By the end of June, more than 250 businesses and the livelihoods of more than 15,000 employees and their families were provided with a crucial lifeline of €200 million in additional liquidity from local banks backed by the Malta Development Bank COVID-19 Guarantee Scheme.
The MDB Guarantee Scheme covers 90 per cent of each working capital loan to businesses whose cash flow has been impacted by the COVID-19 outbreak. It is therefore providing the necessary backing so that commercial banks can provide otherwise-unavailable working capital loans with reduced collateral requirements, highly-subsidised interest rates on loans, as well as a moratorium on repayment of both capital and interest.
The MDB scheme, through these efforts, allowed these businesses, regardless of their size and their economic sector, to obtain the necessary liquidity to cover salaries, rental payments, utility bills and other payments of an immediate nature.
At the height of the coronavirus pandemic, the government allocated a guarantee fund of €350m to MDB to develop, administer and implement the scheme through the intermediation of the local commercial banks. Nine local commercial banks have been accredited to intermediate this scheme which has the potential to generate an overall loan portfolio of almost €789m.
The MDB COVID-19 Guarantee scheme is one of the major pillars in the overall economic recovery package enacted by the government. The European Commission praised the package as a significant contributor which will allow the Maltese economy to soften the blow in 2020 and recover strongly by 2021.
The chairman of the board of directors of the Malta Development Bank, Josef Bonnici commented: “Despite Malta’s success in dealing with the health aspect of the coronavirus, the impact of the pandemic on our businesses was inevitable. Through the guarantee schemes managed by the MDB, we have ensured that business owners are supported in their efforts to be resilient through these challenging times while most importantly safeguarding the jobs these companies support. At the same time, we are also making it easier for the banks to continue providing new loans which will be crucial in supporting the economy not only to survive but to regenerate itself and deliver growth in the months ahead.”