RIGA - The European Commission (EC) has found Latvian loan guarantee scheme and subsidized loan scheme for companies affected by coronavirus outbreak to be in line with EU State aid rules, LETA learned from the EC representation in Latvia.
The schemes were approved under the State aid Temporary Framework to support the economy in the context of the Covid-19 outbreak adopted by the Commission on March 19, 2020.
EC Executive Vice-President Margrethe Vestager, in charge of competition policy, said: "With these two measures Latvian companies affected by the coronavirus outbreak can mitigate the current extremely difficult situation. The Latvian schemes of EUR 250 million are an important contribution to reaching this objective. With this decision we continue working with Member States to ensure timely, coordinated and effective action under the new State aid Temporary Framework.”
Latvia notified to the Commission a subsidized loan scheme and a loan guarantee scheme for companies affected by the coronavirus outbreak under the Temporary Framework. The overall budget for the subsidized loan scheme is EUR 200 million, out of which EUR 50 million is envisaged from the State budget and the rest from the international financial institutions. The amount envisaged in the State budget for the loan guarantee scheme is EUR 50 million. It is expected to be leveraged and cover guarantees worth over EUR 200 million.
The schemes aim at enhancing the access to external financing for those companies that are most severely affected by the economic impact of the coronavirus outbreak. The objective of the measures is to ensure that these companies can continue their activities faced with the difficult situation caused by the coronavirus pandemic.
The Commission found that the Latvian measures are in line with the conditions set out in the Temporary Framework.
In particular, they entail guarantees at reduced guarantee fees on loans with limited maturity and size. The measures limits the risk per loan taken by the State to a maximum of 50 percent; and working capital loans at reduced interest rates with limited maturity and size.
This ensures that support is swiftly available at favorable conditions and limited to those who need it in this unprecedented situation. To achieve this goal, the measures also involve minimum remuneration and safeguards to ensure that the aid is effectively channeled to the beneficiaries in need.
The Commission concluded that that the Latvian loan guarantee scheme and subsidized loan scheme will contribute to managing the economic impact of the coronavirus in Latvia. The measures are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State.
On this basis, the Commission approved the measures under EU State aid rules.