Spanish government considers issuing “green bonds” with private investment

Spanish Economy Minister Nadia Calviño spoke about the government’s intention to issue “green bonds,” an initiative to get private firms to finance the ecological transition.

“Spain has a very ambitious stance in terms of climate change. We want to be at the lead in the ecological and energy transition, which requires significant investment. Therefore, we must study the possibility of issuing green bonds,” Calviño explained.

The Official Credit Institute (OCI), a state agency working under the Ministry of Economy, is in charge of collecting the funds. The plan, announced by the Spanish government in early February, requires an investment of nearly €47 billion over the next ten years until Spain achieves carbon neutrality by 2050.

In detail, the Ministry of Economy assures that nearly €270 billion of private investment could be secured by 2030. “The bonds would be linked to the energy efficiency and renewable generation targets, as well as sustainable water and land management. All of these elements are included in the energy and climate plan.”

Also, the government wants to strengthen “legal security and stability for investors in the medium term,” using these public funds as a lever to get private investment, the minister explained. However, she did not specify what kind of companies will have access to the proposed plan.

As for the Spanish debt, the minister stated there is “less room” to continue moving forward in terms of increasing the average life of the debt stock– which currently stands at 7.45 years –; although, she added that expectations are to reduce financing costs.

Nadia Calviño in a press conference after a cabinet meeting. October 2018. REUTERS/Susana Vera/File Photo - RC1B8D341AB0

The economic outlook for the Spanish government

The administration is set to issue €35 billion of net debt throughout 2019. Minister Calviño assures that this figure could be reduced, if possible, using extraordinary revenues. In this scenario, she reaffirmed the government’s official commitment to cut the deficit.

Calviño has requested early repayment of another part of the financial assistance that Spain received back in 2012. She sustains that the government intends to repay this bailout as soon as possible.

With regards to the possibility of privatizing Bankia, which the State estimates would demand a stock percentage of 61 percent; Indeed, Calviño assured there was “no interest in going making a small IPO.” Also, she said that the Spanish government has not made a decision regarding the possibility of a financial partner that may collaborate with Bankia.

Calviño makes proposals and advocates to align the pension increase with the IPC

Calviño is the only one of Pedro Sanchez’s 17 ministers that will not run as a candidate in the coming elections; even though she is leading the PSOE’s proposed reform agenda.

Furthermore, she anticipates that the first reform that the Spanish government should implement is “reinforcing education and professional training and investing in human resources.”

Calviño also stands for aligning the pension increase with the IPC, as she says this would guarantee purchase power. Nonetheless, she clarified that this would only work by adopting countervailing measures that guarantee the balance of the financial system in the long run.

For more information, check Energía16

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