Belgium, (Brussels Morning Newspaper) The European Commission has approved Croatia’s state aid scheme worth up to 500 million euros aimed at supporting the economy.
The EC pointed out in a statement on Thursday that it approved the scheme under the Temporary Crisis Framework, noting that the war in Ukraine is disrupting the EU economy.
Margrethe Vestager, European Commissioner for Competition, noted “in a period during which the functioning of the market is severely disturbed, this up to 500 million euro Croatian scheme will ensure that sufficient liquidity remains available to those companies affected by the current geopolitical crisis by incentivizing lending by private banks.”
She stressed that the EC “continues to stand with Ukraine and its people,” adding that it wants to help EU member states to implement measures that do not undermine competition.
The scheme will provide aid to companies in all sectors that are affected by the crisis with the exception of financial institutions.
According to the plan, the Croatian Bank for Reconstruction and Development (HBOR) is to provide aid in the form of subsidized loans, direct loans, or interest rate subsidies.
Measure to maintain solvency
The move is aimed at incentivizing commercial banks to continue lending to companies affected by the crisis at a time when the market is disturbed.
The EC pointed out that the Croatian scheme is in line with EU rules, noting that aid to agricultural companies will not exceed 35,000 euros per company and aid to other companies is limited to 400,000 per company.
It added that the maturity of loans under the scheme is limited to 6 years, and interest rates are in line with the Temporary Crisis Framework and will be signed by the end of the year.
The Commission noted that companies in sectors severely affected by EU sanctions may be provided with more aid. Loans to such small and medium-sized enterprises (SMEs) may cover their solvency needs for 12 months and loans to larger companies for up to 6 months.
The EC concluded that the proposed scheme is appropriate, proportionate, and necessary to address the economic disturbance caused by the war in Ukraine and EU sanctions imposed against Russia.