Under the terms of the scheme, suppliers can purchase a six-month top-up insurance from the government if credit limits on their UK customers are reduced.
The amount available to each supplier if a company's credit limit is reduced will either restore cover to the original amount, double the amount the company is able to obtain from the private sector, or insure up to £1m, whichever is lower.
Tim Elliott, managing director at merchant Elliott Baxter, said: "The taxpayer is being asked to invest in 'toxic assets', which a credit insurer believes are too high a risk," he said.
"Sufficient to say, in our view this government initiative is a total waste of money, and provides further evidence of how out of touch with the real world they really are."
Elsewhere, Steve Parkins, UK Credit Manager at merchant Antalis, said that for the scheme to work, printers will have to have an existing policy and most can't afford the premiums.
"This means there will be nothing to top-up. The theory is fine and not a new concept, but this could be a potential black hole for the government.
"Insurers could accelerate limit reductions knowing that the excess will be matched by alternative means."
Premier Paper Group managing director Graham Griffiths said it does appear to be a positive move on the surface if it helps merchants and customers get more cover.
However, he added there needs to be more information on how it will work in practice.
He said there is a tendency not to reduce cover but to pull it altogether, which could affect the way the scheme works.
PaperCo group credit manager Brian Breslin said that any government assistance to the print industry is very welcome.
However, he said that short term fixes are not necessarily the answer.
"While the industry has been going through a tremendously difficult period, there is scope for a brighter future where focus remains on service, innovation and cost control," he said.
He added that top up insurance schemes may serve as an important bridging facility for some companies and certain situations.
"It is more important that all of the industry stakeholders work together in a cohesive and supportive manner to address the short and long term issues we all face."
Also see:
Budget 2009 - Live text
