Spain's King Felipe VI (saluting), Queen Letizia (2nd from right) and their daughters Spanish Crown Princess Leonor and Princess Sofia attend Spain's National Day ceremony at the Royal Palace of Madrid. It comes after the Spanish government declared a state of emergency in Madrid to try and halt the spread of coronavirus in one of Europe's most significant outbreaks. Photo: AFP

The Spanish government is increasingly under fire over its use of the European Union's massive economic recovery funds, with critics blasting the distribution of aid as too slow and arbitrary.

Spain is due to receive 140 billion euros ($160 billion) from the fund by 2026, half of it in grants, making it the program's second-biggest beneficiary after Italy.

The landmark 800 billion euro recovery plan was approved by Brussels in July 2020 to help the bloc rebound from the impact of the COVID-19 pandemic, and make its economy greener and more digitalized.

"We are talking about extraordinary amounts," Socialist Prime Minister Pedro Sanchez said earlier in January, calling the funds "a historic opportunity for Spain."

Spain and Portugal were the first nations to receive money, with Madrid collecting 19 billion euros during the second half of 2021. The funds are at the heart of the economic and political strategy of Sanchez's government after the economy contracted by a whopping 10.8 percent in 2020 under its watch as the pandemic hit.

The government faces elections by the end of 2023.

But some business leaders and opposition parties have complained about a lack of coordination between the central government and Spain's powerful regions over the deployment of the money.

Although Spain was the first to receive aid, the money was "not injected" as fast as expected in the "real economy," the CEOE employers' association said in a report in early January.

By the end of the year, only 38 percent of the funds allocated to Spain for 2021 had been used, official figures show.

This is "very far from the targets" that were set and the delay in using the aid will hamper growth, think tank Funcas has warned. Aerospace giant Airbus complained of a lag in the allotment of the funds, citing a "lack of coordination and leadership" from the responsible ministries, according to an internal memo published in El Pais newspaper in December.

Critics also say that even when the money is distributed, it is often not well spent, with small amounts spread across many projects.

"The current assignment system for the funds" leads to their "dispersion" and favors "little projects," some of them "a bit odd," said the Exceltur tourism association's vice president, Jose Luis Zoreda.

He cited as an example a golf course in the rainy northern region of Asturias. To have a "real impact," the funds should focus on "a few large projects" with a strong potential to "transform" the Spanish economy, he added. The row has in recent days become political, with the right-wing opposition Popular Party (PP) accusing the government of favoring regions and municipalities run by the left.

"Two years ago we proposed setting up an independent agency for managing EU funds" as happened in Greece, Italy and France, PP leader Pablo Casado said.

"But Sanchez preferred to distribute aid arbitrarily," he charged. Casado and several right-wing regional leaders have threatened to take the government to court over the distribution of the EU money, accusing it of "favoritism."