Government approves new raft of measures for 50 billion euros, within framework of Agreement on Economic Reactivation and Employment

Moncloa Palace, Madrid

The extraordinary Council of Ministers approved a Royal Decree-Law on urgent measures to support economic reactivation and employment. This new raft of measures principally seeks to strengthen and speed up the recovery of the economy, now under way, following the crisis stemming from COVID-19. To that end, measures will be implemented that boost investment and support the solvency of companies, which in turn will support thousands of jobs.

These measures include the creation of a new guarantee for lines of credit from the Official Credit Institute for the sum of 40 billion euros. This new line is designed to boost investment activity and promote it in areas that create the greatest added value, based on two main cornerstones - environmental sustainability and digitalisation.

Given the high use of the previous guarantees for lines of credit (designed to cover liquidity needs, for the sum of 100 billion euros), and the optimal functioning of the model of public-private collaboration, its method of approval and management will be repeated to optimise the resources and the dispersion of the arrival of the funds to the productive fabric.

Fund to Support Solvency of Strategic Companies

The Council of Ministers also approved the creation of a Fund to Support the Solvency of Strategic Companies. This is a new instrument with a provision of 10 billion euros that seeks to provide temporary public support to enhance the solvency of non-financial companies affected by the COVID-19 pandemic. This Fund will be attached to the Ministry of the Treasury and will be managed by the State Company for Industrial Participations (Spanish acronym: SEPI), adapted to the European Commission's rules on State support.

The Fund will be structured through different instruments, such as the concession of equity loans, the acquisition of subordinated debt and the subscription of shares and other capital instruments. The amount of the dividends, interest and capital gains from these investments will be paid in to the Public Treasury.

The Fund to Support the Solvency of Strategic Companies is aimed at companies undergoing severe temporary difficulties as a result of the situation caused by COVID-19 and which are considered strategic for different reasons, such as their social and economic impact, their importance for security, public health, infrastructures, communications and their contribution to the smooth functioning of the markets.

"Renove 2020" Plan

Pool Moncloa/JM CuadradoThe Council of Ministers also approved the "Renove 2020" Plan to renew the vehicle pool. The aim of the Plan, with a provision of 250 million euros, is to stimulate demand, activate production in Spain and promote the replacement of the oldest and worst polluting vehicles.

Support under the "Renove 2020" Plan will be granted directly and will range from 300 to 4,000 euros, depending on the type of vehicle and beneficiary. An additional 500 euros will be allocated in the case of the scrapping of a vehicle that is more than 20 years old, for beneficiaries with reduced mobility and those households with monthly income below 1,500 euros. The "Renove 2020" Plan covers vehicles purchased as from 16 June 2020. The Plan will end on 31 December 2020 or until such time as the funding runs out.

It is estimated that this Plan will have an economic impact for Spain of 1.1 billion euros throughout the value chain and associated services, and that it will contribute to the maintenance of 7,400 jobs in the sector.

Support for tourism sector

The government also approved three measures to support the Spanish tourism sector. On the one hand, a financing system will be introduced for digitalisation and innovation projects in the tourism sector. The budgetary provision under the programme amounts to 216 million euros for 2020. The granting of a maximum of 1,100 loans is forecast for each financial year, with the estimated average sum of each loan standing at 200,000 euros.

In addition, the creation of an instrument known as "Sustainable Tourism Plans at Destinations" has been approved, that seeks to boost the development of tourist destinations located in rural and inland areas.

Thirdly, a mortgage moratorium has been approved for buildings associated with tourist activity, by granting a grace period of up to 12 months for financial transactions for mortgages signed with credit institutions. Independent contractors and legal persons with their registered office located in Spain may benefit from this, provided that they are experiencing financial difficulties due to the health emergency.

Non official translation