Structural Reform Support Programme to strengthen MDB’s organisational capacity (2019-2020)
With the support of technical assistance from the European Commission’s Structural Reform Support Programme (SRSP), during 2019 the MDB utilized external expertise to strengthen its organisational capacity. Such capacity building enhanced MDB’s ability to comply with the pre-conditions of an upcoming Pillar Assessment. This organizational assessment is necessary in order to qualify as an implementing partner of the EU Budget. This capacity building project supported by SRSP commenced in September 2019 and was completed in November 2020.
Through this assistance the MDB significantly improved its internal controls and accounting systems, with a view to ensuring compliance with the requirements of the EU Pillar Assessment as well as complying with standards applicable to national promotional banks. Furthermore, the assistance provided by the experts engaged by SRSP helped MDB improve its publication of information, data protection and reporting.
European Investment Advisory Hub supporting MDB in the implementation of financial instruments
During 2020, the European Investment Advisory Hub (EIAH), the advisory arm of the European Investment Bank (EIB), provided support on the preparation and implementation of financial instruments under the InvestEU Programme in Malta for the next Multiannual Financial Framework (MFF).
Through the technical expertise of external consultants, the EIAH supported the MDB in identifying those sectoral areas of the economy that are most deserving of the Bank’s intervention through financial instruments under InvestEU, and to propose a set of products that could potentially be deployed to mitigate these identified market failures. This exercise was completed in March 2021.
These advisory services were funded by the EIB and were structured around three major components:
Component 1: The objective of this component was to identify the financial instruments implemented in the 2014-2020 programming period and provide an indication of their performance. This component aimed to ascertain the degree of success of the implementation of the financial instruments as well as map the instruments under implementation across the different areas of the economy to avoid duplication and displacement in the market.
Component 2: The objective of this component was to conduct a broad market analysis of the Maltese economy, with the aim of identifying the specific areas of the economy that hold the most potential for MDB’s effective intervention through financial instruments in the next programming period. The findings of the market analysis were incorporated into an analytical framework, that assesses and ranks each subsector against a predefined set of criteria.
Component 3: The objectives of this component were (i) to analyse the selected subsectors further with the aim to gain a stronger view on the current bottlenecks and the type of intervention needed to mitigate the existing market failures, and (ii) to propose a set of financial instruments that could be implemented by MDB to mitigate the identified gaps within each of the selected priority subsectors.
Technical support to develop targeted financial instruments for SMEs and Start-Ups
In 2021, the MDB continued to collaborate with the European Commission in terms of the Technical Support Instrument (TSI) which is the Commission’s instrument to provide technical support to reforms in EU Member States. The TSI builds on the success of its predecessor, the Structural Reform Support Programme (SRSP).
Collaboration under the TSI will now be focusing on targeted support to assist the MDB in achieving its strategic objectives of addressing financing gaps for SMEs and start-ups.The main deliverables of this assistance will revolve around the design and launch of an equity-based financial instrument for SMEs and another financial instrument for start-ups. A detailed gap assessment of the current offerings for both SMEs and start-ups will be undertaken and benchmarked against international best practices.
This project which was finalised by the first quarter of 2023, will help position the MDB as a key stakeholder and catalyst for start-up and SME financing in Malta. Furthermore, it will help the MDB to develop tailored financial instruments to support SMEs and R&I investment, which are two important windows under the InvestEU programme.