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Factsheet for measure MT-2020-20/1622 – measures in Malta

Interest rate subsidy on bank loans

Country Malta , applies nationwide
Time period Temporary, 15 May 2020 – 30 June 2022
Context COVID-19
Type Legislations or other statutory regulations
Category Supporting businesses to stay afloat
– Direct subsidies (full or partial) or damage compensation
Author Luke Anthony Fiorini (University of Malta) and Eurofound
Measure added 22 December 2020 (updated 11 January 2021)

Background information

In order meet the working capital requirements of organisations in Malta which due to COVID-19 are suddenly facing an acute liquidity shortage, the Malta Development Bank is administering a Government interest subsidy of up to 2.5% on commercial bank loans.

The aim of the scheme is to support organisations who require liquidity and to better prepare them for the recovery process post COVID-19. The subsidy cannot be used by organisations which are trying to take advantage of the COVID-19 crisis e.g., to purchase property at advantageous prices.

Content of measure

The scheme which was approved by the EC in May 2020 under the State aid Temporary Framework allows the Government to provide an interest rate subsidy of up to 2.5% on bank loans. The subsidy is subject to participating organisations paying a minimum rate of 0.1%, and applies during the first two years of working capital loans guaranteed by the COVID-19 Guarantee Scheme (CGS)

The interest rate subsidy applies automatically to all recipients of working capital loans approved by accredited commercial banks under the COVID-19 Guarantee Scheme. Furthermore, businesses which wish to make use of this scheme are to contact accredited commercial banks. Applications were to be received by the end of June 2020.

Use of measure

Specific statistics regarding this measure have not be publicised, however by the end of September 2020, 453 facilities had been approved under the COVID-19 Guarantee Scheme (CGS), covering total sanctioned lending of €343.7 million, with €165.6 million disbursed by the end of September, up from the €121.4 million disbursed by the end of August. The interest rate subsidy is provided automatically on CGS loans.

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 Unknown Consulted
Form Not applicable Unknown

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

  • No involvement
  • Main level of involvement: Peak or cross-sectoral level


From the beginning of COVID-19, social partners had demanded financial support for businesses and to protect employment. Their calls were heeded as the Government announced a series of measures culminating on 24 March 2020 with a joint announcement by Government and social partners (including Malta's largest employer associations and trade unions) with regards to a package of measures that included substantial financial support. It was announced that discussions between social partners would continue following this date. The current measure was announced following these publicised discussions, and social partners' involvement on this specific measure is unclear. Further support in terms of finance had however been requested by various employer associations.

Views and reactions

The Malta Chamber of Commerce welcomed the Government subsidy as "a step in the right direction and further support to businesses at this time of unprecedented challenges." The Malta Chamber however encouraged flexibility on the part of banks with enterprises experiencing hardships in view of the need for organisations to contribute at least 0.1%.

The Gozo Business Chamber, and the Gozo Tourism Association also welcomed the announcement by the government, noting that their suggestions to improve finance for enterprises had been taken onboard.



Eurofound (2020), Interest rate subsidy on bank loans, measure MT-2020-20/1622 (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.