Hungary: Temporary aid scheme for granting aid in the form of loans with subsidised interest rate
On 12 February 2009, Hungary notified the Temporary aid scheme for granting aid in the form of loans with subsidised interest rate. State aid # 78/2009
The scheme is expressly based on Article 87(3)(b) ECT, as interpreted by Paragraph 4.4.2 of the Commission communication "Temporary framework for State aid measures to support access to finance in the current financial and economic crisis."
The aid is provided in the form of subsidized public loans. The scheme applies to the whole territory of Hungary, and is open to all sectors of the economy. The potential beneficiaries of the scheme are SMEs and large enterprises. The Hungarian authorities estimate that the total number of beneficiaries will exceed 1000.
The Commission considers that the notified measure constitutes State aid within the meaning of Article 87 (1) of the EC Treaty and gave the following assessment:
" State resources are involved in the notified scheme since the subsidized loans are made available from State resources. The measure is selective since it will be granted only to a limited number of firms located in Hungary. The measure confers an advantage by relieving the beneficiaries of costs which they would have to bear under normal market conditions since, without the intervention by the State, the borrowers would obtain loans only at higher costs, if at all.The measure affects trade between Member States since the scheme is not limited to beneficiaries which are active in sectors where no intra-community trade exists." (par. 22-25 of the letter from the EC to Hungary - Brussels, 24.2.2009 C(2009) 1371)
Article 87(3)(b) of the EC Treaty enables the Commission to declare aid compatible with the Common Market if it is "to remedy a serious disturbance in the economy of a Member State." This aid has to be applied restrictively and must tackle a disturbance in the entire economy of the Member State according to the interpretation of the Article 87(3)(b) by the Court of First Instance.
The Commission referred to its Communication on the financial crisis (Temporary Framework) and concluded that the Measure complies with the conditions laid therein. Therefore, despite the measure constituting State aid pursuant to the Article 87(1) EC, it is compatible with the Common Market according to the Article 87(3)(b) EC Treaty. The Commission raises no objections against the measure at issue and authorizes it as emergency intervention in the face of the current financial crisis. (par. 27 - 32of the letter).
Prolongation of the "Temporary aid scheme for granting aid in the form of loans with subsidised interest rate" - State Aid SA.32215 (2011/N)
On 6 January 2011, Hungary notified the prolongation of the existing aid scheme until 31 December 2011. The measure may cover loans of any duration. The reduced interest rates (see original measure) may be applied for interest payments until December 2013. The Commission did not raise objections.
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.
Any Evidence-Based Deliberation:
|Is there anything in the public record to suggest that evidence of the effectiveness of the proposed measure was considered during official deliberations?||Yes|
|Is there any evidence that alternatives to the proposed measure were considered?|
|Is there anything in the public record that suggests that empirical evidence informed the comparison across the alternatives available to government?|
|Was such evidence identified?|
|Is such evidence publicly available?|
|Did the official decision-maker in question provide an explanation as to why a chosen measure was favoured over alternatives?|
|Is there any evidence to suggest that potentially affected trading partners were consulted before the measures were taken?|
|Is there any evidence that safeguards have been put in place to ensure that implementation of the initiative is transparent and non-discriminatory?|
|Did the government state its intention to review the measure within one year of implementation?|
Date of inception: 23 Feb 2009
Duration: 35 months
GTA Evaluation: Red
the letter from the EC to Hungary - Brussels, 24.2.2009 C(2009) 1371. Available from < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=... >
the letter from the EC to Hungary - Brussels, 24.01.2011 C(2011)369 final. Available from : < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=... >