27 Dec
Chapter News

Investment Plan for Europe: Momentum continues with EFSI-backed agreements in all 28 Member States

The recent agreement in Cyprus means that the EFSI guarantee is now helping to boost investment throughout the EU.

The European Commission welcomes the news that, with the agreement in Cyprus, the European Fund for Strategic Investments (EFSI) is now helping to boost investment, support jobs and spur growth in all 28 Member States.

Commission Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness, said: “The EFSI has already proven to be a crucial first step towards returning investment levels towards a long-term sustainable path. Today’s agreement in Cyprus places a greater emphasis on enhancing the EFSI’s geographical coverage, which remains a priority. We hope other agreements will follow to benefit Cypriot SMEs’ access to finance. Together with the EIB, we must now redouble our efforts to build on the EFSI’s success so far for jobs and growth in Europe.”

European Investment Bank President Werner Hoyer, said: “The signature in Cyprus today is a key milestone for the EIB Group. The pioneering use of the EIB-EU budget guarantee is now delivering across EU Member States. EFSI builds on the strong EIB Group engagement across a broad range of sectors and using a variety of financial products across the European Union. EFSI will continue to drive our ambition to reach out to new financing partners, targeting new projects and SMEs in need of finance.”

In just 18 months since the EFSI guarantee was launched, the EIB Group loans backed via EFSI are well on track to mobilise its initial target of EUR 315 billion in additional investments in the real economy by 2018. We have already moved beyond the halfway point of this initial target. As of December 2016, the operations approved under the Investment Plan for Europe now represent a total financing volume of EUR 30.6 billion. These operations are now present in all 28 Member States and are expected to trigger total investments of over EUR 164 billion.

The European Investment Bank (EIB) has approved 176 infrastructure projects for financing under the European Fund for Strategic Investments (EFSI). These projects represent a financing volume of EUR 22.4 billion. The European Investment Fund (EIF) has approved 244 SME financing agreements, with total financing under the EFSI of EUR 8.1 billion. Over 388,000 SMEs and Midcaps are expected to benefit.

Given its success so far, President Jean-Claude Juncker announced a proposal in his State of the Union address of 14 September to extend the duration and capacity of the EFSI to boost investment further (“EFSI 2.0”). The proposal will extend the initial three-year period (2015-2018) with a target of EUR 315 billion to at least half a trillion euro in investments by 2020. It also seeks to place a greater emphasis on additionality, cross-border projects, support for SMEs and enhancing the EFSI’s geographical coverage.

The performance of the EFSI guarantee has now been evaluated by the Commission, EIB and independently by global accounting firm EY. The Commission concluded that each of these evaluations gave evidence to support the extension of the EFSI. The findings in the three evaluations are broadly addressed in the Commission’s proposal and will feed into the future legislative debate on the EFSI 2.0.

The proposal to extend the EFSI has already made good progress. EU Finance Ministers gave their backing to the Commission’s proposal at a meeting of the ECOFIN earlier this month. At its December meeting, the European Council welcomed this agreement and called for the extension of the EFSI to be adopted by the co-legislators in the first half of 2017.

Background

The Investment Plan for Europe consists of three pillars.

  • First, the European Fund for Strategic Investments which provides an EU guarantee to mobilise private investment.
  • Second, the European Investment Advisory Hub and the European Investment Project Portal which provide technical assistance and greater visibility of investment opportunities and thereby help investment projects reach the real economy.
  • Third, removing regulatory barriers to investment both nationally and at EU level.

Under the first pillar, the market absorption has been particularly quick under the so-called SME window, where EFSI is delivering well beyond expectations. To ensure that sufficient funding is available to continue providing finance to SMEs with EFSI support, the SME window was scaled up by EUR 500 million in July 2016.

Under the second pillar, the European Investment Advisory Hub was launched on 1 September 2015. Project promoters, public authorities and private companies can receive technical support to help get their projects off the ground, make them investment-ready. They can get advice on suitable funding sources, and access a unique range of technical and financial expertise. In order to provide investors with more visibility of what investment opportunities exist in the EU, the Commission created the European Investment Project Portal, which went live on 1 June 2016. Project promoters can submit their projects online, where they are matched with relevant investment opportunities – a kind of match-making service.

In order to remove barriers to investment – the third pillar of the Investment Plan – the Commission has already proposed concrete initiatives to help support investment and facilitate the financing of the real economy, such as lowering capital charges for insurance and reinsurance companies as regards infrastructure investments. The Energy Union, the Capital Markets Union, the Single Market and the Digital Single Market Strategies, as well as the Circular Economy package all contain specific measures that will remove barriers, promote innovation and further improve the environment for investment, if fully implemented. At the same time, Member States must continue to implement the necessary reforms to remove obstacles to investment identified in the context of the European Semester in areas such insolvency, public procurement, judicial systems and the efficiency of public administration or sector-specific regulations.

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