MADRID, Dec 20 (Reuters) – The Spanish government will ask the European Union for loans worth 84 billion euros ($89.1 billion) and a further 7.7 billion euros in grants as part of the bloc’s COVID-19 recovery package, Economy Minister Nadia Calvino said on Tuesday.
That means Spain will seek its full allotment under the European pandemic relief package worth a total of over 800 billion euros, as well as use 2.6 billion euros in new Repower EU aid aimed at improving energy security in Europe following Russia’s invasion of Ukraine.
The government estimates that the EU grants and loans will on average add 2.6 percentage points to gross domestic product annually through 2031.
“We are almost certainly going to have higher growth for this year than we had predicted in…the budget for 2023,” Calvino told a news conference, without elaborating.
The Bank of Spain earlier on Tuesday slightly raised its economic growth prediction for this year to 4.6% but cut the forecast for next year, when it expects a steep slowdown to 1.3%, and for 2024.
Calvino said the EU soft loans would be channelled through state-linked investment vehicles so as not to directly impact Spain’s public debt burden, she added.
In total, Spain will mobilise 160 billion euros, out of the 140 billion euros initially planned and subsequently increased by new programmes or adjustments.
It has so far received 31 billion euros from EU pandemic recovery funds and deployed around 22 billion from that amount, according to Calvino, although a recent study by EY consultants and ESADE business school estimated that just 9.3 billion euros had 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 7.7 billion in grants and up to 18.6 billion in loans will beef up the financing already allocated to large projects, such as microchip production in Spain or green hydrogen.
($1 = 0.9427 euros)
Additional reporting by Emma Pinedo, editing by Andrei Khalip and Emelia Sithole-Matarise
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