Presidency Issues note
The Investment Plan for Europe in the near future
Informal ECOFIN, September 10, 2016
Weak investment is weighing on the economic recovery, harming Europe´s long-term
growth and competitiveness. The Investment Plan for Europe, adopted by the
Commission in 2014, is a comprehensive response to the unprecedented EU investment
gap. The first two pillars – the European Fund for Strategic Investments (EFSI), the
European Investment Advisory Hub (EIAH) and the European Investment Project Portal
(EIPP) - launched in cooperation with the European Investment Bank, are targeted
towards mobilizing additional investment, whilst assuring investment reaches the real
economy. The third pillar aims to remove barriers to investment by providing greater
regulatory predictability and increasing investor confidence. In June 2016, the
Commission published its Communication1 taking stock of the Plan and outlining
possible next steps. At its July meeting, the ECOFIN Council discussed on the “Third pillar
of the Investment Plan” reaffirming its importance and committing to further work.
The Investment Plan has already started to deliver concrete results. EFSI is on track to
attain its ultimate objective of mobilizing 315 billion of investment in the next three
years. Available information on EFSI implementation is encouraging. According to the
latest EIB group figures (19th July 2016), 20.4 billion euro of EFSI financing have already
been approved by the EIB and the EIF with an estimated overall investment impact of
more than 115 billion euro. The approved projects span all of the relevant sectors, with
most projects having been approved in energy and research and development fields.
The investment impact is the strongest in the SME sector where the EFSI is delivering
well beyond expectations. The European Investment Advisory Hub (EIAH) has also made
a positive start, providing technical assistance on more than 170 requests as of mid-May
2016.
Building on these positive results the Commission has announced its intention to
present a legislative proposal extending the duration of the EFSI until 2020. Aside
from extending EFSI, the Communication highlighted a number of non-legislative
measures aimed at improving the functioning and delivery of the Fund as well as of the
Advisory Hub. Among these changes the Commission has announced plans to scale up
the SME-window, further simplify the combination of EFSI and ESI Funds, enable EIAH to
provide more targeted outreach, encourage the establishment of Investment Platforms,
contribute to the development of the market for sustainable/green projects, and
provide further clarity as regards accounting aspects of public-private partnerships.
The Council, when discussing the upcoming Commission proposal to extend the
duration of the EFSI, should also reflect on the functioning of the Plan and provide the
Commission and the EIB with its assessment and suggestions for possible
improvements. In light of the planned legislative proposal, improvements in the
functioning of the Plan are warranted. Apart from the aspects highlighted by the
European Commission in its Communication, the Presidency has identified a number of
issues to be discussed at the ministerial level as regards the functioning of the EFSI and
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COM(2016) 359 final

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Presidency Issues note
the EIAH, as listed below. This discussion could potentially form basis for the ECOFIN
Council Conclusions towards the end of the Slovak Presidency.
In order to ensure that EFSI contributes towards closing the investment gap in the EU,
additionality2 needs to be strengthened and in each case credibly verified. The success
of EFSI rests on our ability to ensure that its investments are truly additional and not
merely business as usual - facilitating and mobilizing rather than crowding out private
investment. In the absence of detailed project-specific information, it is hard to assess
whether the EFSI meets this crucial objective. There is a general concern, at technical and
political level that additionality is not being sufficiently delivered. While on the one hand
the flexibility of EFSI needs to be preserved in order for it to remain operational, on the
other hand, the broad definition of additionality casts a shadow on EFSI´s achievements.
In general, projects supported by the EFSI rightfully carry a risk corresponding to the EIB´s
“Special Activities.” It is, however, more difficult to determine whether these projects
help address market failures or suboptimal investment situations and whether they
would have been carried out also in the absence of the EFSI. More elaborate and
transparent criteria, which would clearly define and operationalise additionality, should
be considered. In addition, it could also be better defined what types of projects can be
considered as strategic.
To overcome the reliance on debt financing in the EU, the role of EFSI as an equity
investor should be strengthened and feature more prominently in all investment
windows. EU economies have been traditionally reliant on bank intermediation to finance
investment. However, in light of macroeconomic conditions, bank deleveraging,
regulatory changes and banking sector legacy issues, bank lending to non-financial
corporates has not recovered to pre-crisis levels. To be successful, the EFSI should focus
on diversifying funding sources in Europe through the development of EU equity market.
While the Fund has been focusing on equity investments within the SME Window, its
potential within the Infrastructure and Innovation Window does not seem to have been
fully exploited. The EFSI could, therefore, also act as an equity partner in large public
infrastructure projects, with Member States potentially acquiring buyout options on its
equity shares. For such a set-up to materialise, more clarity and greater predictability in
Eurostat decision making is indispensable.
To improve the geographical balance of the EFSI-funded projects, the European
Investment and Advisory Hub (EIAH) could be enhanced and decentralized to provide
high quality advisory services at the local level. The Advisory Hub has a vital role to play
in the success of the Investment Plan. EFSI projects are generally more complex and
require specific advice. Regional decentralization of EIAH´s offices would facilitate access
of project promoters to EIB specific knowledge and, by extension, improve awareness of
2

Definition of „additionality“ for the purposes of the Regulation (EU) 2015/1017 on the European Fund
for strategic Investments (article 5.1) „additionality means the support by the EFSI of operations which address
market failures or suboptimal investment situations and which could not have been carried out in the period
during which the EU guarantee can be used, or not to the same extent, by the EIB, the EIF or under existing
Union financial instruments without EFSI support. Projects supported by EFSI shall typically have higher risk
profile than projects supported by EIB normal operations and the EFSI portfolio shall have overall a higher risk
profile than the investment portfolio of investments supported by EIB normal investment policies before the
entry into force of this Regulation.“

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Presidency Issues note
the Fund in the region. It could also strengthen the cooperation of the National
Promotional Banks with the EIB and among themselves. In addition, more targeted and
specific outreach could improve the submission rate and the project success rate in
Member States that have not yet benefited from the EFSI at a sufficient scale.
Furthermore, an improved uptake of Investment platforms would enable financing of a
larger amount of smaller projects, including those below the usual EIB project threshold
of 25 million euro, thus improving the EFSI presence in smaller Member States.
Member States should be incentivised to contribute financially to EFSI at the level of
the Fund, thus strengthening the EFSI fire-power. One way to encourage Member State
contributions is to further simplify the blending of ESI Funds and EFSI. However, specific
incentives need to be developed to motivate Member States to contribute at the Fund
level rather than at the level of individual projects, as is currently the case. While the
principle of project-based approach is sound, an unintended consequence is that
Member States are not sufficiently motivated to contribute directly to the Fund, where
the funds would be leveraged, and prefer to participate in the Plan at the national level.
This may result in an overall lower volume of investment undertaken. A solution to this
problem should be sought.
Issues for discussion


Do Finance Ministers share the views on the main issues related to the
functioning the Investment Plan for Europe, as outlined by the Presidency? Are
there any additional issues that could be highlighted and deserve Council
attention?



Do Ministers broadly agree with proposals aimed at improving the functioning of
the Fund, as outlined by the Presidency? Are there alternative proposals to
address these issues?

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