Next MFF - financial instruments & budgetary guarantees ...

Next MFF - financial instruments & budgetary guarantees ...

Investment plan for Europe: the European Fund for Strategic Investments and future developments Access to EU Funding and the Investment Plan for Europe Conference 4 December 2017, Nicosia Estelle Gger, Team Leader on the Investment Plan for Europe DG ECFIN, European Commission Why an Investment Plan for Europe? Investment & competitiveness gap Public budget constraints Financial and non-financial barriers to investment High liquidity in the market

2 Investment Plan for Europe 3 Pillars 2. MAKING FINANCE REACH THE REAL ECONOMY 1. MOBILISING FINANCE FOR INVESTMENT Mobilise at least 315bn over 3 years for strategic investments and access to

finance via the European Fund for (EIPP) Strategic Investments (EFSI) within European Investment Project Portal European Investment Advisory Hub (EIAH) EIB/EIF Cooperation with National Promotional Banks 3. IMPROVED INVESTMENT

ENVIRONMENT Predictability and quality of regulation Removing non-financial, regulatory barriers in key sectors within EU Single Market Structural reforms at national level 3 4

EFSI key areas General objectives/key areas: 1. Research, development and innovation 2. Energy (ref. Energy Union priorities) 3. Transport 4. Information and Communication Technologies 5. Environment and resource efficiency 6. Human capital, culture and health 7. Support to SMEs and mid-cap companies, through local partner banks and institutions 5 Key features of EFSI (I) EFSI key principles No geographic allocation No sectoral allocation Projects' own merits

Approval by independent market experts 6 Continuously adapting to market needs 7 8 EFSI setup and governance EFSI EIB Group All EFSI operations are financed by the EIB Group

On the EIB Groups balance sheet (no separate entity) Subject to standard due diligence EIB & EIF governing bodies approve each operation EFSI governance: Steering Board Investment Committee, Managing Director, Deputy MD, Secretariat 9 EFSI State of play All transactions 10 Financing for a French pioneering programme

SME guarantee agreement Examples EFSI operations EURof 400m to trigger Unlocking energy efficiency investments in private homes Driving clean energy

investment For energy efficient buildings EUR 100m of loans for 1 000 SMEs in Bulgaria Backing midcap modernisation Equity-type financing for an innovative fund

Funding cutting-edge steel production facilities in Italy EUR 75m for EUR 100m for investment in offshore wind, biomass and transmission projects in Denmark innovative and competitive steel products Supporting smaller businesses

11 How to improve pipeline of EFSI projects? Tools (enhanced use promoted under EFSI 2.0): Investment Platforms: bring together smaller projects from the same sector or region Advisory services to structure projects: the European Investment Advisory Hub (EIAH) Collaboration with National Promotional Banks or other initiators Use opportunities of Public-Private Partnerships (PPP) Combination of several financial instruments or with grants Advertise project on European Investment Project Portal (EIPP) 12 EFSI in Cyprus 1/2 Small and medium enterprises (SMEs):

2 approved agreements with intermediary banks (RCB and Bank of Cyprus) 10 million in total financing set to trigger approximately 28 million in investments Some 125 SMEs and mid-cap companies expected to benefit from improved access to finance 13 EFSI in Cyprus 2/2 KODAP strategic oil reserves storage project Approved at the EIB's November 2017 Board Meeting EIB financing backed by the EFSI guarantee amounts to EUR 35mio EIB lending for a total financing cost of EUR 52.8mio 14

EFSI 2.0 Regulation Until 2020 EUR 33.5bn to mobilise at least EUR 500 billion Reinforced additionality More transparency Enhanced geographic coverage More local technical assistance through the European Investment Advisory Hub Combination with other EU funds Reinforced focus on climate action 15

EFSI 2.0: What will change? Additionality Projects must address market failures and suboptimal investment situations as part of the

eligibility criteria More detailed definition of additionality: EIB special activities supported by the EFSI should have typical features such as subordination, participation in risk sharing instruments, cross-border characteristics, etc. Cross-border projects should be considered additional by definition

Present an exposure to specific risks: country-, Geographic & sectorial coverage More targeted / local technical assistance through European Investment Advisory Hub (EIAH):

o leveraging local knowledge o providing pro-active support on the establishment of investment platforms o providing advice on combinations with other sources of EU funding Enlarged sectorial coverage Reinforced focus on climate action Facilitating the combination with other sources of EU funding, in 16 particular European Structural and 16

Investment Funds (ESIF) EU Financial Instruments today Source: Report from the Commission to the European Parliament and the Council on financial instruments supported by the general budget according to Art.140.8 of the Financial Regulation as at 31 December 2016, {SWD(2017) 312 final} 17 Next MFF Reflection paper on the future of EU finances (June 2017): "The number of EU-level financial instruments and rules applying to them is an obstacle to their efficient use. One option to address this could be their integration within a single fund ().

These new EU-level financial instruments and the loan, guarantee, and equity instruments managed by Member States under cohesion policy should be complementary. This complementarity between the different instruments should be ensured, through upstream coordination, same rules and clearer demarcation of interventions." (pp. 26-27) 18 Next MFF A Single Investment Fund Discussions ongoing on a possible Single Investment Fund instrument for the next MFF (post-2020); A transparent structure, directly communicated to project promoters in search of EU financing; A more integrated, consistent and simplified structure for EU financing, that is understandable for

beneficiaries and financial intermediaries; A flexible structure to address investment gaps where most needed, depending on the market conditions, that may evolve during the same budgeting period. 19 19 Next MFF Key Principles Single Fund: a single regulation and single agreements with implementing partners Thematic Policy Windows Budgetary Guarantee Blending: harmonised combination rules Complementarity between EU level and ESIF Simplification and Flexibility

20 Thank you

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