Brussels, 17/02/2015 (Agence Europe) - European finance ministers, meeting as members of the EIB board, decided on Tuesday 17 February that the EIB will pre-finance development projects for small and medium-sized enterprises (SMEs) before the European Fund for Strategic Investment (EFSI) comes into force as part of the Juncker investment plan.
The money can be made available to SMEs from the European Investment Fund (EIF), part of the EIB Group, which will cover the risk of transactions with intermediaries providing additional finance to SMEs and small mid-caps until the main EFSI is in place. Infrastructure projects may also benefit from similar pre-financing arrangements before EFSI is fully set up, but later than SMEs, explains the European Commission in a press release.
In a debate at the Ecofin Council, the president of the EIB, Werner Hoyer, said that there would be the necessary room for manoeuvre for pre-financing projects before the regulation underlying the EFSI comes into force in June. Investment Commissioner Jyrki Katainen said: “This news from the EIB means that by the summer, cash-starved SMEs and innovative mid-caps across Europe could be benefitting from an injection of badly-needed capital. We have said that we want to help get Europe investing again - and today we are doing exactly that.”
The Ecofin Council has worked on the draft EFSI Regulation so that the fund can leverage €315 billion in private investment (see EUROPE 11253). Latvian finance minister Janis Reirs said the talks between the member states were speeding ahead with a view to agreement in principle at the Ecofin Council in March. He said it was important for the member states that the project selection process to be kept non-political and with this in mind, there was “strong support” at the Council for not modifying the European Commission's initial proposal.
For EFSI governance, a steering committee will be set up, comprising the European Commission, the EIB and countries and/or private investors that contribute to the fund directly (such as sovereign wealth funds). The question is what decision-making power these extra public and/or private shareholders will have while avoiding the question of fair returns in the sense of countries contributing capital to the fund demanding that projects be carried out in its own country. Katainen welcomes the fact that a number of countries are interested in contributing directly to the Juncker Plan, but feels this should go through their public investment banks. Given the lack of drive from other member states, Poland is not very enthusiastic about contributing directly to the EFSI, explained Polish finance minister Mateusz Szczurek.
“We don't want to have seats or voting rights of other Member States or third parties in the steering committee,” said German finance minister Wolfgang Schäuble. He went on: “Investment guidelines to be adopted - it is the job of Council and European Commission to set up guidelines. The added value of the steering committee is not clear to me.”
The Netherlands want to know how much it will cost to run the EFSI, and who will cover these running costs. Denmark says the fund should only run until 2019, but the draft legislation on the negotiating table includes a revision clause so that a decision can be taken in this connection after the fund has been up and running for a few years. Poland recommends that the investment committee should have 12 rather than 6 independent experts on it, given the amount of work it will be required to do. Several countries said it was important that the creation of the EFSI did not jeopardise the EIB's top-notch credit rating (AAA). (Mathieu Bion)