The EIB Group should strive for sectoral and geographical diversification when managing the provision of the European guarantee to support projects selected by the InvestEU Fund after 2020.
This is the headline of the new features of the draft compromise that the Romanian Presidency of the Council of the EU tabled at the end of January and which EUROPE has had sight of.
Drawing on the experience of the Juncker investment plan, the InvestEU Fund will provide a public guarantee based on the EU budget to offset any potential initial losses incurred in the implementation of certain risky investments. The EIB Group will manage 75% of this public guarantee and the remaining part will be managed by national implementing partners such as national development banks.
The Romanian proposal also specifies how the Commission, which is responsible for selecting these national implementing partners, can ensure that the InvestEU Fund’s portfolio of financial instruments achieves adequate sectoral and geographical diversification of the selected projects.
This diversification will be achieved by gradual release of the public guarantee, introducing project concentration limits and creating incentives for the participation of smaller and less sophisticated partners, according to the Romanian Presidency.
The proposal is based on the recent ministerial debate of the Economic and Financial Affairs Council, during which many Member States in Central and Eastern Europe and the Mediterranean stressed the need to strengthen geographical sectoral diversification (see EUROPE 12177).
This diversification issue is one of the sources of the controversy over the economic impact of the Juncker investment plan, whereas the EU legislator has always refused to include sectoral and geographical investment quotas in European legislation (see EUROPE 12182).
Governance. The governance of the future InvestEU Fund is the subject of a power struggle between the EIB, which does not want to lose its banking role, and the Commission, which intends to retain its powers in the management of financial instruments (e.g.: Connecting Europe Facility) which will be integrated into the InvestEU programme.
In response to the close partnership that the two European institutions have agreed to set up, a steering board chaired by the Commission will determine the strategic and operational guidelines of the future InvestEU Fund.
The Romanian Presidency proposes that this committee be composed of: - four representatives of the Commission; - three representatives of the EIB Group; - two representatives appointed by the implementing partners; - one representative of the advisory board as a non-voting member.
In most cases, the decisions of the steering board will be made taking into account the positions of all its members. If a vote is required, the Romanian Presidency suggests that decisions should be taken by a qualified majority of at least seven members. Clearly, the EIB and the Commission must always agree and cannot be individually outvoted. (Original version in French by Mathieu Bion)