Commission approves Latvian measures of eur 181.5 million in support of companies in connection with Russian invasion in Ukraine
The European Commission has approved two Latvian support measures with a total budget of eur 181.5 million for small and medium-sized enterprises (“SMEs”) and large companies in various sectors related to the invasion of Russia in Ukraine. The measures were approved under State aid temporary regulation of the crisis, adopted by the Commission on 23 March 2022, on the basis of Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU), recognising that THE EU economy is facing serious disturbance.
Vice-President of the Commission Marsinte Westagerin charge of competition policy, he said:
Russia's unjustified aggression war against Ukraine continues to negatively affect THE EU economy and businesses in various sectors. These two measures will allow Latvia to reduce the liquidity gap faced by both SMEs and large enterprises due to the current geopolitical crisis and related sanctions. We continue to support Ukraine and its citizens. At the same time, we continue to work closely with Member States to ensure that State aid measures can be implemented in a timely, coordinated and effective manner while protecting a level playing field in the single market.
Latvian measures
In accordance with the interim framework of the crisis, Latvia notified the Commission of two measures with a total budget of eur 181.5 million IN support OF SMEs and large companies in various sectors related to the invasion of Russia in Ukraine.
In accordance with these measures, which will be managed by the State stock company and the Latvian State Development Bank Altum, the aid will be provided as (i) guarantees for new loans and leases, and (ii) subsidised loans.
In view of the high economic uncertainty caused by the current geopolitical situation, the measures aim to ensure that sufficient liquidity is still available to the companies that need it.
The measures will be available to businesses in different sectors, with the exception of credit institutions and financial institutions.
Guarantee cover up to 90 % of the principal amount of the loan or lease. The losses will be proportionately covered by the credit institutions and the country. The estimated budget for this measure is eur 22.5 million.
The subsidised loans will be granted directly to Altum. The budget of this measure is eur 159 million.
Both the maximum amount of the loan or lease covered by the State guarantee and the maximum amount of the subsidised loan per beneficiary will be either (i) 15 % of its average total annual turnover in the last three closed reference periods, or (ii) 50 % of the energy costs incurred within 12 months of the submission of the aid application. Exceptionally, if the beneficiaries are start-ups or companies with little or no turnover in 2019 and 2020, which are badly affected by the current crisis, the amount of the loan or lease can be increased to cover liquidity needs (i) 12 months IN THE case OF SMEs and (ii) 6 months for large enterprises.
The Commission found that Latvian measures are in line with the conditions of the temporary regulation of the crisis. In particular, (i) guarantees and loans will not exceed six years; (ii) guarantee premiums and reduced interest rates correspond to the minimum levels laid down in the provisional crisis framework, and (ii) the aid will be granted no later than 31 December 2022.
In addition, aid in the form of guarantees is subject to safeguards to ensure that the benefits of the measure are transferred as much as possible to final beneficiaries with financial intermediaries.
The Commission concluded that the measures taken by Latvia are proportionate, appropriate and necessary to prevent serious disturbance in the economy of a Member State under Article 107(3)(b) TFEU and the conditions of the provisional regulation of the crisis.
On this basis, the Commission approved the compatibility of the aid measures with EU State aid rules.