Spain plans direct aid of 11 billion euros to help businesses affected by COVID


MADRID (Reuters) – Prime Minister Pedro Sanchez on Wednesday announced an additional 11 billion euros ($ 13.4 billion) to help Spain’s small and medium-sized businesses and the self-employed cope with the economic crisis caused by the coronavirus pandemic.

FILE PHOTO: Spanish Prime Minister Pedro Sanchez arrives at a press conference, amid the coronavirus disease pandemic (COVID-19), at Moncloa Palace, Madrid, Spain December 29, 2020. Javier Soriano / Pool via Reuters

He gave no details. A government source said the plan, the contents of which were still under discussion with the Bank of Spain and the banking sector, would include haircuts for state-guaranteed loans and recapitalizations for SMEs.

This would be in line with what the sectors hardest hit by the crisis, including restaurateurs, have demanded, providing them with direct aid after the Spanish government initially provided mostly state-guaranteed loans and holidays.

“We don’t just want to save businesses and jobs. We want to create new businesses and new jobs, ”Sanchez told Parliament.

The Bank of Spain declined to comment.

Another government source told Reuters the goal was to help businesses deal with the pandemic, but the exact instruments were still being worked out.

“Agreeing on the details (of the hairstyles) is very complicated,” said a financial source with first-hand knowledge of the package talks.

A third government source pointed out that this would also require the approval of the European Union’s executive board anyway.

Several sources told Reuters earlier this month that the government was preparing this new package of measures.

In November, Madrid extended its € 140 billion ICO liquidity plan until June, but that was not enough to offset the impact of the third wave of the pandemic on heavily indebted companies.

The European Commission has authorized member state governments to temporarily provide direct aid and convert part of the debt into grants to support their economies during the pandemic.

The implementation of haircuts on ICO loans is a controversial issue, and the Spanish banking association has said these measures are not a priority.

As part of the plan being discussed, banks, which already share some guarantees with the state under the program, would also share some of those losses, a source told Reuters recently.

Consulting firm Oliver Wyman worked with the Bank of Spain on assessing the financial needs of companies and found that SMEs needed € 5 billion while large companies needed € 7 billion support, without saying whether they were direct injections of liquidity or haircuts. , according to a source with knowledge of the process. Oliver Wyman declined to comment.

Spain’s hotel industry has complained that it does not receive the same aid as in other EU countries, highlighting reductions in value added tax for the restaurant sector in Germany or a reduction in social charges in France.

Spain is one of the countries most affected by COVID-19. Its tourism-dependent economy shrank a record 11% last year.

($ 1 = 0.8224 euros)

Reporting by Emma Pinedo, Belén Carreño and Jesús Aguado; Editing by Ingrid Melander and Mark Heinrich

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