The European Commission already has “a first draft” of the new addendum to the recovery plan that it is negotiating with the Spanish Government, according to official spokespersons for the Community Executive. “We maintain constructive contact with Spain on this matter,” they add. In these negotiations, the Executive has informed Brussels of its renunciation of requesting around 75% of the credits that correspond to the Spanish recovery fund program, which means reducing the credits from the slightly more than 83,000 million allocated to an amount that will be around 22,000 million. The amounts provided for in subsidies that do not have to be returned will, however, be enjoyed in full.
Although the approval of the official request with the proposed changes corresponds to the Council of Ministers, the Government is negotiating these changes with the Commission. . Then it only contained the request for subsidies, which amount to nearly 80,000 million and there is no obligation to return. From this part, Spain has already received some 55,000 million and does not give up a single euro. Then came the first modification, the largest of all, since it included the request for loans and was linked to the final amount of subsidies that corresponded to it.
After that change, several more have arrived, some of which have arisen due to the European Commission’s own modifications in the management criteria to facilitate execution. As the recovery fund was launched, the most ambitious financial program in the history of the EU, approved to cushion the impact of the pandemic, it was observed that there were very rigid elements that made it very difficult for Member States to implement their ambitious programs in such a tight time frame, just five years. There have also been changes that have come to comply with the demands of the EU Court of Auditors. And in other cases, unforeseen circumstances have led to these adjustments: Spain, for example, has made modifications as a result of the dana.
The change that Spain is now proposing comes after and once it has processed the modifications it made for the reconstruction of Valencia due to the catastrophe. Taking advantage of these changes, this seventh modification has arrived, with the renunciation of three quarters of the assigned credits.
“Spain maintains good access to financial markets, practically eliminating the cost advantage of financing European Commission loans. For example, in 20-year loans (average life of the European Commission loan), the differential is negative: it is now 3.84% in the case of European bonds and 3.77% in Spanish bonds, that is, in general terms we finance ourselves in markets at lower costs,” argue government sources.
Another element is that those just over 60,000 million less in loans are still debt and if everything is requested in a single year it could mean a jump in public debt of an amount equivalent to four points of GDP, although this is a dynamic measurement that could be lower if the economy grows a lot.
The very different Spanish economic situation in just five years helps to understand the step taken by the Executive. Although there is also an obvious element: the lack of time to spend all the money. The recovery fund was approved with the condition that the money received by the capitals would have to be finalized between the end of next August and December 31, 2026, that is, with almost all the resources executed. This represents an almost impossible challenge to meet, which is why Spain, in the current negotiation, is looking for mechanisms to be able to postpone the investment of some resources in compliance with the European regulation that regulates the Recovery and Resilience Fund, the official name of this financial program.
“The addendum being worked on will allow the investment projects to continue to continue beyond August 2026, which is when the execution period of the recovery plan ends,” government sources point out. This, in principle, to channel that investment. However, the Executive is recovering this idea and emphasizing it.
