Portugal pushes ahead with plans for state-owned development bank

Portugal’s government has approved plans to create a state-owned development bank to channel funds into companies and sectors to bolster the economy. 

Approval from the Bank of Portugal and the European Commission is needed to proceed with the development bank, which would be created by merging three existing investment and mutual guarantee funds. Its functions will include providing bank guarantees and long-term financing to companies in high-risk sectors, supporting exports and taking equity and shares in companies requiring investment. 

The plan comes as the country hopes to receive €26.5 billion ($29.73 billion) from the European Union’s €750 billion coronavirus recovery fund to help it through the coronavirus pandemic. Portugal is due to receive €15.5 billion in non-repayable grants and €10.9 billion in loans from the European Commission, if the recovery fund is approved, and that would be channelled through the bank, the council of ministers, or cabinet, said in a statement.