March 2, 2021

Casado affirms without proof that the “European Central Bank pays” to Spain “300,000 million every year”

“I offered him a third thing: Pedro,” said the president of the PP, Pablo Casado, this Monday on Cadena SER, “We are going to do what the European Central Bank asks of you, which is to comply with the specific recommendations of the European Semester. To understand us, Spain does not depend on the funds, it depends on the European Central Bank. The funds are 140,000 million in six years The Central Bank pays us 300,000 every year. What did Pedro Sánchez tell me? Nothing. ” Well, the ECB does not ask any government to comply with the specific recommendations of the European Semester in those terms, because compliance with the European Semester is the responsibility of the European Commission and the Council, of the governments. The ECB has jurisdiction over the central banks of the euro zone, and their purchase of debt and assets is not conditional on compliance with the recommendations by country.

For what you do have to comply with the recommendations by country of the European Semester, which is the EU’s governance mechanism, as well as with digital and green reforms is to access reconstruction funds. Moreover, these requests are translated into files that make up national reform plans that are, in fact, being negotiated with the European Commission, not with the ECB. And the European Commission and the Council will be the community institutions that authorize and supervise the fulfillment of these plans.

This is so much the case that in the latest guidelines on the regulation of the funds, published by the European Commission ten days ago, it is stated: “Member States must accompany each payment request with the necessary information so that the European Commission can evaluate compliance with the disbursement conditions, and the Commission may request additional information if necessary. If the objectives and goals are not satisfactorily met, payments will be suspended and, eventually, the financial contribution could be reduced. ”

In other words, the European Commission can cancel the payments if the objectives are not met, which in this case do have to do with the European Semester.

“The Central Bank pays us,” stated Casado. Does the ECB pay us? In reality, what the ECB does is buy debt, and like all debt, the purchase is subject to a return with interest, although the fact that the ECB is buying so much debt (1.85 trillion euros until the summer of 2022 ) of the euro zone supposes a relief for the interests that the States have to pay to place it. To the extent that 240 billion of the Health MEDE that no one has requested yet.

“300,000 million every year”, assured the leader of the PP. This doesn’t add up either. According to Treasury data, Spain has never issued such a gross debt figure in a year, not even in the pandemic, which was 277,000 million, with an economic disaster equivalent to that of the Civil War and with an open bar. opened by the European Commission. And when it issues debt, not even the ECB buys 100%. First, because its rules prevent it; second, because there are more buyers in the market.

So? The most plausible approximation to the data released by Casado, while his team has not responded to questions, may have to do with the fact that at the end of last year the Treasury estimated the total Spanish public debt at 25% in hands of the ECB. That is, accumulated debt, not debt purchased in a year or every year, but the total public debt as of the end of 2020.

And, according to an approximate rule of three, if the ECB has a quarter of the total Spanish debt, the figure can be around 322,000 million euros, taking into account that the Spanish debt in relation to GDP increased during 2020 by the pandemic up to 115%.

But, of course, that total debt is an accumulated debt, it is not that each year Spain adds 300,000 million of debt that “pays” (or, rather, buys) the ECB.

It’s more, as the former Minister of Economy of Mariano Rajoy and Vice President of the ECB, Luis de Guindos, said three weeks ago at COPE, “last year [el BCE] bought Spain’s public debt for an amount close to 120,000 million euros, practically all of the net issuance and the equivalent of what Spain will receive from the EU fund in four years [que son 140.000 millones]”.

In any case, technically, the one that buys debt is not the ECB, but the European System of Central Banks (ESCB, also known as the Eurosystem). Most of it is purchased directly by the Bank of Spain, and the rest by the Frankfurt ECB.

Covid funds for Filomena?

Pablo Casado asked two weeks ago for European money for the effects of the storm. But the president of the PP asked from some “Filomena funds”, supposedly newly created, to “part” of the funds against COVID-19, something that is unfeasible, while the reconstruction funds are conditioned to reform projects linked to to the digital and green transition, as well as to the recommendations of the European Semester – the European Commission’s economic supervision mechanism – of the last two years.

In other words, it is a fund designed for “reconstruction and resilience” to take advantage of the economic, social and health crisis of the coronavirus to inject 750,000 million in the 27 EU countries to address transformations in the coming years, not to alleviate the effects of a temporary: it cannot be used for something other than what it was created for.

For this, to alleviate the effects of the storm, there are other European funds, such as the Solidarity Fund, from which money has come in the past for Spain after catastrophes such as the Prestige, the Lorca earthquake or the forest fires.

“From the FEMP, and within the European framework, we have to ask for Filomena funds, to alleviate the effects of the perfect storm”, the PP leader assured: “This is possible in the European Parliament. It is also possible in the funds of reconstruction that are coming, just as we will continue to ask for it with COVID funds, “said Casado.

The leader of the Socialists in the European Parliament, Iratxe García, affirmed: “I only hope that they do not listen to him in the European Commission saying that he wants COVID funds for Filomena ……. how daring is ignorance”.

The vice-president of the Greens in the European Parliament and MEP of Catalonia in Comú, Ernest Urtasun, responded: “The lack of European political culture of the head of the opposition is alarming. Can someone inform you of the operation of the European Recovery Fund before it continues claiming nonsense? ”


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