A fund to help settle workers' unpaid wages is to receive an urgent cash boost from the government to help it overcome difficulties arising from a surge in new applications during the summer. The Executive Council yesterday agreed to extend a bridging loan of $695 million to the Protection of Wages on Insolvency Fund Board between 2002-03 and 2005-06 to help it through its cash-flow problems. The loan will take the form of a credit line at the government's 'no-gain, no-loss' interest rate of 3.125 per cent a year, so money will be drawn only when necessary. The board expects that, after the economy picks up and severance payments can be met by savings in the Mandatory Provident Fund, the insolvency fund should be able to repay the loan by 2015-16. The fund has suffered annual deficits since the Asian financial crisis in late 1997. Its deficit leapt from $24.7 million in 1997-1998 to $204.6 million two years later, and has hovered at about $130 million since then. The Business Registration Certificate levy, which contributes to about 70 per cent of the fund's income, was raised from $250 to $600 a year in May to help revive the fund's finances. However, the number of new applications rose to 7,660 between June and August, up 65 per cent over the same period last year. The number of outstanding applications rose to 14,000 by September. As a result, the fund's reserves fell to $114.4 million in August. They are expected to shrink further as $60 million to $70 million is paid to workers of the collapsed Treasure Restaurant Group over the next few weeks. The Permanent Secretary for Economic Development and Labour, Matthew Cheung Kin-chung, said the move created a 'win-win-win' situation for those involved. 'Firstly, the employers will not have to worry about facing extra financial burdens on top of the levy increase,' he said. 'The interests of the workers will be protected as the smooth operation of the fund will provide them with a safety net. 'Thirdly, no extra subsidies will be required from the taxpayers as this is a one-off loan on which the fund will need to pay interest.' Fund chairman Ho Sai-chu said the extra cash was greatly appreciated. He warned that, without the injection, the fund could dry up by next March as its payouts now exceed revenue by an average of $10 million a month. Mr Ho said about 40 per cent of applications to the fund came from workers in the catering and construction industries.