The Bulgarian Development Bank (BDB) has arranged 230 million leva in credit lines to small and medium-sized businesses as part of a total support package of 500 million leva. Twelve commercial banks will make the money available in medium and long-term investment loans and pre-export loans and for projects approved for financing from the EU Structural Funds.

Meeting in the office of Prime Minister Sergei Stanishev on Monday, representatives of the BDB and the Association of Banks in Bulgaria stated that 43 million leva had already reached the beneficiaries. All 500 million leva are expected to be made available to the beneficiaries by the end of March.

Stanishev said that if this policy yielded good results, the government would provide a second installment. He called on the banks to make the information available to SMEs.

Stanishev also recommended that priority be given to enterprises with a larger workforce and to export-oriented ones. He also suggested that a separate programme be drawn up to support agricultural producers and that banks could consider lending working capital to companies.

"For years on end, the pension funds were very profitable, but last year they sustained substantial losses," Stanishev said, adding that the BDB is inclined to issue bond loans amounting to some 100 million leva. Angel Gekov of the BDB management said that the bank will release a bond issue expressly intended for financing the pension funds.

"There is no problem organizing a credit line in support of farmers, too," Gekov said. This sector would be boosted adequately by a line of some 100 million leva, considering that the average loans contracted there range from 50,000 to 250,000 leva, the banker added.

Small and medium-sized enterprises will be loan-financed by up to 2 million leva at an interest of 8 per cent and with up to 0.7 per cent charges and commissions per annum. The loans will be for up to ten years with a three-year grace period.

Regarding the Joint European Resources for Micro to Medium Enterprises Initiative (JEREMIE), the BBD and the European Investment Fund are to set up a special-purpose joint venture with capital of 200 million leva. The company will develop financial products for the commercial banks in Bulgaria.

This programme will make it possible to extend the period for absorption of the resources for small and medium-sized enterprises from the EU Structiral Funds from two to seven years.

Source: BTA