The promises and challenges of repayable EU structural funds

What is the role of financial instruments in cohesion policy? [Shutterstock/Tendo]

With increased pressure on the core cohesion budget, financial instruments utilised as a means of delivering EU structural fund support are touted as a way to do “more with less” by leveraging EU and public money to generate private investment and recycle resources.

The role of repayable assistance in cohesion policy, the EU’s bid to decrease disparities between its regions, has grown significantly over the past decades.

From only €600 million in 1993-99, the EU and member states have spent more than €17 billion in the 2007-13 in loans, guarantees and equity investments in non-listed companies.

According to the latest available figures for the 2014-2020 budget period, by 2018 the EU has already committed to spend €16.2 billion in financial instruments under cohesion policy, climbing up to €22.1 billion if we include contributions from national budgets.

Meanwhile, EU countries are pushed towards planning more repayable cohesion projects under the next seven-year budget.

In this Special Report, EURACTIV looks into the changes the rising role of private investment in implementing cohesion policy could bring and explores the potential of market-based solutions to the bloc’s regional gaps.

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