Brussels, 10/06/2015 (Agence Europe) - On Tuesday 9 June, the European Commission gave the go-ahead to Latvia's plan to use a recent merger of three public institutions to set up a financial institution (the Latvian Single Development Institution - SDI) to facilitate access to finance for small and medium-sized enterprises (SMEs) and other players facing obstacles to raising finance on the markets.
Latvia plans to inject more than €512 million of capital from state resources into the SDI for the period 2015-2022. The SDI will use this budget to act within a strictly defined remit, based on identified market failures. It will in particular offer financing - such as loans, guarantees, equity injections or grants - mainly to SMEs, start-ups, mid-cap and micro-enterprises, but also to individuals and companies active in the agricultural sector. The SDI will also act as a financial intermediary and channel funds for programmes and projects co-financed by international financial institutions, such as the European Investment Bank or the European Bank for Reconstruction and Development.
The SDI, which was established as a result of the recent merger of three State-owned institutions - Altum (the former Mortgage and Land Bank), the Latvian Guarantee Agency (LGA) and the Rural Development Fund (RDF). Before the merger, the three institutions (Altum, the LGA and the RDF) were also involved in other activities that are not directly related to the fundamental objectives of a development financial institution. The Latvian authorities have promised that the SDI will cease, wind-down or sell these legacy activities that are outside its approved scope as soon as possible and by 31 December 2018 at the latest. (Elodie Lamer)