April 8, 2020

President Piñera announces the second stage of the Emergency Economic Plan

President Piñera announces the second stage of the Emergency Economic Plan
The plan includes US$2 billion to provide more benefits for vulnerable families and create more jobs. The plan will also finance loans to companies for an unprecedented amount of up to US$24 billion.

The President of Chile, Sebastián Piñera, presented this Wednesday the second stage of the Emergency Plan, which complements the Central Bank’s measures to strengthen liquidity in the financial market, and the Financial Market Commission’s measures to relax regulations in order to improve access to loan finance for companies.

The Government plan presented by the President has two main themes. The first will "protect families by creating a US$2 billion fund to provide greater benefits and create more jobs for vulnerable individuals and families. This will particularly benefit 2.6 million informal workers without employment contracts, who do not have the protection of unemployment insurance.”

The second will "help those entrepreneurs, small- and medium-sized companies and business people who require it, by opening lines of credit backed by state guarantees," said President Piñera. He added that "this measure will provide up to US$24 billion in loan finance for companies, which is equivalent to multiplying the lines of credit currently available by a factor of 20.”

These new state-guaranteed lines of credit will limit the extraordinary credit risk caused by the state of emergency and will streamline the conditions for banks to lend working capital to companies for up to 48 months, with a grace period of up to 6 months, subject to a maximum amount equivalent to 3 months’ sales.

The President explained that "banks that lend these state-guaranteed resources to companies must reschedule any outstanding loans with each company and postpone all repayments on those loans until the new state-guaranteed loans are fully repaid.” He emphasized that "this will provide relief to entrepreneurs and protect the guarantees granted by the state."

President Piñera also announced that "we are preparing a plan to protect self-employed workers who issue boletas de honorarios (invoices for services rendered) from the catastrophic situation caused by the coronavirus pandemic.”

The President stated that the Government's main priority "has been to care for the health and life of everyone. To protect family incomes and jobs. To support SMEs and businesses. And to ensure that this transitory crisis produced by the coronavirus does not become a permanent crisis that affects the quality of life or the dreams and future endeavors of all Chileans.”

“I want to thank all my fellow Chileans for their contribution and commitment to overcoming this crisis and reiterate our full conviction that together and united we will overcome it. We will once again be able to greet each other with affection, embrace our loved ones and recover our freedoms and rights in order to seek happiness together with our families and friends," the President concluded.

First emergency plan

The President also reiterated that on March 19 the Government launched its first Emergency Plan, worth some US$12 billion, equivalent to almost 5% of Chile's Gross Domestic Product. It included a mechanism that is now in place to protect the jobs and incomes of 4.6 million workers by granting them access to unemployment insurance benefits and the retention of their employment contracts. It included the Covid19 bonus, which benefited 2.8 million vulnerable people.

Furthermore, it strengthened the capacity of the state-owned bank BancoEstado to provide further working capital loans to entrepreneurs and small- and medium-sized companies, by providing US$500 million in additional capital.

It also provided additional resources to the Treasury to finance state support for vulnerable Chileans and companies, introduced various taxation measures to benefit small- and medium-sized companies and self-employed workers, accelerated payments by the Treasury to suppliers, and created a US$100 million Municipal Solidarity Fund.