State aid and financial crisis: balancing competition and financial stability

This paper analyses temporary state aid framework as a policy tool that has been adopted by the European Commission‘s decision to temporarily authorise EU Member States state aid granted for rescuing and restructuring of enterprises in order to minimize the consequences of the global economic crisis. The framework has provided Member States with possibilities of ac¬cess to state aid for a initial period of two years, , with the option for prolongation of certain state aid measures targeted at facilitating companies’ access to finance justified by market conditions. The temporary framework contained two different sets of instruments: new measures and a temporary adaptation of the existing state aid measures. One of the new measures was to introduce subsidised guarantees with higher guarantee coverage, subsidized guarantee premiums, and loan subsidies to companies, either sound firms or firms which were not in difficulty on 1 July 2008 but had got into difficulty thereafter as a result of the crisis. The second part of the paper shall investigate the current situation on the State Aid Framework in EU accession countries, such as Republic of Croatia (that becomes full member in summer 2013) and Republic of Serbia (still in earlier phase of accession), with an aim to ensure macroeconomic stability and access to finance in the current crisis, and fulfilment of obligations assumed under the Stabilisation and Association Agreement with the EU