The European Commission has approved an increase in the State aid envelope supporting the Malta Development Bank's (MDB) remit of intervention for the next five years. This remit primarily includes the provision of access to finance for SMEs and the funding for infrastructure projects, the MDB said.
The maximum state aid that may be provided by the government to the MDB on non-commercial terms for its operations in the form of capital, guarantees and tax measures for the period ending 31 December 2027 is of €678 million, an increase of €423 million compared to the first remit of 2016.
The Commission concluded that the measure is necessary and appropriate to improve access to finance for sectors or companies that have difficulties in obtaining sufficient finance from the market, a statement by the MDB read. The Commission found that the measure is also proportionate as MDB will limit its interventions to addressing established market failures, notably investments in areas suffering from insufficient private funding. In addition, MDB will only provide financing if beneficiaries demonstrate that they could not obtain sufficient financing on the market.
Finally, the Commission concluded that the measure has sufficient safeguards to avoid undue negative effects on competition and trade in the EU. On this basis, the Commission approved the Maltese measure under EU State aid rules.
Josef Bonnici, Chairman of the MDB, welcomed this approval as this will allow the MDB to continue rolling out financial instruments and to continue enhancing its role in supporting Maltese businesses and other segments that may face challenges in accessing finance.