Spain approves 11bn-euro aid package for pandemic-hit companies

MADRID: The Spanish cabinet approved on Friday an 11 billion-euro ($13.1 billion) relief package for small- and medium-sized companies to help them weather the COVID-19 pandemic-induced crisis, including 7 billion in direct aid, the government said.

The package will also include 3 billion euros to be implemented through voluntary debt restructurings of state-backed loans granted by banks to companies hit by the pandemic - many of them in the key tourism sector - and 1 billion euros will come in the form of capital injections.

"The duration and the economic impact of the pandemic increase the risk of over-indebtedness ... By acting at the right moment we will avoid greater costs in the future," Economy Minister Nadia Calvino told reporters after the cabinet meeting.

Debt write-offs will be a measure of last resort, she said.

The relief package, which is in line with what Reuters reported on Thursday, is primarily aimed at helping companies from the hospitality sector reduce excess debt they took on to cushion the effects of restrictions on tourism and mobility in general for the past year and bolster their solvency.

As part of the strengthened support to the tourism industry, the direct aid component includes 2 billion euros for companies in the Balearic and Canary Islands, the two regions most severely hit by the tourism slump.

Direct aid, or grants, will be channeled through Spain's regions and supervised by the country's tax office.