021 by more than one and a half points: from 6.2% announced in July to 4.6% of the autumn forecasts published this Thursday. This reduction also means leaving Spain, which was at the head of European growth, below the average of 27, which stands at 5%. Of course, for the next two years, Brussels does foresee a growth in Spain that is higher than the European average. Thus, the European Commission believes that Spain will grow 5.5% in 2022 –4.3% on average for the EU– and 4.4% in 2023 –2.5% in the 27–, so Spain will not will recover its pre-pandemic economic levels until the first quarter of 2023.

Money in exchange for milestones

Spain expects that there will be no problems for these 10,000 million that have just been requested. But the curves may come with what is to come, in particular the reform of the labor market and pensions. The first, still on social dialogue, must be published in the BOE before the end of the year. The second, before the summer of 2022.

And, as it was ratified this Wednesday when the operational provisions of the funds were known, Spain and Brussels have signed the extension of the calculation period of years for retirement. There were many tug of war in the Toledo Pact commission, in social dialogue and within the coalition government. To such an extent, that the Government considered until the last minute to send to Brussels a pension reform proposal that expressly included an increase from 25 to 35 in the number of years of contributions to calculate the benefit to be collected upon reaching retirement. This is stated in the penultimate version of the records that the Executive has sent to the European Commission, to which had access and which was distributed in the last weeks of 2020. The final version that it sent to Brussels no longer included this precision, although it did maintain the intention of expanding the years of calculation.

In May, the text sent to the European Commission, component 30, which defined several questions of the pension reform, such as the time frame in which it intends to increase the contribution of the highest salaries progressively, during the next three decades, and on the calculation period to calculate the pension, the verb “adequate” from 2023.

Component 30 of the European Recovery Plan was entitled ‘Long-term sustainability of the public pension system within the framework of the Toledo Pact’. “The pension reform is aimed at ensuring the financial sustainability of the system in the short, medium and long term, maintaining purchasing power, preserving its adequacy and sufficiency in the protection against poverty, and guaranteeing intergenerational equity”, it states the document, which emphasizes the willingness of the reform to acquire consensus in social dialogue after reaching political agreement on the recommendations of the Toledo Pact.

A month later, already in June, that verb “to adapt” gives way to the verb “to extend”. Milestone 408, called “adequacy of the computation period for calculating the retirement pension”, is defined as “entry into force of the legislation relating to the adequacy of the computation period, extending the computation period for calculating the retirement pension “.

Well, in the contract known this Wednesday, the operational provisions for the evaluation of the milestones and goals that Spain has committed to for European funds, the same thing is said again, but in English, pending the translated document .

As confirmed by a spokesperson for the European Commission, “the operational provisions agreed with the Spanish authorities do not establish new requirements on the corresponding milestone 408 of Annex CID [Decisión de ejecución del Consejo por la que se aprobó el plan de recuperación español en junio] on the extension of the calculation period for calculating the retirement pension. Milestone 408 establishes that this legislation will come into force at the end of 2022. More generally, it is up to the Member States to determine which reforms or measures to include in the plan. The European Commission will evaluate the recovery and resilience plans on the basis of the 11 criteria established in the European funds regulation, which has been agreed by all the Member States and the European Parliament. ”