Eurozone collapse: Spain’s debt reaches record €83bn in 2020 as EU’s recovery fund stalls
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The Bank of Spain revealed on Wednesday that the debt of all Spanish public administrations with their private suppliers reached €82billion in 2020.
The staggering sum is up 39.4 percent since 2016 and by €2billion since 2019, the bank said.
Prime Minister Pedro Sanchez was urged by the confederation of Spanish Small and Medium Enterprises to act quickly to solve the situation “without delay”.
Last March, the Spanish Government approved a direct aid package worth €7billion to help SMEs and self-employed people in the country.
But Spain’s economic difficulties were further exacerbated by the halt of tourism, which amounts to 12.5 percent of the country’s GDP.
The country is also still waiting for the European Union recovery funds to be delivered.
Spanish economy minister Nadia Calvino said on Thursday she expects the country to receive the EU funds in the second part of the year.
She told Cadena SER radio station: “We expect (the rescue package) to be approved in June and get paid the pre-financing of it in the second half of the year.”
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Spain is due to receive around €140billion out of the EU’s €750billion coronavirus recovery package in the next few years.
A little more than half that will come as grants, the rest as debt.
But the European Commission could find it hard to deliver on the first tranche of the funds to all members states, according to its own calendar, as 10 countries are yet to submit their plans.
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The bloc’s slow implementation of the package will put the eurozone under further strain, as the Commission does not have enough funds to make the first transfer of 13 percent of the total amount allocated to each member states.
If the process goes to plan, transfers should begin in the second half of July.
Budget Commissioner Johannes Hahn said on Wednesday that around €45billion will be needed to cover the 13 percent of prefinancing – the amount corresponding to non-refundable grants.
He added that the Commission could raise from the markets between €15billion and €20billion a month to finance the fund, or around €150billion a year until 2026.
But Spain and Italy alone, as the main beneficiaries of the fund, would already absorb almost €20billion in grants.
To date, a total of 17 member states have approved the EU Own Resources decision, which will allow the Commission to borrow the €800billion.
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