Libya: No state guarantees on loans – Fenech

Businesses with Libyan interests would not have loans guaranteed by the government, Finance Minister Tonio Fenech said yesterday.

“It’s very difficult for the government to use the people’s taxes to give guarantees on loans of businesses exposed to the Libyan crisis,” Mr Fenech said.

In an interview with The Times Business yesterday, the director general of the Malta Chamber for Small and Medium Enterprises – GRTU, Vince Farrugia urged the government to guarantee loans of businesses with interests in Libya in the same way it had done on deposits during the banking crisis.

“Some of the banks are now tightening their belts with people who have business interests in Libya and who have bank loans. They should actually be a bit more flexible, after all, the government used taxpayers’ money to guarantee people’s deposits during the banking crisis,” Mr Farrugia said.

The minister however shot down the proposal, saying “one has to understand the government cannot pay for the debts incurred by individual enterprises”.

“At this stage, we are collecting the information from economic operators that are exposed and drawing up a list of who owes them money and, once the situation stabilises, the government will do all it can on a political level to help enterprise recover what they are owed,” Mr Fenech said.

GRTU president Paul Abela said the government should meet businesses individually to see what their needs were “in the same manner factories were contacted and helped when the recession hit”.

“What would have happened had the banks gone bankrupt like they did in other countries? How would have the government helped?” Mr Abela asked.

Industry sources said a business should always have insurance, adding risk management was done by the banks and the entrepreneurs themselves. “Libyan returns on investment were high because of the high risk involved,” the sources said.