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Title: Expert evaluation network delivering policy analysis on the performance of cohesion policy 2007-2013, Year 2–2012 : Task 1 : Financial engineering : Malta
Other Titles: Task 1: Financial engineering : Malta
Authors: European Commission. Directorate-General for Regional and Urban Policy
Authors: Cordina, Gordon
Vella, Stephanie
Zammit, Alexandra
Keywords: Financial engineering -- Malta
European Union countries -- Economic policy
Malta -- Economic policy
Investments -- European Union countries
Investments -- Malta
Economic assistance, European -- Malta
Issue Date: 2013
Publisher: European Commission. Directorate-General for Regional and Urban Policy
Citation: Expert evaluation network delivering policy analysis on the performance of Cohesion policy 2007-2013, Year 2 – 2012 : Task 1: Financial engineering : Malta. Brussels: European Commission. Directorate-General for Regional and Urban Policy, 2013
Abstract: In 2010, the Managing Authority (MA) in Malta launched the first Financial Engineering Instrument (FEI) under Cohesion policy, taking the form of a loan guarantee scheme entitled the JEREMIE First Loss Portfolio Guarantee Product. This addresses a “financing gap” in Malta wherein enterprises, particularly micro and small, face difficulties in obtaining the necessary financing from banks due to their above-average credit risk and lack of collateral. The JEREMIE scheme utilises funds under Operational Programme (OP) I, Priority Axis (PA) 1 entitled “Enhancing Knowledge and Innovation”, and comprises a holding fund of EUR 10 million to be managed by the European Investment Fund (EIF). The current banking structure in Malta makes such forms of FEIs particularly successful. The JEREMIE scheme is currently the only FEI financed through ERDF in Malta. Although this is true, FEIs, financed through local funds, are not new to the Maltese economy. Unlike loan guarantee schemes, however, not all FEIs have proven to be suitable to the local economy. Venture Capital (VC) funds, for instance, are not economically viable for small ventures that are not engaged in cutting edge innovation. The local authorities realize that although FEIs may effectively generate growth potential for SMEs, non-refundable assistance is still necessary given Malta’s economic structure. Prior to EU accession, non-refundable assistance mainly took the form of tax credits which have been highly successful in retaining investment in Malta as well as attracting new investors to operate locally. Upon EU membership, through improved Community funding opportunities, Malta was better able to diversify its portfolio of assistance to industry and began to offer other forms of nonrefundable assistance, mainly grants. These may be more useful in helping businesses that need imminent and short-term assistance, such as start-ups and micro businesses. Since this type of assistance was lacking prior to EU accession, the authorities have focussed more of their resources on non-refundable assistance in the current programming period under OP I
Description: Acknowledgement: The University of Malta would like to acknowledge its gratitude to the European Commission, Directorate-General for Regional and Urban Policy for their permission to upload this work on OAR@UoM. Further reuse of this document can be made, provided the source is acknowledged. This work was made available with the help of the Publications Office of the European Union, Copyright and Legal Issues Section.
Version: Final
Appears in Collections:EU Publications - ERCSSFin

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