Pearse Doherty (Donegal South West, Sinn Fein)
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Question 145: To ask the Minister for Jobs, Enterprise and Innovation the position regarding the programme for Government commitment to provide a temporary partial credit guarantee scheme that will provide a level of insurance to banks against losses on qualifying loans to job creation firms to get banks lending again to industry and entrepreneurs; if he will provide an estimation of the level of insurance to be provided; and if he will further provide an explanation as to the reason the scheme will only be temporary. [18603/11]

Richard Bruton (Dublin North Central, Fine Gael)
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The Deputy will be aware that as part of the Jobs Initiative announced in this House on 10 May, both the Minister for Finance and I confirmed the commitment given under the Programme for Government to initiate a tendering process for the development of a temporary partial credit guarantee scheme. A call for competition for the design of a scheme was published on e-tenders on 15 June with a closing date of 7 July 2011.

The design of the scheme will draw from international experience to support new lending that would not otherwise have been extended by the banks. In this way, the scheme will be limited in its scope and will complement, rather than be a substitute for, existing lending activities by the main financial institutions. It will be a targeted scheme aimed at new companies or expanding companies trying to develop new products or markets that can demonstrate repayment capacity for the additional credit facilities but which cannot secure credit facilities, due to certain market failures that pre-date but have been exasperated by the financial crisis. The level of any guarantee to be provided will be an intrinsic element of the scheme design and is one of the key issues to be addressed by the current tendering process.

The Government's commitment will be for an initial period of one year. Specific performance criteria will be set down that allow for review and revision of the scheme at the end of that initial period before any commitment to a roll-over of the scheme for subsequent years. The temporary credit guarantee scheme will complement the Government actions to date plans on the restructuring and recapitalisation of the banking system.

It is envisaged that the introduction of a temporary scheme should provide lenders with a sufficient period within which to address the types of market failures identified above for coverage under the scheme. With a restructured and properly functioning banking sector the need for any partial credit guarantee scheme should reduce over time.