(NICE) - EU finance ministers will propose on Saturday that the European Investment Bank boost lending to small- and mid-sized firms by half in 2008 and 2009 to 15 billion euros (21 billion dollars), according to a document seen Friday.

"Given the importance of European SMEs for economic growth, employment and social cohesion, a special initiative targeted at SMEs is crucial to ensure the provision of adequate financial products at attractive conditions," said the document, obtained by AFP.

As a result, EU finance ministers meeting in Nice were to ask the EIB "to raise its level of lending to SMEs up to 15 billion euros, ie. 50 percent, in 2008-2009, including with a new product line allowing risk sharing with banks," said the proposal to be submitted to ministers.

The EIB allocated 5.2 billion euros to SMEs in 2007 out of a total of nearly 48 billion euros in loans.

The EIB, whose board of governors is made up of EU finance ministers, is a public development bank that finances investments based on the European Union's priorities.

The ministers, who were meeting Friday and Saturday in the French Riviera city of Nice, want the institution to play a bigger role in reviving economic activity in the midst of a sharp downturn.

Having ruled out a broad European economic stimulus plan, the ministers have pinned their hopes of boosting activity on increased lending from the EIB to SMEs.

With the financial sector in turmoil, commercial banks have reined in their lending, making it difficult for SMEs in particular to raise funds necessary for investments.

"This is a subject that I care a lot about because I think that its through financing SMEs that we will be able to boost growth," said French Finance Minister Christine Lagarde.

Informal meeting of EU economy and finance ministers in Nice

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