The European Commission has announced plans to extend the European Fund for Strategic Investments (EFSI).
The extension is based on three different assessment reports: two reports were released last month – one by the European Commission and another by the European Investment Bank (the second largest counterpart of EFSI). A third report was published earlier this month by the consultancy firm Ernst & Young.
“EFSI functions as planned. It crowds in private resources from the market,” European Commission Vice-president Jyrki Katainen told reporters after presenting the expansion, also known as the “Juncker Plan”.
According to the proposal, the re-launched EFSI will draw €315bn from the European Union’s economy by the end of next year.
Is it the time right to extend the EFSI?
According to the European Commission, now is the right time to extend the EFSI. The official announcement of the forthcoming expansion came directly from European Commission President Jean-Claude Juncker during his annual State of the Union address in September. The announcement was made before any assessment of the Juncker Plan’s first year.
It was November 14 when the Ernst & Young review was released – exactly two months after Juncker’s speech in which he announced the extension of EFSI until 2020.
“In terms of the objectives relating to growth and jobs, no targets have been set for EFSI. The EIB Group will work on modelling tools to estimate the impact, but no figures are available yet,” writes Ernst & Young in its assessment. It also notes that it is still too early for these effects to materialise.
Meanwhile, the European Commission has assessed the programme as successful by suggesting that an encouraging number of projects has been agreed and is expected to trigger a total investment of €138.3bn. However, there is still no definitive answer about whether these specific projects have delivered.
“The evaluation is going to happen, it will take some time,” one EU official tells New Europe, suggesting that in order to be fair to the Commission’s initiative, all incidental and side gains will have to be assessed carefully.
“The idea of EFSI was what to fund could not be done by national budgets, but would be essential for modernising the economy of EU member states,” adds another EU official.
SMEs are mostly benefiting
The European Commission’s communication, which was presented on November 29, shows that market absorption has been particularly quick under the SME window where “the EFSI is delivering well beyond expectations”. This is in line with the very positive reception that EFSI has received from SME stakeholders.
Meanwhile, the Commission – together with the EIB – is scaling up to €500bn, in order to ensure that sufficient funding is available for continuous support to SMEs via EFSI.
The projects approved by the EIB, under both windows, by mid-November under the EFSI will mobilise €154bn in total investments to support some 377,000 SMEs across 27 EU member states.