I am aware from media reports that the German Government is in the process of finalising details of a bilateral arrangement with Spain that will enable KfW, the German state-owned development bank, to lend €800 million to the Instituto de Crédito Oficial (ICO), its Spanish counterpart, to provide liquidity and capital for Spanish SMEs. I understand that the idea is that the Spanish State will guarantee the loan and will supervise loan disbursement and supervision through the banking system. While this is a very interesting concept, any guarantee by the State in respect of borrowings by SMEs would need to be carefully considered. However, Deputies can rest assured that my Department is closely monitoring developments.
The Irish Government is very conscious of the need to encourage a vibrant and well-resourced SME sector. As part of the redeployment of the National Pensions Reserve Fund (NPRF) towards commercial investment in Ireland, the NPRF Commission announced on 9 January 2013 its commitment to a suite of three long-term funds to provide equity, credit and restructuring investment to SME and mid-sized corporates. The NPRF has completed commitments of €125 million to the SME Equity Fund, €50 million to the SME Turnaround Fund and €175 million - €325 million (depending on the amount of third-party investment raised) to the SME Credit Fund. As Deputies will be aware, the Government is preparing legislation to establish the Ireland Strategic Investment Fund (ISIF), through which resources from the NPRF will be channelled towards productive investment on commercial terms in the Irish economy. The ISIF will seek to leverage and maximise its resources by attracting private sector co-investment.
