By Silvia Marchetti
ROME (MaceNews)- Italy’s government is expected to extend the state-backed guarantees scheme for loans launched to help struggling firms’ access to credit, according to ruling coalition sources.
The state guarantees tap into an emergency fund aimed at supporting small- and medium-sized enterprises’ investments that was boosted last year at the outbreak of the COVID pandemic. The reinforced public guarantees scheme will terminate in December and coalition forces are debating on how to extend it, in line with more lenient European rules on state aid.
A coalition source familiar with banking issues noted that total state guarantees issued for bank loans subscribed by firms already stand at roughly EUR95 billion and are soon likely to hit the target of EUR100 billion, which was the initial maximum amount the state had forecast and envisaged for the loan instrument backed by public money.
So far more than one million firms have applied for the state guarantees, of which 952,000 were for loans up to EUR30,000.
“Ever since the outbreak of the pandemic, each day more and more firms apply for the fund’s state guarantees to obtain bank loans. At a pace of nearly EUR500 million per day, we will be getting to the EUR100 billion target by early November, well before year-end,” said a source familiar with banking issues.
It is likely that an extension of the state-backed guarantees for another 6 months, until June 2021, will be a key measure of the upcoming budget document which is being defined by parliament.
Ruling parties are debating whether to extend the state guarantees for all bank loans or only those reaching EUR30,000, which would leave out loans of up to EUR5million currently representing the largest share of firms tapping into the fund.
A 5 Stars Movement source argued that it would be “wise” to extend the scheme and further boost the pandemic fund by exploiting the EU’s more lenient rules on state aid introduced after the pandemic outbreak.
“It is almost certain that new pro-growth measures aimed at supporting struggling firms are on their way. Italy faces a second pandemic wave and as opposed to last year when the emergency struck during spring when the virus was expected to abate during summer, we now face an entire autumn and winter ahead which look very gloomy,” said a Democrat official.
Italy’s banking lobby is urging the government to act quickly to extend the state-backed guarantees in November, before the scheme expires at the end of December.
Another Democrat source noted that in order to extend the scheme and further boost the SME fund, Italy might need to further increase deficit spending, particularly if there is a delay in EU direct aid through the Recovery Fund set up to support member states in tackling the COVID emergency.
So far, Rome’s total pandemic deficit spending amounts to roughly EUR100 billion.