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    EC Approves State Aid Schemes in the Context of COVID-19 Outbreak

    April 04, 2020

    EC approved German, Greek, Maltese, Polish, Portuguese, Spanish, and Swedish State aid schemes to support the economy in the context of the COVID-19 outbreak. The schemes were approved under the State aid Temporary Framework, adopted by EC on March 19, 2020. The Temporary Framework will be in place until the end of December 2020. EC also published questions and answers (Q&As) on the Coronavirus Response Investment Initiative Plus.

    The State aid schemes approved by EC includes the following:

    • German State Aid Scheme—Following the approval of the German measures for subsidized loans adopted on March 22, 2020, Germany notified to EC an additional support measure, under the Temporary Framework, which is implemented through the German federal and regional authorities and promotional banks. Similar to the first subsidized loan scheme, this new scheme is open to all companies of the real economy. While the initial scheme was designed in a way that subsidized loans could only be granted by the German state-owned development bank (KfW), this new scheme allows other regional authorities and promotional banks to provide support along the same lines.
    • Greek Aid Scheme—Greece notified EC a support measure in the form of guarantees on loans. The measure will be implemented through the issuance of guarantees by the Hellenic Development Bank (HDB) to financial intermediaries. The measure will partially guarantee eligible working capital loans originated by financial intermediaries.
    • Maltese State Aid Scheme—Malta notified EC, under the Temporary Framework, about a guarantee scheme for working capital loans granted by commercial banks to support companies affected by the COVID-19 outbreak. The scheme has an estimated budget of EUR 350 million.
    • Polish Aid Scheme—Poland notified EC, under the Temporary Framework, about a guarantee scheme on existing or new loans. The support constitutes the provision, by the Polish National Development Bank (Bank Gospodarstwa Krajowego), of public guarantees on investment loans and working capital loans. The scheme, which will be accessible by medium and large Polish companies active in all sectors, aims to limit the risk associated with issuing loans to companies that are most severely affected.
    • Portuguese State Aid Schemes—Portugal notified EC about two schemes under the Temporary Framework: a State guarantee scheme for investment and working capital loans granted by commercial banks and a direct grant scheme. Support under both the schemes will be accessible to SMEs and large companies facing difficulties as a result of the economic impact of the COVID-19 outbreak.
    • Spanish Aid Scheme—Following the EC approval of two Spanish guarantee schemes on March 24, Spain notified EC about a new “umbrella” scheme under the Temporary Framework. Under this “umbrella” scheme, the Spanish authorities will be able to provide liquidity support to self-employed, SMEs, and large companies in the form of direct grants, repayable advances, tax and payment advantages, guarantees on loans and subsidized interest rates for loans.
    • Swedish Aid Scheme—Sweden notified EC, under the Temporary Framework, about a guarantee scheme on new loans granted by commercial banks to support companies, mainly small and medium-size enterprises (SMEs) affected by the COVID-19 outbreak. The scheme aims to limit the risk associated with issuing loans to companies that are most severely affected by the economic impact of the current crisis.

    EC found that the German, Greek, Maltese, Polish, Portuguese, Spanish, and Swedish measures are in line with the conditions set out in the Temporary Framework. It concluded that these measures are necessary, appropriate, and proportionate to remedy a serious disturbance in the economy of the member states, in line with Article 107(3)(b) Treaty on the Functioning of the European Union and the conditions set out in the Temporary Framework. On this basis, EC approved the measures under EU State aid rules.

     

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    Keywords: Europe, Germany, Greece, Spain, Sweden, Malta, Portugal, COVID-19, Banking, SME, State Aid Rules, Temporary Framework, Credit Risk, EC

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