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International Internet Magazine. Baltic States news & analytics Monday, 01.06.2020, 18:56

Lithuania's proposes fund to support big companies, ensure settlements

BC, Vilnius, 01.04.2020.Print version
– The central Bank of Lithuania has suggested establishing a special fund to provide swift temporary financial assistance to big and socially important companies facing difficulties due to the coronavirus crisis and failing to receive bank loans, informed LETA/BNS.

The central bank is also suggesting issuing direct loans to fund bills of promising small and medium enterprises, unpaid due to the coronavirus.

Such a fund would be similar to a pawnshop to provide last-resort funding, Marius Jurgilas, a board member of the Bank of Lithuania, says.

"Sometimes you need to go to a pawnshop and pawn your golden watch and get the money that will help you to survive this way. The idea of the proposed state fund is similar to that. If we have strategic sectors that are important for the state, the state would agree to invest in these enterprises as the last-resort lender," Jurgilas told.

In his words, the fund could encourage such enterprises to issue bonds to create a possibility to invest into these enterprises' authorized capital. The state would have to fund the establishment of such a fund, but the private sector would also take part in its activity later.

The settlement chain has been disrupted as the existing quarantine affected certain activities, and small and medium enterprises do no receive payments for their goods and services, and they cannot access loans from credit institutions.

"We are monitoring the market and see that not only businesses that were banned by the state to continue operating for obvious reasons were affected, but also enterprises that supplies goods and provides services to them. The latter could regroup and continue their activity but cannot do that because of unpaid bills," Jurgilas said.

Those behind the idea say the maximum loan would depend on an enterprise's size and could range from 10,000 to 100,000 euros.

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