With the Ministry of Industry, Trade and Tourism launching a public consultation to identify projects that will be developed with the millions that make up this aid fund and the lifting of the veto of Hungary and Poland, which had put the European recovery plan on hold the theme of the projects that could revolutionize the Spanish economy. Expert Pablo Merello, Grant Thorton’s Public Sector Partner and a member of Grant Thornton’s European Fund team. “NEXTGEN GT” has been consulted on this complex question.
What is the Next Generation EU?
The Next Generation EU (Next Generation EU) is an instrument that Brussels has put into action to face the economic crisis generated by the pandemic. Next Generation EU is formed for two large funds, the first is called the «Recovery and Resilience Mechanism», This is the largest fund with an endowment of 140 billion euros, of which 80 billion will be loans and 60 billion will be non-repayable transfers or non-refundable funds. The other fund or mechanism that makes up the Next Generation EU is the «React EU», A smaller fund that has a budget of 12,000 million euros.
The Recovery and Resilience Mechanism (MRR from now on) plans that 70% of those 60 billion non-reimbursable transfers will be granted between 2021 and 2022 and the remaining 30% could be granted until 2026.
The 80,000 million euros of loans are still more in the air, because there are many things to be clarified by the Government. However, it is known that these will be financial support loans to companies that would enter from the year 2023.So there are different currents in time to execute these funds. Most between 2021-2022, a part in 2023 and another part until 2026.
Currently the funds had a stall problem on the part of two EU member states, Hungary and Poland, who on Thursday withdrew the veto on the European budgets that are starting up again.
Part of these loans have already been included by the Government within the General State Budgets (PGE) in budget items within different ministries for around 27 billion euros. These 27 billion euros are part of that 70% of the MRR of 60,000 million and the 12,000 million of the React EU. The government’s idea would be to execute projects in 2021, so next year it is planned to spend 27,000 million euros in order to reactivate the European economy.
What projects are going to be executed?
exist two types of differentiated projects to be executed. The first kind they are the most common projects and are more similar to those that have been underway since about 1994, when the structural fund operational program began. This type of project will be managed through “summons orders”. These are orders will be published by the autonomous communities and state agencies through their agencies, which are those that will distribute the aid. These summons orders that will take the form of publications that will establish the guidelines that those entities that request the grants will have to follow and have.
The second type project to be executed are called Strategic Projects for Recovery and Transformation (Perte). These are larger public-private partnership projects that claim to be engines of the “new economy.”
The first step in creating the Pertes is the publication of the Expression of Interest (MDI) by the ministry or agency. Although it is still uncertain whether all the Ministries or organizations will present their MDI, yesterday that the first MDI was published (by the Ministry of Industry).
What is the MDI?
It is a public consultation where the Ministry explains the requirements, evaluates and identifies the areas of interest of the projects of those who present them. With the presentation of possible projects by the entities, the Ministry will evaluate that these ideas are “Tractor projects” that is, Pertes. These macro-projects will have “long-term effects, carried out in a cooperative way, involving all or almost all the links of the industrial value chain in which it intends to insert itself and with a backbone character of the territory, as well as the involvement of SMEs”, notes the Ministry. This type of project, for this ministry, They can be submitted until January 20, 2021. Once this consultation is finished and “after the analysis and evaluation of all the proposals received, the Ministry of Industry, Commerce and Tourism will define the areas of interest for the realization of future calls for aid for strategic projects for the industrial transition.”
That is to say, submitting a project to the MDI does not imply submitting to a project call, but it will help the Ministry to raise the areas and specifications for future project calls.
A unique record for Pertes?
Like most of the information regarding strategic projects, it has not yet been confirmed by the Government, however, experts speak of the creation of a single registry for these macro-projects that will be managed only by the Ministry of Industry, Commerce and Tourism. This registry will publish the Pertes that have been evaluated and considered relevant and it is there where the entities that are considered suitable to help carry out the project will have to sign up. After this inscription there has been talk of a selection process or a new call (not to be confused with the call orders mentioned above) to decide who will execute the project, which, in this case, has a minimum budget of 40 million euros.
How will SMEs be able to access these funds?
In order for these projects to be accepted, they must meet other characteristics, such as the collaboration of at least five entities, of which at least 40% must be SMEs, so they will be able to access these funds if They are part of the “cluster” of companies that help develop and execute a project.
What objectives do the projects pursue?
According to the Government the objectives are “to promote the economic, social and territorial cohesion of the EU; strengthen the resilience and adjustment capacity of member states; mitigate the social and economic impact of the COVID-19 crisis and support ecological and digital transitions.
What are the challenges?
The challenges Spain and Europe are facing in order to face this instrument without historical antecedents are many and very different. In the first place, that the State and the organizations in charge of the distribution of these funds and selection of these projects are capable of dealing with the management in a fair and correct manner. The participating entities will have to face the second challenge, from SMEs to large companies and organizations that will have to deal with the so-called “reporting”, multiple reviews, controls and regulations from the beginning so that execution is not stopped in the future of projects and these can be fully financed by the funds.
These challenges are minor compared to what really matters, this is that projects are proposed and developed that really generate the change that the member states of the European Union have proposed.