Brussels, 07/03/2006 (Agence Europe) - Following a request from the European Parliament's Budgets Committee (chaired by Polish EPP-ED MEP Janusz Lewandowski), the President of the European Investment Bank (EIB), Philippe Maystadt, outlined to the Committee the EIB's three new financial instruments to back the revised Lisbon Strategy, explaining that if people believe the European economy needs greater investment in R&D, then it had to give itself the resources and focus on the lever effect. He said the European Parliament and Council should agree to boost the lever effects resulting from combining EU funding with EIB loans to make the EIB loans more effective. For every euro from the EU budget, he added, it is possible to mobilise other resources in the form of EIB loans or private loans, and that in this way the EU would be able to find a further EUR 10 bn for developing R&D. Maystadt warned, however, that the EIB needed absolute certainty and budget planning over time, and the current budgetary constraints (uncertainty about the Financial Perspectives 2007-2013), meant a multi-annual pledge was required from the Council and European Parliament before the three new instruments can be launched.
The EIB President briefly outlined the three new joint EIB-Commission financial instruments developed by the EIB: 1) the Risk Sharing Finance Facility developed with Direction General Research. The EIB and the Commission suggest making available to R&D the Structured Finance Facility which enables the EIB to take higher risks than a bank would normally take. In order to do this, however, the EIB needs funding to allow rating agencies to continue to grant good rates (the EIB's triple A gives it access to the best conditions for finance). To this end, Maystadt will suggest at its meeting in June 2006 that the EIB's Governing Council takes the equivalent of EUR 1 bn from the EIB's annual surplus that the European Commission will release from the EU's 7th Framework Programme for Research and Development. This would provide a fund of EUR 2 bn for high risk R&D projects to the order of between EUR 8 bn and EUR 12 bn. 2) With DG Transport, an EU guarantee system would be set up for trans-European Transport Networks (TENs). To fund energy and transport TENs, private investment must be attracted to public private partnerships (PPPs), but the risks that came to light in the first few years of using the new infrastructure (where traffic and income levels tended to be below forecasts), a new form of risk sharing between public and private partners is required, and some risks cannot be left to the private sector alone. The EIB and Commission are therefore suggesting to set up an EU guarantee system targetted on specific risks in the first few years that infrastructure is used to provide a huge lever effect (to the order of 20, according to experts, meaning that one euro in the guarantee system would attract 20 euros from the private sector). To be fully effective, experts say that system must be based on minimum funding of EUR 1 bn. Given budget constraints, DG Transport cannot release EUR 1 bn from the upcoming EU budget, so Maystadt will assume that the European Commission budget can provide EUR 500 million and will suggest to the EIB Governing Council that it takes the same amount from the EIB's annual surplus to provide a total of EUR 1 bn. 3) With DG Enterprise, extending the MAP programme under the Competitiveness and Innovation Programme, CIP 2007-2013, for SMEs. In parallel to the EUR 1 bn the European Commission is proposing to provide to renew, extend and develop the European Investment Fund (EIF) mandate in two directions (venture capital and SME guarantee systems), the EIB is suggesting providing EUR 1 bn itself. This EUR 2 bn would enable the EIF to leverage nearly EUR 30 bn to support the CIP (and therefore support SMEs).
In response to a question about whether given the cuts in the budget foreseen in the December budget deal, the joint Commission/EIB funding ratio (50/50) can be changed so the EIB provides a greater share of funding (60%), Maystadt said the EIB was restricted and could not provide more EIB resources because the EIB always has to have enough reserves to self-finance future capital increases. Maystadt said that EIB loans could not be required to be a perfect substitute for reduced budgets and it was a pipedream to think it was possible to replace budget cuts in the budget talks with EIB loans, which play a complementary role.