March 27, 2019 / 5:04 PM / a month ago

Spain may issue green bonds to finance environmental plan, minister says

MADRID (Reuters) - Spain is studying the issuance of so-called “green bonds” to help businesses fund reforms necessary under the government’s environmental plan, Economy Minister Nadia Calvino told Reuters in an interview on Wednesday.

FILE PHOTO: Spain's Economy Minister Nadia Calvino speaks during a news conference after an extraordinary cabinet meeting at the Moncloa Palace in Madrid, Spain, October 15, 2018. REUTERS/Susana Vera/File Photo

“Spain has a very ambitious approach to tackling climate change and we wish to be at the very vanguard of the ecological and energy transition. This requires large investment volumes and we are studying the possibility of issuing green bonds, among other means,” Calvino said from her office in Madrid.

Spain’s state run Official Credit Institute (ICO) would oversee the bonds’ issuance, she said.

The Spanish Socialist government said in February that it had earmarked 47 billion euros ($53 billion) in public investment over the next 10 years as part of its effort to become carbon neutral by 2050.

“These bonds would fund investment in areas such as renewable energy and energy efficiency, or sustainable water and land management, all elements of our National Energy and Climate plan, currently subject to public consultation,” she said.

The state-backed bonds would help companies leverage private investment, Calvino said, though she did not say how much would be invested or which companies could opt into the plan.

The economy minister also said that the government has asked the European Stability Mechanism for permission to repay early another part of the country’s 2012 bank-bailout rescue. Spain received nearly 42 billion euros in rescue funds and has around 24 billion euros left to pay back.

Spain plans to issue 35 billion euros in debt in 2019, and Calvino says it will reduce this figure if the economic situation allows.

UPCOMING ELECTIONS

Prime Minister Pedro Sanchez called a general election for April 28 after his minority government failed to garner support for its 2019 budget. Calvino is the only one of his 17 ministers who does not plan to run for reelection.

She stressed her commitment to reducing Spain’s budget deficit and debt levels in coming years if Sanchez is elected to form a government. Reforms in education and training are the top economic policy priorities for the next government, she said.

Spain has the second highest unemployment rate in Europe, which stood at 14.5 percent at the end of 2018. It has struggled to pass labor market reforms that address high levels of seasonal unemployment and low-paid, temporary work.

Writing by Paul Day; Editing by Axel Bugge and Peter Graff

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