© Reuters. FILE PHOTO: International Monetary and Financial Commission Chairwoman Nadia Calvino speaks during the IMFC news conference during the International Monetary Fund and World Bank Annual Meeting in Washington, U.S., October 14 year 2022. REUTERS/Elizabeth
By Belén Carreño and Inti Landauro
MADRID (Reuters) – The Spanish government will ask the European Union for loans worth 84 billion euros ($89.1 billion) and an additional 7.7 billion euros in funding as part of a COVID-19 recovery package bloc, Economy Minister Nadia Calvino said on Tuesday.
That means Spain will seek its full allocation under the European pandemic relief package totaling more than 800 billion euros, as well as using 2.6 billion euros of new Repower EU aid. aimed at improving energy security in Europe after Russia’s invasion of Ukraine.
The government estimates that EU subsidies and loans will, on average, add 2.6 percentage points to gross domestic product annually through 2031.
“We will almost certainly have higher growth this year than we predicted in… the 2023 budget,” Calvino said in a press conference without elaborating.
The Bank of Spain earlier on Tuesday slightly raised its forecast for economic growth this year to 4.6% but cut its forecast for next year, as it predicted a sharp decline to 1.3% and for the year 2024.
Calvino said EU concessional loans would be channeled through state-linked investment vehicles so as not to directly affect Spain’s public debt burden, she added.
In total, Spain will raise 160 billion euros, out of 140 billion euros originally planned and then increased by new programs or adjustments.
According to Calvino, it has so far received 31 billion euros from EU pandemic recovery funds and deployed around 22 billion from that, despite a recent study by consultants EY and The ESADE business school estimates that only 9.3 billion euros have reached the real economy.
Up to 15 billion euros will go to the official Credit Institute (ICO) fund to provide green finance for companies.
The funding of 7.7 billion and the loan of up to 18.6 billion will strengthen the financial resources already allocated to large projects, such as microchip production in Spain or green hydrogen.
($1 = 0.9427 euros)