Spain is reorganizing the flow of European funds aimed at economic recovery, shifting from non-repayable aid to loan-based support that must be repaid by member states before 31 December 2058. The Instituto de Crédito Oficial (ICO) is set to channel 15,000 million euros in favorable loans to finance environmentally sustainable projects, support companies, SMEs, and the self-employed, according to sources familiar with the process cited by El Periódico de Catalunya from the Prensa Ibérica group.
The Vice President of Economics, Nadia Calviño, plans to present this update to the Inter-ministerial Improvement Commission on Tuesday. The measure adjusts the Spanish recovery plan approved by Brussels in July 2021. The European Commission has earmarked 7,706 million euros in additional grants for Spain due to slower growth in recent years, bringing the total to 77,234 million; 2,586 million have been allocated under the REPowerEU framework to save energy, boost green production, and diversify supply; and the Recovery and Resilience Facility (RRF) loans, which remain the largest source, with total commitments reaching 84,000 million by 2026 and the government aiming to tap the full amount, in line with 2023 budget projections of 4,789 million. [Source: Prensa Ibérica]
Within the 84,000 million loans, the ICO’s 15,000 million will primarily finance sustainable investments and circular economy initiatives, benefiting companies, SMEs, and freelancers. Activities include the installation of solar panels, renovation of buildings, and the replacement of vehicles with greener alternatives. The overarching goal is to accelerate ecological transition while boosting competitiveness, as sustainability criteria increasingly attract investment and enable participation in tenders. [Source: Prensa Ibérica]
Some of the 15,000 million are expected to help financial entities accelerate capital deployment for new investment projects. These loans will come with favorable EU financing terms, such as longer tenors and lower rates, offering better conditions than those currently available from national channels. Naturally, the ICO would not provide loans on terms more favorable than those granted to Spain by Europe. [Source: Prensa Ibérica]
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Calviño is set to appear before the hybrid session of the Congressional and Senate mixed committee for the European Union expansion knowledge. The government will review the attached measures on Tuesday. Beyond the investment target, the expanded Recovery Plan will include new reforms that the administration commits to implementing to secure the funds. The European Commission will evaluate the proposal and approve it through the Council. [Source: Prensa Ibérica]
The annex must meet stricter criteria than the original plan, with a larger portion of funding directed to the green transition and digital transformation. The green transition share should exceed 37%, while the digital transformation allocation should rise to roughly one-fifth of the total. Calviño’s investment strategy will reinforce PERTE programs and focus on strategic autonomy, energy security for Spain and Europe, and sectors like agri-food, technology, and digital infrastructure. [Source: Prensa Ibérica]
Proposed instruments include loans, financial instruments such as guarantees or equity participations, and a Strategic Investments Fund aimed at autonomous communities. This fund would empower them to pursue public policies within their competence, such as housing, transportation, and social care economics. [Source: Prensa Ibérica]
Negotiation with banks
The plan centers on channeling European loans through financial instruments and engaging banks in their deployment, as reported by the same outlet. The objective is to extend credit across regions and manage risk indicators relevant to lending to clients, especially SMEs, to decide on approvals. The aim is for the financial sector to participate in financing projects linked to the ecological transition. [Source: Prensa Ibérica]
Bank participation with the ICO remains on the table, following patterns from the first pandemic phase when €140.737 million in loans supported state-guaranteed companies. The current discussion explores combining mediation lines where the ICO finances green projects through banks and collateral lines that provide additional funding with partial public guarantees from the ICO. The critical point for banks is ensuring that projects meet sustainability requirements and the associated risk is acceptable. Businesses note that they are not all experts in this area and would welcome independent third-party assessment. [Source: Prensa Ibérica]
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