Tuesday, 19 July 2011
Department of Enterprise, Trade and Innovation
Credit Guarantee Scheme
Question 229: To ask the Minister for Jobs, Enterprise and Innovation, further to Parliamentary Question No. 134 of 17 May 2011, the position regarding a temporary partial credit guarantee scheme; the details of the scheme; and the date he plans to introduce the scheme. [20768/11]
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 initiating 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 2011, closing on 7 July. Arising from this process, formal tenders should be received early in August and on completion of the procurement process, contract commencement is envisaged to be the last week in August. The completion date for the scheme design is scheduled for early October.
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 insufficient collateral or a lack of familiarity or understanding of the new industry, the new product or the potential of new markets. The amount of money that will be invested in this scheme and the criteria that will be applied are intrinsic elements of the scheme design, which is the subject of 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 partial credit guarantee scheme will complement the Government plans on the restructuring and recapitalisation of the banking system which seek to secure an adequate flow of credit into the economy to support economic recovery.