Spain faces a challenge like none in its recent history: the management of 140,000 million euros that in the next six years will arrive from Brussels in the form of transfers and loans. It is a spectacular injection that will fatten the public budget in subsequent years. To get an idea of the magnitude of the aid, in the last year, all state investment was around 25,000 million. It may seem that the new resources will only derive advantages, but the truth is that managing to spend them will not be easy. This is what can be deduced from the execution of the funds that Spain received from the previous European budget six-year period that lasted between 2014 and 2020: the country has only spent 34% of the more than 56,000 million.
The bulk of this money is committed, around 80%, and it is not expected that any amount of the total will have to be returned because we did not know which projects to allocate the resources to. But Raymond Torres, Funcas joint director, highlights that Spain presents lower execution and commitment figures for structural funds than other European countries. Therefore, the foundation of the old savings banks warns that “without organizational improvements or reforms of the processes, monitoring and execution of projects, Spain will only be able to attract a part of the funds available for 2021-2027”.
Funcas warns of the risk that the country will not be able to be agile enough to spend the money that corresponds to it and that it is essential not only to support the recovery after the pandemic, but to turn the production system around and direct it towards the most cutting-edge sectors, with more potential and that have the capacity to provide higher quality jobs and to sustain the Welfare State.
The Government has to send to Brussels in October a draft of your national plan recovery and at the beginning of 2021 the concrete development of the program, something that the Executive affirms that it will fulfill in a timely manner.
In addition, the country will undergo periodic evaluations. As Cándido Pérez, partner responsible for infrastructure, government and health at KPMG recalls, the great immediate challenge is that by the end of 2022, 70% of all projects have to be committed. It is, after the most immediate of the coming months, the great test that Spain will face.
Projects and legal changes
Pérez considers that it would be smart if, among the existing projects, already underway, or on which work has already been carried out, those most aligned with the community agenda for the coming years –Because they are oriented towards digitization or the ecological transition, or because they focus on health, education or territorial and social cohesion– they should be part of the payroll of those who present themselves in Brussels.
Although that will not be enough. The volume of investments to be made is huge. One hurdle to jump will be the current existence of ‘bottlenecks’ in project management and development. To achieve that ‘decongestion’, options that go through legislative changes are being considered. This is something that Silvia Lacarra, PwC’s strategic consultant, has an impact on, who explains: «We are thinking of streamlining all processes, in the design of an agile mechanism; because what cannot happen is not being able to spend the resources.
Lacarra specifies that “one of the angles” to make public investment more flexible involves changing the law that governs the public sector contracting. “This program has to change the regulatory framework,” defends Lacarra, who clarifies that this should not imply that the awarding process loses guarantees, but it must meet the objective of mobilizing private investment. State attorneys are already studying how to make the relevant regulatory changes.
These should also go through the drawing of a clear scheme for public-private collaboration. Is a formula that is little used in Spain and that the situation may require, although, according to Lacarra, provided it is expedited.
Marciala de la Cuadra, Deloitte’s public sector consulting partner, insists on the same. Consider what to do «The necessary modifications in the public procurement frameworkto streamline processes and, in particular, to facilitate public-private collaboration in the execution of actions ”.
This week, from the CEOE, Ínigo Fernández de Mesa affirmed the need for investment linked to European funds to “make sense”, “generate employment not only in the short term but in the long term” and “modernize and strengthen the production system” . Fernández de Mesa defends public-private collaboration and considers that the participation of companies’ money can work as a guarantee that the plans presented make sense, they are sustainable and efficient.
Fernández de Mesa announced that the employers are designing fifteen tractor projects with the capacity to pull the economy as a whole to present them to the Executive.
According to Cándido Pérez, although the Government must be the one to lead the challenge, it must not act behind the back of the private sector.
De La Cuadra also points out that, in addition to public-private collaboration, it is necessary to promote inter-administrative cooperation (central-regional-local) to accelerate the channels that will allow the funds to reach the respective beneficiaries according to the competences that each one has. The autonomies already elaborate plans to present to the Executive.
Torres points out that the more centralized countries tend to have better execution results. In any case, it encourages the creation of an organ effective coordination between administrations or mechanisms to avoid or correct that there are institutions that delay the execution of their projects.
The management of the funds will require legislative changes to streamline contracts and investments. And also, reforms linked to the recommendations that Brussels makes to each State which, in the case of Spain, go through the sustainability of pensions, budgetary strengthening, as well as those related to the labor market.
To address all of this, the country will have to overcome political fragmentation and polarization and pass laws in Congress. Lacarra trusts that differences will be overcome. Because he insists: “The risk is not spending the resources.”