In coming months €300M in EU bazooka funds to be transferred to firms

Portugal’s economy and maritime affairs minister, António Costa Silva, said on Friday that “in the coming months” 300 million euros will be transferred to companies under the Mobilising Agendas of the Recovery and Resilience Plan (RRP), the so-called EU bazooka funds.

“When we sign the Agendas, the companies will immediately have a transfer of 13% of the money upfront and therefore I estimate that in the coming months about 300 million euros will immediately reach the companies to boost all their activities, to put the consortiums on the ground and to start making the transformation,” the minister said.

Costa Silva was speaking during the CNN Portugal Summit, held today in Porto by CNN Portugal to discuss European funds and the opportunities and challenges arising from the application of the RRP.

According to him, the aim is to change the profile of the Portuguese economy, which “is very poorly diversified”: “It has sectors of high technological innovation, but the big issue is that the innovation we are producing, the knowledge, is not being extensively incorporated into production processes and is not yet reflected in areas that are absolutely crucial, of technological development and production and creation of products and services with high added value,” he explained.

The minister pointed out as “another absolutely vital element” the “imported content” of Portuguese exports, which he said is “one of the highest in the European Union”: “This has to change, we have to incorporate more national product, more knowledge, more innovation, because this will be transformative”, he argued.

According to Costa Silva, although it is “absolutely clear that the companies that have been supported by European funds have increased their productivity and capacity building”, the fact is that Portugal “has not yet managed to create, despite this whole cycle, a high-tech sector that is highly exportable”.

“I think that these Agendas can do it”, he sustained.

Emphasising that “the PRR and PT2030 funds that go to companies are 90% more than in PT2020”, the governor stressed that “there has never been an investment of this order for companies” and warned of the importance of a good implementation capacity.

“In my accounts it is between 11 and 12 billion euros and, at this time, I am more concerned with the capacity of the country to implement, whether companies or public administration,” he said.

According to him, “the maximum of the maximums” that the country ever spent from structural funds “was 2.5 to 3 billion per year, in the best of years”, and now it will be “more than double that”, which will also require “a much more effective and much more agile public administration”.

Although he believes that we are facing “a new monetary era, of higher inflation”, the minister considers that “the ECB [European Central Bank] is acting well”, raising interest rates, and sees “some important signs that may allow for a rebalancing”.

“After this extraordinary increase in the prices of metals and raw materials, in recent weeks the Bloomberg metals index has shown a drop in price of around 40%, which is an indicator that seems very clear to me,” he specified.

To this, he says, are added other “very clear indicators, such as the cost of shipping, which has risen exponentially, but which shows transport between China and the US has already fallen by around 40%, also, in recent weeks,” as well as inventories in various industries, whose accumulated ‘stocks’ “are already happening in some sectors.”

“This means that we cannot be doomsayers, we cannot be deterministic, we have to consider that the Portuguese economy is resilient,” he maintained. “We often underestimate the underlying dynamics of the Portuguese economy,” he added.

Comparing the current situation with the crisis experienced in 2011, the minister stressed that it is a “different” scenario: “In 2011 we had our economy collapsing, shrinking, and we had debt rising and skyrocketing. That is why the issue of fiscal consolidation is absolutely central: because investors are often attracted not so much by the level or magnitude of the debt itself, but by how the debt is behaving,” he said.