The First Vice President and Minister of Economic Affairs, Nadia Calviño (left), and the Minister of Finance, María Jesús Montero.A. Pérez Meca. POOL / Europa Press / Europa Press
When the 2021 budgets were approved in the autumn of last year, the Executive pointed out that some 24,000 million of the European recovery mechanism were advanced in these to start spending them from day one and thus try to reinforce the budding recovery. However, the execution of these resources is not being so fluid and the arrival in the real economy accumulates delays. This year the State has only disbursed 18,000 euros of these funds until May, as shown in the latest data on the budget execution of the recovery and resilience mechanism, of which Spain will account for some 70,000 million in direct aid in three years.
After the first half of the year, the State has only launched a few calls: about 90 million from public employment services in training digital skills and for tourism, several from R&D for a total amount of more than 110 million and 50 million for Artificial Intelligence. And there are some actions underway, for example from Adif worth about 300 million. Although in recent weeks the accelerator has been stepped on and some 7,000 million have been approved in transfers to communities and municipalities, an important part of these items still have to be endorsed in the sector conferences with the communities, return to the Council of Ministers for approval , be processed by the autonomous governments and, finally, be granted. Even if the electric car strategic plan has already been approved, its resources will not begin to be distributed at least until February of next year. That is, the Executive will have to hurry to spend what it had planned this year.
In reality, for the Government this is not so much of a problem insofar as these credits have been configured as multi-year and can be spent over several years. However, it made sense to try to anticipate the money so that it would reach the productive fabric as soon as possible because it was known that the ECB was financing it, that Europe would take time and that it would cost a lot to set up the projects. Furthermore, this delay underscores the challenge of executing in time to meet the demanding schedule of milestones committed to Brussels. “The problem with Spain is not its ability to execute European funds, but the delay it usually has. It always concentrates many disbursements at the end of the period ”, explains a community source.
Half of what was planned
According to estimates by the Bank of Spain, this year only half or less will be spent than the Government expected, which will shift part of the fiscal stimulus to next year. According to Funcas, only 10 billion of the 24,000 planned will be disbursed. “I am not so concerned to the extent that it is being done to select the projects well,” says Raymond Torres, director of conjuncture of the think tank of the old savings banks.
Juan Pablo Riesgo, partner in charge of EY Insights, expects that as of the summer there will be a significant boost in the publication of calls for aid and contract tenders under the European mechanism. However, he argues that it will be very difficult for these to have an effect on economic activity in 2021, and postpones the bulk of the impact to 2022 and 2023.
In any case, the Executive will have to accelerate in the remainder of the year. The delays began with the recovery plan itself, which the government initially hoped to send to Brussels in late February and was finally forwarded on April 30. And above all there have been significant delays in the EU. European leaders approved the first delivery of money for Spain on Tuesday, a year after the recovery mechanism was agreed.
European times and the negotiations with the Commission have conditioned everything. And these funds were supposed to get into the economy quickly to regain pre-pandemic levels soon. Indeed, it is the euro economy that is later expected to rebound to pre-covid levels compared to China and the United States. And this despite the fact that Europe has had the important network of ERTEs and the welfare state. Although European economies have fiscal stabilizers that act automatically like unemployment benefits, the US has deployed greater public stimuli.
In Spain, it has also been difficult to get the machinery ready: one of the main obstacles has been the creation of a platform that serves to record, control and certify all payments, so that Brussels can supervise them directly.
7,000 million transferred to communities
Recently, the Executive has rushed to approve some 7,000 million in transfers for autonomous communities and municipalities. Among them there are 1,600 million for housing rehabilitation; about 900 million for education; 730 million for the care economy and equality and social inclusion policies; 680 million for employment policies; 500 million for conservation of biodiversity and ecosystems in small municipalities; 600 million for self-consumption of energy, storage and air conditioning; two items of 400 million for the health system, and another 400 million from the Moves III plan.
Less than a third of these transfers have the certificate so that the communities can begin to process them. However, the distribution of more than two thirds of these funds has not yet been approved at their respective sectoral conferences. It will have to go back to the Council of Ministers. And then, the autonomies will have to write the orders or decrees to be able to spend them, something that takes about four months due to the advertising procedures, the reports and other procedures. And the accounting closing is usually set for November 30. So it seems difficult for all of them to run this year. Unless the regional executives choose to issue them as decree laws, which can be issued in a week but are not always the most suitable formula and can be rejected by the intervention or the chamber of accounts.
In such circumstances, it will be more difficult for European funds to increase GDP by 2.6 points this year, an estimate that was included last autumn in the preparation of the Budgets.