MADRID (Reuters) – Spain has asked the European Commission for 84 billion euros ($90 billion) in loans from the bloc’s COVID-19 recovery package, a quarter of which will be managed by the European Investment Bank, Economy Minister Nadia Calvino said.
The EIB will administer about 20 billion euros worth of loans destined for the governments of Spain’s autonomous regions, Calvino told a news conference, meaning the funds will not be directly controlled by the Spanish government.
The rest of the loans will be managed by the next central government that emerges from the snap general election called by Prime Minister Pedro Sanchez for July 23 after his Socialist Party was routed in municipal and regional votes on May 28.
“It’s not about borrowing immediately, it’s about having a safety net so that in the coming years and beyond 2026 we can maintain the strong public and private effort that we have put in place,” Calvino said.
Up to six regional administrations – which under Spain’s semi-federal system have a large degree of autonomy – are set to flip to coalitions between the main opposition People’s Party (PP) and the far-right VOX, potentially bringing 12 out of the country’s 17 regions under PP control.
Although the Commission has two months to formally approve the loans, Madrid and Brussels have already reached an informal agreement on the terms and conditions after several months of negotiations, a person close to the talks told Reuters.
Spain was initially hesitant to request the loans as it could borrow from the market at very low interest rates at the time. But the subsequent rise in rates meant it could obtain them at better conditions than from the market, according to a second source with direct knowledge of the plan.
In addition to the loans, Madrid is set to receive 7.7 billion euros in direct aid following an upward revision of the 77 billion euros initially allocated to Spain in subsidies, as it was one of the bloc’s economies that suffered the most from the effects of the pandemic.
($1 = 0.9350 euros)
Photo – Spanish Economy Minister Nadia Calvino . EPA-EFE/Zipi