Finland to Support Companies as Crisis Crimps Lending

By Kati Pohjanpalo

Nov. 18 (Bloomberg) -- Finland will provide loans to companies after the global financial crisis led banks to curtail lending, the government said today.

``There is a threat of export projects that are important for Finland being canceled or postponed due to banks' liquidity problems,'' Economy Minister Mauri Pekkarinen said in an e-mailed statement today.

The government set aside 1.2 billion euros ($1.5 billion) for Suomen Vientiluotto Oy to channel funds to export projects. The lending program will last until 2010, the government said.

The 15-month-old global financial crisis has led to a freeze in liquidity as mistrust among banks crimps lending worldwide. That pushed the euro area into its first recession since the 1999 introduction of the single currency in the third quarter.

The Nordic nation's economy will expand 0.5 percent next year, the Helsinki-based government said in an e-mailed statement today. That compares with its Aug. 27 forecast of 1.8 percent. The economy will expand 2.5 percent this year, it added.

``Some laws will have to be changed'' to support the exporters, the government said. Exports account for about a third of the $246 billion economy.

Start-ups and other fast growing companies have also had problems securing capital and 80 million euros will be set aside for loans to them, the government said.

To contact the reporter on this story: Kati Pohjanpalo in Helsinki at kpohjanpalo@bloomberg.net