Brussels, 13/01/2015 (Agence Europe) - On Tuesday 13 January, the European Commission adopted the legislative proposal to institute the European Fund for Strategic Investments (EFSI), which aims to generate the funding of €315 billion in new investments over three years where the needs are greatest, making a small proportion of the EU budget available, but without creating any new debt.
“The governance structure has been devised in such a way as to ensure that the activity of the EFSI will have added value over and above that of the EIB,” said Jyrki Katainen, vice-president of the Commission.
The governance of the EFSI will be based on a steering board and an investment committee. The steering board will be made up of the Commission and the EIB, for as long as they are the only contributors to the fund. The role of this board will be to define the strategic orientations, the guidelines for investments, the risk profile, strategic policies and the allocation of the fund's assets. The number of members and votes will be allocated on the basis of the size of the contributions and decisions will be made by consensus. Once other contributors join the fund, the number and votes will remain in proportion to the contributions and decisions will be made by simple majority if consensus cannot be reached. No decisions can be adopted if the Commission or EIB vote against them.
The investment committee, which will answer to the steering board, will decide which specific projects will receive the support of the EFSI, with no quota based on geography or sector of activity. It will be made up of six independent experts and a director general who, together with his or her deputy, will be appointed by the steering board on the basis of a joint proposal by the Commission and the EIB. This means that the choice of projects will not be political, Katainen stressed.
At a debate at the European Parliament, the President of the Commission, Jean-Claude Juncker, called on the states to give “impetus to the investment plan” by participating in its funding. The Commission has built in a “powerful incentive” in this matter, said Commissioner for Economic and Financial Affairs Pierre Moscovici, who explained that if the threshold of 3% of public deficit of a State is exceeded as a result of contributing to the EFSI, the Commission would not launch a procedure “if this discrepancy is limited and temporary” (see other article). The States will also be able to participate at the level of risk-bearing capacity, by topping up the contributions of the budget of the EU and the EIB, or of the investment platform, or by directly co-funding certain projects and activities.
The Commission's proposal also provides for an advisory hub which will help to identify, prepare, develop and fund projects.
Noting that a lack of information was a major obstacle to investment, the Commission is also to provide a transparent project pipeline, to provide investors with information on existing or future projects. The Commission/EIB task force has already identified 2,000 potential projects.
Lastly, the proposal establishes a European guarantee fund, which will provide the liquidity buffer for the EU budget against any losses the EFSI may incur. This will be worth €8 billion by 2020 through EU budget payments. This will call for an amendment to the 2015 budget creating new budgetary lines and the transfer of €1.36 billion in commitment appropriations and €10 million in payment appropriations to the EFSI, which will have a budgetary impact on the 2015 budget.
Negotiations at the Council will kick off on 19 January in an ad hoc working group, and shortly at the European Parliament as well. Juncker has called upon the European legislator to adopt the proposal as quickly as possible, so that the fund can be up and running by mid-2015. (EL)