ECA: EFSI results may be overstated

The auditors urged for improving the geographical spread

Photo: ECA The EFSI has a high profile as a flagship EU programme, rapporteur Leo Brincat (second L), stated.

In their newest report, the EU auditors noted that the European Fund for Strategic Investment (EFSI), the financial arm of the Juncker Plan, has been effective in raising finance for investments in the EU, but they are concluding that the amounts of investment mobilised may be overstated.

The initial target of EFSI, which the European Commission and the EIB jointly set up in 2015, was to generate €315bn in public and private money, to tackle the investment gap following the financial and economic crises.

The European Court of Auditors (ECA) found that by mid-July 2018, the EIB had approved €65.5bn of financing, which was more than the indicative volume of €61bn of finance to be raised. EFSI support enabled the EIB to achieve a four-fold increase in its higher-risk financing operations compared to 2014. Nearly a third of projects signed under the Infrastructure and Innovation Window could have been financed without EFSI support, but not on such favourable terms, points the report. The auditors specified that some projects could have been financed by private and other public sources or by the EIB itself and that project promoters preferred EFSI financing because it was either cheaper or offered a longer payback period.

The ECA also question the reported estimate of €335bn of additional investment mobilised. They stated that in some cases the methodology used overstated the extent to which EFSI support actually induced additional investment in the real economy. Also, the reported amounts do not take account of the fact that some EFSI operations replaced other EIB operations and EU financial instruments.

According to the report, the funding that EFSI partly replaced related mostly to centrally managed EU financial instruments, in particular in the fields of transport and energy. The auditors also found that the geographic concentration was not sufficiently balanced, mostly ending up in a few larger EU15 Member States with well-established national promotional banks.

Accenting that EFSI has a high profile as a flagship EU programme, Leo Brincat, the member of the ECA responsible for the report, underlined that “this makes it all the more important that any claims for its effectiveness are built on solid foundations”.

In the report, the auditors made recommendations for promoting the justified use of higher-risk EIB products under EFSI and encouraging complementarity between EU financial instruments and EU budgetary guarantees. They also asked for improving the assessment of whether potential EFSI projects could have been financed from other sources, as well as for better estimating of the investment mobilised and improving the geographical spread of EFSI supported investment.

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