Brussels, 1 August 2022 (TDI): The European Commission has an Italian scheme of €2.9 billion. This is to support the liquidity needs of companies in the context of Russia’s invasion of Ukraine.
#EUStateAid #StandWithUkraine Commission 🇪🇺 approves €2.9 billion Italian 🇮🇹 scheme to support companies in the context of Russia’s invasion of #Ukraine ⬇️https://t.co/dfF9LxI0Ay pic.twitter.com/uJo9fSjTSJ
— EU Competition (@EU_Competition) July 29, 2022
Italy will be able to support affected sectors as well as the companies with the help of this scheme. These will particularly include the smaller ones by ensuring that sufficient liquidity remains available to them.
The Commission adopted the State Aid Temporary Crisis Framework on 23 March 2022 and later amended it on 20 July 2022 based on Article 107(3)(b) TFEU. This was because the Commission recognized that the EU economy is experiencing a serious disturbance. The Italian Scheme works under the same framework.
Under the framework, Italy notified the Commission that in the context of the Russian invasion of Ukraine. This scheme will provide liquidity support to small and medium-sized enterprises as well as the mid-caps.
The Scheme also aims to ensure that there is enough liquidity available to the affected enterprises despite the high level of economic uncertainty brought on by the current geopolitical crisis by allowing banks to keep lending to the actual economy.
According to the plan, assistance will be provided in two ways. One is the direct grants to cover the guaranteed premiums. The other guarantees cover a portion of new qualified loans made by commercial banks.
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Luxuries for Beneficiaries
The qualified beneficiaries will get new loans with maximum maturities of up to eight years as well as State guarantees of up to 90% of the loan amount. According to the Commission, the Italian plan complies with the guidelines outlined in the Temporary Crisis Framework.
Conditions limiting excessive competition distortions are related to public backing. These will have the measures to guarantee that the benefits of the measure pass on to the final beneficiaries. These benefits will pass through financial intermediaries to the greatest extent practicable.
The Commission concluded that the Italian scheme is necessary to address substantial disruption in the economy of a Member State. This was according to Article 107(3)(b) TFEU besides the criteria outlined in the Temporary Crisis Framework.
