France’s state-guaranteed loan program will put less strain on public finances than expected, as the strength of the economic recovery surprised the government and will help businesses repay their loans.
Speaking to business leaders at a conference in Paris, Finance Minister Bruno Le Maire said he was continuing to downgrade the cost of € 142 billion ($ 165 billion) in loans guaranteed to the State, against an initial estimate of 5 billion euros.
The loans were a central part of France’s strategy to do ‘whatever it takes’ to protect businesses and workers during Covid lockdowns. This included around € 35 billion in grant spending and about the same amount for the state leave program.
“We really took the gamble by saying that we were going to inject massive sums of public money to protect employees, skills and businesses,” said Le Maire. “It was an extremely bold choice that turned out to be the most responsible and wise choice. “
The state will provide assistance on a case-by-case basis to the “very small number” of businesses that may struggle to start repaying state-guaranteed loans in the spring, Le Maire said. Although there is no overall extension of the program, he said the state is ready to extend the period during which companies pay deferred taxes to three years, down from two currently.
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