Sánchez announces the creation of a sovereign wealth fund with 10.5 billion euros from European funds

MadridThis August, the European anti-pandemic funds will run out, but the Spanish government has found a loophole to give "continuity" to this windfall beyond its end point: the creation of a Spanish sovereign wealth fund that will bear the name of Spain Grows Fund And it will be launched with an initial allocation of €10.5 billion, coming precisely from European funds. This was announced by the Spanish Prime Minister, Pedro Sánchez, on Thursday during the closing ceremony of the 16th Spain Investors Day (SID) Forum, held in Madrid, which brings together more than 300 foreign investors, investment funds, sovereign wealth funds from other countries, and dozens of companies.

The announcement, therefore, was not made to just any audience, but to those who, in the last five years, have benefited from an unprecedented boom in public investment – European funds will have represented an outlay of €79.854 billion for Spain in transfers alone. Sánchez, who will provide more details about the new "sovereign fund" next Monday alongside the Minister of Economy, has indicated that the Official Credit Institute (ICO) will manage this mechanism.

Sánchez also assured that the fund will mobilize up to €120 billion through private debt and international and domestic investments. In fact, the fund's objective, according to the Spanish government, is to "co-invest" with the private sector through loans, guarantees, or equity instruments, prioritizing nine key sectors for improving economic productivity: housing, energy, digitalization, AI, reindustrialization, the circular economy, infrastructure, and water and sanitation. "If the European funds were an exercise in European sovereignty, the Spain Grows fund will be an exercise in national sovereignty," Sánchez emphasized.

Six years of "achievements"

During his speech, the Spanish president did not hesitate to boast about the economic results of his six years in office, which he summarized as a "success".The place to be"," he stated, placing Spain in the Champions "The results of the Ibex-35 or the labor market are a test of the level of confidence investors have [in Spain]," said Sánchez, who also touted the "social peace and cohesion" that he claims prevails in the country.

Sánchez anticipates that this will continue to be the path shaping the economy in the coming years, "despite the news we are receiving internationally, especially from across the Atlantic," he said. In this context of geopolitical tension, he has championed agreements such as Mercosur, and the one the European Union has just signed with Latin America.

However, he did not hesitate to lay out the cornerstones of his economic policy, beginning with a commitment to renewable energy. "As long as I am president, we will strive for cheaper energy," he stated. In fact, the Spanish Prime Minister did not hesitate to send a message to the companies that own nuclear power plants, which have already requested an extension of the operating license for the Almaraz plant in Extremadura, reminding them of the government's three red lines for considering a possible extension of the closure schedule. The Prime Minister also touted the reforms in the labor market, as well as the improvement in wages.

The Minister of Economy, Business and Trade, Carlos Cuerpo, echoed this sentiment hours earlier: "Spain is truly the best option, not only now but also for the future," he asserted to investors. As future challenges, Cuerpo cited housing and productivity, two of the concerns raised with investors during the Forum.

This is the second economic announcement of the week from Sánchez, who has sought to start the year by setting the agenda with government management, despite the current low point in the legislature due to the fragile relationship with his investiture partners, as well as the corruption, workplace harassment, and sexual harassment cases plaguing Sánchez's inner circle. On Monday, he announced a package of measures to facilitate access to housing, including a 100% income tax credit for landlords who reduce rent. However, this measure has sparked a clash between the PSOE and the junior partner in the Spanish government, Sumar, which rejects the proposal. Although the Minister of Housing, Isabel Rodríguez, expressed confidence in reaching an "internal agreement," the party led by the Second Vice President and Minister of Labor, Yolanda Díaz, insists that the solution must be a freeze on rents, at least for those contracts being renewed this year.