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ECONOMY

Spain approves record 2022 budget

Spain's fragmented parliament gave final approval Tuesday to the biggest budget in the country's history, with billions of euros from EU's huge Covid-19 recovery fund.

Spain's Prime Minister Pedro Sánchez
Photo: Gabriel BOUYS / AFP

Passage of the 2022 spending plan boosts the chances that Socialist Prime Minister Pedro Sánchez’s minority government will survive until the end of its mandate in late 2023.

Lawmakers voted 281-62 in favour of the budget, which calls for a record €240 billion  ($269 billion) in spending next year as the government seeks to spur activity in an economy badly hit by the coronavirus pandemic.

It includes €26.3 billion from the European Union’s economic recovery fund.

Spain is one of the main beneficiaries of the fund, with the country set to collect a total of €140 billion in grants and loans from it over six years.

Sánchez’s Socialists and its junior coalition partners, hard left party Podemos, hold only 155 of the 350 seats in Spain’s highly fragmentented parliament.

But the government struck deals with smaller leftist and regional parties to get their support for the budget, including one with Catalan separatist party ERC that sets a quota for regional languages on streaming platforms.

In a tweet sent just after the budget was approved, Sánchez said the budget is “key to consolidating a fair and inclusive recovery”.

“Hopefully this will be the prologue to many more agreements. We will be working on that,” he added.

Sánchez is betting the expansive budget will stoke an economic rebound from the Covid pandemic that has lost some momentum due to weak domestic consumption and a slower than expected recovery in its key tourism sector.

READ ALSO: Politics in Spain: Seven predictions for 2022

Among the measures financed by the budget is a payment of €400 to all those who turn 18 to spend on cultural activities, and a monthly rent subsidy of €250 for low-income youths.

Civil servants will get a 2.0 percent pay increase while old-age pensions will be increased in line with inflation.

The budget sees Spain’s public deficit to fall to the equivalent of 5.0 percent of Spain’s economic output next year, down from 8.4 percent in 2021.

But it is based on a prediction that Spain’s gross domestic product (GDP) will expand by 7.0 percent next year, a forecast many analysts say is unrealistic.

Spain’s economy contracted 10.8 percent in 2020, one of the worst results among industrialised countries, as pandemic travel restrictions crippled its tourism sector.

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ECONOMY

Qatar to invest an extra €4.75 billion in Spain

Qatar on Wednesday said it plans to invest an additional $5 billion (€4.75 billion) in Spain on the second day of a state visit by its emir, Sheikh Tamim bin Hamad Al-Thani.

Qatar to invest an extra €4.75 billion in Spain

“The volume of investments agreed upon with the Spanish side amounts to $5 billion in various sectors,” said Qatari Foreign Minister Mohammed bin Abdulrahman Al-Thani in a statement tweeted by his ministry.

Neither side gave a timetable for the investment, which amounts to some €4.75 billion, nor did they say which sectors would benefit.

“Qatar will invest close to five billion euros in our country in the coming years,” Prime Minister Pedro Sánchez said during a business meeting with the Qatari delegation.

“It is a gesture of confidence in the Spanish economy and Spanish businesses which will strengthen bilateral ties,” he said ahead of afternoon talks with the emir.

Before the pandemic, Qatari investment in Spain stood at €2.67 billion ($2.8 billion), the Spanish government said, making it the country’s 24th biggest investor.

To date, Qatari funding has been notably invested in several sectors: civil aviation, construction, energy and communications.

According to a Spanish government source, the two sides will on Wednesday sign around a dozen commercial contracts, notably concerning energy as Madrid seeks to diversify its gas supplies following Russia’s invasion of Ukraine.

Qatar, one of the world’s three biggest exporters of liquified natural gas (LNG), is currently Spain’s fifth-largest supplier after the United States, Algeria, Nigeria and Egypt.

The country accounted for 4.4 percent of Spain’s total gas imports in April and the Spanish government hopes to increase this share.

European states are increasingly looking to other sources of natural gas as they try to wean themselves off dependence on Russia, with LNG easily shipped by boat from countries such as Qatar and the United States.

After Madrid, the Qatari leader will continue his tour of Europe, visiting Germany, Britain, Slovenia and Switzerland, where he will attend the World Economic Forum in the mountain resort of Davos which runs from May 22-26.

Qatar will host the World Cup later this year.

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