Last week’s European Commission decision on state subsidies to pandemic-riven enterprises has triggered the Finance Ministry’s planning for a haircut on the debts from the first three phases of the cheap state loans program known as the “Deposit To Be Returned.” This has effectively allowed the government to turn a part of those loans into grants for companies.
A ministry source has told Kathimerini that the share of those loans which will be considered non-returnable will reach up to 50%. Announcements to that effect are expected in March. However, for the time being, nothing has been set in stone and ministry sources say it is too early for any pledges to be made as long as the pandemic remains in full swing and the restrictions stay in place – as budget spending is already off course. “Let’s first see where all this ends up,” they note.
In any case, the ministry’s intention is to implement cuts with specific criteria and not horizontally. The main criterion will be the decline of turnover in 2020. For the first three phases of the program the criterion was a drop of at least 10%. In the following phases the requirement rose to at least 20%, while 50% of the loans was transformed into grants.
In the first three phases there was also a provision for a share that would not be returned, of between 30% and 40%, but this only concerned companies with over 20 staff and a year-on-year drop in turnover of more than 70%.
The assistance granted over the first three phases added up to 3 billion euros; therefore a horizontal 50% write-off of the loans would cost €1.5 billion plus interest, given that these loans had very low interest. An estimated 145,000 businesses benefited from this form of support.
The anxiety of enterprises and the self-employed who received the cheap loans is growing, as the pandemic is not subsiding while pressure is growing on the state budget. Sources spoke recently of a 20% slump in state revenues in January, although the picture seems to have improved somewhat over the last few days.