The Malta Development Bank has provided support to the tune of more than €500 million in loans since its first scheme was launched in late 2018, it said on Wednesday.
These loans were taken up by close to 650 local businesses, operating across the local economic spectrum, to invest in the expansion of their operations or to access the working capital needed to ensure survival through the COVID-19 pandemic.
Micro, small or medium-sized enterprises represent 91% of all businesses assisted, the bank said in a statement.
It said the loans, which were intermediated through local commercial banks, were made possible through the guarantee schemes it offered.
Such loans reflect some 12.5% of the overall currently outstanding loans extended by the banking system to non-financial corporations in Malta.
Lending to non-financial corporations in Malta expanded by an annual rate of 9% in 2020. Without this intervention by the MDP, such lending to companies would have contracted by 2.5%, the bank said.
It said that the largest contributor to this impact was the COVID-19 guarantee scheme, which, thanks to a government-backed guarantee of €350 million, the MDB was able to guarantee up to 90% on new working capital loans granted by commercial banks to businesses facing liquidity shortfalls as a result of the pandemic.
In this case, the retail, accommodation and food sectors were the major beneficiaries of the guarantees. This scheme is still running through nine accredited commercial banks intermediating it.
Other MDB schemes
Other schemes operated by the MDB include SME invest, the family business transfer facility and the further studies made affordable scheme.
The bank said that the businesses that benefitted from its guarantees are responsible for the employment of more than 40,000 employees, equivalent to more than 22% of total private-sector employees in Malta.
It said that as the country seeks to exit the challenges brought about by COVID-19, it is positioning itself to enable financing for more sustainable, longer-run growth, in line with national and European objectives.
It intends to facilitate investment in green infrastructure projects, innovation and digitalisation, as well as projects with a social dimension. It will strive to contribute to the achievement of the country’s ambitious targets in various priority areas.
Bank chairman Josef Bonnici said that the milestone achieved in such a short timeframe is testament to the role of the MDB in Malta’s economic fabric.
He said that new financial instruments will be launched later this year to give further impetus to the economy during the post-pandemic recovery phase.