Spain will have to invest in 6 years the 140,000 million it will receive from the EU

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Spain will have to invest in just six years the 140,000 million euros that it will receive from the European Union Recovery Fund, quite a challenge considering that so far it has only spent 15,574 million of the European cohesion funds corresponding to it for 2014-2020, 39%. The money from the Fund to deal with Covid-19 will begin to arrive in 2021, but the Spanish Government is already working on the reform and investment plan that Brussels will require to authorize the aid.

Of the 140,000 million for Spain, 72,700 million will come in the form of grants and the rest in loans, and the bulk will come from the Mechanism for Recovery and Resilience. States must commit – allocate to specific projects – 70% of this money between 2021 and 2022 and 30% in 2023, although the payments may be extended until 2026. That is, they will have at most six years to spend it.

This is an exceptionally short period to absorb aids equivalent to 11% of Spanish GDP, They far exceed the total European structural and investment funds allocated to Spain in the 2014-2020 period (39.907 million) and will arrive in parallel to the rest of the funds of the 2021-2027 Community budget.

The objective is to respond as soon as possible to the recession, but the Court of Auditors has warned that with such a tight calendar “implementation on time can be complicated by absorption problems” Of funds.

“Some of the Member States with the lowest absorption rates in the current programming period they will receive substantial support from the Mechanism. This could create a serious administrative burden and a risk for implementation of the recovery plans, “he said this month.

This is the case of Spain, the second beneficiary of the fund and with the lowest rate in the EU: so far It has only spent 39% of the 39.907 million in cohesion funds that correspond to it for 2014-2020, according to data from the European Commission.

A slowness influenced by the inheritance of the financial crisis, which reduced the money available for the national cofinancing required by these funds – and which will not be necessary in the recovery one – and the decentralization of the administration, according to experts. The Government, however, qualify these figures. They remember that funds for 2014-2020 can be spent until 2023 and that there is a “lag” between these data and the current execution level, which is higher than those figures.

The Dutch Prime Minister, Mark Rutte, together with the President of the European Council, Charles Michel; the French President, Emmanuel Macron; and the President of the Spanish Government, Pedro Sánchez, during the meeting of the European Council in Brussels.

Spain has “very meticulous control and auditing systems” and until these are passed, it is not communicated to Brussels, sources from the Executive explained. They also emphasize that Spain has used community funds “efficiently”, with an execution of around 99% in the previous financial framework – something confirmed by the Commission figures – and expects to “make the most of” the recovery fund.

In any case, the general situation in the EU is not far from that of Spain: the execution average stands at 49%. Among the countries with an endowment similar to that of Spain, Italy has absorbed 40% of its funds (17,879 million), Poland 52% (44,900 million), Romania 44% (13,398 million), and Germany 50% ( 13,906 million), in all cases, amounts lower than those they will receive for post-pandemic recovery.

“The speed of disbursement of the Recovery Fund will be fast compared to the structural fund absorption path“, says the researcher at the Bruegel study center Zolt Darvas.

Countries tend to accelerate absorption at the end of the financial framework, but the Fund’s 750 billion they are already 63% higher than the cohesion item of the last seven years and to this will be added more than a billion euros of the budget.

“The sum of European money that they will have to absorb from 2021 will be much larger than the previous ones. Absorbing all of these funds could be a huge challenge“says Darvas, who believes that the greater freedom countries will have to decide how they use recovery money could speed up the task.

The European Commission is aware of the difficulty and will present proposals to accelerate and facilitate investments in early October, explained a spokeswoman. Brussels calls on countries to identify projects that are already “mature” to allocate the funds as soon as possible and to equip themselves with sufficient administrative capacity to manage them, while offering them technical assistance to do so.

It also calls for the adoption of reforms in matters of public administration, business legislation, tenders or the fight against fraud and corruption to ensure good implementation.

The president of the European Commission, Ursula Von Der Leyen, at a press conference to report on the economic response to the impact of the coronavirus.

The objective is not only that the money is spent, but that it is done efficiently. For the socialist MEP Eider Gardiazábal, one of the negotiators of the Recovery Fund in the European Parliament, there is “no doubt” that Spain will be “capable of perfectly executing the recovery plan”.

“Spain has never lost funds, we have always executed 100% of available structural funds,” he said. “Government He has been working for months on presenting a plan as soon as possible and there are ideas and projects to carry out that they are going to fully comply with this availability of money, “he explained about the plans of the Executive that his party leads in coalition with United We Can.

Ernest Urtasun, MEP of En Comú Podem and vice president of Los Verdes, agrees that “Spain has never lost a cohesion euro” and stresses that all the groups in the European Parliament “have an interest” in the aid for recovery “arriving quickly and facilitating absorption.”

For this, they will propose that the pre-financing that the Commission will give to the countries as soon as they approve their plans be 20% of their allocation, instead of the 10% planned now, and that expenses incurred in 2020 due to the pandemic are eligible.

“If we want to absorb it we will have to do things differently“said Luis Garicano MEP for Citizens, who acknowledges that there will be a” very short “time to spend the funds and expects most of them to be disbursed in 2023 and 2024.

The also vice president of the Liberals of Renovar Europa advocates changing Spanish legislation so that the Government can spend in areas transferred to the Autonomous Communities and for creating a recovery plan “commissioner” who can decide on all Fund spending “regardless of the ministries.” At the European level, your group will ask to increase the budget to provide technical assistance to countries.

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