The European Commission has a “first definition” of the new annex to the recovery plan that it is negotiating with the Spanish government, as explained by spokespersons for the Union’s executive body. He added: “Let’s maintain constructive contacts with Spain on this issue.” In these negotiations, the Executive informed Brussels of its resignation to request about 75% of the appropriations that correspond to the Spanish program of the Recovery Fund, which means reducing the appropriations of more than $83,000 million allocated to an amount that will amount to about $22,000 million, as agreed in EL PAÍS. The amounts stipulated in the grants which are not, as such, not to be returned are to be enjoyed in full.
Although the approval of the formal request with the planned changes is consistent with Cabinet approval, the government is negotiating these changes with the Commission. It will be the seventh amendment to the plan since the original version was presented in 2021. Then it includes only a request for grants amounting to about 80 thousand million, and there is no obligation to return them. Since this moment, Spain has received about 55 thousand million euros and has not given up a single euro. Then I made the first adjustment, the largest of all, in which I prepared the loan application and linked it to the final amount of the corresponding grants.
Following this change, several changes were made, some of which arose due to amendments made by the European Commission itself in the governance standards to facilitate implementation. With the emergence of the Recovery Fund, the most ambitious financial program in the history of the European Union, approved to mitigate the impact of the pandemic, it was noted that there were very stringent elements that made it very difficult for the Brazilian states to be able to implement their ambitious programs in such a modified amount of time, only five years. There have also been changes made to be able to comply with the requirements of the EU Court of Accounts. In other cases, there were circumstances that led to these modifications: Spain, for example, made modifications to the roots of the dance.
The change that Spain is planning now comes after the latest amendment to the standards approved by Brussels in June and after it processed the adjustments necessary for the reconstruction of Valencia due to the disaster. To take advantage of these changes, it was when this Seventh Amendment arrived that three-quarters of the appropriations were given up.
“Spain maintains good access to financial markets, which practically eliminates the total cost of financing loans from the European Commission. For example, in loans over 20 years (the average life of a loan from the European Commission), the spread is negative: it is now 3.84% in the case of European bonuses and 3.77% in Spain, i.e. in general, we finance ourselves in the markets with lower costs,” say government officials.
Another element is that it reduces by more than $60,000 million in loans in the future of grants, and if all of that is requested in one year, a jump in public debt can be assumed by an amount equivalent to four points of GDP, although this is a dynamic measure that could be lower if the economy grows a lot.
The very different Spanish economic situation over five years helps to understand the step taken by the executive. But there’s also an obvious element: lack of time to spend all the money. The recovery fund has been approved on the condition that the funds received by the capitals will be completed between the end of next August and December 31, 2026, that is, with all resources implemented. This assumes the existence of a straight line that is impossible to adhere to, as Spain seeks in the current negotiations to find mechanisms capable of facilitating the investment of some resources, while adhering to the European regulations governing the Recovery and Resilience Fund, which is the official name of this financial program.
“The addition being worked on will allow us to continue investment projects until August 2026, which is the deadline for implementing the recovery plan,” state governor sources said. This was, in principle, part of the government’s plans to use public companies to direct this investment. However, since the executive order was issued, this idea has been restored and reaffirmed.