Spain launches € 11 billion plan in direct aid to businesses

by Belén Carreño and Jesús Aguado

MADRID, February 24 (Reuters) – Spanish Prime Minister Pedro Sanchez on Wednesday announced the launch of a new € 11 billion plan to help small and medium-sized businesses and self-employed workers affected by the crisis in coronavirus.

He did not give details but from a government source, it is explained that the terms of the plan, still under discussion with the Bank of Spain and the banking sector, should include debt forgiveness on loans guaranteed by the State and recapitalizations.

Such measures would respond to the demands of the sectors most affected by the crisis, such as tourism or catering.

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

The Bank of Spain declined to comment.

“Reaching an agreement on the terms (discounts on loans) is very complicated,” said a financial source directly informed of the progress of discussions on the project.

Another government source stressed that the measures should also be validated by the European Commission.

The implementation of discounts on guaranteed loans, which amounts to exempting the companies concerned from part of their repayments, is not considered a priority by the Spanish banking federation.

In the project under discussion, banks, which already share the cost of some guarantees with the state, should also bear part of these discounts, a source recently told Reuters.

The consulting firm Oliver Wyman, which cooperates with the Bank of Spain, estimates that the country’s SMEs need five billion euros in aid and large companies seven billion euros, but does not specify the nature of this aid, according to a source close to the project.

Oliver Wyman declined to comment.

(With Emma Pinedo, French version Marc Angrand)

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