A push for ESIF Financial Instruments

Published on 21 April 2015

Having established the need to make Europe more attractive for investment and channel these investments where they are most needed, the European Commission recently announced a €315 billion Investment Plan over the next three years to boost jobs and growth (COM(2014)903). The plan was immediately substantiated by the proposal to create a new European Fund for Strategic Investments (EFSI), to provide for additional risk financing. This is the first pillar of the plan. The second pillar is about making investment happen in the real economy with better technical assistance. This must be complemented by a series of measures to remove barriers to investment and to create a true Single Market, which is the third pillar. In addition, Member States are being urged to boost the impact of ESI Funds and encouraged to double the use of financial instruments in key investment areas for the programming period 2014-2020.

The objective is for EFSI resources to complement European Structural & Investment Funds (ESIF). Hence individual projects could be co-financed by ESIF and EFSI. Some €450 billion of ESIF are available for MemberStatesand their regions in the period 2014-2020. Cohesion, rural development and maritime policies are the biggest areas of EU investment for smart, sustainable and inclusive growth. ESIF programmes are explicitly expected to make a significant contribution to the objectives of the Investment Plan, and the commitment by Member States to use ESIF more effectively is an essential element of the plan. The intention is to structure ESIF to leverage not only more public, but above all more private investment through the increased use of financial instruments.

Member States are being urged to boost the impact of ESIF and encouraged to double the use of financial instruments in key investment areas for the programming period 2014-2020. To that purpose, a number of targets have been set with regards to the use of financial instruments in the allocations made to each of the key investment areas. The Commission will play a pro-active role in the coming months to encourage Member States to explore all possible options with a view to boosting their use of financial instruments.

Financial instruments co-funded with ESIFunds, and which leverage additional financing, are expected to help improve general SME access to finance in regions where conditions are tight; support innovative and growth-oriented businesses in specific sectors (e.g. biomedical); provide loans to apartment owners to invest in energy-efficient measures; and provide equity and / or debt to infrastructure investments in broadband, waste management and transport. With the necessary political push for speedy implementation, at least €20 billion could be mobilised in the first three years after the commitment is made.

The European Commission will provide further, easy to use, off the shelf instruments and, together with the European Investment Bank (EIB), promote the SME Initiative and synergies with instruments at EU level (R&D, digital, energy). This will encourage managing authorities to look to financial instruments as an effective and efficient delivery option.

The European Commission and EIB are providing technical advice to Member States and their regions to encourage and facilitate the use of financial instruments as well as support for capacity-building. Fi-compass was set up to better equip and strengthen the expertise of the managing authorities and stakeholders working with financial instruments. It is an advisory platform for financial instruments under ESIF and Employment and Social Innovation (EaSI). This will strengthen capacity and enable Member States to develop a wider pool of projects for investment.