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Spain has sent to Brussels its benchmark plan to spend 140 billion euros of the EU coronavirus recovery fund, as the government of Pedro Sanchez wants to respond to criticism that it has centralized control of money and that the immediate economic impact may be less than expected.
The Socialist Prime Minister argues that the plan, formally presented to the EU for approval on Friday, will transform the country’s economy in the same way as Spain’s entry into the European Community in 1986 did.
In addition to the 70 billion euros in subsidies that Madrid plans to take advantage of between 2021 and 2023, the government intends to contract an equivalent amount of loans from 2024 to 2026. It has also proposed more than 100 complementary reforms.
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EU nations, including Portugal, Germany and Greece, have already submitted their plans, but there will be others that will miss the deadline on Friday, after which the European Commission will have two months to evaluate the schemes before the states’ decision. members to release the funds.
Spain, which has suffered greatly from the pandemic in human and economic terms, is one of the countries that will receive the most from the 750 billion euro recovery fund, formally known as New generation EU.
Political rivals and some business figures have accused the Sánchez government of insufficient transparency on how the money will be spent, while economists – including some at the Bank of Spain – have worried that resources may not produce as much growth. as the government anticipates.
The government has already revised its growth forecast for this year from 9.8% to 6.5%, in part because some EU funds will be spent later than expected.
This week, the Andalusian administration, led by the opposition, complained that since January it had no news from the central government on the fund, from which the southern region expects to receive 35 billion euros.
But in an interview with the Financial Times, Reyes Maroto, Spanish Minister of Industry and Tourism, said the planning process was open and responded to the demands of the sectors.
“We have been as transparent as a government can be, setting spending in the budget,” he said. “There has been a dialogue with all the actors to design the vision we want for Spain.”
And he added: “In the case of the industry, we have received more than 700 projects, with a total value of 30 billion euros, but I have [just] 4 billion euros to invest for three years. . . The tourism sector has asked me for 5.2 million euros to develop its strategic project; I have 3.4 million euros ”.
Maroto said EU funds would contribute to the planned € 10 billion investment in a planned electric car center and that the country also intended to boost its pharmaceutical sector, in line with plans to increase self-sufficiency and the share of manufacturing GDP, which has so far declined this century from the 16th to the 11 percent.
Spain currently wants to reach an agreement with the commission on the amount of state aid allowed for battery factory intended to supply car manufacturers like Seat, a problem Maroto said needs to be resolved soon.
He argued that because Spain borrowed 27 billion euros before the funds, it had an advantage compared to countries that have to wait for the commission to approve their recovery plans before disbursing the funds.
“Because we’ve set it in the budget, now we can carry it out,” he said. “We know the money will come.” The government, for example, has already authorized the disbursement of 731 million euros in advance funds to help care for the elderly and modernize social services.
But Maroto said details still needed to be filled in many areas. “We have established the structure of the plan; now we have to land the [specific] projects, ”he said.
The government has been criticized for its lack of clarity on the three most sensitive reforms in the plan: they affect pensions, the labor market and the country’s fiscal balance.
He says he hopes this year to reach an agreement with unions and companies on labor reform and reach an initial agreement on pensions, but that economic growth and job creation currently have priority over tax reform.
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