MP calls for limit on economic guarantees

An Open Vld MP has raised concerns about the Flemish government’s business guarantee scheme, warning that the government faces making a loss through the system for the first time. 

Research by Maurits Vande Reyde shows that guarantees given in 2022 totalled a record high of 1.785 billion euros. He is now calling for a cap on the total outstanding amount.

Alongside subsidies, economic guarantees are an increasingly common measure to support companies and entrepreneurs, helping them to secure a bank loan. Companies pay a one-off premium, based on the amount and duration of the guarantee, and if they go bankrupt, the government pays out all or part of the guarantee to the lending institution. 

In recent years, partly due to the pandemic, the system has expanded considerably, bringing the total amount from 776 million to 1.785 billion euros between 2015 and 2022.

According to Vande Reyde, the increase in the past year is mainly due to the record-high guarantee made to chemical company Ineos in November: 500 million euros for investments in an ethane processing facility at the port of Antwerp. Vande Reyde predicts “an even grimmer picture” for 2023.

While the guarantee scheme was originally a better system than subsidies, he says, “the current increase and too easy allocation” are cause for concern. “It is not the task of the government to take over the role of bank and lender,” he said. “The system has become an alternative channel for subsidies. That was not the original intention.”

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