Spain Will Be The Guinea Pig Of The European Recovery Fund

Spain was one of the countries that fought the most to create the recovery fund to overcome the collapse caused by covid-19. It managed to be one of the main beneficiaries together with Italy, due to the destruction caused by the pandemic in their economies.

And now it will almost certainly be his turn to inaugurate the machinery of the mechanism and, above all, the tacit agreement between the Member States of the North and the South: long-postponed reforms in exchange for funds to weather together the worst crisis in three generations.

Spain, like the rest of the 15 countries that have already received approval for their recovery plans, is waiting to receive pre-financing of 13% of the total amount that corresponds to it. In the case of our country, the figure reaches 9,000 million euros, as an advance of the 70,000 million in non-repayable aid that we will receive, and it still has to request another 70,000 million in loans.

This first transfer will arrive when Spain validates and signs all the documentation sent by Brussels, which is expected to happen by the end of this month of July or even in the first days of August. But the Government has also indicated that it will then request the payment corresponding to the fulfillment of the first series of milestones and objectives agreed with the Commission.

This is because the Regulation of the Recovery and Resilience Mechanism allows countries to send investments and reforms that they have carried out since February of last year, 2020.

Our country has already completed the 25 milestones that it agreed to as part of the first block
Spain has since completed the 25 milestones that it agreed to as part of the first block for the disbursement of another 10 billion euros. The first goals include the modernization plan for vocational training, the digital tax, the tax on financial transactions or the revision of tax benefits for supplementary pensions.

Advance reforms
Compared to other capitals, the government’s strategy has been to advance reforms as far as possible to also receive more funds before 2023, as a stimulus to accelerate the rebound.

In Brussels, nobody considers that the Spanish Government will have problems receiving the payment corresponding to the first block, according to the community and diplomatic sources consulted.

But even though it will happen before the year is out, it probably won’t come as quickly as they would like in Madrid. First, because the dates do not match, since the Commission will not be fully operational again until September.

And, above all, because according to community sources explain to elEconomista, the Spanish application will probably be the first to land, so the Commission will take its time to carefully analyze all the documentation on these milestones and objectives, since this first examination will serve as a model and set a precedent for the almost 300 evaluations that it will carry out. every half year until 2026 for each of the 27 Member States, to authorize disbursements in exchange for meeting milestones and targets.

The Mechanism’s regulations stipulate that the Commission has up to two months to carry out this evaluation. As part of the approval, it must consult the Economic and Financial Committee of the Council, made up of the envoys of the 27 ministries of Economy.

In exceptional circumstances, a Member State may bring a national plan to a European summit, if it considers that there are “deviations serious “. This is the emergency brake that the Netherlands managed to include last summer after a tough fight. However, this brake will function more as a maneuver to delay a payment, not to veto it.

In the event that any country has not satisfactorily met all the agreed milestones and objectives in a block, the Commission may deny the payment, or authorize only a part of the agreed amount.

Hard exam at the end of 2021
Spain will find it more difficult to comply with the second block. By the end of the year, the Government has promised to present a large part of the labor reform, among 40 other initiatives. It will give you access already in 2022 to a second payment of about 12,000 million euros. This second block will be the litmus test to see if the agreement of funds in exchange for reforms really works, since Italy will have to carry out the long-demanded reform of the Justice.