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    Spain: The Government only spent 2,400 million of European funds last year | Economy | The USA Print


    The First Vice President and Minister of Economic Affairs, Nadia Calviño.
    The First Vice President and Minister of Economic Affairs, Nadia Calviño.EUROPA PRESS/A.Ortega.POOL (Europa Press)

    The Government only spent 2,400 million euros of European funds last year, the equivalent of 0.2% of GDP according to official national accounting data published by the European Commission. Is it a meager figure or something normal given the circumstances? If compared with other countries, the amount materially disbursed by Spain from the European Recovery and Resilience Mechanism is within normal limits: for example, Italy has executed 0.1% of GDP at the end of 2021. Portugal, still nothing. And Greece, also 0.2%. All of them have received a greater proportion of resources from this fund that was set up to help Europe get out of the pandemic and modernize the economy. On the contrary, this figure seems very low when compared to the 24,000 million that the Government budgeted for last year. The boost that these investments were going to give to activity, which the Executive came to estimate at 2 points of GDP, has also fallen short.

    However, the Government alleges that the plan was not actually approved by the Commission until July and that it was not fully operational until September. He maintains that it does serve to improve investment: investment in capital goods and intellectual property is at record highs. “This pull occurs because companies have already begun to invest preparing for projects and the award of contracts,” state government sources. In addition, they remember that Spain is the country that has made the most progress with its plan: it is the only one that has already requested the second payment.

    Spain has received close to 70,000 million in non-reimbursable aid that it must allocate before the end of 2023 and spend it by the end of 2026. These are granted in exchange for the achievement of investments -especially in the green and digital field- and reforms , such as labor or pension. In addition, you can have another 70,000 million in credits that the Government negotiates and that will be included in the Spanish recovery plan as an addendum, with new milestones and objectives.

    In any case, there are quite a few countries that have not yet spent anything. Some have preferred to have more time to prepare their plans and have not gone as fast as Spain or Portugal, which were the first to obtain the approval of the Commission for their programs and have already obtained disbursements. The idea was that it would be a stimulus to ensure recovery from covid.

    That said, other States that receive a smaller proportion of funds such as Germany already have 0.2% of GDP spent. Despite having presented its plan late, Sweden already has 0.2% of GDP disbursed. And France stands out as one of the two countries that has used the most funds in relation to its economy: 0.5%. Perhaps thanks to its centralized structure it has been able to mobilize resources faster. The other that has spent the most is Hungary, which despite not having achieved the approval of the EU has already accounted for investments worth 0.5% of GDP by the mechanism. These data are those that the national agencies have officially provided to Eurostat, which has validated them. However, the Commission warns that some numbers may not have arrived on time and these figures may still have some revision.

    The problem arises when these figures are compared with the expectations generated by the Government in the 2021 Budgets. Then the Executive promised that it would increase spending by some 24,000 million only due to the recovery mechanism. However, this has been far from the case. For example, public investment barely increased last year by about 2,500 million, to 32,152 million. And almost half of that increase is due to roads that the State took. In fact, in the execution data of the central State, some 16,700 million appear that have been transferred in 2021 to other parts of the public sector. In other words, the Government has delivered the money to entities such as Adif, Tragsa, highways, ports, Red.es, IDAE or the communities, and these in turn have to prepare the regulatory frameworks, bid and resolve. Consequently, the money is taking time to arrive.

    It was difficult to start the machinery. The necessary procedures and controls are numerous. The administration staff is limited to manage such a large amount of resources while attending to ordinary tasks. Communities are showing a slower pace. And the limits on State aid make application difficult. So the Government has focused on publicizing the data of committed funds. This is the phase in which the contest is drawn. And it is important because resources must be allocated before 2023. The acceleration in this regard has been very pronounced. As progress is made in the strategic projects or PERTE, these will help because they will channel more funds. But now it remains to accelerate the resolution of the calls.

    “For now, there is a lot called and little resolved,” explains Manuel Hidalgo, from the Observatory of European Funds at EsadeEcPol and EY Insights. A report by Llorente and Cuenca points out that the challenge is execution at the necessary pace to promote the intended recovery. In this context, both the Fiscal Authority and BBVA see it as increasingly likely that some 15,000 million will be executed this year, below the 26,000 budgeted for 2022. The good news is that it could be concentrated in the second half of the year, just when the recovery of the tourist campaign is over, helping in an autumn that could be complicated. The bad news is that the stimulus lands when inflation is already a headache.

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