Executive Vice-President of the European Commission Margrethe Vestager presented on Friday at a press conference the Solvency Support Instrument aimed at helping businesses across Europe amid the coronavirus pandemic
MOSCOW (Pakistan Point News / Sputnik - 29th May, 2020) Executive Vice-President of the European Commission Margrethe Vestager presented on Friday at a press conference the Solvency Support Instrument aimed at helping businesses across Europe amid the coronavirus pandemic.
"Today, I'd like to present the Solvency Support Instrument. I have worked closely with my colleague, [European Commissioner for Economy] Paolo Gentiloni to develop this instrument ... The Solvency Support Instrument will enable equity support to businesses all over Europe. It will be focused where businesses are most in need of support as a result of the pandemic," Vestager said, as quoted by the European Commission in a press release.
According to the current estimates, Europe's businesses will need 720 billion euros ($800 billion) this year to replace lost equity or they will face insolvency putting millions of jobs at risk, and threatening the EU's ability to recover from the crisis.
"Here the Solvency Support Instrument can provide a guarantee for the fund to cover possible losses. This would give an incentive for the investment fund to take a higher risk and support the manufacturer, even in these uncertain times. This also makes it possible for the investment fund to attract other private investors," Vestager added.
The vice-president also said that different member states' financial markets and different sized companies need different solutions. The proposed instrument leaves a lot of freedom for the European Investment Bank (EIB) Group to develop these different solutions working through existing entities equity funds or investment vehicles or newly established intermediaries, specifically for this purpose.
"The proposal aims to mobilise 300 billion euros for equity investments in viable businesses through the European Fund for Strategic Investments. Part of the guarantee will already be available this year. The goal is to crowd in significant private investment in equity of companies. This is a temporary instrument, because it is aimed to help out in this crisis," Vestager stated.
Earlier this week, European Commission President Ursula von der Leyen announced another plan worth 750 billion euros to support the EU member countries' economies amid the pandemic Next Generation EU. It, in particular, includes 500 million that will be issued in grants and the remaining 250 billion in loans.
