The ‘Juncker Plan’ for investment is a sufficient success for this pioneering experiment to be extended beyond 2020. However several European institutions have differing views on the real impact that this initiative, which is based on innovative use of the EU budget, has had at this stage.
Questions arise in particular about the uptake by the European Fund for Strategic Investments (EFSI), the financial arm of the ‘Juncker Plan’ managed by the European Investment Bank (EIB), of projects that would receive financial support from other existing European instruments, the scale of private investment attracted and a uniform distribution of the geographical scope of such investment.
The European Court of Auditors does not question the effectiveness of the ‘Juncker Plan’ in attracting new investment. However, it considers that "some EFSI operations replaced other EIB operations and EU financial instruments", notably in the transport and energy sectors, in a report published on Tuesday 29 January. According to the Court, at the end of 2017, "almost a third of the projects financed under the ‘infrastructure and innovation’ component would have been undertaken without the support of the EFSI".
Compared to 2014, the EIB has achieved a four-fold increase in its higher-risk financing operations, agreed Leo Brincat, Member of the European Court of Auditors. But this increased risk-taking remains lower than initially expected and has been carried out through traditional instruments (long maturity loans or riskier counterparts), according to EU auditors.
In addition, the Court is of the opinion that the methodology used exaggerates the scale of the additional private investments attracted by the EFSI, with the European Commission and the EIB reporting a leverage effect of 1 to 15. "We do think that there is a leverage effect, but we do think that the reported leverage effect is overestimated", the Court stated.
Finally according to the Court, the analysis of the geographical scope of EFSI operations appears unbalanced. As at 30 June 2018, ‘infrastructure and innovation’ operations of this component were concentrated in France (18%), Italy (17%) and Spain (12%). "The countries with the most EFSI uptake were those with the most developed and active national promotional banks", it says.
Although they are competing for the leadership of the InvestEU programme to take over from the ‘Juncker Plan’ after 2020 (see EUROPE 12177), the European Commission and the EIB challenge the European Court of Auditors' position, arguing that many of the recommendations made by the EFSI have already been implemented.
In response to the Court of Auditors' report, EIB President Werner Hoyer admitted that some projects supported by the EFSI could have been financed in another way. However, he stressed that the EU Bank was "unique" in its ability to provide so many loans with long maturities. And it should be noted that financial engineering was not popular everywhere in the EU.
Regarding the geographical distribution of the transactions, Mr Hoyer rejected the argument en bloc. "It's complete nonsense", he said. According to him, in relation to national GDP, the four countries that have benefited most from EFSI operations are Greece, Estonia, Spain and Lithuania.
As for the overestimation of the leverage effect, Pier Luigi Gilibert, Managing Director of the European Investment Fund at the EIB, argued that the methodology had been revised and approved since a case of double accounting had been identified in a project.
Claiming to be "surprised by such negative coverage", Annika Breidthardt indicated, on behalf of the European Commission, that the volume of private investments attracted was revised at the end of each project and that the measure of the expected leverage effect - in this case 375 billion euros for a public guarantee of 21 billion - applied to the entire EFSI portfolio. (Original version in French by Mathieu Bion)