State aid: Commission approves €181.5 million Latvian schemes to support companies in context of Russia's invasion of Ukraine
The European Commission has approved two Latvian schemes with a total budget of €181.5 million to support small and medium-sized enterprises (‘SMEs') and large companies across sectors in the context of Russia's invasion of Ukraine. The scheme was approved under the State aid Temporary Crisis Framework, adopted by the Commission on 23 March 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:
“Russia's unjustified war of aggression against Ukraine continues to negatively affect the EU economy and companies across sectors. These two schemes will enable Latvia to mitigate the liquidity shortages that SMEs as well as large companies are facing due to the current geopolitical crisis and the related sanctions. 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 Latvian measures
Latvia notified to the Commission under the Temporary Crisis Framework two schemes with a total budget of €181.5 million to support SMEs and large companies across sectors in the context of Russia's invasion of Ukraine.
Under these measures, which will be administered by the State-owned Joint Stock Company and Latvian public development bank Altum, the aid will take the form of (i) guarantees on new loans and leases; and (ii) subsidised loans.
In light of the high degree of economic uncertainty caused by the current geopolitical situation, the schemes are aimed at ensuring that sufficient liquidity remains available to the companies in need.
The measures will be open to companies across sectors with the exception of credit and financial institutions.
As regards the guarantees, they will cover up to 90% of the loan or lease principal. Losses will be sustained proportionally by the credit institutions and the State. The estimated budget for this measure is €22.5 million.
When it comes to subsidised loans, they will be granted directly by Altum. The budget for this measure is €159 million.
Both the maximum loan or lease amount covered by a public guarantee and the maximum subsidised loan per beneficiary will be equal to either (i) 15% of its average total annual turnover over the last three closed accounting periods; or (ii) 50% of the energy costs incurred over a 12-month period preceding the application for aid. Exceptionally, when the beneficiaries are start-ups or companies with low or no turnover in 2019 and 2020 heavily affected by the current crisis, the amount of the loan or lease may be increased to cover their liquidity needs (i) for a 12-month period for SMEs; and (ii) for a 6-month period for large enterprises.
The Commission found that the Latvian schemes are in line with the conditions set out in the Temporary Crisis Framework. In particular, (i) the maturity of the guarantees and loans will not exceed six years; (ii) the guarantee premiums and the reduced interest rates respect the minimum levels set out in the Temporary Crisis Framework; and (iii) the support will be granted no later than 31 December 2022.
Furthermore, the aid in the form of guarantees is subject to safeguards to ensure that the advantages of the measure are passed on to the largest extent possible to the final beneficiaries via the financial intermediaries.
The Commission concluded that the Latvian schemes are 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 measures under EU State aid rules.
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