March 17th, 2020
As a response to the extraordinary situation and the reinforced contention measures decided by the declaration of the State of Alarm last Saturday March 14th, the Government of Spain has adopted today a second package of comprehensive economic and social measures, mobilizing a total amount of EUR 117 billion. These measures will be able to leverage a total of EUR 200 billion of liquidity in support to companies affected by coronavirus.
This second package of measures is added to a first package of EUR 18 billion adopted last week, bringing the total amount of public funds provided to fight the effects of COVID-19 to over 135 billion euros.
These measures are aimed at:
- Ensuring the liquidity of companies through the extensive provision of loans and guarantees in favourable conditions,
- Facilitating a flexible framework for companies to adjust through short term employment schemes to avoid job losses and closures,
- Protecting the income of workers, self-employed and families impacted by the virus
- Reinforcing the health sector and providing additional funds for research of a vaccine or a cure
This extremely ambitious and forthcoming package is directed to minimize the risk of defaults and lay-offs so that the economic impact is as small and transitory as possible and Spain can resume the growth path previous to the outbreak of the COVID-19 crisis.
Measures to ensure liquidity and stability
With a view to help self-employed workers, SMEs and other companies facing the drop in revenues resulting from reduced activity, specific measures are directed to support liquidity and facilitate bureaucratic procedures:
- The Government will open a new line of guarantees via the national development bank (Instituto de Crédito Oficial) of up to EUR 100 billion so that the financial sector provides liquidity to firms and self-employed workers to fund working capital, payment of bills and other needs to maintain operations and protect economic activity and employment.
- Furthermore, the Instituto de Crédito Oficial is allowed to increase its funding by EUR 10 billion to extend its existing lines of credit to companies and self-employed workers.
- Additional guarantees of up to EUR 2 billion through the Spanish Export Insurance Credit Company (CESCE), for financial institutions to provide new working capital credit to export companies.
- Public contracts affected by COVID-19 will be suspended and compensations foreseen for certain cases in order to avoid termination of contracts leading to companies exiting the market
- Procedural and administrative requirements for companies are facilitated: for the holding of shareholder and management meetings, preparation of financial statements, and extension of deadlines for the submission of certified documentation. Deadlines for insolvency declarations as well as for tax filing procedures and requirements are also extended.
Measures to add flexibility to the economy, protect employment and support workers
The following measures facilitate capacity adjustment to respond temporary activity and liquidity shortage and encourage the protection of employment:
- Temporary employment adjustment schemes (ERTE) are significantly simplified.
- Extension of access to temporary employment adjustment schemes (ERTE), contingent on maintaining employment.
- Exemption of Social Security contributions directed to maintain employment in temporary employment adjustment schemes (ERTE) due to COVID -19.
- An extraordinary allowance is provided for self-employed workers (autónomos) affected by the suspension of economic activity.
- Flexibilisation of working conditions, encouragement of telework and adjustment of working times. Reduced working times are permitted for workers having to take care of children, elderly or dependent persons
- Support to the digitalization of small and medium companies through grants and loans to finance investment in digital equipment or solutions for remote working conditions (programme ACELERA PYME).
Measures to support families and the most vulnerable
- One-month credit postponement on mortgage payments for the most vulnerable.
March 10th and 12th 2020
These measures, amounting to over EUR 18 billion, have been adopted by the Council of Ministers on March 10th and 12th.
Additional measures will be adopted as needed.
Measures to strengthen the healthcare sector
- Increase by EUR 1,000 million of the Contingency Fund for the Health Ministry to cover expenditures related to increased healthcare needs.
- Financial support of EUR 2,800 million to the regions through early transfer of funds under the regional financing framework of 2020 to support additional health expenditure.
- Price intervention: possibility for the Government to set, in an exceptional public health situation, a maximum price for medicines and certain products.
Measures to support families
- Improved protection for workers under precautionary confinement and/or suffering from COVID-19: workers and civil servants under precautionary confinement or affected by coronavirus will benefit from the regime applicable to leave due to workplace accidents instead of leave due to a regular sickness. The public sector will cover the cost of the leave of these workers. The aim of this measure is to facilitate workers to follow health safety instructions, while avoiding that the costs of medical leaves are borne by families and firms.
- Supplemental credit of EUR 25 million to cover meal allowances to ensure the basic access to food for vulnerable children affected by the suspension of educational activity in schools. This measure will also help support economic activity for meal and food services providers.
- Flexibility in the school calendar.
- Publication of sectoral guidelines: (i) guidelines by the Ministry of Labour and Social Economy on how to operate in labour related aspects in the context of Coronavirus, and (ii) guidelines by the Ministry of Industry, Trade and Tourism on good practices for businesses and workers in the tourism sector.
- Measures to support the tourism sector and related activities
- Specific ICO financing facility amounting to EUR 400 million to support, through liquidity provision, firms and self-employed workers in the tourism sector affected by COVID-19.
- 50% exemption from employer’s social security contributions, from February to June 2020, for workers with permanent discontinuous contracts in the tourism sector and related activities.
- Measures to support the aviation sector: EU Commission has been requested to provide urgently flexibility for airport slots.
Measures of transitional support for firms
- Flexibilization of the tax deferral regime: possibility for SMEs and self-employed workers, upon request, to defer tax payments for six months, and benefit from interest rate subsidies. This measure will allow for an injection of up to EUR 14,000 million in the system.
- Deferral of the reimbursement of principal and/or interest of loans received from the Ministry of Industry, Trade and Tourism if COVID-19 has caused disruptions to the beneficiary firm.
Measures for the efficient operation of the public sector
- Emergency management process for the procurement of all goods and services needed by the public sector to implement any measure to address COVID-19.
- Budgetary flexibility measures in order to enable transfers between budget lines.