Anti-Crisis Shield to limit the negative effects of the pandemic
A state of epidemiological emergency has been introduced across Poland. It is not a state of emergency or marital law. The state of epidemiological emergency is outlined in a 2008 law, which was recently updated by an emergency act outlining special powers and responsibilities for public servants and businesses (“Emergency Act”) passed in preparation for a coronavirus outbreak.
The state of epidemiological emergency provides powers such as enforcing mandatory vaccinations, restricting certain forms of public movement, limiting or banning the sale or use of certain items, banning assemblies, and restricting the functioning of specific institutions and workplaces. The Polish Minister of Health, Łukasz Szumowski announced that, as the epidemic develops, he would decide on which powers to enforce.
The coronavirus outbreak has dominated the legislative agenda in Poland. The Emergency Act is valid for 180 days, from the act’s entry into force, i.e. as of March 8, 2020.
The President of Poland, Andrzej Duda and the Prime Minister of Poland, Mateusz Morawiecki have already announced an outline of a package of support actions for the society and entrepreneurs referred to as “Anti-Crisis Shield”. The package is to limit the negative effects of the pandemic and is valued at PLN 212 billion. It is not a law in force yet, but President Duda informed that the drafts of legal acts introducing the specific solutions within the scope of the Anti-Crisis Shield is ready by the end of the current week.
The Anti-Crisis Shield includes five pillars:
1) Workers – protecting jobs
The government is to compensate for lost salaries in companies. One of the proposals assumes the possibility of limiting a given employee's working hours to 0.8 of a full-time job, with the state subsidizing up to 40% of the remuneration from the Guaranteed Employee Benefits Fund. This will be conditioned by a 15% drop in the company's turnover within two months or by 25 % within one month while showing a loss.
Firms which had to close their business activity, for example due to quarantines, will be able to reduce wages by 50%, and will be funded from the extra-budgetary fund.
Self-employed and the employed on civil contracts workers are to get one-off benefits of around PLN 2.000.
Workers will also benefit from additional nursing benefits and extended deadline of PIT 2019 settlement by two months, to the end of June 2020.
The Anti-Crisis Shield also includes an automatic extension of work permits for foreigners.
2) Companies liquidity credit
This pillar is to assure liquidity of firms includes, inter alia, the deferral of tax and social security contribution payments and extension of de minimis guarantees of BGK for SMEs. The level of loan security will increase from 60 to 80%, while the value of loans will reach PLN 3.5 million. Large companies will be able to receive support from the Polish Development Fund and a Liquidity Guarantee Fund worth PLN 8.5 billion will be created.
Transport companies can expect the refinancing of vehicle leasing – the Industrial Development Agency will allocate PLN 1.7 billion to this. The government expects that it will be possible to settle the entire loss of this year's corporate taxpayers in the next year. Companies operating in sectors particularly affected by the crisis - such as tourism and transport - will receive additional tax preferences if their revenues fall by 50%. Travel companies will have 180 days to reimburse money for services not rendered – now it is 30 days.
Under this pillar, the government intends to allocate an additional PLN 7.5 billion. PLN 6 billion will be dedicated to healthcare on fighting the pandemic, including the creation and equipping of single-name infectious hospitals, additional healthcare services, and medical transport.
The government plans to allocate PLN 1 billion at the Prime Minister's disposal to co-financing hospital infrastructure.
The Anti-Crisis Shield also includes money for the digitalization of healthcare.
4) Financial sector
This pillar is a selection of measures aimed at rising liquidity, lowering the cost of capital, facilitating credit creation and new buyers on the Polish government bond market.
On Tuesday, the National Bank of Poland cut interest rates and reduced minimum reserve requirements by PLN 40 billion of cash. Last Monday, the central bank conducted repo operations (purchases of commercial securities from banks with a commitment to repurchase them at a predetermined price) of PLN 7.5 billion to stabilize the Treasury bond market. These actions so far are independent of the Anti-Crisis Shield but should be treated as part of the same strategy.
The Anit-Crisis Shield also includes a regulatory package, which is within the competence of the Ministry of Finance and the Financial Supervision Authority. The plan consists of abolishing the 3% systemic risk buffer for banks, the Financial Supervision Authority allowing temporary non-compliance with capital and liquidity requirements, as well as making the rules of estimating losses in banks more flexible and shifting selected supervisory duties.
5) Public investments
Under this pillar the new public investment fund of PLN 30 billion will be created to support infrastructural spending, energy transition, digitalization and environment protection.