Ratas: Kredex loan guarantee terms need to be reviewed
The Governor of the Bank of Estonia has said the terms of Kredex's loan guarantees - which are a key part of the government's economic package to mitigate the economic impact of the coronavirus - are holding back their issuance. Prime Minister Jüri Ratas said the terms will be reviewed.
On Tuesday, the Governor of the Bank of Estonia Madis Müller sent a letter to Ratas saying the current limit of Kredex's guarantee should be raised as they do not provide enough confidence for banks.
"The 15% percent cap on total liability for Kredex loan guarantees makes Kredex guarantees, which are intended to be a strong state guarantee, uncertain for banks, and therefore the state's large-scale support package may not actually reach companies," Müller wrote.
Müller wrote the modest use of the guarantees offered by Kredex shows the overly restrictive nature of the current guarantee conditions.
Speaking on Vikerraadio's program "Stuudios on peaminister" on Tuesday, Ratas said the conditions of the guarantee should be reviewed.
"If you ask whether these guarantee conditions are holding back the issuance of this Kredex guarantee, then yes, and it needs to be reviewed," Ratas said.
"Whether this [cap] will be 20 or 25 percent should be discussed now," he added.
Ratas also highlighted banks have granted payment leave to many companies which show the measures are also working.
In March the government launched a €2 billion package of measures to boost the economy and mitigate the effects of the crisis caused by the coronavirus.
Money from the state is supporting businesses through KredEx and the Rural Development Foundation. The package also includes support for the Estonian Unemployment Insurance Fund's labor market support (Töötukassa), sickness and tax benefits.
The measures amount to almost 7 percent of GDP.
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Editor: Helen Wright