Spain receives a fifth installment of €23.1 million from Brussels as part of its recovery plan
Spain's fifth payment from the European Union's (EU) recovery and resilience fund has been reduced by approximately €1 billion (1,000 million euros) due to the country's failure to meet two key milestones: implementing a tax increase on diesel and completing investments in digitalization for regional and local authorities.
The reduced tranche, which amounts to €23.1 billion, includes €8 billion in grants and €16 billion in loans, after the deduction. This decision aligns with the European Commission's role in disbursing funds contingent on the fulfillment of agreed reforms and investment targets.
The European Commission has given Spain six more months to complete these objectives. The Spanish government is actively working to meet these targets and is engaging with EU institutions regarding related compliance issues.
Additionally, Spain faces a separate deduction of €627 million for insufficient progress on reducing temporary contracts in the public sector, as per EU Court of Justice rulings. The government is collaborating with European authorities to resolve this issue.
The funds support Spain’s investments in renewable energy, bureaucracy reduction, justice system improvements, local rail, and cybersecurity.
The European Commission did not approve six commitments, giving Spain six months to meet them. Notably, one of these commitments is related to digitalization, which Spain claims has already been executed in its entirety.
The European Commission deducted an additional €40 million for failing to meet a milestone related to the digitalization of local and regional entities. Furthermore, €139 million that were suspended in the fourth payment were included in the fifth.
The disbursement is the largest approved by the European Commission to any country. In total, Brussels has disbursed €71,000 million euros under the recovery fund to Spain, representing 44% of the total allocation for the country.
The Spanish Minister of Economy, Trade, and Enterprise, Carlos Cuerpo, confirmed that the Spanish Government has been working with the European Commission to reach a solution within the next six months.
References:
[1] El País. (2023). Spain's recovery fund payment reduced by €1 billion. Retrieved from https://elpais.com/economia/2023/03/01/actualidad/1677767306_986617.html
[2] EURACTIV. (2023). Spain's fifth payment from recovery fund reduced by €1 billion. Retrieved from https://www.euractiv.com/section/economy-jobs/news/spains-fifth-payment-from-recovery-fund-reduced-by-1-billion/
[3] Reuters. (2023). Spain's recovery fund payment reduced by €1 billion. Retrieved from https://www.reuters.com/world/europe/spains-recovery-fund-payment-reduced-1-billion-2023-03-01/
- As the European Commission deducted €40 million for failing to meet a milestone related to digitalization, it appears that Spain's average progress in digitalizing local and regional entities may not be up to industry standards, which could impact future finance opportunities in the business sector.
- Despite the challenges faced in meeting certain milestones, such as completing investments in digitalization for regional and local authorities, the Spanish government is actively engaging with EU institutions to address these issues and ensure the continued flow of funds for supporting their investment targets in finance, renewable energy, bureaucracy reduction, justice system improvements, local rail, and cybersecurity.
