URGENT ECONOMIC AND SOCIAL MEASURES ADOPTED BY SPAIN TO PROTECT FAMILIES, WORKERS, SELF-EMPLOYED PEOPLE AND FIRMS AFFECTED BY COVID-19

March 18th, 2020

As a response to the extraordinary situation and the reinforced contention measures decided by the declaration of the State of Alarm last Saturday March 14th, the Government of Spain has adopted yesterday a second package of comprehensive economic and social measures, mobilizing up to 112 billion in guarantees and an estimated 5 billion in expenditure. These measures could mobilize up to EUR 200 billion of liquidity in support to companies affected by coronavirus.

Exceptional measures will be applicable for 1 month, which can be extended if the reinforced containment measures persist.

These measures are aimed at:

• Ensuring the liquidity of companies through the extensive provision of loans and guarantees in favourable conditions,
• Facilitating a flexible framework for companies to adjust through short term employment schemes to avoid job losses and closures,
• Protecting the income of workers, self-employed and families impacted by the virus
• Reinforcing the health sector and providing additional funds for research of a vaccine or a cure

This extremely ambitious and forthcoming package is directed to minimize the risk of defaults and lay-offs so that the economic impact is as small and transitory as possible and Spain can resume the growth path previous to the outbreak of the COVID-19 crisis.

Measures to ensure liquidity and stability

With a view to help self-employed workers, SMEs and other companies facing the drop in revenues resulting from reduced activity, specific measures are directed to support liquidity and facilitate bureaucratic procedures:

• The Government will open a new line of guarantees via the national development bank (Instituto de Crédito Oficial) of up to EUR 100 billion so that the financial sector provides liquidity to firms and self-employed workers to fund working capital, payment of bills and other needs to maintain operations and protect economic activity and employment.
• Furthermore, the Instituto de Crédito Oficial is allowed to increase its funding by EUR 10 billion to extend its existing lines of credit to companies and self-employed workers.
• Additional guarantees of up to EUR 2 billion through the Spanish Export Insurance Credit Company (CESCE), for financial institutions to provide new working capital credit to export companies.
• Public contracts affected by COVID-19 will be suspended and compensations foreseen for certain cases in order to avoid termination of contracts leading to companies exiting the market
• Procedural and administrative requirements for companies are facilitated: for the holding of shareholder and management meetings, preparation of financial statements, and extension of deadlines for the submission of certified documentation. Deadlines for insolvency declarations as well as for tax filing procedures and requirements are also extended.

Measures to add flexibility to the economy, protect employment and support workers

The following measures facilitate capacity adjustment to respond temporary activity and liquidity shortage and encourage the protection of employment:

• Temporary employment adjustment schemes (ERTE) are significantly simplified.
• Extension of access to temporary employment adjustment schemes (ERTE), contingent on maintaining employment.
• Exemption of Social Security contributions directed to maintain employment in temporary employment adjustment schemes (ERTE) due to COVID -19.
• An extraordinary allowance is provided for self-employed workers (autónomos) affected by the suspension of economic activity.
• Flexibilisation of working conditions, encouragement of telework and adjustment of working times. Reduced working times are permitted for workers having to take care of children, elderly or dependent persons
• Support to the digitalization of small and medium companies through grants and loans to finance investment in digital equipment or solutions for remote working conditions (programme ACELERA PYME).

Measures to support families and the most vulnerable

• One-month credit postponement on mortgage payments for the most vulnerable.
• Additional budgetary funds of EUR 300 million to ensure the provision of assistance to dependent persons.
• Additional flexibility for local authorities to use their 2019 budgetary surplus to fund social services and primary assistance to dependent persons.
• Broadened scope for protected families in the supply of water and energy, which is ensured for vulnerable groups. Telecommunication services are also guaranteed.
• The social benefit for energy provision (‘bono social’) will be automatically extended until September 15.
• No updates of maximum sale prices of liquefied petroleum gas for six months in order to avoid price increases.

Measures to support research on COVID-19

• An additional 110 million will be devoted to fund R+D+I for the development of drugs and vaccines for COVID-19.

Other measures

• Prior government authorization for third country FDI in strategic sectors
• Acceleration of custom procedures for imports and exports in the industrial sector for six months
• Guarantees for loan maturity extensions to farmers using credit lines under the special 2017 drought credit line.

Exceptional measures will be applicable for 1 month, which can be extended if the reinforced containment measures persist. Total expenditure measures amount to an estimated 5 billion euros per month.