The European Commission gave a fresh boost to the Greek economy on Friday by approving a lifeline of 2 billion euros for the country’s businesses.
Greece had requested support in the form of loan collateral that will be granted to local banks through the Hellenic Development Bank, so as to cover loans for corporate liquidity.
The program, according to a Commission statement on Friday, is open to all Greek enterprises except for banks and businesses in the agricultural and fish farming sectors that are not included in the European Regional Development Fund.
The government measures cover loan collateral for working capital for a limited amount and period. The risk being undertaken by the state does not exceed 80 percent of the loans guaranteed, while the collateral may not cover any more than 40 percent of the total volume of loans each bank issues.
The Commission said that this minimizes the risk for the state and ensures “that support is swiftly available at favorable conditions.”
Development Minister Adonis Georgiadis told Skai TV on Saturday that the 2-billion-euro support measure will allow the domestic credit system to leverage up to 7 billion euros for funding enterprises. He said that firms will be able to start applying at banks for those loans in late April or early May, for working capital of up to 25 percent of their annual turnover.
“This Greek scheme of 2 billion euros enables the granting of guarantees on working capital loans to help Greek businesses cover immediate working capital needs and continue their activities in these difficult times. We continue working closely with Member States to ensure that national support measures can be put in place in a coordinated and effective way, in line with EU rules,” European Commission Executive Vice-President Margrethe Vestager, who is in charge of competition policy, was quoted as saying in a statement on Friday.
This decision forms part of the broader easing of the European Union’s regulatory framework on state subsidies, so as to allow the greatest possible leeway to member-states to support their economies during the coronavirus crisis.