European Commission approves Estonian schemes to support economy in coronavirus outbreak

  • 2020-03-31
  • BNS/TBT Staff

TALLINN - The European Commission has approved two Estonian state aid schemes to support the Estonian economy in the context of the coronavirus outbreak, a press release from the Commission spokesperson's service reads.

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.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: "The 1.75-billion-euro Estonian schemes will enable the provision of public guarantees on loans and the granting of loans at favorable terms. They will help businesses cover immediate working capital and investment needs, and continue their activities in these difficult times. We continue working closely with member states to ensure that national support measures can be put in place in a timely, coordinated and effective way, in line with EU rules."

Estonia notified to the Commission two support schemes to support companies affected by the coronavirus outbreak under the Temporary Framework:

The first support scheme will be implemented and administered by the public foundation KredEx. It will be open to all companies, subject to certain exceptions defined by Estonia, for example excluding certain activities or companies active in sectors such as agriculture, tobacco, cloning and genetic modification.

The second scheme will be implemented and administered by the public Estonian Rural Development Foundation. It will be open to companies in all sectors and for the whole territory of Estonia.

Under both schemes, with a total estimated budget of €1.75 billion, the support will consist either in the provision of public guarantees on existing or new loans or in the granting of loans at favorable terms. The aim of the schemes is to help businesses cover immediate working capital or investment needs.

The Commission found that the Estonian measures are in line with the conditions set out in the Temporary Framework. In particular: (i) the underlying loan amount per company is linked to cover its liquidity needs for the foreseeable future, (ii) the guarantees will only be provided until the end of this year, (iii) the guarantees are limited to a maximum six-year duration, and (iv) guarantee fee premiums and interest rates do not exceed the levels foreseen by the Temporary Framework.

The Commission concluded that the measures are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state, in line with Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU) and the conditions set out in the Temporary Framework.

On this basis, the Commission approved the measures under EU state aid rules.