MDB Covid-19 Guarantee Scheme extended until 31 December 2021

Last Updated on Tuesday, 19 October, 2021 at 3:48 pm by Andre Camilleri

The Malta Development Bank (MDB) is pleased to announce that the European Commission, in its decision of 15 October 2021, has approved the prolongation of the Bank’s existing Covid-19 schemes by a further three months to 31 December 2021.

The objective of the MDB’s schemes is to preserve the continuity of economic activity during and after the COVID-19 outbreak, thus ensuring that undertakings impacted by the pandemic continue to have access to the necessary bank facilities to finance their working capital. As these facilities will continue running until end of year, businesses requiring such financing are encouraged to approach one of the nine accredited commercial banks intermediating the schemes.

Through the COVID-19 Guarantee Scheme (CGS) which was launched in April 2020, the MDB is leveraging on a Government guarantee of €350 million by mobilising commercial banks’ liquidity into the flow of credit to the real economy. Commercial banks are thus being provided with very substantial credit risk reduction and capital relief enabling the creation of a portfolio of up to €777.8 million in new working capital loans to all businesses, regardless of size or sector. Eligible working capital costs under the CGS include wages, rental costs and utility bills, among others.

Thanks to this extension, the MDB will continue guaranteeing new loans sanctioned by the nine accredited banks until the end of 2021. Moreover, the extension is also applicable to MDB’s COVID-19 Interest Rate Subsidy Scheme that provides a grant of up to 2.5 percentage points on the interest payable on the CGS loans for the initial two years of the term.

As at end September 2021, around 610 local businesses, operating across all economic sectors, have benefitted from these advantageous schemes, collectively having been granted a total of almost €510 million in sanctioned working capital loans. Such loans reflect 12.5% of the overall currently outstanding loans extended by the banking system to non-financial corporations in Malta, attesting to the fundamental role played by the MDB in supporting economic activity.

MDB’s Chairman Prof Josef Bonnici commented that: “while the MDB’s focus is now turning to the development of new schemes to support new investment and sustainable growth, we are cognisant that there may be pockets of businesses that are still facing liquidity constraints and may not yet have utilised our schemes. Therefore, this extension is a welcomed news as it will help these businesses to benefit from the support being made available through these schemes.”

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