Government has set up a Distressed and Marginalised Areas Fund to address capital constraints faced by the local industry to the tune of US$40 million.
The coming on board of government towards supporting distressed firms is a shot in the arm in the local manufacturing industry which is currently operating below 50% capacity utilisation owing to unavailability of lines of credit.
According to information from the 2011 Mid-Term Fiscal Policy review statement, the US$40 million facility will come as collaboration between government and a local pension house.
Government will pour in US$20 million while the remainder will be availed by the partner identified by government, of which US$500 000 will be directed towards SEDCO for on-lending to small and medium enterprises out of the budget allocation of US$3.35 million.
Government has also set aside US$5 million towards the development of small to medium enterprises and it will be complemented by US$10 million from a local commercial bank while the other US$5 million will be availed by the Arab Bank for Economic Development in Africa.
Setting up a fund for distressed firms has been viewed by observers as a positive development for the local economy as over 70 companies have been reported to have closed operations or relocated to the capital city.
The fund is anticipated to kick start operations of many firms which have been negatively affected by continued existence of illegal economic sanctions imposed on the country by western nations, hence failure to attract lines of credit.