The Recovery and Resilience Plan (PRR) funds allocated to the private sector have been mostly channeled to older, more productive companies with strong export intensity, according to a report prepared by the Bank of Portugal (BdP).
The document released this Thursday, which explores the implementation of the financial package in Portugal and is part of the October economic bulletin, highlights that, to date, 87% of the program’s allocation has been approved and 24% has actually been paid to beneficiaries.
Of these funds that have already obtained the “green light” – around €19.2 billion – the largest share was applied to public administrations, with 62% of the amount, with emphasis on the Institute of Housing and Urban Rehabilitation (€756 million), the Metropolitano de Lisboa (€748 million) and Infraestruturas de Portugal (€512 million).
Another 5% went to public companies outside the perimeter of public administrations, such as Banco Português do Fomento (€268 million), Águas do Algarve (€169 million) and Empresa de Eletricidade da Madeira (€97 million).
The remaining 33%, which is around €7.3 billion, was allocated to the private sector, with a significant concentration in micro, small and medium-sized companies, which represent close to half of the amounts allocated to this sector. The average value approved per entity is higher in large companies.
In general, the BdP says that the proportion of the amount paid in relation to the approved amount is, on average, higher in private institutions.
Regarding the characteristics of private companies benefiting from the PRR, the analysis reveals that are very specific: compared to the universe of non-financial private companies in the Portuguese economy, they are, on average, 11 years older, they tend to be more productive and with a greater export vocation.
In the specific case of micro, small and medium-sized companies, the weight of exports reaches, on average, 32% of turnover, which contrasts with the 7% observed for total companies.
By economic activity, manufacturing industries (32%), consultancy, scientific and technical activities (24%) and the financial and insurance sector (13%) stand out as the largest private beneficiaries of PRR funds, absorbing 70% of the amount approved, more than double its weight in the total economy (30%).
On the other hand, activities with a large presence in the national economy, such as wholesale and retail trade, have little significance in terms of approved funds, highlights the BdP.
The document recalls that Portugal is the fifth country in the euro zone to receive the most funds from the Recovery and Resilience Mechanism, totaling €22.2 billion – of which 16.3 billion in grants and 5.9 billion in loans -, the equivalent to 10.4% of 2019 GDP.
Around 38% of the global allocation has already been received, with the receipt of the first four tranches, which totaled €7 billion.
In terms of execution, while the area of digital transition is the one showing the greatest progress, with 30% of funds paid out, climate transition is the slowest, with only 20% of money transferred. The resilience dimension, which accounts for 68% of the funds, also has a low execution rate (24%).
With 202 milestones and 261 targets established, divided between 123 investments and 44 reforms, the national PRR has seen, to date, 75 milestones and 30 targets met, corresponding to 23% of the total.
The country recently submitted the request for the fifth tranche, and it is expected that, if the request for the sixth tranche is also approved later this year, Portugal will be able to catch up in meeting its targets.
