Romanian Govt. meets half of the target set under IMM Invest scheme

Banks in Romania have extended about 23,000 loans totaling RON 10 billion (EUR 2 bln) to local small and medium-sized enterprises (SMEs) under the Government-backed scheme IMM Invest, announced Dumitru Nancu, the head of the body that handles the program (FNGCIMM), quoted by Ziarul Financiar daily.

The bank lending data reported by Romania's National Bank (BNR) partly reflect these figures. The volume of new corporate loans denominated in local currency surged to RON 3.9 billion (EUR 800 million ) in October, up 50% compared to the same month last year, according to data released by BNR. In September, the new local currency corporate loans were RON 3.5 bln (EUR 0.7 bln), the highest value since July 2019 and twice as much as the RON 1.65 bln new loans extended in April during the lockdown. However, this also means that local banks have hardly extended any other corporate loans, except for those guaranteed by the Government. The EUR 2 bln extended so far under the IMM Invest program represents only half of the RON 20 billion (EUR 4 bln) target approved by the Government.

Under the scheme, launched in June but yielding results only late in the autumn, the Government fully subsidizes the application fee and the interest plus the risk fee for 90% of the loans extended to SMEs "at least by the end of the year [2020]". Extending these subsidies will have to be approved under next year's public budget and might pend approval from competition bodies.

FNGCIMM has cleared loans worth RON 17 bln (EUR 3.5 bln), which can be extended by local banks, Stefan Nancu said, speaking during the event organized by CNIPMMR for the launch of the SME White Paper report. A couple of months ago, Nancu announced that 21,000 loans summing up to RON 15 bln (over EUR 3 bln) had been approved.

He also said that he hoped that 25,000 SMEs might get bank loans under the scheme designed in June to support Romanian companies recover from the economic crisis caused by the COVID-19 pandemic.

"Under IMM Invest, which started on June 1, 23,000 guarantees were granted, and RON 17 bln were paid from the financial-banking system [extended as bank loans to SMEs]," said Nancu.

At this moment, FNGCIMM subsidizes the interest, risk fees, and the guarantee fee for RON 10 bln, he said, stressing that the money was lent by the banks and not from the public budget.

"The value of the loans approved [by FNGCIMM] is RON 17 bln, and counting the applications on banks' pipeline, we hope to reach 25,000 SMEs by the end of this year," said Dumitru Nancu.

The differential between RON 17 bln approved loans, and RON 10 bln actual loans might be explained by the fact that once approved by FNGCIMM, a loan would not be automatically extended - particularly in the case of the credit lines.