Basic concepts of the Plan

At the beginning of 2020, the COVID-19 pandemic changed the economic, social and budgetary prospects in Spain, the European Union (EU) and the world. This required, and even today requires, a coordinated response at both national and EU level, addressing the effects that the pandemic has caused. While all countries have been affected by the pandemic and the restrictive measures implemented to control it, the economic impact has been mixed, complicating the process of convergence and cohesion in the Union.

The ability of Member States to cope with the economic consequences of the pandemic depends on the scope for budgetary manoeuvre they have to take measures to mitigate as far as possible the social, economic and health impact of the crisis.

As a result of the above, the European institutions created the Recovery and Resilience Mechanism (MRR), setting itself up as an innovative tool for providing direct financial assistance to Member States to intensify sustainable reforms and public investments. These reforms and investments should contribute to improving the resilience of the Union as a whole.

The six pillars underpinning the process of recovery and strengthening resilience are as follows:

• ecological transition;
• digital transformation;
• smart, sustainable and inclusive growth;
• social and territorial cohesion;
• health and economic, social and institutional resilience;
• policies for the next generation, children and youth

As set out in the MRR Regulation, for a Member State to receive a financial contribution, it should submit a recovery and resilience plan. The Government of Spain submitted the Recovery, Transformation and Resilience Plan (PRTR) dated 29 April 2021. The PRTR was evaluated very positively by the services of the European Commission, obtaining the highest rating in 10 of the 11 variables analysed. On 13 July 2021, the meeting of ministers and ministers of finance of the Council (ECOFIN) approved the Spanish Plan. The milestones and objectives associated with the detailed reforms and investments by each Member State have to be carried out in accordance with the timetable and description included in the Council Implementing Decision (CID).

In October 2023, the PRTR Addendum was adopted, which has introduced improvements and new actions resulting from experience in the first phase of implementation of the Plan.

The PRTR is designed to cover reforms and investments of a wide variety of kinds. For this reason, the PRTR targets are mainly citizens living in Spain and Spanish companies, one of the main objectives of the PRTR being to boost the resilience of SMEs seeking to promote an economic recovery that does not leave anyone behind, improving the ecological and digital transition of our country. Also, the bodies of the General Administration of the State, Autonomous Communities and local authorities and any other public sector entities, which will also manage the PRTR, favouring co-governance, channelling in an appropriate manner the funds to be received and the milestones and objectives CID (pdf) that each participant must meet.

The milestones and targets included in the PRTR must be linked to measures, i.e. reforms and investments, which have been implemented within the period from February 2020 to August 2026.

The RCF is set up as a results-oriented financing instrument. The milestones and objectives set out in the Plan are binding, involving all the public administrations involved.

Those responsible for compliance are all their participants, from ministries, autonomous communities, local entities, as well as public sector entities (whether state, regional or local); private sector beneficiaries, such as contractors, subcontractors, recipients of aid and other final beneficiaries.

Good management of PRTR depends primarily on an appropriate management and monitoring system, designing strategies and instruments to ensure its real impact.

The management of MRR funds is the responsibility of the public administrations, which is why they must have an overall view of the projects in which the different measures are implemented (595 milestones and CID objectives are included in the PRTR). Thus, the management and monitoring system incorporates the various projects that specify the objectives included in the PRTR, and allows the monitoring of the amounts reflected through the defined indicators (in units of the indicator, for example: number of projects, kilometres, hectares, actions, etc.). ), which shall be enforceable on those involved in the management of the MRR.

The management and monitoring system is aimed at defining, planning, implementing, monitoring and controlling projects and sub-projects where the measures (reforms or investments) envisaged in the components of the PRTR are disaggregated as a basic tool for implementing the milestones and objectives defined in the CID (pdf). To this end, an information system is set up, supported by a computer application called CoFFEE-MRR, which enables information flows to be channelled between the various actors involved in the management of the Plan, facilitating compliance with the requirements resulting from the applicable Community and national regulation.

The failure of the PRTR by any of the entities or beneficiaries (legal or natural persons), which have received funding from the MRR, creates an obligation to reimburse those funds. This non-compliance may mainly arise from non-compliance with the established timetable, non-achievement of the milestone or targetCID (pdf) to which they have committed themselves, non-compliance with any of the principles set out in the MRR regulation, inter alia:

• contribution to the climate and/or digital objective (according to the PRTR, Spain commits 39.9% and 25.9% respectively detaggingverde and digital).
• Not significant harm (‘no significant harm to the environment’).
• not engage in fraud, corruption or conflict of interest, having in place mechanisms for their prevention, detection and correction.
• The amount of assigned revenue in accordance with Article 21(3) of the Financial Regulation is estimated at EUR 1000000.
• full respect for the rules governing State aid.

Royal Decree 682/2021 of 3 August, which develops the basic organizational structure of the Ministry of Finance and Public Service and amends Royal Decree 139/2020 of 28 January, which establishes the basic organizational structure of the ministerial departments, specifically stipulates that the General Secretariat of European Funds is to act as the authority responsible for the MRR to the European institutions. Among others, this article refers to coordination functions, such as the contact point of the European Commission, and to monitoring progress in relation to the milestones and objectives of the Plan.

The PRTR provides that the General Secretariat of European Funds, in its capacity as Responsible Authority, is responsible for the monitoring and integration of management information and the results achieved by the bodies responsible for each component.

In Article 20 of Royal Decree-Law 36/2020 of 30 December approving urgent measures for the modernisation of the Public Administration and for the implementation of the PRTR, the management centre of the Ministry of Finance with competence in the field of European funds (General Secretariat of European Funds) shall act as the responsible authority before the European institutions, in the terms established in European legislation, by developing to such powers.

Paragraph 4.6 of the PRTR regulates the Control and Audit. It is structured in the following controls:

• Internal control of the executing body (Level 1). Scope of each body responsible for implementing an action. It is a primary and basic control. It includes regulations aimed at preventing fraud, corruption, conflict of interest and double funding.
• Internal control of independent body (Level 2). Entrusted to the independent internal control bodies of the various acting administrations. They act with complete autonomy and independence. In the ministries and public bodies it is the delegated intervention (under the Ministry of Finance) and in the public corporations and corporate entities its own internal control bodies which act independently of management. In this area, the role of legal advisory services is also important.
• System of national audits and ex post controls. The IGAE is the Control Authority of the MRR and shall exercise its functions in full independence. An audit strategy shall be adopted and updated at least annually. The IGAE audit methodology will be based on the Structural Funds methodology, with the fundamental difference in the emphasis on verifying compliance with milestones and targets. The control authority shall coordinate the activities of the CAAs in order to ensure the proper performance of the tasks to be carried out.
• Audits of payment claims sent to the Commission. They provide assurance to the Commission on the fulfilment of the relevant milestones and objectives.
• Audits on the existence of appropriate measures to prevent, detect and correct fraud, corruption and conflicts of interest. It shall be based on the methodology provided for in the area of control of structural funds on the issue. As regards the differences with regard to the structural fund control scheme, the key functions would be:

• the absence of a Management Authority.
• the absence for the Audit Authority of specific reporting models, sampling guidelines or the audit summary document to be submitted.
• the absence of a scope to be covered by the audits.
• the lack of financial corrections determined for non-compliance with the law.
• the absence of an annual account upon submission of attestations or the possibility to rely on national control systems.

• The IGAE shall carry out these audits. The results of these audits will be included in the audit summary (Article 22.2.c)(ii) of Regulation (EU) 241/2021 of 12 February establishing the Recovery and Resilience Mechanism).
• Audits on the double financing of projects/linking of expenditure to the MRR. It shall be included in the audit strategy.
• Audits of the legality and regularity of expenditure: national control systems. IGAE and CAA General Interventions.
• Coordination on combating fraud. The National Anti-Fraud Coordination Service (SNCA) shall be the essential part of the model. A specific channel of complaints will be created. The SNCA shall exercise its powers in full independence.

The MRR Control Authority is the General Intervention of the State Administration (IGAE). It shall be responsible for the exercise of the functions and powers conferred on it by European legislation by the supervisory authority of the European Instrument for Recovery (Article 21 of Royal Decree-Law 36/2020 of 30 December approving urgent measures for the modernisation of the Public Administration and for the implementation of the Recovery, Transformation and Resilience Plan).

The tasks assigned to IGAE in this area are:

• Actions to design and exercise control of the funds required by European legislation, taking over the coordination of the controls assigned to any other state, regional or local control body
• The exercise of relations with the Community and national institutions in order to ensure an effective and efficient control system.

The Follow-up Report is a monthly report which, at the different levels of the defined planning, includes the monitoring of the progress of milestones and objectives and of budget implementation, thus allowing for the detection of any deviations that may arise from the planning and the implementation of the corresponding corrective actions.

The Forecast Report is a quarterly report in which, identified as possible risks of non-compliance and deviations from planning, appropriate preventive or remedial actions shall be established, where appropriate.

The Management Report is the document by which the signatory is responsible for the information contained therein in relation to the implementation of the PRTR.

This document certifies the status of the relevant milestones and targets and the remaining requirements of Regulation (EU) 241/2021 of 12 February establishing the MRR, as well as the accounting information on the expenditure incurred.

The Management Reports shall form the basis for the accreditation, to the Community authorities, of compliance with the milestones and objectives and of the regularity of the underlying transactions.

Article 22.2.c of Regulation (EU) 241/2021 of 12 February establishing the MRR stipulates that two documents must be attached to the payment application: on the one hand, a summary of audits and checks carried out, including the deficiencies identified, as well as the corrective measures taken and, on the other hand, a management declaration.

The Management Declaration is the document which states that the funds have been used for the intended purposes, that the information submitted with the payment application is complete, accurate and reliable and that the control systems established provide the necessary guarantees that the funds have been managed in accordance with all applicable rules, in particular the rules on the prevention of conflicts of interest, fraud, corruption and double funding from the Facility and other programmes of sound financial management.

Article 11.1.g of Royal Decree 682/2021 of 3 August provides that, inter alia, the General Secretariat of European Funds, as the authority responsible for the RCF, is to:

“The submission of reports under the Recovery and Resilience Mechanism regulatory regulations, requests for payment of the financial contribution accompanied by the relevant statement of assurance and, where applicable, the loan tranche provided for therein, all of this, on the basis of the checks carried out by the EEAS. All this, on the basis of the result of the checks carried out, under the terms and conditions provided for in that regulatory regulation of the Recovery and Resilience Mechanism.'

It is the document by which Spain may request payment of the amounts set out in the PRTR once it has complied with the PRTR. Thus, Article 24 of Regulation (EU) 241/2021 of 12 February establishing the MRR regulates the rules linked to payment in such a way that, once the relevant agreed milestones and objectives have been reached, the Member State shall submit to the Commission a duly justified request (a summary of audits will be annexed and the Management Declaration, Article 22.2 of Regulation 241/2021, where the financial contribution is due),

Following Recital 53 of Regulation (EU) 241/2021 and Article 24, Member States should be able to submit payment applications twice a year. Spain has opted for this alternative, for submission of up to two applications for payment per year at the latest.

Payments should be made in instalments, which are included in the Annex to the Council Implementing Decision. The Commission shall, on a preliminary basis and without undue delay, and no later than two months after receipt of the request, assess whether the relevant milestones and objectives have been satisfactorily met. Such satisfactory compliance shall presuppose that the Member State has not revoked measures relating to milestones and objectives previously satisfactorily fulfilled.

If the preliminary assessment by the Commission is positive, it shall submit its conclusions to the Economic and Financial Committee and request it to deliver an opinion, taking it into account for its assessment. Once the Commission's assessment is positive, the disbursement of the financial contribution shall be made without undue delay.

According to Article 24.6 of Regulation 2021/241 establishing the MRR, “if, as a result of the assessment referred to in paragraph 3, the Commission determines that the milestones and objectives set out in the Council implementing decision referred to in Article 20(1) have not been satisfactorily met, the payment of all or part of the financial contribution and, where applicable, of the loan shall be suspended. The Member State concerned may submit comments within one month of the date on which the Commission has communicated its assessment.'

All payments of financial contributions to Member States should be made by 31 December 2026 at the latest.