BRUSSELS – MADRID
The European Commission assures that the post-Covid recovery fund will enter into force as planned in the middle of the year, despite the multiplication of signals that warn of the possibility of further delays. “We remain convinced that the recovery plan will be launched as planned and our goal remains to complete the ratification process by the end of the second quarter,” the Commission spokeswoman said yesterday.
The question was related to the decision of the German Constitutional Court to suspend the ratification process of the legal instrument that will allow the European Commission to borrow to request the 750,000 million euros with which to provide credits and subsidies to the countries most affected by the effects of the pandemic. So far, 16 countries have ratified it, including France, Italy and Spain. The German Parliament has already given its approval but on Friday the Constitutional Court of this country suspended the process until doubts about the legality of the mechanism were resolved. Until all member countries have ratified this legal package, the Commission cannot go to the financial markets.
But it is that in addition to the delay in the processing of the legal mechanism to obtain financing, the Commission also recognizes that at this point there has not yet been any country that has presented its reform plan to invest that money. Those plans have to be finished before April 15 to be presented in Brussels before the end of the month. Although the Commission has always been very optimistic about the management of governments such as Spain, which is one of the most affected countries, things are not entirely clear in some of the aspects that will lead to the decision to be approved or not. by the European partners and that are the reforms of pensions and the labor market.
In Spain, and even with the arrival of European funds on time, the reforms will have to come. This was warned yesterday by the governor of the Bank of Spain, Pablo Hernández de Cos, who stressed that the European manna cannot be a “substitute for the necessary structural reforms” that the country must implement to increase its potential growth.
De Cos, during his speech at EP’s Informative Breakfasts, explained that, when they arrive, European funds, both because of their high volume of 140,000 million euros and because they are destined for transformative projects, are a “very useful” tool for that the country recovers the path of growth, but he clarified that they are not a replacement for the reforms that will have to be undertaken in our country.
In addition, in the midst of the controversy over the distribution of direct aid, De Cos pointed out that support in this phase should focus on the companies and population groups “most affected”, and especially on the “viable” companies that, given the magnitude and the duration of the crisis, their solvency has deteriorated. The governor’s words come when criticism from Madrid and other autonomous communities still resonate for the distribution criteria established by the Government to distribute direct aid.
The Commission has not yet managed to define the parameters of what can be considered a “viable company” beyond what is foreseen in the European legislation on State aid and which refers to times of more or less normal economic activity, without take into account the exceptional circumstances of the pandemic.
The governor warned that the stakes are of vital importance. For this reason, he asked that the 11,000 million plan, which can be a “useful tool” precisely to reduce risks, have a “rapid and homogeneous execution”, and that the distribution mechanisms allow the aid to be focused “selectively” on viable companies but with solvency problems. Of course, he asked for a good filter when allocating the funds.