For the International Monetary Fund, the European recovery plan offers Spain an “exceptional opportunity” to “partially” close the demand gap caused by the pandemic and “facilitate” the economy’s necessary structural transformation in the medium term. For this reason, it has urged the Spanish government to establish a “clear governance structure” that will be in charge of supervising the use of the EU recovery funds.
According to the annual review of the Spanish economy, known as ‘Article IV’, the IMF believes the impact of the European funds will increase the GDP growth forecast for 2021 to 7.2%. This compares with the previous estimate of 6.3% made in June. The final forecasts will be made known in October, when the institution will publish its biannual ‘World Economic Outlook’.
The IMF suggests that European resources could be earmarked for the rehabilitation of buildings, the creation of charging stations for electric vehicles and improving the infrastructure for water distribution and waste management. In its opinion, this type of investment “would create jobs in the short-term, while promoting the decarbonisation of the economy and progress towards environmental sustainability in the long-term.”
On the other hand, the IMF flags that the priorities in order to achieve greater equality remain the “employability” of those affected by economic change through more and better active employment and training policies, as well as labour market segmentation. The institution chaired by Kristalina Georgieva recognises that the European funds offer an “opportunity” to approve labour reforms.
In this respect, the Washington-based organisation proposes that the European funds can be used to smooth any transition costs caused by the introduction of a redundancy fund, which at the same time makes permanent contracts more attractive. This ‘redundancy fund’ would be the ‘Austrian backpack’. It could also be used to expand job training, digitalise the economy and boost companies’ capacity to innovate and absorb new technologies.