Council of Ministers

Government to allocate 140 billion euros from European Recovery Fund to modernise economy and alleviate social effects of COVID-19

Moncloa Palace, Madrid, Tuesday 21 July 2020

The Minister for the Treasury and Government Spokesperson, María Jesús Montero, described the agreement reached by the European leaders as "historic", following five days of debate to approve the Recovery Fund that will tackle the social and economic effects of COVID-19 and the Multiannual Financial Framework for the next seven years.

In her opinion, the most important economic agreement has been reached since the creation of the Euro, which amounts to a "genuinely huge step forward" in the economic and social reactivation of the European continent and progress towards a "stronger, fairer and more cohesive Europe".

María Jesús Montero explained that the European Council has approved a great financial package with a provision of up to 750 billion euros, of which 390 billion will be paid out in direct transfers to Member States and 360 billion in loans. "This is the first time that the European Commission has indebted itself to finance programmes", she stressed.

The resources, she specified, will be distributed attending to the countries that have been worst affected by the crisis, and consequently, Spain will be the country to receive the most funding, with a total allocation of around 140 billion euros, which accounts for 11% of the Gross Domestic Product in 2019. Of this amount, 72.75 billion will be received in direct transfers, which will need to be used between the years 2020 and 2026, and the rest of the resources in the form of loans.

The Government Spokesperson stated that these resources account for almost 10 times more than the Cohesion Funds we received in recent years. Their aim is to boost the immediate recovery of the economy and its modernisation, and to ensure that this recovery reaches the sectors of the country worst affected by the crisis, with the aim of "not leaving anyone behind".

Allocation of programmes under the fund

Pool Moncloa/Borja Puig de la BellacasaThe minister highlighted that, within the Fund, the so-called Recovery and Resilience Facility will have a provision of 672 billion euros, 312.5 in transfers, of which 59 billion correspond to Spain. The government will thus be able to push through a national reform and investment plan with the priorities set out at the start of the legislature - a commitment to green and digital growth, innovation, science, education and the training of human capital.

For its part, the ReactEU Programme will have a provision of 47.5 billion euros, of which Spain will receive 12.4 billion to tackle the socio-economic consequences of the crisis.

María Jesús Montero highlighted that this mobilisation of "unprecedented public resources" by the European Union will act as a lever to mobilise private resources. "The EU will act as a driver so that all companies can be more competitive, more productive and create quality jobs and opportunities for young people", she said.

EU Budget beneficial to agriculture

The Minister for the Treasury stressed that the Multiannual Financial Framework 2021-2027, with a provision of more than 1 trillion euros, will be very positive for the Spanish countryside.

The Minister for Agriculture, Fisheries and Food, Luis Planas, highlighted that the government has complied with its goal of maintaining, for the period 2021-2027, the same amount of funds for crop and livestock farmers under the Common Agricultural Policy (CAP) as in the previous period.

Luis Planas stated that Spain has ensured that at least 47.5 billion euros will become available over the next seven years to support crop and livestock farmers and the rural environment, through direct aid under the development funds and the market measures.

Pool Moncloa/Borja Puig de la BellacasaThe minister underlined that this amount comes to around 6.8 billion euros per annum in support for the sector, which are not subsidies, and will benefit some 700,000 recipients. According to Luis Planas, the Recovery Fund amounts to a European Union response to the problems deriving from the crisis in both the medium and long term.

This minister also underlined that this budgetary package will be complemented by contributions from the State and the regional governments, and will end up amounting to more than 50 billion euros.

The minister specified that once the EU Budget is established, the Common Agricultural Policy (CAP) will not fully enter into force until the year 2023, although until such time the old rule will apply. As from the year 2023, both the rules will enter into force, which will hopefully be shored up before the end of the year, as is the case for the Budget.

Luis Planas announced that next Thursday he will meet with all the regional agriculture councillors to analyse the application in Spain of the Common Agricultural Policy, which is fundamental for the rural environment.

The Common Agricultural Policy, according to the minister, will become part of the Green Pact and the Green Policy in its entirety. In other words, it will contribute to the fight against climate change, to land, water and air preservation, to biodiversity, the countryside and the extension of ecological agriculture. From a social perspective, it will allow Spain to tackle the demographic challenge, the generational change of a very elderly sector and cover the gender gap with the inclusion of crop and livestock farmers.

Strategy for Spanish cooperation following COVID-19

Pool Moncloa/Borja Puig de la BellacasaThe Minister for Foreign Affairs, European Union and Cooperation, Arancha González Laya, considered that the agreement reached with the Heads of State and Government of the EU-27 in Brussels defines a Europe that is more committed to protecting its citizens, more supportive with the countries worst affected by the pandemic and more united.

Arancha González Laya stated that Spain's participation at the European Council has helped solutions be forged. "Never more will Spain be at the heart of the problem, but rather Spain will be a consensus-builder", she claimed.

In this context, the minister argued that it is fair for Spain to show the same solidarity called to help it in Europe towards the worst hit developing countries, the same solidarity called to help it in Europe, to which end she highlighted the importance of the approval, by the Council of Ministers of the Joint Response Strategy of Spanish Cooperation to the COVID-19 Crisis.

Arancha González Laya announced that the government plans to mobilise, within the next two years, 1.7 billion euros for third countries, particularly in those regions with which Spain has a particular commitment, such as Latin America and the Caribbean, Africa, the Near East and the southern neighbourhood of Europe.

The action priorities will be to strengthen the public health system, cater for people in situations of vulnerability, extreme poverty and exclusion, and drive the economic recovery through support for micro-, small- and medium-sized enterprises.

Support will be channelled through emergency and humanitarian NGOs, United Nations agencies and multilateral bodies, international financial institutions (World Bank, International Monetary Fund and regional development banks), European partners and directly with each beneficiary country by "strengthening our alliances" stated the minister.

The Strategy has been drawn up by the government, the regional governments, local authorities, trade unions, companies, universities, NGOs and experts, which will also contribute funding. As well as this funding, Arancha González Laya highly rated the support and commitment, "reflected in different surveys", of Spanish citizens to development cooperation.

First support items

The Council of Ministers approved the first budgetary items of the Strategy. Specifically, 32 million euros will be allocated to the United Nations, to its Refugee Agency (UNHCR), to UNICEF and to humanitarian aid. Another 85 million euros will serve as support, through micro-loans, to companies in Honduras, Peru, Colombia, Mali and Senegal. And a third package of funding, amounting to 120 million euros, will be allocated to replenishing resources in the African Development Bank, the Asian Development Bank and the World Bank, and to writing off debts.

Functioning of Fund to Support Solvency of Strategic Companies

Pool Moncloa/Borja Puig de la BellacasaThe Council of Ministers agreed to the conditions and requirements for access to the Fund to support the solvency of strategic companies for the national and regional productive fabric. With a provision of 10 billion euros, its aim is to economically help all those companies affected by the COVID-19 pandemic.

The Government Spokesperson explained that applications must be made by the interested company, which must accredit that, without this public support, "it would have been forced to cease its activity or be in serious difficulties to remain afloat", and consequently, would have a major negative impact on the country, or on national or regional employment.

The support instruments under the Fund may be through shareholder loans, convertible debt or shares or stakeholdings, among others, with a minimum amount of 25 million euro per beneficiary and a maximum that may not exceed the equity of the company at 31 December 2019.

Applicant companies must have their registered office and main work centres in Spain, not have applied for voluntary insolvency or have been declared insolvent as at 31 December 2019, be up-to-date with their tax obligations and National Insurance contributions and not have been convicted of the criminal offences of malfeasance, bribery or the embezzlement of public funds.

Companies that receive support may not undertake aggressive commercial expansion or take on excessive risk and will be banned from distributing dividends. The members of the board of directors may not receive variable remuneration or premiums.

María Jesús Montero stated that the agreement also includes the composition and regulation of the Management Board of the fund, which will be set up "within 30 days".

1.9 billion for grants and study aid for 2020-21 academic year

The government approved the Royal Decree establishing the income and family wealth thresholds and the amounts of grants and study aid for the 2020-2021 academic year.

The total budget will amount to 1.9 billion euros, which is a 22% increase - "the largest in the last decade" - stressed the Government Spokesperson. The forecast is that more than 600,000 graduate and master degree students, and those studying outside of university, will benefit from this measure.

The aim, continued María Jesús Montero, is that "these grants will reach more students, be larger, for those that need them", and thus allow not only their access to the education system, but also ensure that they stay in education, "regardless of their initial socio-economic situation".

The law approved includes the reform of the academic requirements, such as the establishment of a 5 entry mark for non-university grants, and other aspects such as a 100-euro increase in the fixed amount to be received.

40 million euros for PROA educational programme

The government approved the distribution among the regional governments of 40 million euros for the PROA programme, aimed at educational orientation, progress and enrichment - particularly of vulnerable pupils - and to strengthen the functioning of centres following the COVID-19 pandemic.

4,500 new places offered for National Police and Guardia Civil officers

The Council of Ministers approved two Royal Decrees to offer 2,491 new places for National Police officers and 2,154 for Guardia Civil officers. This public employment offer comes under the plan drawn up by the Ministry of Home Affairs to reverse the process to reduce the workforce undertaken in previous periods, and is in addition to the 4,881 places offered for the two forces last year.

"This is an ongoing, necessary and essential effort to strengthen and consolidate the State law enforcement agencies", remarked María Jesús Montero. The entry system for the National Police force will be through open competition and for the Guardia Civil, the system provides for direct entry for ordinary officers.

Current affairs

Pool Moncloa/Borja Puig de la BellacasaMaría Jesús Montero reported that the President of the Government has requested to appear before the extraordinary plenary session of the Lower House of Parliament to report on the results of the European Council and will call, before the end of the month, the Conference of Regional Presidents with the same aim.

The Government Spokesperson expressed her wish to see the same consensus shown by the European leaders among the Spanish political forces, which she urged to support the reconstruction pact that will be voted on in the Lower House on Wednesday. "We would encourage one last effort and support this vote, which is not a blank cheque or a guarantee for this government, but rather it is a case of drawing up a shared roadmap to give the country a boost at a time of extreme difficulty".

María Jesús Montero also urged people to take special health care, basically through social distancing, the use of face masks, hand washing and the cleaning of public spaces, because "the new normal does not mean returning to the old normal before the pandemic or acting as if the virus has gone away".

Non official translation