Saturday

21st Jan 2017

Commission defends extending investment plan

  • Katainen: the investment fund "functions as planned" (Photo: European Commission)

The European Commission on Tuesday (29 November) tried to diffuse doubts over its flagship investment plan saying it would continue extending it.

"EFSI functions as planned. It crowds in private resources from the market," commission vice-president Jyrki Katainen told journalists, referring to the European Fund for Strategic Investments, the vehicle through which the EU raises private money to finance projects.

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Launched in 2015, the investment plan, often called Juncker plan after the commission's president, aims at pumping €315 billion into the EU economy until the end of 2017

The commission now wants to extend the plan until 2020, with the aim to top up the fund to €500 billion.

But earlier this month, a report by the EU Court of Auditors said extension plans "were drawn up too soon and with little evidence that the increase is justified."

"It is still too soon for the economic, social and environmental impacts to be measured or for a conclusion to be drawn as to whether EFSI is achieving its objectives," said Mihails Kozlovs, member of the court responsible for the opinion.

However, another report by consultancy firm Ernst & Young, commissioned by the EU executive published a few days later, said that the design of the fund was "relevant in the current market and prevailing investment gaps in Europe."

In October, the commission published its own evaluation in which it said the plan "has proven useful in encouraging a sustainable increase in investment in member states."

A report by the European Investment Bank also in October said that EFSI was "on track to deliver its investment target" but needed to improve its functioning.

Putting aside the auditors" report, Katainen said on Tuesday that" the three evaluations strengthen the case for extending and reinforcing the EFSI."

He said that the plan so far allowed €154 billion in funding for small and medium enterprises and infrastructure projects. The EFSI has approved projects for €27.5 billion in 27 member states, with Cyprus the only country missing out.

Katainen added that some 60 percent of all investments have come via the private sector,

'A matter of priority'

The commission, however, said it would take into account the auditors' remarks to improve the transparency of the EFSI investment committee, which will have to publish its decisions.

The commission now calls on member states and the European Parliament to deal with the extension proposal - what it calls EFSI 2.0 - "as a matter of priority".

Finance ministers will discuss the proposal at their next meeting on 6 December.

Member states have criticised the lack of impact assessment from the commission before prolonging the plan. They're also calling for more geographical balance in the projects funded.

Then the parliament is expected to define its position by February and Katainen said that he expected a law to prolong the plan to be adopted "by the end of May."

EU should raise own taxes, says report

A group chaired by former Italian PM and EU commissioner Mario Monti says Brexit should be used to create EU-level levies to depend less on member states contributions, and to abolish member states rebates in the EU budget.

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