The Lithuanian Free Market Institute has examined a draft law on the National Development Agencies no 7-11269 and submitted its comments and proposals to relevant authorities. The proposed legislation is aimed at creating a legal basis for the establishment of national development agencies that would engage into investment, lending, leasing and other financial services. Specifically, the draft law covers the following areas: the establishment and development of medium-sized enterprises, urbanization, the renovation and development of residential and public property, the promotion of energy efficiency and agricultural production and processing.
In its position paper, the Lithuanian Free Market Institute noted that the market is already served by several agencies, including the Public Investment Development Agency, Investment and Business Guarantees and the Agricultural Credit Guarantee Fund that provide financial guarantee and lending services on behalf of the state; therefore, the establishment of additional financial institutions for development would unjustifiably increase state participation in the financial markets. Under the proposed legislation, a newly created commercial financial institution would function as a state-run commercial bank thus competing with private market players and posing a threat of market distortions. Moreover, the provision of financial services would be politicized and open the way for financing politically-motivated projects.
Given the aforementioned, the Lithuanian Free Market Institute called for the rejection of the draft law.
The full position paper (in Lithuanian) is available here.
