The Court of Auditors of the European Union has issued a report outlining significant delays by the Spanish government, led by Prime Minister Pedro Sánchez, in the execution of Next Generation EU funds.

With just 15 months remaining until the deadline in August 2026 for completing the planned reforms and investments, the report raises alarms about the potential loss of crucial financial resources.

As of now, Spain has submitted only five requests for payment of grants to Brussels.

The initial timeline agreed upon with the European Commission stipulated that the sixth payment request should have been submitted by 2024, with the seventh due in June 2025. The current situation presents a notable deviation from the agreed schedule.

The analysis from the EU's auditors does not account for requests for loan payments, for which no indicative timeline was set.

However, the Spanish government has also fallen behind in this area, having requested only two of the six anticipated loan tranches associated with the fifth payment.

This fifth payment, amounting to €23.9 billion, which includes €8 billion in grants and €15.9 billion in loans, was requested by Spain on December 20, 2024. Nevertheless, the European Commission has yet to release its assessment of this request, despite the expiration of all legal deadlines.

The delay stems from the Spanish Ministry of Economy, under Minister Carlos Cuerpo, seeking a series of technical modifications to the milestones and objectives to ease their compliance.

These amendments are expected to be approved in the upcoming Ecofin meeting.

Following that, the timeline for payments will resume.

Additionally, Minister Cuerpo has formally communicated to the European Commission that one of the conditions of the fifth payment—a proposed increase in diesel taxes—will not be fulfilled, as the accompanying fiscal reform is deemed complete without it.

This decision comes amid a lack of sufficient parliamentary support, particularly from the leftist party Podemos, which opposes the tax increase.

Currently, Brussels has not indicated whether it will apply a reduction to the fifth payment due to this non-compliance.

In its recent report, the Court of Auditors cautions that 'implementation is progressing with delays and persistent risks related to the completion of measures, results, and financing.' This warning addresses all member states but highlights Spain's situation, as it stands as the second-largest beneficiary of the Next Generation funds.

EU auditors also note that these challenges are compounded in the latter half of the funding period, primarily due to a shift from reforms to investments, which can be considerably complex, particularly for large infrastructure projects.

Moreover, the nature of milestones and objectives is changing to reflect more advanced implementation phases, often heightening the difficulty of achieving targets.

In response to the auditors' findings, EU Commissioner for Economic Affairs Valdis Dombrovskis stated that efforts would continue to maximize the Recovery and Resilience Mechanism before its expiration.

The delay in Spain’s execution of Next Generation funds is underscored by its performance metrics—of the 594 milestones and objectives committed to the EU, only 30% have been completed, placing Spain in 16th position among the 27 member states.

In terms of disbursed Next Generation funds, Spain has received approximately €48.3 billion thus far, equating to about 30% of the total €163.014 billion allocated.

In comparison, Italy, under Prime Minister Giorgia Meloni, has completed 43% of its milestones and has received €122.13 billion, or 63% of its allocated €194.382 billion in Next Generation funds.