State support blueprint in three stages
The Finance Ministry is drafting a detailed plan for the support of the market that will unfold in three stages: The first will be up to March or April, the second till the end of the year and the third in 2022.
The baseline scenario, on which the blueprint is based, provides for a significant economic contraction in the first quarter of 2021, followed by a gradual return to economic normality from April, with the stabilization of the economy in the second quarter and strong growth in the second half of the year.
The first stage of the support measures includes the sixth phase of the cheap state loans program to cover the lost turnover of January and February, the extension of labor contract suspensions for as long as the enterprises concerned remain closed or harmed by the pandemic, and the suspension of tax and social security obligations up to March or even April if required.
The second stage, which is supposed to coincide with the lifting or clear reduction of restrictions, will incorporate the improvement of debt repayment schemes of 12 to 24 installments for settling dues accumulated during the pandemic, the activation of a compensation plan for the losses corporations suffered during 2020, and a subsidy program for the repayment of small and medium-sized enterprises’ corporate loans along the lines of the Gefyra program for mortgage holders.
Finally the package of measures for next year will need to be drawn up during the summer for inclusion in the 2022 draft budget.
The Finance Ministry will have to assess next year’s fiscal scope, possibly to render the loans of the first three phases of the state credit program non-returnable for certain enterprises and to continue in 2022 the government’s two emblematic pandemic measures: the reduction of social security contributions by three percentage points in total for employers and employees, and the abolition of the solidarity levy, possibly for more social groups than those enjoying it in 2021, as civil servants and pensioners have not been included.
Spreading the measures across three stages is aimed at having more cash channeled into the market immediately, and then providing targeted support from the summer for those hit hardest.
