Purpose of the Draft amendment Act of the Support of Enterprise and State Loan Guarantees Act of Estonia, approved by the Estonian Government, is, compared to the valid Act, to specify the definition of state guarantee and guarantee contract terms and conditions. The Act will explain the system, in which case the State intervenes in loan guarantees and how respective mechanism will work, in a more accurate manner.

Above all, the Draft concerns KredEx Foundation, who provides the service of state loan guarantees. It means that when an enterprise needs to borrow from a bank, it has an opportunity to apply for a state guarantee from KredEx. Explanation of state participation and responsibility provides certainty for banks that ceasing of funds from the loan provider (here: KredEx) will not compromise the loan guarantees. In that case, guarantee responsibilities will be transferred to the State.

Overall, it enables to make borrowing more accessible for enterprises and promote business.

Source: Briefing Room, Estonian Government Communication Office
Date: July 17, 2008