WIREDGOV

The European Commission has approved a €1.25 billion Hungarian loan and guarantee scheme to support small and medium enterprises (‘SMEs') and large companies in the context of Russia's war against Ukraine. The scheme was approved under the State aid Temporary Crisis Framework, adopted by the Commission on 23 March 2022 and amended on 20 July 2022, based on Article 107(3)(b) of the Treaty on the Functioning of the European Union (‘TFEU'), recognising that the EU economy is experiencing a serious disturbance.

Executive Vice-President Margrethe Vestager, in charge of competition policy, recently said:

“This €1.25 billion scheme will enable Hungary to provide them with liquidity support necessary for the continuation of their activities. We continue to stand with Ukraine and its people. At the same time, 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, while protecting the level playing field in the Single Market.”

The Hungarian measure

Hungary notified to the Commission, under the Temporary Crisis Framework, a €1.25 billion loan and guarantee scheme to provide liquidity support to SMEs as well as to large companies in the context of Russia's war against Ukraine.

Under this measure, the aid will take the form of (i) loans with subsidised interest rates; and (ii) guarantees on loans granted by the Export-Import Bank Private Limited Company Eximbank (“Eximbank”), the State-owned export credit agency.

The measure will be open to companies active across sectors affected by the current geopolitical crisis, with the exception of financial institutions.

The Commission found that the Hungarian scheme is in line with the conditions set out in the Temporary Crisis Framework. In particular, when it comes to aid in the form of guarantees: (i) the maturity of the guarantees cannot exceed six years; (ii) the maximum coverage cannot exceed 90% of the underlying loan; and (iii) the guarantee premiums respect the minimum levels set out in the Temporary Crisis Framework. When it comes to aid in the form of loans: (i) the maturity of the loans cannot exceed eight years; and (ii) the interest rates on the loans respect the minimum levels (modulated by an increase reflecting the duration of the guaranteed loans) set out in the Temporary Crisis Framework; and (iii) for indirect loans, the financial intermediary will pass on the advantage to the beneficiary to the largest extent possible. Finally, the loans and guarantees will be granted no later than 31 December 2022.

The Commission concluded that the Hungarian scheme is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Crisis Framework.

On this basis, the Commission approved the aid measure under EU State aid rules.

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