The Executive has made a significant shift in the final stretch of Recovery Plan Funded with European Next Generation funds. The Council of Ministers has agreed do not use more than 60.000 billion euros in loans that were available to Spain, prioritizing instead the full collection of the non-refundable grants still pending.
With this decision, the total volume of the Spanish plan goes from slightly more than 160.000 billion euros initially planned to around 103.000 billion, while milestones and reforms are being rearranged to avoid political clashes in Parliament and to meet the deadlines set by Brussels, which end between August and December 2026.
How much money will no longer be requested and what will become of the Recovery Plan?
Spain could have up to 83.000 billion euros in repayable loans coming from Recovery and Resilience Mechanismin addition to some 80.000 billion in transfers that do not have to be repaid. The Government has opted to limit loan applications to 22.800 millionwhich means giving up around the 70%-75% of that loanable portionThat is, more than 60.000 billion euros.
Following this reduction, the overall size of the Spanish Recovery Plan is now around 103.000 millones de eurosThis is compared to the initial estimate of around €163.000 billion. The portion of subsidies remains virtually unchanged: Spain maintains its objective of leveraging the total of the approximately 80.000 billion in direct aidof which around 55.000 billion have already been received (around 70% of the total allocated).
The Ministry of Economy explains that the new program will only require €6.500 billion in loans in the next year, within those total 22.800 billion, thus adjusting the debt profile to the realistic project execution schedule.
This revised proposal is being sent to Brussels via a new addendum to the Recovery Plan, which the Government already considers the definitive version for the final stage of the program, and which must receive the formal approval of the European Commission and, subsequently, of the Council.
The official explanation: the cost of debt and a strong economy
The Minister of Economy, Charles BodyHe justified the mass rejection of European loans primarily on financial grounds. In his words, The cost difference between borrowing from Brussels or in the markets has blurred. thanks to the improvement in Spain's position with investors.
In long-term periods, such as 20 years average lifespan typical of European loansThe Treasury is now financing itself at practically the same rate as the European Commission, and even with slight advantages in some tranches. This leads the Executive to conclude that It makes no sense to burden the accounts with more European loans. The cost is very similar to that of national debt, but with much more bureaucracy associated with the plan's milestones.
Cuerpo has summarized the change with a phrase that marks the focus of this new stage: it goes from “From a European safety net to a national safety net”In other words, the financial instruments linked to the Recovery Plan will continue to exist, but will rely primarily on Treasury's own financing and from the Official Credit Institute (ICO), instead of in community loans.
At the same time, the Government emphasizes that Spain has achieved a reduction in the risk premium and improvements in credit ratings by rating agencies, which, in his opinion, reinforces the idea that the country can sustain investments with national debt without needing to squeeze the European loanable component.
Another element taken into account is the accounting effect: if all the loans had been requested, Public debt would have jumped equivalent to several percentage points of GDP in a single yeareven if the money was spent gradually over the years.
Political pressure, impossible deadlines, and simplification of milestones
Beyond the financial explanation, the underlying reason for the decision is... difficult parliamentary arithmetic and the lack of time to implement all the plan's commitments. Many of the reforms linked to the loans were of high legislative content And, in several cases, they were blocked in Congress due to the absence of stable majorities.
Among the clearest examples are the Law of the Financial Customer Protection Authority, which has been stalled in Parliament for months due to opposition from some key partners, and the promised new Land Law, equally stalled. Both were part of the milestones associated with disbursements from Brussels.
The new addendum introduces profound changes to that map of commitments: it They modify or eliminate around 160 milestones and objectives of the Recovery Plan. Many adjustments are technical in nature —elimination of redundant specifications, clarification of ambiguous language, suppression of intermediate milestones—, but there are also qualitative changes.
La The reform of the Land Law is replaced by the creation of a new public housing company, linked to the old Sepes or the new state structure to manage affordable rental, a milestone already achieved and which now occupies the place of the original legislative commitment.
In the case of the Financial Customer AuthorityThe government has removed it from the milestones directly linked to European payments. The regulation will continue its course at the national level, but it is no longer connected to a specific disbursement from the Recovery Plan, thus easing the pressure of deadlines.
The Economics Department maintains that this review seeks three objectives: simplify the administrative burden, strengthen investments considered priorities —such as decarbonization and supercomputing— and maintain the level of ambition of the plan despite the renunciation of the bulk of the loans.
The thorn in their side: the diesel tax
There is, however, one condition that Brussels has not allowed to be removed from the document: the equalization of diesel and gasoline taxesThis increase in the special tax on hydrocarbons was already attempted to be included in the 2024 fiscal package, but Congress rejected it and the measure lapsed.
La European Commission He has made it clear that raising the tax on diesel remains one of the milestones that Spain must meet if it wants to receive 100% of the remaining transfersThe Government is working with a deadline that extends until the end of January, following the extension granted in the latest review of the plan.
The measure implies an increase in 9,36 cents per liter in the special diesel categorywhich would exceed 11 cents if VAT is included. For drivers, this could translate into a few extra euros per tank; for the Treasury, the Ministry calculates an extra revenue of around 1.400 billion euros per year.
The delay in its approval has already had consequences: Brussels cut funding a few months ago. almost 500 million euros from the fifth disbursement of the funds to Spain for the breach of this commitment, along with other imbalances related to digitalization and public employment.
In the current context, and with a highly fragmented Congress, It is far from clear that the Executive will be able to push through the tax reformIf it falls back in parliament, the risk is losing some of the non-refundable aid that is still at stake, something the Government is trying to avoid by reorganizing the rest of the milestones through the addendum.
Injection into the ICO and reinforcement of national financing
To compensate for the lack of European loans, the Executive has planned a much more relevant role for the Official Credit Institute (ICO) and for direct Treasury financing. The new addendum includes a initial allocation of 13.000 billion euros to the ICO, with the aim of keeping alive projects that were originally intended to be funded by repayable community funds.
With these resources, the ICO will be able to continue channeling credit lines and support mechanisms for the productive sector Beyond 2026, without the time constraints of the European Recovery Plan. National funding, according to the Ministry of Economy, avoids some of the bureaucratic procedures imposed by the Commission and provides greater flexibility to adapt programs to market needs.
In parallel, the Government has approved the Treasury financing strategy for 2026The plan envisions maintaining in €55.000 billion net debt issuancewhile gross emissions will increase to around 285.000 billion due to the volume of planned amortizations.
Priorities include further development of green bond programwhich already has around 16.000 billion euros in circulation and has become one of the tools to finance investments linked to the ecological transition.
At the same time, the State must place on the markets a amount of debt slightly higher than this year, around 285.693 million euros compared to the slightly more than 274.000 million finally issued in 2025. This greater dependence on own financing is the flip side of the renunciation of European loans.
Reorganization of affected investments and projects
One of the great open questions is Which specific projects will be left out of the umbrella of European loans? or their funding will be reduced. Although the Government has not yet detailed the final list, in recent months a series of programs financed with the loanable portion had been designed, which will now have to be reviewed or alternative forms of support sought.
These included large-caliber instruments such as those intended for Peter ChipThese include the ICO-Verde lines of credit for sustainable financing, the Regional Resilience Fund, the ICO-Companies and Entrepreneurs programs, and the Next Tech fund aimed at high-growth technology projects. The cancellation of more than €60.000 billion necessitates a rethinking of some of these schemes.
In certain cases, the reorganization may involve effective cuts to the initially planned funding or delays in their deployment. In others, the intention is to maintain the projects by changing their source of funding, replacing the European loan with national debt issuances channeled through the ICO or other public vehicles.
What the Government has hinted at is that, with the addendum, priority is given to new investments considered strategic, such as the additional 2.500 billion for industrial and energy decarbonization or the nearly 300 million contribution to the European supercomputing program, two areas that Brussels is closely monitoring due to their importance in the green and digital agenda.
In this context, some critics argue that the decision to shed debt in the loan portfolio also reflects the difficulties in mobilizing the private sectorThe execution of the loans was significantly delayed, with a large portion still unallocated even though the spending horizon is rapidly approaching its end.
Implementation, bureaucracy, and debates about the real impact
Official data and independent estimates agree that the plan's implementation is progressing, but with major bottlenecksAccording to the Ministry of Economy, around [number] have already been awarded 58.000-59.000 billion euros in different instruments, although this does not necessarily imply that all that money has reached the final recipient.
Monitoring and analysis platforms indicate that There are still tens of billions in aid to be distributed.Many of these are in the form of ongoing or pending calls for proposals. The change in methodology, which allows certain investments to be counted as completed from the moment they are transferred to public companies or large operators, has also helped to accelerate the official figures.
One particularly controversial aspect is the sectoral distribution of funds. A significant portion of the resources has gone to public entities and programs —as infrastructure managers, ministries, or regional governments—, while the direct impact on the private business sector is a matter of debate. Some sources point to little interest or access difficulties for many SMEswho encounter complex procedures or a lack of capacity to participate in the calls for applications.
The government argues that its priority is to ensure the full absorption of the subsidies so as not to miss out on the investment boost. Therefore, foregoing the bulk of the loans is presented as a justification. a pragmatic adjustment to the reality of deadlines, administrative capacity and the political context, rather than as an abandonment of the objectives of economic transformation.
In any case, the new addendum implies that The execution of the plan enters a phase of maximum intensity.The process with Brussels must be completed, commitments rearranged, pending calls for proposals launched or resolved, and parliamentary tensions surrounding still sensitive reforms such as diesel must be managed.
The government's move leaves a scenario in which Priority is being given to collecting up to 25.000 billion in subsidies that are still pending.The use of European loans is drastically reduced, and the center of gravity of financing shifts towards the Treasury and the ICO (Official Credit Institute). With less time and political leeway than in 2021, the challenge now is to convert every euro still available into concrete and effective projects before the Recovery Plan window closes.
