European Fund for Strategic Investments, Does it need extra action to make a full success?

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European Fund for Strategic Investments, Does it need extra action to make a full success?

My new article has been published in the Journal of International Law of the Canadian Institute for International Law Expertise.

The European Commission set out an approach based on three pillars in the circle of Economic Policy Priorities: 1. Structural reforms: to put Europe on a new growth path, 2.Fiscal Responsibility: to restore the soundness of public finances and cement financial stability, 3.Investment: to kick-start growth and sustain it over time.

According to this plan Member States (MS) with fiscal room for manoeuvre should invest more. MS with more limited fiscal space should prioritize investment and growth-related expenditure in their budgets, make better use of EU Funds and create an environment that is more conductive to investment by private actors. The Investment plan consists of three stands:

1. mobilizing finance for investment (ambition was to mobilize at least EUR 315 billion in additional public and private investment into the real economy) without creating new public debt (strong boost to strategic investment, better access to investment finance for Small and Medium Enterprises (SMEs) and mid-cap companies, strategic use of EU budget, better use of European Structural and Investment Funds). The proposed action was/is partly financed within the current Multi-Annual Financial Framework for the EU budget for 2014.-2020.

2. making finance reach the real economy, supporting projects and investments in key areas such as infrastructure, education, research and innovation: project pipeline preparation and selection, technical assistance at all levels (through the form of an investment advisory “Hub” with three audiences in mind: project promoters, investors and public authorities. The Hub is providing guidance on the most appropriate advisory support for a specific investor, whether it is delivered by the EIB-Group, National Promotional Banks (NPBs) or other international financial institutions), strong cooperation between NPBs and EIB, follow up at global, EU, national and regional level, including outreach activities

3. Improved investment environment (predictability and quality of regulation, quality of national expenditure, tax systems and public administration, new sources of longterm financing for the economy, removing non-financial, regulatory barriers in key sectors within our Single Market. The Single Market is Europe’s greatest structural reform achievement) The stakeholders as a part of Plan are: MS, NPBs, regional authorities and private investors. To establish the EFSI, a guarantee, of 16 billion €, has been created under the EU budget to support the Fund. The EIB committed 5 billion €. MS, directly or through their NPBs or similar bodies, will have the opportunity to contribute to the Fund in the form of capital. Private investors can also join at the level of the Fund. The EFSI supports long term investment projects (16 bill € in the form of an EU guarantee could reach over 240 bill € of investments) in infrastructure (transport infrastructure, in a particular in industrial centres), education, research and innovation through ongoing EU programmes such as the Connecting Europe Facility (for infrastructure investments) and Horizon 2020 (for innovation and research) and small and medium enterprises (SMEs) and mid cap companies (5 bill € provided by EIB on its own risk without support from the EU budget; could reach 75 bill € of investments). The Fund is flexible since different regions have different needs in order to jump-start investments.

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