Ecofin gives the green light to the Spain Plan and definitively clears the way for European funds

The first 9,000 million euros will arrive in a few weeks and another 10,000 million, if there are no surprises, before the end of the year

The First Vice President and Minister of Economy, Nadia CalvioJAVIER BARBANCHOREUTERS

The ministers of Economy and Finance of the EU have approved this Tuesday to the Recovery, Transformation and Resilience Plan for Spain and eleven other member states. It was the most important pending procedure and the only one that could block the delivery of the funds, but the process has been more comfortable than feared, so much so that the vice president Nadia calvio did not even have to be present today at the meeting with his colleagues, because he chose to return to Madrid from Brussels to participate in the first Minister council of the new remodeled Government.

In the absence of a series of administrative steps and paperwork, which could take a few weeks, Moncloa trusts that the first 9,000 million euros hit the public coffers later this month or early next month. After negotiation and positive evaluation of the European Commission, States have discussed during the past month, at a very technical level, the details of the documents and the ministers today have definitively cleared the way. Now Madrid and the Commission have to formalize a series of legal documents, something that is slow because it requires many verifications, the participation of the State Attorney and intervention. Something similar was done last year with a program SURE, the European mechanism created to finance employment assistance programs such as ERTEs through credit. Spain has some experience and sources from the Ministry of Economy trust that this will serve to accelerate the steps and, hopefully, achieve the transfer this month.

“The decisions of the Economic and Financial Affairs Council on almost half of the national plans constitute a great step forward in economic recovery. They allow the Member States to sign the first financing agreements and to make the pre-financing payments. support from the EU, Member States can initiate the reforms and investments necessary for the recovery, thus strengthening and transforming our economies, “he said. Andrej ircelj, Minister of Finance of Slovenia, who this semester holds the rotating presidency of the Union and is in charge of the negotiations.

In any case, that it arrives in July or August is not very important. Spain is financed with Treasury issues and expects the disbursement of another 10,000 million euros, approximately, before the end of the year. The first check, this month’s, is the so-called ‘prefinancing’, It is equivalent to 13% of the total to which our country can aspire and is backed by the reforms and measures taken since 2020 to deal with the pandemic. The second is ‘protected’ by the reforms and milestones put in place and, at this point, practically completed, for which Calvio has reiterated several times that there should be no surprises either. Another thing is the third disbursement, which It will be produced in the spring-summer of 2022, but that is not yet guaranteed, since Spain must approve different reforms between now and December, including elements of the labor market, one of the most controversial.

“Good news. Ministers have given the green light to the first 12 national recovery plans. EU funding may soon start to flow to pay for reforms and investments. Now we have to focus on putting them in place quickly and properly.” has pointed out the community vice president, Valdis Dombrovskis.

There were doubts in the last months about the approval of the capitals. Today the evaluations of 10 different plans have been given the green light, including Italy, France, Germany, Greece or Denmark, for example. The aim of this review by Ecofin was to ensure that the Commission would be rigorous, as several northern countries have specific mandates from their Parliaments to tighten the nuts, a sine qua non condition set during ratification. It wasn’t a pure veto, but it could pose a major political problem should a fight be sought. The text of Spain has passed without changes, and community sources explain that there have only been minor and very technical modifications in the plans of some country. Nothing serious, they say, just some additional explanations, somewhat more precise schedules or setting certain thresholds for public-private co-financing with precision.

The recovery agreement reached in July 2020 contemplated a package of up to 800,000 million euros, almost half of them in direct transfers, which will not count towards the public deficit or the debt of a country. Spain will have a maximum of 140,000 million between transfers and credits, but for now he has given up the second part, unlike partners like Italy or Greece, who opt for everything. The Government believes that market access conditions are good, so it does not need the advantageous conditions that are attractive to other countries. And that, in addition, it is already quite a challenge to try to absorb about 70,000 million euros in a few years, so it has chosen to go little by little, but without closing the door to ask for it later, if the markets became more expensive. .

From Brussels, states have been encouraged to go all out, to use the tools at their disposal to maximize the stimulus before fiscal ‘normality’ is restored and the rules of the government are restored. Stability Pact.

The next few months will be quiet, because the bulk of the work is done, but everyone in Brussels and Madrid expects 2022 to be more complicated. There are many reforms to implement, many milestones to reach, and there will inevitably be clashes. The rule is clear: if everything agreed is not fulfilled, and the schedules are very detailed, there can be no disbursements. But there is the possibility, in certain circumstances, of renegotiating and perhaps agreeing partial deliveries of the money, if the bulk has been made but there are pending issues of importance. Or the labor, pension and tax issue is in the first line.

There is also some unknown. There are partners, such as the Netherlands, that have not yet delivered their programs because the Executive is in office. Malta submitted it today. And there are others, like Hungary, with whom a hot summer and many crashes are expected. The European Commission has not yet published its assessment (it has two months from delivery, according to the rules) and friction with Budapest is growing. On paper, due to the lack of measures against corruption. In the background, that issue and at least a dozen other technical and political issues. The issue may try to resolve itself these days or weeks, it may be a bilateral shock, the nth. But it can also scale. There are certain issues, including what affects recovery plans, that require unanimity in Ecofin, and Hungary if something has shown these last 12 months is that he had no problem blocking or vetoing important issues for his colleagues.


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