Spain Sets Up Audit System Key to Unlocking EU Recovery Funds

American Age Official

(Bloomberg) — Spain said a new audit system to track European Union funds is operational, a key milestone needed to unlock money from the bloc’s pandemic recovery fund and smooth relations with Brussels after implementation delays.

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The government missed two deadlines to complete installation of the information-sharing system originally promised for the third quarter of 2021, putting at risk payments from the €160 billion ($170 billion) it’s eligible to receive.

“The system is up and running and, like all applications, it is updating, developing and modernizing functionalities,” Spain’s Budget Ministry said in an emailed response. In September, the European Commission warned Madrid there would be no further disbursements until the audit mechanism was in place, people familiar with the matter said at the time.

Prime Minister Pedro Sanchez, who is widely expected to run for re-election late next year, is counting on the recovery money to keep the economy humming as rising prices curb household spending in the euro region’s fourth-largest economy.

Spain, the largest beneficiary of the EU Recovery and Resilience Facility after Italy, has received €31 billion in recovery funds, or about 44% of the original grants it is eligible for.

The government in Madrid has been one of the most eager to tap the facility — which is worth a total of about €800 billion — and was the first to request a third disbursement.

The audit mechanism is one of the milestones that will be reviewed by the commission to free up the third payment, worth €6 billion, the Budget Ministry said.

Setting up the unified audit system has been headache for officials due to the different levels of governments in Spain responsible for spending. Spanish officials have spent moths setting up a fiscal database to comply with the commission’s demand for a mechanism to detect conflicts of interest. Delays in its implementation raised complaints from analysts about a lack of transparency.

The government said all levels of administration have access to the system, with 2,152 projects and sub-projects already uploaded by the central government and regional and local administrations.

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