ISLAMABAD, June 2: Italy will provide an interest-free loan of euro 7.75 million for development of small and medium enterprises (SMEs).

An agreement to this effect was inked between the SME Bank and Artigiancassa Bank here on Monday. It provides for implementation of a credit facility offered by the government of Italy for provision of a soft loan of euro 7.75 million for small and medium enterprises development in Pakistan.

The loan payable in 39 years carries zero per cent interest rate. The SME Bank would advance this amount to SMEs at a maximum mark-up of four per cent on loans in euro and eight per cent on loan in rupee.

The credit facility shall be available only to private enterprises or enterprises with a public participation up to 20 per cent.

Research centres and universities may also have access to the soft loan in order to set up pilot projects or demonstration centres in the field of technology innovation and environment protection.

The funding for individual projects, even if split into more than one contract, shall not exceed euro550,000 and shall not be less than euro30,000.

The credit line is proposed to be disbursed through a Smeda-Unido investment promotion unit (IPU).

The IPU would be set up within the Smeda premises, through an Italian grant of euro 1,418,200 (already released in favour of Unido).

The financial and technical feasibility of each project loan is to be undertaken by the IPU and loans shall be managed through the network of SME Bank.

The signing ceremony was also witnessed by Minister for Finance and Economic Affairs Syed Naveed Qamar and Italian minister of state for economic and finance Guiseppe Vegas.

SME Bank Chairman R. A. Chughtai signed the agreement on behalf of the government of Pakistan and Stefano Gatti, head of revolving fund management unit, Artigiancassa Banking Group of Italy signed for the Italian government. Earlier the Italian minister in his meeting with Mr Naveed Qamar discussed general guidelines of the financial agreement between the two governments that would help promote development of small and medium enterprises in Pakistan, besides fostering collaboration in other sectors.

Both sides exchanged views on establishing a Technical Support Unit in economic affairs division of ministry of finance that would underpin all similar Italian-funded projects in various sectors.

Subsequent monitoring and evaluation of all such projects would pave the way for maximum benefits to the people of Pakistan, and will, simultaneously enrich Italian entrepreneurs’ experience in projects handling the world-over.

Mr. Vegas invited Naveed Qamar to visit Italy to further strengthen economic cooperation between the two countries.