Deputy PM announces development bank for Malta

Development bank would offer financing to high-risk projects that commercial banks may not be willing to back


Deputy Prime Minister Louis Grech said that Malta is set to get a development bank in the near future. 

"A development bank would not compete with commercial banks in any way, but will be there to address market failures and provide support where commercial banks may not be willing to," Grech said. 

He explained that following the economic crisis in recent years, banks might not be willing to give loans for particularly high-risk projects, so a development bank would be created to fill this gap.  

European Commission Vice President for jobs and growth Jyrki Katainen said that high risk projects were essential for the economic development of a country, and core investment was necessary in this respect. 

Katainen said that the EU's investment plan, specifically the EFSI, which complemented the efforts made by the European Investment Bank to support SMEs, aimed to provide high-risk investments with the necessary push after the investment sector had suffered a 15% drop since 2007.

He added that the plan would also create structures that would encourage further investment and subsequent growth in European economies. 

He added that the EFSI would provide some €7 billion a year to high-risk financing projects in the private sector. 

"The EFSI will also look at creating the right infrastructure for member states, and this goes beyond roads and transport systems but also goes into the creation of the right digital infrastructure," he added. 

"The plan will be specifically addressing investment in small and medium enterprises and in the infrastructure of the country," he said, noting that Malta had a very positive economic setting and that the only specific area of failure was investment.

"Malta is currently benefitting from economic reforms that took place years ago when the economy was much more stable and when it is easy to become complacent," he said, encouraging policymakers to continue working towards reforms in areas like pensions and employment. 

Katainen also described the EU's investment plan, which was hoped to generate around €315 billion, as flexible and not a "one size fits all" approach but one that can be tailored for each national situation.

"The main aim of this plan is to boost more investment in the private sector and to raise awareness to stakeholders in the sector about the opportunities ahead of them," Katainen said, adding that Malta was the 26th member state he was visiting. 

He added that the Commission aimed to deepen and widen the single market so that regulations were harmonized to give citizens better access to services to products and services such as energy markets. 

"We are also working on creating a project portal which both public and private sectors can use to present their projects and attract potential investors."

Asked about the status of five projects for which the Maltese government had applied for funding, Katainen said that the EIB was currently discussing the projects and that a decision had not yet been made. 

Grech pointed out that one of the projects being suggested was the regeneration of the Marsamxett Harbour, which can generate "enormous wealth" to the country. 

He also added that Malta was also pushing forward other projects besides these five proposals mainly in the energy, health and transport sectors. 

Katainen also referred to migration in his speech, saying that the issue needed an international approach and that the initiatives taken had been "too little too late", particularly because many member states hadn't understood the seriousness and far- reaching nature of the crisis. 

"We need an international solution to address the crises in Syria and Libya and remove the necessity for so many people to leave their home countries, but we also need national efforts to implement better strategies to deal with migration and always remember the humanitarian aspect above all else."

Later on today, Katainen is expected to meet Opposition leader Simon Busuttil.

Countries contributing to the EFSI not to face excessive deficit procedures - Katainen

Speaking with members of the foreign and European affairs and financial and economic affairs committees at Parliament earlier today, Katainen clarified that member states contributing to the EFSI fund would not prompt the Commission to relax any of its strict budgetary rules, but that the same rules would apply to all member states regardless of whether or not they contributed to the fund. 

"However, the countries in question would not face excessive deficit procedures if they surpassed the threshold due to their contribution to the fund itself," he said, in response to an inquiry by MEP Roberta Metsola.  

Talking about the plan, Katainen said that policy makers needed to understand the importance of stimulating investment to push for economic growth.

He added that the EFSI was a new fund and that it was the flagship project of the Junker commission, which would focus on high-risk projects and push for more investments in small and medium enterprises, as well as better infrastructure to allow the country to accommodate as many projects as possible. 

"Companies do not need their government's approval and they can contact the European Investment Bank directly with their ideas. The funding is also very flexible," he said, adding that individual member states could decide how to apply the resources made available to them. 

MEP Roberta Metsola and PN MP Tonio Fenech stressed the importance of ensuring funds to member states regardless of their size and stressed the importance of raising awareness in the public sector, emphasizing that this was an opportunity made specifically for them. 

MEP Therese Commodini Cachia and PN MP Francis Zammit Dimech also said that it was important for the funds to focus especially on the digital and creative industries, which are showing exceptional growth in recent years.