Mr. Gabriel Makhlouf:

I thank the Deputy. He referred to a figure of €6 billion. We published a paper a few weeks ago which said that the amount required to deal with liquidity challenges would potentially range between €2.4 billion and €5.7 billion. It will be a big number. I am concerned about ensuring we protect the liquidity position of businesses. One of the very big challenges we all face, and which underpins what we were saying earlier about the two scenarios we published last week, is the current degree of uncertainty.

With everybody, but in particular with SMEs, making decisions as to what their prospects are and what they need to do to adjust to the Covid-19 environment, requires time, so in my view policies should be focused on giving them time to make some of those decisions. In practice, some SMEs are not going to survive this crisis, but what policy needs to do is to make sure that viable businesses do not become insolvent. So we need to look at how we can provide the facility, whether it is by the State, or by the financial system - by credit institutions - to create time and to enable those judgments and decisions to be made. In my view, we need a suite of offers such as credit guarantees and equity injections. Debt financing has a role to play. One of the interesting issues is that potentially what one could argue was a scarring effect of the last crisis, what economists would call a structural longer term effect, is that many SMEs have no bank debt at all. From the last data I saw, more than half, just over 50%, have no bank debt at all. One could argue that is a good thing, but one could also argue that in the case of a viable business, by deciding not to borrow at all and by restricting one's ability to obtain capital one is limiting one's potential to grow and become more successful. I think that is one of the issues that needs to be thought about as we emerge from this crisis. My main response to the Deputy's question is we need to find a policy that avoids creating structural problems for the economy that is focused on the productive capacity of the economy and looks to support SMEs with the time to make decisions.