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Govt Drafts New Loan Guarantee Scheme for Development Projects

Ljubljana, 21 April (STA) - The Finance Ministry has drafted a bill on state guarantees for loans for investments in a bid to boost liquidity of Slovenian companies hampered by the credit crunch and enable them to fund development projects. The overall amount of state guarantees will stand at EUR 1bn, the ministry said on Wednesday.

State-guaranteed loans will be used for funding of investments into development projects aimed at boosting added value per employee and the number of jobs. The state will take upon itself 75% of the loan risk.

Banks will also be motivated to give loans because of the fact that these loans could be used as collateral for liabilities towards the European Central Bank, the ministry said, adding that the government was expected to discuss the bill next Thursday.

The government intends to rush the bill through parliament so that guarantees will be available in September. The measure will be a follow-up to the loan guarantee scheme for companies and cooperatives, which entered into force last May.

Individual loans will range from EUR 500,000 to EUR 20m with the maturity of one to ten years. Guarantees will be issued by the state-owned SID development and export bank, while applications will be reviewed by a special government commission.

As part of the first loan guarantee scheme, worth EUR 1.2bn, a total of EUR 645m has been auctioned off. The state has taken upon itself an average of 34% of the loan risk.

The scheme expires in December and the government has envisaged in the exit strategy through 2013 a new instrument to encourage funding of investments in activities of particular importance for the Slovenian economy.

These include technological upgrades, development of tourism, regional development, investments into environmental protection and efficient use of energy and R&D investments, according to the ministry.

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