Public hearing on The extension of the duration of the European - - PowerPoint PPT Presentation

Public hearing on The extension of the duration of the European Fund for Strategic Investment (EFSI 2.0)

10 November 2016

EUROPEAN FUND FOR STRATEGIC INVESTMENTS (EFSI)

• A SUCCESSFUL FIRST YEAR
• EUR 138.3 bn, 27 MSs, 290 000 SMEs
• THE PROPOSED EXTENSION
• EUR 500bn by end-2020, limited budgetary impact
• THE MAIN CHANGES
• Enhanced

additionality & transparency, reinforced geographic & sectorial coverage (incl. via facilitation of ESIF-EFSI combination), focus on climate action

Agenda

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• In place since July 2015, the

EFSI has mobilised EUR 138.3 billion in investments across 27 Member States, benefitting more than 290,000 SMEs.

• It is firmly on track to deliver the
• bjective of mobilising at least

EUR 315 billion in additional investments in the real economy by mid-2018.

• 62% of private sector financing

mobilised for signed EFSI

• perations so far.

A SUCCESSFUL FIRST YEAR

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Commission proposal to amend Regulations 1316/2013 and 2015/1017:

• Envisaged in the Commission Communication of 1 June 2016,

proposing an extension of the EFSI beyond its initial three-year period;

• Supported by the European Council, which concluded, on 28 June

2016, that "[t]he Investment Plan for Europe, in particular the EFSI, has already delivered concrete results" and invited the European Parliament and the Council to examine as a matter of urgency the Commission's proposal on the EFSI's future;

• Adopted by the European Commission on 14 September 2016, with

a view of mobilising at least half a trillion euro investments by end-2020;

• Complemented by evaluations from the Commission, the European

Investment Bank, and an independent evaluation as foreseen in the EFSI Regulation.

THE PROPOSED EXTENSION

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Evaluations

• Regulation (EU) 2015/2017 foresees three evaluations:
• Article 18(1): EIB evaluation on the functioning of the EFSI by 5 January

2017

• Article 18(2): COM evaluation on the use of the EU guarantee and the

functioning of the guarantee fund by 5 January 2017

• Article 18(6): independent evaluation by 5 July 2018
• All three evaluations are available earlier:
• COM evaluation was published on 14 September and accompanies the

legislative proposal

• EIB evaluation was published on 5 October
• The independent evaluation will be available mid-November. E&Y won the

tender, the contract was signed on 21 September.

THE PROPOSED EXTENSION

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Proposal to extend the duration and increase the firepower of the EFSI to mobilise at least EUR 500 bn by end-2020

• EU guarantee: EUR 26 billion, of which a maximum of EUR 16

billion available prior to 6 July 2018, backed by a EUR 9.1 billion guarantee fund (target rate set at 35% of total EU guarantee

• bligations)
• EIB contribution: EUR 7.5 billion*
• Increase of the EFSI risk-bearing capacity: from 21 billion to

33.5 billion

• Expected by the end of 2020:
• EUR 100 billion of total investment by the EIB and EIF,

mobilising at least EUR 500 billion of additional investment in the real economy.

THE PROPOSED EXTENSION

6 * Subject to final confirmation by EIB Governing Bodies

Increase of the EFSI risk-bearing capacity Guarantee fund (35%) EUR 9.1bn

EUR 16bn + EUR 10bn

+

EUR 5bn + EUR 2.5bn* EU guarantee: EUR 26bn EIB contribution: EUR 7.5bn*

• EUR 33.5 bn x 15 = EUR 502.5 bn (2015-2020)

targeted multiplier (same as EFSI 1)

THE PROPOSED EXTENSION

7 * Subject to final confirmation by EIB Governing Bodies

Limited budgetary impact to finance the provisioning of the guarantee fund

• Commission evaluation on the guarantee fund concludes that an

adjustment of the target rate from 50% to 35% of total EU guarantee

• bligations is adequate while limiting risks to the Union budget
• Increase of the guarantee fund by EUR 1.1 bn, reaching EUR 9.1 bn:
• No changes to the Multiannual Financial Framework (MFF)
• Transfer from the Connecting Europe Facility (CEF)
• EUR 500m transfer from CEF financial instruments to build up the

guarantee fund: EUR 155m from CEF transport, EUR 345m from CEF energy

• Net positive income of existing operations: EUR 450m
• Very limited use of the unallocated margin of the EU budget: EUR 150m

THE PROPOSED EXTENSION

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Multiplier and distribution between infrastructure and SME windows

THE PROPOSED EXTENSION

9 2.5bn EIB + 3bnEU 2.5bn EIB + 13bn EU 1.5bn EIB + 3.5bn EU 1bn EIB + 6.5bn EU

Enhanced additionality

• Projects under the EFSI must address market failures and sub-optimal

investment situations as part of the eligibility criteria for EFSI support.

• Art. 1(3)  Art. 6(1)
• More detailed definition of additionality: EIB special activities supported

by the EFSI should have typical features such as subordination, participation in risk sharing instruments, cross-border characteristics, etc.

• Art. 1(2)  Art. 5(1)

Annex, Section 2  Annex II, Section 3(d)

• In view of their importance for Europe, cross-border projects should be

considered additional by definition.

• Art. 1(2)  Art. 5(1)

THE MAIN CHANGES

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Proposal Consolidated version

Enhanced transparency (1)

• Selection of projects
• The Investment Committee's decisions approving the use of

the EU guarantee, which are public and accessible, should include the rationale for the decision, with particular focus

• n compliance with the additionality criterion.
• Art. 1(4)(d)  Art. 7(12)

THE MAIN CHANGES

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Enhanced transparency (2)

• The scoreboard of indicators shall be made public as soon

as an operation under the EU guarantee is signed, with the exception of commercially sensitive information. Annex, s.3  Annex II, s.5

THE MAIN CHANGES

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Enhanced transparency (3)

• EFSI support: enhanced visibility
• Final beneficiaries, including SMEs, should be made aware of

EFSI support (via the EIB/EIF or financial intermediaries).

• Art. 1(11)  Art. 19

THE MAIN CHANGES

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Reinforced geographic & sectorial coverage (1)

• More targeted and local technical assistance through the

European Investment Advisory Hub (EIAH):

• leveraging local knowledge to facilitate EFSI support

across the Union;

• providing pro-active support on the establishment of

investment platforms;

• providing advice on the combination of other sources
• f EU funding (ESIF, Horizon 2020, CEF) with EFSI

support.

• Art. 1(9)(b)  Art. 14(2)
• focusing on climate action, digital sector & cross-border

projects

• Art. 1(9)(a)(ii)  Art. 14(1)

THE MAIN CHANGES

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Reinforced geographic & sectorial coverage (2)

• Blending grants with EFSI support: EUR 1.1bn of CEF financial

instruments to be transferred to CEF grants for blending with EFSI support

• Enlarged sectorial coverage to support less-developed regions

and transition regions

• Proposals to facilitate the combination of EFSI financing with

support by other sources of EU funding, in particular European Structural and Investment Funds (ESIF)

THE MAIN CHANGES

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Omnibus provisions on ESIF and EFSI combination (1) The new "omnibus" provisions create 2 possibilities for MSs:

• 1st possibility: at EFSI level
• FR Art. 125: MS may use ESIF to enhance EFSI risk-bearing

capacity

• CPR Art. 30a: MS has to submit a request by 30 September,

financial appropriations of future years only, programme amendment required

THE MAIN CHANGES

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Omnibus provisions on ESIF and EFSI combination (2)

• 2nd possibility: at platform/project level
• Reliance on assessment by EIB for its contribution to financial product

under EFSI (no need for a new ex-ante assessment)

• Reporting to avail of information under Article 16 of EFSI Regulation
• Reliance on EIB selection procedures (no need for second selection

procedure)

• Payment phasing in line with payment schedule for other investors

(derogating from general phased/tranched payments rules)

• Co-financing rate of up to 100%
• Subordination of ESIF to EFSI (including possibility for ESIF to

contribute to junior/mezzanine tranches of portfolios for guarantee instruments)

• Contributions can be used to originate new finance in entire territory of

Member State

THE MAIN CHANGES

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Reinforced focus on climate action (1)

• 40 % of EFSI financing under the infrastructure and innovation

window to be geared towards projects with components that contribute to climate action, in line with the COP21 commitments

• Art. 1(5)(b)  Art. 9(2)
• The EIAH should provide support in the preparation of

climate action and circular economy projects or components thereof, in particular in the context of COP21.

• Art. 1(9)(a)(ii)  Art. 14(1)

THE MAIN CHANGES

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Reinforced focus on climate action (2)

• Avoiding support to motorways unless needed to attract

private finance in transport projects in cohesion countries or in cross-border transport projects involving at least one cohesion country Annex, s. 1(a)  Annex II, s. 2(b)

THE MAIN CHANGES

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Governance

• Investment Committee
• Obligation on Investment Committee members to inform the

Steering Board, the Managing Director and the Deputy Managing Director of any issues pertaining to a possible conflict

• f interest.
• Art. 1(4)(b)  Art. 7(10)
• Managing Director made responsible for informing the Steering

Board of potential conflict of interest situations and for proposing appropriate action.

• Art. 1(4)(c)  Art. 7(11)

THE MAIN CHANGES

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Thank you for your attention!

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