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WRAPUP – SEE governments take first steps to back economy amid Covid-19 outbreak

WRAPUP – SEE governments take first steps to back economy amid Covid-19 outbreak Source: SeeNews, pixabay

SOFIA (Bulgaria), March 25 (SeeNews) – The scale and speed of spread of the Covid-19 pandemic, its devastating impact on the global economy caught businesses in Southeast Europe (SEE) unprepared, bringing whole sectors to the verge of collapse and sparking concerns how much pressure they can endure.

To mitigate the blow, governments in the region adopted relief packages comprising zero-rate loans, deferrals on loan and tax payments and incentives for preserving jobs. At the same time, the governments and central banks came up with steps to ensure the stability of banks in the region.

Following is a wrapup of the measures taken by governments in SEE to back businesses and ensure the stability of the banking system by March 24 included.

ALBANIA

Albania’s government prepared a $370 million (341.3 million euro) relief package to support the coronavirus-affected sectors of the economy, boost health expenditures and help people in need. Large enterprises will get a $100 million aid package, while $65 million will go to small and medium-sized enterprises (SMEs). All interest levied on past-due electricity bills will be scrapped for businesses and individuals affected by the spread of the virus. The deadline for payment of profit tax by businesses with annual turnover of $20,000 to $140,000 is postponed to the second half of the year.

BULGARIA

Bulgaria will introduce a package of financial measures worth 4.5 billion levs ($2.5 billion/2.3 billion euro) to support businesses under strain from the coronavirus disease (COVID-19) and preserve jobs, prime minister Boyko Borissov said. The measures include  increasing the capital of state-owned Bulgarian Development Bank (BDB) to help businesses affected by the COVID-19 pandemic, government-backed payment of 60% of the salaries of employees who might otherwise be fired, delaying the payment of annual corporate tax until June 30 and offering interest-free loans to workers put on leave. The government will increase the capital of BDB by 500 million levs, which will serve as a guarantee that businesses will receive credits in the amount of 2.5 billion levs. 

CROATIA

Croatia's central bank cut the mandatory reserves requirement to 9% from the current 12% in order to provide the banking system with more liquidity. The move will reduce the volume of total mandatory reserves by 10.45 billion kuna ($1.48 billion/1.37 billion euro). Furthermore, Croatia's central bank barred local lenders from distributing dividend for last year in order to make sure that the liquidity of the banking system will support the domestic economy. Commercial banks are also expected to refrain from distributing various additional remunerations, including bonuses and severance payments. The HNB is also postponing certain supervisory activities such as stress-tests.

At the same time, Croatia's parliament approved legislative changes aimed at letting state-owned development bank HBOR and commercial banks freeze and delay loan repayments, as well as provide financing for working capital and for restructuring of existing loans, including loans for financing the payment of salaries, overhead costs and other basic operating costs. The financial package is worth 30 billion kuna, prime minister Andrej Plenkovic said. The government will finance 100% of the costs related to the payment of minimum net wages if companies do not lay off workers. The package also includes special measures to support the tourism sector, such as deferral of payment of taxes to the state and municipalities, increased funding for micro and small entrepreneurs and for working capital, and faster payment of funding approved under EU projects, among others.

MONTENEGRO

Montenegro's government introduced a three-month moratorium on the repayment of loans to banks, financial leasing companies and the Investment-Development Fund of Montenegro (IRF). Moreover, the government has introduced a 3 million euro ($3.3 million) credit line with an interest rate of 1.5% to back companies active in the delivery of medicines, medical equipment and vehicles, tourism and catering, transport, services, as well as food production and processing. The payment of leases for state-owned real estate was also postponed by 90 days, while the launch of all types of public procurement procedures except for those necessary for the functioning of the health system were banned.

NORTH MACEDONIA

North Macedonia plans to borrow almost 600 million euro to ensure budget liquidity and maintain employment during the coronavirus crisis, finance minister Nina Angelovska said. Skopje will borrow some 400 million euro through a bridge-to-bond facility with a term to maturity of up to 12 months. The government will also borrow 87 million euro from the International Monetary Fund (IMF) and 100 million euro from the World Bank. The government said last week it would provide nearly 12 million euro worth of zero-interest loans to micro, small and medium-sized enterprises (MSMEs) affected by the coronavirus. Skopje is also in talks with the European Investment Bank (EIB) to relocate an additional 50 million euro that will be available to companies in the form of interest-free loans.

ROMANIA

Romania's government decided to raise the ceiling for credit guarantees for SMEs affected by the coronavirus crisis by 5 billion lei ($1.11 million/1.03 million euro). Depending on the financing needs of SMEs, the ceiling can be increased even further, to 15 billion lei, prime minister Ludovic Orban said. "Basically, we are guaranteeing loans for investments and for working capital. Interest is 100% subsidized. Also, the guarantee will cover 90% of loans of up to one million lei and 50% for credits of over 1 million lei," Orban said. The government has also decided to cover 75% of the salary of employees sent into technical unemployment and allocate almost 2% of GDP to support sectors affected by the coronavirus epidemic.

Romania has also asked the European Bank of Reconstruction and Development for assistance in developing and implementing a post-coronavirus economic development strategy.

SERBIA

Serbia's government plans to provide up to 4.5 billion euro ($4.9 billion) in support for businesses, primarily tourism, services and agriculture, president Aleksandar Vucic has said without specifying in what form the support will be made available. The government will provide assistance only to companies who retain their employees, Vucic also said.


SLOVENIA

Slovenia's government is drafting an estimated 2 billion euro stimulus package for businesses and individuals with a focus on preserving jobs. According to the draft legislation that is being prepared, the government will co-finance until the end of May the salaries and social contributions of all workers who have been sent home, awaiting to resume work, with an option to extend this period if the current state of affairs persists. All employees unable to work due to force majeure caused by the coronavirus crisis such as urgent need to provide childcare will be treated as equal to the above mentioned group of workers. In addition, workers who lose their jobs during the crisis, will automatically start receiving unemployment benefits from the first day of their redundancy. Self-employed workers who are unable to do their business in the current situation will be eligible to receive up to 70% of Slovenia's minimum net monthly salary, with the government also taking over the payment of their health and pension contributions. The measures also aim to improve the social state of retirees, especially those with lower pensions, via the payment of solidarity supplement due to the coronavirus.

Moreover, the government has prepared a set of measures to support the liquidity of local businesses and to provide financial support to health research projects. The measures also include specific support to agriculture companies. At the same time, the salaries of all public office holders will be reduced by 30% for the period of the crisis. All fees and remunerations of supervisory board members at state-controlled companies will be also cut by 30%. The Slovenian government said it has adopted draft legislative changes allowing the deferral of loan repayment for a period of 12 months, as banks and borrowers could also settle upon a longer or shorter delay that would be more favourable to the borrower.

($=0.92550 euro)

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