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European Commission gives go-ahead for Economic Stabilisation Fund
The European Commission has today approved the Economic Stabilisation Fund (WSF) as the overarching regulatory framework for the granting and execution of stabilisation measures. From now on, recapitalisation measures under the WSF of up to €250 million as well as WSF guarantees no longer need to be separately notified to the European Commission. Applications can be submitted to the Federal Ministry for Economic Affairs and Energy.
Economic Affairs Minister Peter Altmaier said: “Now that we have got the go-ahead from Brussels, we can jump-start the Economic Stabilisation Fund. It will allow us, in particular, to help larger companies, family-owned businesses and SMEs better as they try to weather the impact of the coronavirus pandemic. After all, if we want to secure prosperity and employment in Germany, we must preserve the substance of our economy. The Economic Stabilisation Fund provides us with valuable tools for this effort. I would like to extend my thanks to the European Commission for its support and constructive cooperation.”
Minister of Finance Olaf Scholz said: “The Federal Government is doing everything it can to usher Germany quickly out of the crisis. A lot of measures have already been implemented and have proven to be successful. Now the European Commission has given the go-ahead for the Economic Stabilisation Fund, which is a key element of the Federal Government’s support programme. The financial scope of the Fund is sufficient to protect our economy, jobs and companies. This is good news for all businesses that have been facing difficulties as a result of the coronavirus crisis through no fault of their own, and for their employees.”
The Economic Stabilisation Fund serves to stabilise companies from across the real economy which have been facing difficulties as a result of the coronavirus pandemic through no fault of their own and for which other aid is not applicable or sufficient. The scope of application of the WSF also extends to a large number of medium-sized businesses. In certain circumstances, smaller companies may also get access to the Fund.
The WSF, which paves the way for swift, targeted and temporary stabilisation measures and has a total volume of up to €600 billion, is intended to prevent the pandemic from inflicting long-term harm on the economy or society. An amount of up to €400 billion has been earmarked for the purpose of insuring liabilities by means of federal guarantees. Up to €100 billion has been allocated to recapitalisation measures aimed at strengthening companies’ equity. The Fund thus helps businesses to consolidate their capital base and overcome any cash-flow problems. A further €100 billion is available to refinance the KfW Special Programme, yet another instrument launched in response to the crisis.
On 24 March 2020, the Federal Government had notified the Act to Establish an Economic Stabilisation Fund as state aid legislation to the European Commission. It went on to flesh out this legislation after the Commission extended the Temporary Framework for State aid measures to support the economy, thus laying the foundation for the implementing ordinance.
The ordinances required for the processing and approval of applications under the WSF will be published in the near future.
Decisions on WSF stabilisation measures are generally taken by the Federal Ministry of Finance in consensus with the Federal Ministry for Economic Affairs and Energy. Besides serving as a contact point for interested companies for all questions relating to the WSF, the Federal Ministry for Economic Affairs and Energy is in charge of reviewing the applications.
For more information about the WSF and the application process, please visit www.wsf.bmwi.de (in German).