The European Investment Bank has said it will mobilise €40 billion in financing to alleviate constraints caused by the spread of Covid-19, calling on European countries to establish additional guarantees for small and medium businesses.
The bank said it proposed the measures as the virus puts a “heavy strain on both public health and the economy”.
The financing package will go towards bridging loans, credit holidays and other measures “designed to alleviate liquidity and working capital constraints for SMEs and mid-caps”.
“The EIB Group recognises the impact that the coronavirus is already having on the Irish economy, employment and daily life,” its vice-president, Andrew McDowell, said.
"Detailed discussions with the Irish government, the SBCI [Strategic Banking Corporation of Ireland] and other stakeholders are taking place to ensure that this package of new measures to strengthen resilience to the virus shutdown can rapidly support sectors in Ireland most vulnerable to this unprecedented shock."
Guarantee schemes to banks will account for €20 billion of the funding, liquidity lines to support SMEs will account for €10 billion, and an asset-backed security purchase programme to allow banks transfer risk on portfolios of SME loans will account for the remaining €10 billion.
The bank's president, Werner Hoyer, also called on European member states to establish additional guarantees to ensure that access to finance for small and medium businesses remains open. "This would help reassure markets and citizens at this time of unprecedented uncertainty," he said.
Such funds could be drawn from the European Financial Stability Mechanism, he added.
Mr Hoyer also noted that the bank was already in contact with companies seeking to “fund the search for Covid-19 vaccines and medication”.
The European Investment Bank Group is directly owned by EU member states. Last year it made €63.3 billion available for projects, including a record €1.08 billion worth of projects in the Republic.
The project which received the largest financing package in the Republic last year was Dublin Airport’s resilience upgrade which got €350 million.
A social and affordable housing project received €200 million, and one private-sector company that received funding was the Carbery Group, which got a package of €35 million for its investment programme.