EU finance ministers on Tuesday (6 December) backed the European Commission’s proposal to expand the investment plan to mobilise at least €500 billion by 2020.
Building on the initial backing of EU leaders at the Bratislava summit, the Ecofin Council reached a political agreement to support adding more funds to the European Fund for Strategic Investments (EFSI), the EU’s scheme to mobilise mostly private investment for projects with high-risk profiles.
“I am confident that a bigger, smarter and more effective EFSI supported by a well-functioning capital markets union is a right path to take,” said Slovak Finance Minister Peter Kažimír, whose country is currently in charge of the rotating presidency of the Council.
Citing good results, in September, the European Commission proposed doubling the Juncker Plan’s financial capacity and duration.
Under the expanded plan, €26 billion of EU budget money would be used to guarantee the riskiest parts of investments in energy, transport and telecommunication infrastructures, in a bid to attract private and other public investors. The original plan envisaged the use of €16 billion from the EU budget.
The European Investment Bank (EIB) would contribute €7.5 billion, up from its current commitment of €5 billion.
The combined €33.5 billion in EU cash and guarantees would then be used to attract private investments totaling €500 billion, compared to the €315 billion initially planned until 2018.
In parallel with the EU funds, Commission President Jean-Claude Juncker urged member states to add funds from the national coffers to increase the firepower and attract at least €630 billion in fresh investment.
However, EU finance ministers did not announce fresh contributions to the scheme.
The new proposal also added new technical elements in order to ensure that the EFSI backs projects that otherwise would have failed to attract private investment.
As part of the review, member states also supported the idea of better achieving the geographic coverage of the investment plan.
In addition, new sectors will become potential recipients of the EFSI guarantees. These are agriculture, forestry, fisheries, aquaculture and other elements of the bio-economy, as well as sectors eligible for EIB support in less-developed, transitional regions.
The executive and the capitals also want to support more initiatives linked to the fight against climate change, allocating at least 40% of the plan’s funds to this goal.