Spain approves 11bn euros in aid to virus-hit firms

MADRID: Spain's cabinet approved Friday an 11 billion euro aid programme to help struggling small- and medium-sized firms, and self-employed workers, cope with the economic fallout from the coronavirus pandemic. The package, which seeks to prevent bankruptcies, will include 7.0 billion euros ($8.4 billion) in direct aid, Economy Minister Nadia Calvino told a news conference.

"It is a question of taking the lead to prevent possible corporate solvency problems" which could "undermine" Spain's economic recovery, she said after the measure was approved during an extraordinary cabinet meeting. This will be the first direct state aid to companies since the start of the health crisis last year. Up until now government support has taken the form of state-backed loans and a national furlough scheme.

The aid package also includes 3.0 billion euros to restructure companies' debt and one billion euros for capital injections. Spain's economy contracted sharply by 11 percent in 2020, one of the worst performers in the eurozone, with its key tourism sector battered by the pandemic.

The number of registered jobless in Spain jumped by nearly 23 percent last year to around 3.9 million, according to labour ministry figures. The country's public debt stockpile stood at 1.3 trillion euros at the end of December, up 10 percent from December 2019 as public expenditure increased and income shrank. Spain has been hard-hit by the pandemic, recording over 73,000 deaths from more than 3.1 million cases.