Czech government prepares $40 billion plan for businesses

The Czech government is preparing up to 100 billion crowns ($4.05 billion) in direct aid for businesses and 900 billion more through loan guarantees to help recovery from the outbreak of the new coronavirus, Prime Minister Andrej Babis said on Wednesday.

The combined aid is equal to almost 18% of the central European country's economic output in 2019 and will go to businesses hurt as the Czech Republic, like much of Europe, shuts shops and factories, closes borders and puts people on lockdown to fight the virus's spread. The Czech economy had already started slowing last year, but the outbreak has wiped out estimates for at least 2% growth in 2020 and raised questions of how big of a contraction would come.

Babis called on companies not to start firing workers as he announced his economic plans. The country's largest exporter Skoda Auto, part of the Volkswagen Group, has shuttered production for the next two weeks and Toyota-PSA joint venture TPCA will stop car production at its plant east of Prague.

The government has so far started taking applications for a loan program for small and medium-sized enterprises and offered firms and individuals the option to postpone some tax payments. ($1 = 24.7100 Czech crowns)