What a relief: Spain’s government considers debt relief for businesses hit by pandemic restrictions – Olive Press News Spain

What a relief: Spain’s government considers debt relief for businesses hit by pandemic restrictions – Olive Press News Spain

THE Spanish government is considering debt relief measures to help companies weather the coronavirus pandemic storm.

Last year, aid was focused on furlough schemes and a state-backed loan guarantee programme.

This has helped push state debt up to an estimated 120% of GDP. Now there is a growing realisation that  the emphasis of government help will need to change as pandemic restrictions drag on and a vaccine roll-out is stalled.

DEBT RELIEF: Pedro Sanchez considering next move

With Spanish bankruptcy laws cumbersome and often leading to the demise rather than rescue of struggling businesses, the aim of inter-departmental negotiations is to save businesses that have a good chance of survival once the crisis is over, according to media reports.

READ MORE  New Year's Eve curfew bans gatherings in Gibraltar amid COVID-19 surge

One proposal would excuse a portion of the debt borrowed through Spain’s state-backed loan guarantee programme that was rolled out last year.

Another being considered is to use state guarantees to encourage banks to offer companies participatory loans, sources said.

Such subordinated debt is treated as similar to equity and improves the financial situation of a company by reducing its debt ratio. This means banks are more likely to either lend more cash or hold off forestalling on loans.

Source link

Be the first to comment

Leave a Reply

Your email address will not be published.


*