The European Commission has approved Malta's COVID-19 interest rate subsidy scheme, Finance Minister Edward Scicluna said. The scheme will be funded by the government and managed by the Malta Development Bank (MDB).

The scheme, which is open to all businesses established and operating in Malta, met all the conditions of the Temporary Framework established by the EC, the ministry said. "The scheme was considered by the Commission as necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state."

Scicluna said: "I am pleased to note the Commission's go-ahead on this scheme, which is expected to ease the companies' negative cashflow impact and meet their new working capital requirements due to the effects of COVID-19, at the least cost possible."

The government has allocated around €40 million to pay up to 2.5 per cent interest due on the working capital loans covered under the MDB COVID-19 Guarantee Scheme, for the first two years. In certain cases, businesses will only be paying an annual 0.1% interest rate on the loan advanced for the first two years of the loan term.

Loans will be available from the credit institutions accredited by the MDB, and will cover new working capital loans.