Ministers clash over Juncker fund

“We are not in favour of national government contributions to the fund," Wolfgang Schaueble told the public broadcast section of the meeting of EU finance ministers in Brussels on Tuesday (27 January).

He added that governments “should refrain from being represented in the steering board and capital contributions should not entail voting rights”.

However, speaking later with reporters, the German finance minister said his government would contribute through state-owned development bank KfW.

Schaueble’s stance was backed by Portugal's Maria-Luis Albuquerque and Dutch minister Jeroen Dijsselbloem, who chairs the 19 Eurogroup finance ministers.

No member state has formally announced its intention to contribute to the planned European Fund for Strategic Investments (EFSI).

If they do, under legislation proposed by the commission earlier this month, they will be granted a seat on the "steering board" of the new fund, which will set out the investment guidelines and the level of the risk the EFSI will be able to cover.

“The EIB has great experience and expertise in executing this kind of instrument. So why do we actually need a new steering board?" asked Dijsselbloem during the debate.

For his part, EIB president Werner Hoyer warned that more legal clarity about state-aid regulation was needed to make sure that projects did not fall foul of the EU’s rules on unfair government subsidies.

The fund has been billed by the commission as a key tool with which to kick-start the EU’s stagnating economy.

Addressing MEPs on Monday, EU jobs commissioner Jyrki Katainen said the programme could create 1.3 million jobs across the bloc.

However, its aim of a 1:15 leverage ratio has been greeted with scepticism by a large section of the business community, many of whom have argued that more public funds are needed to encourage them to invest.

Under the scheme, if projects make losses the publicly-funded portion would be the first in line to suffer financial losses.

"That's why they are interesting for private investors", said Katainen

The commission hopes to have the programme up and running from June, and has identified around 2,000 projects worth €1.3 trillion which could be eligible for the programme.

The EU executive has offered governments an incentive by stating that any extra funds provided by national treasuries to bolster the fund’s lending capacity would be given favourable treatment when calculating their debt and deficit levels.

Countries with a deficit above the 3 percent of GDP limit in the EU’s stability and growth pact could be exempted from censure if their governments were pushing through structural reforms.