Spain gets EU approval for $84 bln COVID recovery plan

Spain's plan for recovery after the COVID-19 pandemic and transformation into a greener and more digitalised economy got European Commission approval on Wednesday, the second such green light in the 27-nation EU after Portugal.

Spain's plan for recovery after the COVID-19 pandemic and transformation into a greener and more digitalised economy got European Commission approval on Wednesday, the second such green light in the 27-nation EU after Portugal. As one of the main beneficiaries of a 750 billion euro ($908 billion) European Union recovery scheme, Spain will get 69.5 billion euros in grants until 2026 to help revive its tourism-dependent economy, which has been hit hard by the crisis.

Madrid will get the first 9 billion euros in pre-financing once EU finance ministers sign off on the plan in July. "This is a historic day for Spain... it means a new understanding of Europe," Prime Minister Pedro Sanchez told reporters, standing next to Commission President Ursula von der Leyen, who called the plan "ambitious and far-sighted".

"The plan was designed here in Spain and will promote growth here in Spain," she said. A 10 billion euro tranche should be released by December once Spain meets milestones such as progress on reforms, followed by a further 12 billion euros in June 2022.

Partly boosted by the plan, which has suffered delays, the government in Madrid expects Spanish growth to reach 6.5% this year, after a record 10.8% slump last year. Envisaging a total of 110 large investment projects, the plan also involves important reforms, notably of the pension system and labour market.

Spain's plan devotes 40% of its total to fight climate change, including the promotion of urban and long-distance sustainable transport, better energy efficiency of buildings, decarbonisation of industry and new technologies for green hydrogen and renewables. Europe's second-largest car producer hopes to use part of the money to start making electric car batteries in partnership with private investors and boost electric vehicle output.

Another 28% of the funding is earmarked for digitalising public administration, industry and business and investments in digital equipment for education and training. ($1 = 0.8256 euros) (Writing by Andrei Khalip, additional reporting by Jan Strupczewski, editing by Alexander Smith)

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