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Spain to receive 140 billion euros from EU recovery fund, half in grants

Greece's Prime Minister Kyriakos Mitsotakis, Spanish Prime Minister Pedro Sanchez, Portugal's Prime Minister Antonio Costa and Germany's Chancellor Angela Merkel interact while wearing face masks during the last roundtable discussion following a four-day European summit at the European Council in Brussels, Belgium, July 21, 2020. Stephanie Lecocq/Pool via REUTERS

MADRID (Reuters) - Spain will receive 140 billion euros ($160.17 billion) from the EU recovery fund approved by the bloc’s 27 leaders after almost five days of tense negotiations, Prime Minister Pedro Sanchez said early Tuesday.

A little more than half of the transfers to Spain, 72.7 billion euros, will be grants and the rest will be repayable loans, Sanchez said.

“It is a great agreement for Europe and a great agreement for Spain,” he told reporters early on Tuesday, after negotiation lasted all night. “Europe laid the basis of a response to the crisis of Covid without losing sight of tomorrow.”

Spain will use the proceeds to encourage investment in its economy’s digital transformation, the transition into greener energy sources and education, Sanchez said.

The 27 EU leaders approved the creation of a 750 billion euro fund, with 390 billion in non-repayable grants. The initial proposal was to hand over 500 billion in grants, with a group of northern, fiscally conservative countries seeking a lower level of handouts to their partners.

The stakes were high. EU economies were in freefall as they faced their deepest recession since World War Two, with initial relief measures like short-time work schemes running out and fears that the autumn could see deep economic malaise and social discontent.

Spain and Italy, arguably the hardest hit European countries by the pandemic, will be the main beneficiaries of the recovery fund.

Reporting by Inti Landauro; Editing by Nick Macfie