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Financials

Spain will activate EU recovery loans from next year

MADRID, April 14 (Reuters) - Spain will request loans included in the EU recovery package for the Iberian country starting next year to finance large projects and recapitalise companies, Prime Minister Pedro Sanchez said on Wednesday.

Until now, the government only intended to use the 70 billion euros in grants from the total package of around 140 billion euros, postponing the decision on whether to access the loans part until the free aid has been used up.

But delays in the disbursement of the funds, intended to help EU members most affected by the coronavrius pandemic, and the nature of the planned large projects have led the government to open the door to loans.

“In addition to direct transfers from the European funds, the loans provided for in these funds will also be gradually mobilised, mainly to finance investments from 2022 onwards,” Sanchez told lawmakers.

The loans will be used to recapitalise medium-sized companies or scale up start-ups, and to support projects of ‘variable magnitude’ and investments beyond 2023.

The government has so far only detailed the planned use of the 70 billion-euro grants plan, with 13.2 billion earmarked to boost the electric car market and 6.8 billion for housing rehabilitation.

Projects can be implemented until 2027 and will be closely monitored by the European Commission.

Although the conditions of the loans are not yet known, such financing is likely to come cheaper for Madrid than issuing debt. The government has already said it will pre-finance 27 billion euros in investment planned for this year with debt issuance. (Reporting by Belén Carreño, editing by Andrei Khalip, William Maclean)

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