Spain will press ahead with its economic recovery plan despite an expected delay to the arrival of European Union funds that finance initial investments via government borrowing, said Prime Minister Pedro Sanchez on Tuesday.
The budget that was passed in December is 27 billion euros in investment spending this year. On Wednesday, Sanchez is expected to present a broader recovery plan to the parliament that envisages 72 billion euro investments by 2023.
Whatever the delay of the EU, we have already allocated resources for Spain, Sanchez told a news conference on Tuesday after explaining the main lines of the plan.
The prime minister gave details of projects worth 50 billion euros, including 6.8 billion euros for housing reform and 13.2 billion euros in green mobility, boosting the key automotive industry.
Spain is due to receive around 140 billion euros from the EU to help it recover from the COVID-19 crisis. About half of the funds will come in the form of loans and the rest will be grants.
But the constitutional court in Germany has blocked the ratification of the EU's legislation on joint borrowing, without a timeframe and delays the distribution of the funds.
Madrid will submit its investment plan for approval to Brussels by the end of April, said Sanchez, later than an earlier March deadline.
There are still elements to fine tune with Brussels, told the news conference without explaining which elements were dragging out the long back and forth with Europe.
Although Spain intends to proceed with its spending plans, it now expects the money to arrive at the end of the year. This will postpone the bulk of the economic impact to 2022, and the government reduced its growth forecast for this year from 9.8% last week to 6.5%.
The European Union Recovery Funds will boost economic growth in the coming years by 2 percentage points annually, according to government calculations.
Spain will use the money to finance 110 major investment projects, said Sanchez, including nearly 8.3 billion euro for helping public administration and digitalize small and medium enterprises.