We disbursed almost EUR 300 million to support 7,500 projects in three years

29/12/2022

 

 "During two past pandemics and this crisis year that is passing, when we faced high energy prices and inflation, the Development Bank disbursed loans to the economy in the amount of EUR 294 million to support over 7,500 projects. In 2022 alone, funds in the amount of EUR 107 million were extended in different activities. The largest percentage, about 40%, is for the support of micro, small and medium-sized companies in the production activity."

 

 

  

 

 Development Bank is continuously increasing its participation in the total gross loans extended to non-financial companies by the banking sector, so that, as of September 30, 2022, 7.3% of the gross loans are from DBNM funds. For comparison, in the same period last year, this percentage was 5.3%.

 

The Guarantee scheme allows companies to provide part of the collateral for approved loans. The use of this product is constantly growing and currently, the amount of guaranteed loans is EUR 7.6 million for 97 companies. We expect the use of the products from the Guarantee Fund to intensify in the future. 

 

 

 

 

Already in the first months after the crisis with the Covid pandemic flared up in 2020, the Development Bank of the Republic of North Macedonia (DBNM) became very relevant in the domestic business sector for its public calls for favorable credit lines that were supposed to help companies mitigate the consequences of the suddenly closed economy. The pandemic subsided, but a new crisis came with increased prices of energy and other raw materials, as a result of the war in Ukraine that started in February of this year, which meant that Macedonian companies still need support for working capital, etc. We discussed with the CEO of the Development Bank, Mr. Kire Naumov, about the importance for domestic companies of the crisis credit lines and other instruments that this state institution has disbursed in the past period, while we should also mention the regular credit lines from the European Investment Bank, EIB 5 and EIB 6, in the amount of EUR 150 million.
 

Mr. Naumov, we went through an extremely difficult year economically... The Development Bank was already involved in mitigating the crisis for domestic companies during the pandemic 2020 and 2021. Please, briefly tell us about the key implemented programs and credit lines in the past three years.

The Development Bank played a significant role in dealing with the crises faced by domestic companies in the past period, starting with the Covid crisis, and the energy and price crisis in the direction of introducing new credit lines and products to support companies. I will highlight only the key credit lines and products that we have introduced in the last three years:
- Four interest-free COVID credit lines to support companies to deal with the Covid crisis, with direct lending through DBNM, through which 4,134 companies are supported in the amount of EUR 45 million (two of them with a grant component);
- Three credit lines to support companies to deal with the energy crisis in the amount of EUR 25 million;
- Interest subsidy on commercial banks approved to companies that reinvested the profit, in the amount of EUR 2 million;
- Facilitation of the terms of the credit line for the production, processing, and export of agricultural products in the amount of EUR 7 million has been made possible;
- Introducing a new product: Guarantee fund (guarantee scheme) in the amount of EUR 15 million, through 2 new types of guarantees: individual and portfolio guarantees;
- Introducing a new product: Customs guarantees i.e. guarantees for securing customs debt in inward processing, with the aim of supporting the exports,
- Funds from EIB 5 and EIB 6 credit lines in the amount of EUR 150 million have been extended to support 458 projects.
 


How many total funds for these three years have been disbursed to domestic companies and what are their effects – preserved and created new jobs, maintained or increased exports, etc.?
During these three years, the Bank's support to domestic companies has been continuously growing. In three years, the Development Bank extended loans to the economy in the amount of EUR 294 million to support over 7,500 projects. In 2022 alone, funds in the amount of EUR 107 million were disbursed in different activities. The largest percentage, about 40%, is for the support of micro, small and medium-sized companies in the production activity. In the past three years, the credit lines have been aimed at supporting liquidity, preserving and creating new jobs, thus preserving about 40,800 and creating about 1,500 new jobs.
 
You recently stated that the assets of the Development Bank have increased in the past period... How much is it now, and with what share in the total portfolio of corporate loans in the banking sector does the Bank participate at the moment?

According to the results of the bank's operations, it recorded increased assets in 2020 compared to 2019 by 16.3%, in 2021 compared to 2020 an annual growth of 21% and in the first half of 2022 the growth of assets is 43%, that is, it has grown from EUR 168 million at the end of 2019 to EUR 267 million in the first half of 2022.

On December 13, 2022, the recapitalization of the Bank was carried out in the amount of EUR 10 million from the State Budget, with which the total capital and reserves of the bank amount to EUR 57.5 million. Funds for recapitalization of the bank during 2023 will be made available to domestic companies through favorable credit products according to the needs dictated by the economy.

Development Bank continuously increases its share in the total gross loans extended to non-financial companies by the banking sector, so that, as of September 30, 2022, 7.3% of the gross loans are from DBNM funds. For comparison, in the same period last year, this percentage was 5.3%.

 

Please explain to the readers, what other products besides loans the Bank offers, and how much the companies are interested in them so far, for instance in export insurance.

In addition to loans, the Development Bank offers domestic companies two more products: insurance of export and domestic receivables, and factoring (purchase of receivables from foreign and domestic buyers). The interest in these two products is continuously growing, especially in crisis conditions when both, collection risks and the need for current liquidity are greater.

Companies can insure their claims against commercial and political risks through credit insurance products. We currently have 80 policyholders from various industries, with over 500 buyers in 33 countries

Also, factoring as a product has been in constant growth over the past years, both in volume and in terms of an expanded portfolio of customers. This product enables easier short-term financing of companies for their current needs, thus representing a kind of accelerator of business cycles in companies.

 

How is the guarantee scheme working so far?

During the Covid crisis, the bank, among other products, introduced the Guarantee Fund, i.e. the Credit-Guarantee scheme in the amount of EUR 15 million, which made two new types of guarantees available to companies: individual and portfolio guarantees.

The guarantee scheme allows companies to provide part of the collateral for approved loans. The use of this product is constantly growing and currently, the amount of guaranteed loans is EUR 7.6 million for 97 companies. We expect the use of products from the Guarantee Fund to intensify in the future.

 

What is the plan for 2023, and which credit lines the Development Bank is preparing? What else will be in focus next year?

The Development Bank continues its activities to support companies in the new working conditions. In this direction, on December 19, 2022, a public call for a new credit line for working capital for companies affected by the energy and price crisis with direct lending through DBNM in the amount of EUR 5 million was announced. Interested micro, small and medium-sized companies, sole proprietors, and artisans who pay taxes on real income can submit their loan applications electronically, starting from December 26, 2022, to January 9, 2023.

The signing of the agreement with the European Investment Bank for a new EUR 100 million, which will be available to the companies in 2023, is expected as soon as possible. The Development bank is also dedicated to expanding cooperation with other international investors in order to provide new sources of funds, monitoring the economic situation, and continuous adjustment of its products in the direction of supporting companies in the newly emerging operating conditions, with a special emphasis on supporting investments in the green economy.

 
What kind of economic year do you expect in 2023, specifically for Macedonian companies, is there room for a little optimism? Will inflation ease, or will we enter an even more uncertain period of recession that threatens the most developed economies?

Optimism, that is, expectations, is very important in the economy. Considering that, according to the latest statistical data, inflation in the country has started to slow down, I expect that this trend will continue in 2023. The tightening of monetary policy should strike a balance between containing inflation and avoiding stifling the economy. The Government's measures to support Macedonian companies in the energy-economic crisis made a significant contribution to maintaining the companies' liquidity, as well as encouraging investments aimed at energy efficiency and renewable energy sources with the aim of long-term cost savings. Even in times of crisis, Macedonian companies have shown flexibility in adapting to new environmental conditions. I practice holding on to optimism and expect a better working climate for domestic companies.