EFSI and ESIF: Complementarity, not overlap

Published on 12 October 2015

The European Fund for Strategic Investments (EFSI) can exploit synergies with the European Structural and Investment Funds (ESIF).

EFSI is an initiative launched jointly by the European Commission (EC) and the European Investment Bank (EIB) Group to assist in overcoming the current investment gap in the EU by maximising the impact of public resources and by mobilising private financing for strategic investments. Legally speaking, EFSI is not a stand-alone fund. It is formally a contractual arrangement between the EC and the EIB Group, consisting of an EU budget guarantee (€ 16 billion) complemented by an EIB capital contribution (€ 5 billion) to leverage total private and public investment of € 315 billion over the next three years. It has its own dedicated governance structure thus ensuring its focus on its specific objectives, namely to increase the volume of higher risk projects supported by the EIB Group and address market failures in risk-taking which hinder investment in Europe. The rationale of EFSI is to allow EIB to provide additional catalytic, risk-bearing capacity and unlock additional sources of financing in delivering greater societal and economic value.

ESIF budgets represent some € 450 billion of EU funding over the 2014-2020 programming period, allocated to Member States and delivered through nationally co-financed multiannual programmes to develop and support actions related to the key Union priorities of smart, sustainable and inclusive growth in line with the objectives of each Fund. National co-financing constitutes an integral and obligatory part of these programme resources and is covered by the same rules as for ESI Funds.

Both the EFSI and ESIF regulations provide for complementarity between EFSI risk financing opportunities and the objectives and delivery principles of the ESIF. ESIF programme resources cannot be directly transferred to EFSI, which is an additional and separate mechanism. However, ESIF programmes may contribute to the achievement of the objectives of the EU Investment Plan and be complementary to EFSI support.

How can this be achieved? For example, a territory that wants to reduce its carbon footprint could use EFSI to help increase the generation of renewable power through supporting investments in large scale renewable plants and grid connections. Such investments contribute to global targets for climate action and can create new employment. At the same time, relevant authorities in the territory could use ESIF loans to help residents and business improve the efficiency of their energy consumption patterns. Such ESIF support can help reduce greenhouse gas emission and offer savings for EU citizens and businesses. The combined use of EFSI and ESIF in these circumstances can therefore create win-win benefits.

A similar combination of EFSI and ESIF could occur in situations where a territory had identified opportunitiese to develop, for instance, a bio-medical cluster. New facilities for research and development could be assisted through EFSI in partnership with universities and healthcare bodies. ESIF could then provide smaller scale inputs through loans to assist business-start-ups in bio-medical fields with support . Other ESIF financial instruments might also be useful for helping companies to invest in manufacturing new healthcare products.

The European Commission will soon publish an explanatory note highlighting the complementarities between EFSI and ESIF. Keep an eye on the fi-compass website to stay informed about relevant guidance from the European Commission. Read more about EFSI