Ecofin gives green light to the plan of Spain and clearly clear the way for European funds

The EU Ministers and Finance Ministers have given their approved plan for Spain on Tuesday, and another eleven Member States.
It was the most important pending process and the only one who could block the delivery of the funds, but the process has been more comfortable than the feared, as far as the Vice President Nadia Calviño has not even had to be present today at the meeting with his
Colleagues, since he chose to return to Madrid from Brussels to participate in the first Council of Ministers of the new remodeled government.

In the absence of a number of administrative steps and paperwork, which could lead a few weeks, Moncloa is confident that the first 9,000 million euros reach public coffers at the end of this month or principles of which it comes. After the negotiation and positive evaluation of the European Commission, the States have discussed during the past month, at a very technical level, the details of the documents and the ministers have definitely clear the path. Now Madrid and the Commission have to formalize a series of legal documents, something that is slow because it requires many checks, the participation of State law and intervention. Something similar was made last year with Sure Program, the European Mechanism created to finance by credit for employment assistance programs, such as ERTE. Spain has some experience and sources of the Ministry of Economy trust that this will help to accelerate the steps and, hopefully, to achieve the transfer this month.

“The decisions of the Board of Economic and Financial Affairs on almost half of the national plans constitute a great step forward in economic recovery. They allow Member States to sign the first funding agreements and pre-financing payments are made. With the
EU support, Member States can initiate the reforms and investments necessary for recovery, reinforcing and transforming our economies, “said Andrej Šircelj, Minister of Finance of Slovenia, which this semester holds the rotating presidency of the Union and
Instructs the negotiations.

In any case, it arrives in July or August does not have too much importance.
Spain is financed with treasure and waiting emissions before the end of the course, the disbursement of another 10,000 million euros, approximately.
The first check, this month, is the so-called ‘pre-financing’, is equivalent to 13% of the total to which our country can aspire and is supported by the reforms and measures taken since 2020 to deal with the pandemic.
The second is ‘covered’ by the reforms and milestones launched and, at this point, practically completed, so Calviño has reiterated several times that there should be no surprise either.
Another thing is the third disbursement, which would occur in the spring-summer of 2022, but which is not guaranteed yet, since Spain must approve by December different reforms, including elements of the labor market, one of the most controversial.

“Good news. Ministers have given green light at first 12 national recovery plans. EU funding will soon be able to start flowing to afford reforms and investments. Now you have to focus on starting them rapidly and adequately”,
The community vice president, Valdis Dombrovskis has pointed out.

There were doubts in recent months about the approval of the capitals.
Today there has been green light to the evaluations of 10 different plans, including Italy, France, Germany, Greece or Denmark, for example.
The objective of this examination by ECOFIN was to ensure that the Commission would be rigorous, since several countries of the North have specific mandates of their parliaments to tighten the nuts, a sine qua non condition fixed during ratification.
He did not suppose a pure veto, but he could suppose a first-order political problem in case he was looking for a fight.
The text of Spain has passed unchanged, and Community sources explain that there have only been minor and very technical modifications in the plans of a country.
Nothing serious, they assure, only some additional explanations, somewhat more accurate calendars or set certain public-private co-financing thresholds with precision.

The agreement for the recovery reached in July 2020 contemplated a package of up to 800,000 million euros, half of them almost in direct transfers, which will not compute for the public deficit or the debt of a country.
Spain would correspond to a maximum of 140,000 million between transfers and credits, but for now it has resigned the second part, unlike partners such as Italy or Greece, which opt for everything.
The Government believes that the conditions of access to the market are good, so it does not need advantageous conditions that are attractive to other countries.
And that, in addition, it is already quite challenge to try absorbing about 70,000 million euros in a few years, so it has opted to go little by little, but without closing the door to ask for it later, if the markets became more expensive
.

Since Brussels, States have been encouraged to go for all, use the tools available to maximize the stimulus before fiscal normality and the standards of the stability pact are recovered.

The next few months will be calm, because the bulk of work is done, but all in Brussels and in Madrid they expect 2022 to be more complicated.
There are many reforms to apply, many milestones to achieve and there will inevitably be crashes.
The rule is clear: if everything agreed is not met, and the calendars are very detailed, there can not be disbursements.
But there is a possibility, in certain circumstances, to renegotiate and pose perhaps partial deliveries of money, if the thick has been made but there are pending drafts.
O The labor, pension and fiscal issue is on the first line.

There is, in addition, some unknown.
There are partners, such as the Netherlands, who have not yet delivered their programs because the executive is in functions.
Malta has remitted it today.
And there are others, like Hungary, with whom a hot summer and many crashes are expected.
The European Commission has not yet published its evaluation (it has two months since delivery, according to the rules) and friction with Budapest is growing.
On paper, due to lack of measures against corruption.
Background, that topic and at least another technical and political court.
The question can try to be resolved these days or weeks, it can be a bilateral shock, the umpteenth.
But you can also climb.
There are certain topics, including what affects the recovery plans, which require unanimity in Ecofin, and Hungary if something has shown these last 12 months is that I had no problems blocking or veto important issues for their colleagues.