Spain’s Calvino Hints at Worry Over Delay to EU Fund Deployment

(Bloomberg) -- Spain’s Economy Minister Nadia Calvino said negotiations over the European Union’s pandemic recovery fund are “still ongoing,” hinting at worries about the quick deployment of billions of euros to member states.

Disputes over governance are holding up the disbursement of funds that were intended to jump-start the region’s economic recovery as early as the beginning of next year.

“We are doing our utmost to accelerate this process so that we can start the implementation of the recovery plan on January 1, 2021,” Calvino said in an interview Wednesday on Bloomberg Television.

Spain’s economy is expected to suffer one of Europe’s sharpest contractions this year, and the country is set to be one of the single biggest recipients of the EU recovery funds to counter that slump.

While governments await the deployment of those funds, European Central Bank bond buying has pushed down borrowing costs, helping national treasuries fund their emergency fiscal response.

“Everything points to a continuation of these accommodative monetary policies, which will be key going forward,” Calvino said. She added that “market confidence in Spain is strong,” which allowed the country to lower its target for net debt issuance this year by 15 billion euros ($17.6 billion).

“The environment in Europe right now is one of support for fiscal expansionary measures that would be accompanying the expansionary monetary policy,” she said. “I think this is the right stance that will continue for 2021.”

Calvino said the government is “working very intensely” on a 2021 budget, which will be needed to properly channel the EU funds when they arrive.

Spain has pledged 140 billion euros in state-backed loan guarantees, and Calvino said the take up of those loans has “been slowing down very significantly as the economy has reopened, as the economic recovery gets underway.” Spain will keep such measures in place, she said, and try to make them more targeted.

©2020 Bloomberg L.P.