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Factsheet for measure MT-2020-14/931 Updated – measures in Malta

Malta Development Bank COVID-19 Guarantee Scheme

Skema ta’ Garanzija tal-COVID-19 tal-Bank Malti ta’ Żvilupp

Country Malta , applies nationwide
Time period Temporary, 03 April 2020 – 30 June 2022
Context COVID-19
Type Legislations or other statutory regulations
Category Supporting businesses to stay afloat
– Access to finance
Author Luke Anthony Fiorini (University of Malta) and Eurofound
Measure added 06 July 2020 (updated 19 June 2023)

Background information

In order meet the working capital requirements of organisations in Malta that are facing an acute liquidity shortage due to the COVID-19 pandemic, the Malta Development Bank COVID-19 Guarantee Scheme (CGS) is providing guarantees to commercial banks to increase access to bank financing.

Malta Development Bank (MDB) is responsible for developing, administering and implementing the scheme. The scheme will be facilitated through commercial banks in Malta.

The loans can be used for a variety of purposes, including, but not limited to: employee salaries (including social and health security payments); lease of establishment, including rental costs, energy and water bills; unpaid invoices; acquisition of material and stock; expenses related to postponed or cancelled contracts due to COVID-19; and maintenance costs.

Content of measure

A guarantee fund of €350 million has been made available by the government in order to guarantee loans by commercial banks in Malta. This fund is necessary to help companies meet the new financial requirements of organisations facing cash flow disruptions during COVID-19. Applications for loans are assessed by the commercial bank, assessment is based on the bank's credit policy criteria, and final approval rests with the commercial bank.

The loans have the following features: SMEs can avail a maximum of loan of €2 million, and large enterprises can avail a maximum loan of €5 million. Loans in excess of these amounts are possible (up to a maximum of €10 million for SMEs and €25 million for large enterprises) but require the prior approval of the MDB. The interest rate of the loan is to be determined by the commercial bank. The banks are required to provide an interest rate reduction to organisations of at least one percentage point on the average lending rate as compared to similar loans prior to the introduction of this scheme. The term of the loan is between 18 and 48 months. Subject to additional terms and conditions, the term of the loan can be increased up to 72 months. The loan also has a minimum moratorium of six months, with a possibility to extend to one year. This moratorium applies to both interest and capital repayments and its extension will be considered on a case-by-case basis.


The following updates to this measure have been made after it came into effect.

01 February 2022

The Malta Development Bank announced that the scheme was prolonged until 30 June 2022, thus preventing cutting off support from those organisations that need it. Some added flexibility has also been added to the scheme. In exceptional cases, and at the discretion of commercial banks, loan terms can be extended from the maximum 72 months, to a maximum of 96 months.

24 March 2021

The moratorium period of these loans was extended from a period of six months to 18 months.

Use of measure

An economic update issued by the Malta Central Bank in November 2020 announced that at of the end of September 453 facilities had been approved by the COVID-19 Guarantee Scheme, covering a total of €343.7 million. Of those approved, 129 facilities were in the wholesale and retail trade sector (€81.9 million), 106 facilities in the accommodation and food service sector (€69.8 million), 39 facilities in the manufacturing sector (€18.1 million), 32 in the transport and storage and information and communication sector (€49.4 million), 31 facilities in the administrative and support service activities sector (€11.6 million), 29 facilities in the professional, scientific and technical activities sector (€12.9 million) and 21 facilities in the construction sector (€33.2 million), amongst others. As the scheme provides loans for working capital, only €165.6 million were disbursed by the end of September, up from the €121.4 million disbursed by the end of August.

By the end of February 2021, 558 facilities were approved covering total sanctioned lending of €420.1 million. Of this, €320.7 million was disbursed by the end of February. The wholesale and retail activities applied for the largest number of facilities and had the largest value of sanctioned loans at €95.8 million, followed by the accommodation and food services sector (126 facilities, €95.1 million in sanctioned loans) and the transport and ICT sector (36 facilities, €44.4 million) (Malta Central Bank, Economic Update 4/2021).

In March 2021, it was announced that the €350 million made available for the initiative generated a possible €778 million in loans, and of these over €300 million were still available.

Since the scheme's introduction it has assisted more than 560 businesses, collectively employing over 40,000 persons. Of these beneficiaries, 500 firms were SMEs. The average loan size of SMEs was around €470,000. Conversely, larger entities were granted an average of €3.1 million (Business Today, 27 May 2021).

By the end of July 2021, 617 facilities were approved, covering total sanctioned lending of €471.8 million. By the end of July, €395.7 million were disbursed, By the end of July, 60.7% of the scheme was sanctioned, while 50.9% was disbursed (Central Bank Malta, Economic Update 9/2021).

By the end of September 2021, 652 facilities were approved, covering sanctioned lending of €508.8 million. Furthermore, by the end of September, €414.5 million were disbursed, meaning that by the end of September, 65.4% of the scheme was sanctioned, while 53.3% was disbursed (Central Bank Malta, Economic Update 11/2021).

By the end of February 2022, 648 facilities were approved, covering total sanctioned lending of €497.8 million. By this month, €459.6 million were disbursed, thus 64.0% of the scheme was sanctioned while 59.1% was disbursed (Central Bank Malta, Economic Update 4/2022).

By the end of September 2022, 622 facilities were approved and still outstanding under the scheme. The wholesale and retail activities sector had the largest outstanding number of facilities, followed by the accommodation and food services sector (Central Bank Malta, Economic Update 1/2023)

Target groups

Workers Businesses Citizens
Does not apply to workers Applies to all businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
EU (Council, EC, EP)
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Consulted Consulted
Form Direct consultation outside a formal body Direct consultation outside a formal body

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • Main level of involvement: Unknown


The measure was first announced by the government following calls by trade union and employer associations for action to save jobs and industries during the COVID-19 pandemic. Discussions took place between social partners and the government directly and consultation was limited, resulting in regular public proclamations by social partners stating that more needed to be done. The measure was approved by the European Commission on the 2 April. The measure was designed and is managed by the Malta Development Bank.

Views and reactions

In response of the COVID-19 pandemic’s impact upon business, and following consultation with social partners, the government initially announced a package of measures which included the deferral of taxes and financial support to incentivise telework. Following this announcement, employer associations publicly announced that these were insufficient and would not protect their businesses or jobs, stating the government instead needed to subsidise wages. On 18 March the government announced further measures including support for those who had lost their job, the disabled, and for employers to subsidise quarantine leave. The current measure to guarantee bank loans was also announced as part of this second package. Both unions and employer associations, who were pushing for wage subsidies, publicly stated that this second package was not sufficient to save jobs or organisations. It was however stated that the measures within this second package were beneficial.



Eurofound (2020), Malta Development Bank COVID-19 Guarantee Scheme, measure MT-2020-14/931 (measures in Malta), EU PolicyWatch, Dublin,


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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.