EMP: the Court of Auditors' mixed assessment

In a report published on July 25, 2022, the French Audit Office (Cour des Comptes) acknowledges that state-guaranteed loans (PGE) have supported a large number of companies and prevented massive bankruptcies. However, it calls for greater control over compliance with the commitments made by certain beneficiaries. We take a closer look at this mixed record.

Supporting businesses in the face of the health crisis

The EMP scheme was set up in March 2020 in France to support companies in the face of the health crisis. This rapid deployment was made possible thanks to the banks that chose to distribute them and to Bpifrance, which responded to requests for online guarantee certificates.

In its July 25 report, the Cour des Comptes states that "of the 137 billion euros of EMPs granted by banks to more than 660,000 companies in December 2021, more than 70% had been granted by June 2020".

The institution estimates that the cost of EMPs to the State should remain contained, at less than 3 billion euros. In all, nearly 700,000 companies have benefited from these schemes, to the tune of 140 billion euros. The proportion of so-called "zombie" companies is relatively low, at less than 2.5% of borrowers.


Better monitoring of companies' compliance with their commitments

While the Cour des Comptes considers that the EMP's objective has been achieved, it nonetheless recommends tighter control of the commitments made by certain beneficiary companies at the time of subscription.

To obtain a state-guaranteed loan, France's major groups had to apply to the Ministry of the Economy for authorization, swear an undertaking on their honour to respect the contractual deadline for paying their suppliers, and not to pay dividends or buy back shares during the year in which the financing was granted. However, the Cour des Comptes report "Les prêts garantis par l'État - Une réponse efficace à la crise, un suivi nécessaire" (State-guaranteed loans: an effective response to the crisis, but a necessary follow-up) indicates that, of the 49 largest French companies benefiting from a PGE, six have not kept their commitments regarding share buybacks. Of these, two did not buy back shares in the year they took out their loans. The amounts of these operations vary, and can reach up to 35.6 billion euros.

The role of the Agence des participations de l'État is to monitor the commitments made by major companies in which the French State is a shareholder. However, the Court deplores the fact that no control procedure is in place for the others.

The financial magistrates recommend "implementing effective monitoring of the commitments made by major companies benefiting from PGEs, and clarifying the consequences of non-compliance".

Among other European countries, Italy, which has introduced more commitments, is planning a better-defined control process, overseen by the lending banks. Germany, for its part, has added a prohibition on repaying loans to associates. This commitment is monitored by the public bank responsible for managing the guarantee (KfW).