-Total funds available for local small and medium enterprises reach €118 million.
In light of the effects of the coronavirus pandemic on the Maltese economy, the EIB Group (European Investment Bank - EIB and European Investment Fund - EIF) has signed an agreement with the Government of Malta and the European Commission to increase financing available under the SME Initiative in Malta. The agreement was signed today by Alain Godard, EIF Chief Executive; Miguel Morgado, EIB Director; Hon. Stefan Zrinzo Azzopardi, Parliamentary Secretary for EU Funds within the office of the Prime Minister; and Paul Zahra, Permanent Secretary for EU Funds within the Office of the Prime Minister.
So far, through the SME Initiative in Malta, Bank of Valletta and BNF Bank have assigned a target portfolio of nearly €90 million for new SME financing in the form of loans across the country. Due to the successful uptake of this initial agreement and the coronavirus pandemic, the Maltese authorities, the EIB Group and the European Commission have decided to add additional resources to this initiative. This will trigger additional €28 million of SMEs financing under advantageous terms, such as reduced interest rates and improved collateral requirements, thus increasing the target portfolio up to EUR 118m.
Malta has contributed up to €29 million from its European Regional Development Fund (ERDF) dedicated envelope. The €29 million will be leveraged with commercial lending through a risk-sharing mechanism.
Commenting on the signature, Elisa Ferreira, European Commissioner for Regional Policy and Structural Reforms, said: "I welcome Malta's decision to increase the available financing under its SME initiative programme as a measure to support local Small and Medium sized enterprises facing the effects of the coronavirus pandemic. This is a smart move that will directly benefit Maltese small and medium-sized businesses and entrepreneurs giving them the financial boost they need to overcome the side effects of the pandemic outbreak, turning their ideas into concrete projects or expanding beyond their local markets."
Commenting on the increase of the SME Initiative in Malta, EIF Chief Executive Alain Godard said: “I am delighted with the very positive results of the SME Initiative in Malta for Maltese SMEs. Both local banks have already managed EUR 72 million of SME financing to help companies over the last 4 years. I am convinced that the additional finance will be instrumental in supporting more jobs and growth and mitigate the effect of the COVID-19 pandemic, via the combination of European Structural and Investment Funds, EU Horizon 2020 and EIB Group resources.”
The Director of EIB Operations, Miguel Morgado, said: “The EIB Group is fully committed to further support the rolling out of the SME Initiative in the context of the COVID-19 outbreak and we are pleased together with the Maltese authorities to be announcing the increase of the resources available under this scheme. With today's signature, additional long term financing at attractive conditions should be disbursed to Maltese SMEs. We are confident that this agreement will deliver lasting benefits to Maltese businesses.”
Parliamentary Secretary European Funds within the office of the Prime Minister, Stefan Zrinzo Azzopardi stated: “By allocating additional funds towards the SME Initiative Financial Instrument, we reiterate the government's commitment towards supporting our businesses. Taking into consideration the current circumstances, the Maltese Government has placed a lot of effort in ensuring a continuous stream of support to enterprises in order to mitigate the impact of the pandemic on Maltese SMEs. This will serve as an opportunity for our businesses to invest and grow even during this time, so that when we start to recover after COVID-19, our enterprises will be able to continue from where they left off and come out stronger.”
The European Investment Bank (EIB) is the long-term lending institution of the European Union and is owned by its EU Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals both in Europe and beyond. The European Investment Bank is active in around 160 countries and is the world's largest multilateral lender for climate action projects. The European Investment Fund (EIF) is part of the European Investment Bank (EIB) Group. Its central mission is to support Europe's micro, small and medium-sized businesses (SMEs) by helping them to access finance.
The European Regional and Development Fund and the Cohesion Fund support projects on the ground through financial products, such as loans, guarantees and equity. Financial instruments in cohesion policy, foreseen under Article 39 of the European Commission Regulation (EU) No 1303/2013, help to trigger investments on the ground for revenue-generating and cost-saving activities while maximising private investment with minimum public support to deliver the Cohesion Policy objectives of economic, social and territorial cohesion. Financial instruments represent a more efficient and sustainable alternative to complement traditional grant-based support.