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Thursday, June 30, 2022

Govt adopts sixth coronacrisis package

The government has adopted the sixth legislative package meant to alleviate the impact of the coronacrisis on businesses and residents, extending once more the furlough scheme subsidies, measures to help liquidity and help with funding of fixed expenses. The package will be presented in more detail on Wednesday.

The government adopted the package, valued at around EUR 1 billion, late on Tuesday in a correspondence session convened immediately after the legislation was presented to the social partners at a session of the Economic and Social Council.

Most of the measures that are being extended or introduced anew will remain in force until the end of the year with the possibility of extension. Some will be in place until mid-2021 or even until the end of next year.

“By extending existing measures and putting in place some new measures in the financial segment, we want to preserve jobs and keep the economy at a level that will allow it to work with full steam when the crisis is over,” Finance Minister Andrej Šircelj told the press on Wednesday.

The pay subsidies for furloughed workers, which have been in place since the spring, are being extended until the end of January. No extension is foreseen after that for now, but the subsidies are to be higher than at present.

The government is also extending by six months subsidies for pay of workers working part time, a measure that has been in place since June. Pay compensation for those in quarantine and parents looking after a quarantined child are being extended until the end of June.

One of the most awaited measures in this package, and one that Economy Minister Zdravko Počivalšek highlighted as the key measure, is the compensation of fixed expenses to businesses whose revenue declined significantly due to the epidemic.

For the last three months of this year, companies with a revenue decline of over 70% will be eligible for compensation equalling 1.2% of their annual income per month; those whose revenue declined by between 40% and 70% will get 0.6% per month.

Overall, compensation will be capped at EUR 1,000 per employee per month or EUR 3 million total for the three-month period. For companies incorporated after 1 October 2019, the cap is EUR 800,000, said Počivalšek.

Rent will be partially or entirely waived for those renting real estate owned by the state or local communities for the period since 19 October, when the epidemic was declared, until the end of the year.

A one-year moratorium on loan repayments is also being extended until the end of the year. New loans taken out this year will also be eligible.

A measures is also being reintroduced allowing taxable persons to put off tax payments for two years or pay tax in instalments if their income was lost due to the epidemic. This was already in place during the first wave of the coronavirus and will now be in effect until the end of the year. After that the measure might get extended until mid-2021.

“This will give companies a better liquidity position,” Šircelj said.

The package is also changing the conditions for the state loan guarantee scheme, introduced in May, as guarantees will be granted for liquidity loans of up to 25% of revenue generated in 2019, whereas in the past the cap was at 10% of last year’s revenue.

Šircelj acknowledged the guarantee scheme had so far not been substantially used, which he thinks is mostly due to the good liquidity of the economy. “Perhaps it was not utilised to such an extent because there was no need to. Banks have performed their activities without it,” he said.

Nursing homes and other social care institutions are to get compensation for drop in revenue due to vacancies caused by the epidemic until the end of next year. Public transport operators will get compensation for loss of revenue until June 2021.

Moreover, several inspectorates are to get powers to check compliance with restrictions in place to prevent the spread of the coronavirus and issue fines.

Under the bill, parents will not have to pay for childcare while kindergartens remain closed and students will not have to pay their dorms, which have also been shut. The bill also provides funds for free meals for poor students during remote learning and also foresees aid to farmers.

Stock companies will be able to hold shareholders meetings online, while parties and associations will be able to assemblies in correspondence form.

Employer organisations have urged the government to also suspend a scheduled increase in the minimum wage on 1 January, but this provision is not included in the legislation. Počivalšek said he has asked trade unions and employers to meet with him and find a solution to this “very sensitive issue”.

Prior to the adoption of the bill, the tourism sector warned that the package does not include measures that would allow tourism companies to survive.

“According to our information only one of our proposal has been adopted and only partially at that: non-refundable aid to companies that are seeing significant losses in revenue compared to last year,” the Tourism and Hospitality Service said yesterday.

The chamber cited a poll it conducted in which nearly 20% of respondents, tourism companies, expected their revenue to drop between 80% and 90% year-on-year, 8% said they expected a 70-80% drop and another 8% they expected a 60-70% drop.

The Chamber of Trade Craft and Small Business (OZS) meanwhile called on the government once again to allow small businesses, such as specialised shops, chemical cleaners, car washes, hair and beauty salons and leather and textile companies, to reopen.

Počivalšek announced that the government would start preparing new legislation within a month. “The situation is changing so rapidly that we have to adjust with new solutions on a monthly basis.”

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