The decision of the Government that the autonomous communities carry out the distribution of aid for companies and the self-employed most punished by the pandemic – of 11,000 million euros, 7,000 of them for direct aid – is not adequate, according to Fedea ( Foundation for Applied Economics Studies). The think tank of large companies consider that they do not have a “comparative advantage” in management compared to the central administration. This is collected in his latest newsletter published this Tuesday.
The document published by Fedea also calls into question the distribution by territories of the total amount of aid, when “the text already establishes criteria to set the amount of aid that each beneficiary may receive.” That is, if the profile of the beneficiary is already defined, the authors of the study consider that each community should receive the amount according to its number of companies and self-employed applicants.
In a 72-page report released Tuesday As part of the monitoring of the covid crisis, Fedea considers that this delivery of powers to the communities will “inevitably” delay the arrival of resources. “It does not seem that the autonomous regions have a comparative advantage in managing the program vis-à-vis the central administration and, in particular, the Tax Agency, and their involvement will inevitably delay the arrival of aid that has already been made to wait longer than is reasonable” , he assures.
Regarding the amounts that each territory will handle, Fedea warns that this delivery of funds ex ante (prior, and not once the volume of plaintiffs has been verified) “could not correctly reflect the distribution of the damages caused by the pandemic.”
Another of the sections that makes the organism frown is the rescue nature of the aid itself, which, in its opinion, endows it with some dysfunctions: “Since the aid is not returnable and there is no convincing attempt to filter to applicants due to viability, we would rather be faced with compensatory compensation, which would go in part to unviable companies or that would survive without them, thus raising the cost of the program ”. In the same way, it also warns of the discriminatory aspect of these when they are distributed, since “those potential beneficiaries who have already had to close their businesses are arbitrarily excluded from them, also restricting the aid to a list necessary of CNAE activities and also excluding its suppliers from other sectors even though they have suffered very high billing declines ”.
To finish off this argument, the text concludes that the effects of the incentives on the administrations involved “will be little or null, since the aid is granted a posteriori and its cost will be borne entirely by the Central Administration despite the autonomous communities being the administrations responsible for managing the pandemic since last fall ”.
In a detailed account of the details of the plan developed by the Government to deploy a new financial cushion to help keep afloat those companies and workers significantly damaged by the pandemic, some of the requirements established in it are also questioned by Fedea. Among all of them, the one that refers to the fact that companies that request the aid must be up to date with payments with the Treasury and Social Security stands out. “Since we are talking about aid for companies with solvency problems, it is very likely that many of them are unable to meet this requirement,” says the document, prepared by Florentino Felgueroso, Ángel de la Fuente and Mireia Jofre-Bonet, which they warn: “To do so they could be forced to concentrate their defaults on their private creditors, thus reinforcing the possible snowball effects that the government presumably seeks to avoid with the aid.”
His last consideration about the spirit of this plan is that it has a marked “finalist” character. This consideration is obtained from “a rigid interpretation of the text”, since, in their opinion, the companies assisted would have as their first objective, once the payment of the outstanding debts with the suppliers has been covered, to reduce the loans requested, being those of the ICOs are the first on the list “even if they lacked liquidity to face new payments to suppliers or cover their fixed costs in the coming months”.
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