The Government will include in the Budgets 20,000 million extra on account of the European aid that Spain will receive

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The Government will advance EU funds and create councils by areas for their governance

European funds will be included in the Budget and will be managed from there in calls, grants, agreements or specific lines of the competent ministries. They will be tendered and will be open to a competitive bidding process. But the money may take time to arrive. So the Government is considering including it in the 2021 investment budget anyway to bring it forward and begin to implement it as soon as possible, promoting the recovery of next year. The figure that the Executive considers of non-reimbursable European funds is around 20,000 million. Even so, government sources acknowledge that this amount may not arrive all in time. And in that case it would translate into a higher public deficit at the end of the year.

The four axes will be those already announced by the President of the Government: green transition, digitization, social cohesion and equality. Of these will hang 10 areas of action. And for each of those ten levers that Sánchez has already detailed, a specific council will be created that will be open to participation and will debate proposals and projects. They will be informal because it is not intended to add more bureaucracy, says a source. This will be one of the pillars of the governance framework of the funds compared to the model of an independent authority proposed by PP and Ciudadanos.

On the other hand, the ordinary management will be done through the Budgets, and the competent ministries will be the ones that will open the processes to the companies. Moncloa will be the one that directly has the last word on the projects that the communities present. The funds are finalists and therefore go to approved projects and not for regional fees, government sources explain.

Those 10 areas will include priorities such as the increase in renewable energies; support for electric mobility; energy rehabilitation and efficiency initiatives; the 5G; the digitization of the Administration, industry and SMEs; the improvement of cloud services; he big data; increasing digital skills; the reinforcement of science and the health system or the recycling of the unemployed and workers.

The Bank of Spain has worsened its forecasts for next year and now only foresees growth between 7.3% and 4.1%, too little to compensate for a fall that this year may be of the order of 12%, according to the most pessimistic band of the supervisory body and according to what the consensus of Funcas analysts collects right now. It is important to boost recovery as soon as possible. And for this it is necessary that European funds begin to be spent from day one, ministerial sources point out. The Bank of Spain itself maintains that, if executed well, they could have a one-to-one push. That is to say: that for every euro spent the economy grows in the same proportion. Thus, for 20,000 million of spending, GDP would rise 2 more points next year as long as they are used for investments.

According to sources from the Administration, the Government is considering getting around 20,000 million from Europe in direct non-refundable aid next year. That is what it aspires to have of the 43,000 million that according to the Commission correspond to it between 2021 and 2022 from the Next Generation EU recovery fund. Of course, provided that it presents some projects considered adequate by Brussels. These funds are delivered as it is verified that the projects are progressing and that milestones agreed with the Commission are met, such as having initiated a tender. And if some of the projects do not take off, Brussels can retain the corresponding part of financing. Or what is the same: the management of funds is essential.

That said, there is an obstacle to overcome before: a calendar that looks complicated. Executive sources acknowledge that the funds may take time. The first advance, which would be delivered as soon as the Commission approves the investment and reform plans that will be sent as of October 15, could be delayed and for now only represents 10% of the 40,000 million, that is, about 4,000 million, a figure that seems scarce. The rest goes in principle in semi-annual disbursements. But it remains to be seen if with luck and by stepping on the accelerator the two that correspond to next year will be achieved. In total the figure obtained could fall short. Although it is possible that 50% of the 12,000 million that are due to Spain by the React EU fund will be advanced.

And all this provided that the examinations and bureaucracy required by the Commission have been complied with. Hence the risk that the process is delayed and resources take time. The Government tries to ensure that in 2021 it receives at least 20,000 million. So President Sánchez is pressing in Brussels seeking to accelerate the delivery of funds. However, the Commission argues that it is difficult because it will take time to organize a Treasury to issue in the markets and have the money. And the national parliaments have to approve the resources. Sánchez also fights to lower the high conditions that the Commission has imposed in order to access the funds. These have included more bureaucracy, recommendations for uncompleted reforms from previous years such as pensions, the fiscal situation and excessive imbalances. In the government environment, the new guidelines presented by the Commission are considered excessive and intrusive.

In any case, the 20,000 million will be painted in the Budgets as an expense regardless of when they can be entered. That amount would double the amount allocated by the Administrations to investment in one year, now at 25,000 million.

Regarding management, the budget is the only efficient way to implement such significant amounts, defends the Government. And aware of the bottlenecks that can be created, Moncloa plans to increase the staff dedicated to processing European funds. “Paperwork is where many projects can fail. That’s where the frugal wait for us ”, they point out.

″ The budget circuit is not prepared to carry out this administratively, “says Moisés Martín, from Red2Red, an expert in the processing of European funds. For this reason, the aim is to at least duplicate the European funds management office located in the Treasury. And even a part could be based in Brussels under the control of Moncloa, which causes misgivings in the Economy.

And there will not be an autonomous section for funds. In general, the Economy coordinates, and the president’s office decides, has political control of messages and relations with the Ibex. And this margin provided by investments will be used for the negotiation of Budgets, admit some government sources.


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