Spain announces €11 billion package, haircuts for state backed loans mooted

Spain’s Prime Minister Pedro Sanchez announced on Wednesday an additional 11 billion euro ($13.4 billion) package for small and mid-sized companies and the self-employed to help them cope with the economic crisis due to the coronavirus pandemic.

He did not elaborate further, but a government source said the plan, whose details were still being discussed with the Bank of Spain and the banking sector, would include haircuts for state-back loans and recapitalisation of SMEs.

That would aim to bolster corporate solvency after the Spanish government initially provided mainly state-backed loans, while the sectors most hit by the crisis, including restaurant owners, demanded direct aid.

“We don’t just want to save businesses and jobs. We want to create new businesses and jobs,” Sanchez told parliament.

The Bank of Spain declined to comment.

Several sources had told Reuters earlier this month that the government was preparing this new set of measures to support companies.

Spain has been one of the countries most hit by the pandemic with more than 3 million cases and more than 68,000 deaths, although coronavirus incidence slipped below 250 cases per 100,000 people – for the first time in two months on Tuesday.

The tourism-dependent economy shrank a record 11% last year, driving unemployment up to 15.5%.