The European Commission has approved a €790 million Croatian liquidity guarantee scheme for export-oriented companies affected by the fallout of the coronavirus pandemic, saying that it is in accordance with EU state aid rules.
"This Croatian guarantee scheme of approximately €790 million will support companies with a certain amount of export activities in these difficult times. We continue to work in close cooperation with Member States to find workable solutions to mitigate the economic impact of the coronavirus outbreak, in line with EU rules," Margrethe Vestager, Executive Vice-President in charge of competition policy, said on Tuesday.
Croatia notified to the Commission under the Temporary Framework a HRK 6 billion (approximately €790 million) loan guarantee scheme targeted at certain companies affected by the coronavirus outbreak.
The support, in the form of State guarantees on loans, will be accessible to all companies whose exports represent at least 20% of their yearly revenue. The guarantees will support lending to those companies, but will not take the form of export aid contingent on export activities, the Commission said.
The scheme aims at limiting the risk associated with issuing operating loans to those companies that are most severely affected by the economic impact of the coronavirus outbreak, thus ensuring the continuation of their activities.
The Commission found that the Croatian measure is in line with the conditions set out in the Temporary Framework. In particular, it covers guarantees on operating loans with a limited maturity and size. It also limits the risk taken by the State to a maximum of 50%. This ensures that support is available at favourable 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 channelled by the banks or other financial institutions to the beneficiaries in need.
The Commission therefore concluded that the Croatian guarantee scheme for exporting companies will contribute to managing the economic impact of the coronavirus outbreak in Croatia. 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 and the conditions set out in the Temporary Framework, the Commission said.
The Temporary Framework, recently adopted by the Commission, enables Member States to use the full flexibility foreseen under State aid rules to support the economy in the context of the coronavirus outbreak.