Juncker urges states to top up EFSI fund

European Commission president Jean-Claude Juncker has urged EU member states' leaders to provide national top-ups for his new EU investment fund, confirming that any such contributions will not count towards EU deficit and debt calculations.

Ahead of his first European Council meeting as commission president, Mr Juncker warned leaders that he needed "money and not just nice words" to ensure the success of his highly-leveraged European Fund for Strategic Investment EFSI.

EU leaders backed his proposal yesterday to use €21 billion in European seed capital to leverage private investment for the €315 billion investment fund but, going into the meeting in Brussels, they were cool on the idea of additional contributions in case they counted towards EU calculations of national debt and deficit.

Mr Juncker moved to allay those concerns yesterday, saying that national EFSI contributions would “not be considered in the commission analysis of member state budgets”.

“Thus there is barely a reason not to contribute to the financing,” he said. National contributions, he added, were the best way for leaders to address their concerns in some quarters at the fund’s “meagre” start capital.

One-off expense

Commission vice-president

Jyrki Katainen

confirmed fund contributions would be classified as a one-off expense, similar to member state contributions to the ESM bailout fund, and would not count towards EU fiscal calculations or trigger disciplinary action.

“I understand very well the questions of member states if capital injections would have a negative impact,” said Mr Katainen to Reuters. “But it will have no negative consequences.”

With this point clarified, Donald Tusk, chairing his first meeting as European Council president, said establishing the fund was a matter of urgency.

EU leaders called for the swift establishment of the fund, noting that the Commission will present a proposal in January, with the various EU bodies expected to agree to the project by June.

“The EIB Group is invited to start activities by using its own funds as of January 2015,” the leaders said in a communique under discussion last night, adding that the EFSI will be open to contributions from member states “either directly or through national promotional banks”. Leaders also called on the Commission and under EU legislators to “step up work on key measures to improve the regulatory environment for investment, including the work towards better integrated capital markets.”

List of projects

Member states have already submitted a draft list of hundreds of projects that could be considered by the EFSI, spanning the transport, telecommunications, education and energy sectors.

The commission’s proposal sees it providing €16 billion in capital, with an additional €5 billion from the European Investment Bank (EIB), in which all EU member states are shareholders. With this seed capital, the EFSI hopes to attract almost €300 billion in private sector investment.

As talks progressed yesterday, senior EU officials suggested Mr Juncker’s primary concern for now is not extracting extra capital from member states, but drumming up the €16 billion his own institution has committed to the fund.

With €48 billion in the bank, the EIB says it is ready to go and, pending approval by the council and parliament next year, has agreed to begin funding projects.

In this the bank’s priority is that EU shareholders loosen EIB operating rules, allowing it to invest in – and attract private co-investors to – investments more risky and innovative than is currently permissible.

Now, the looming political negotiations will be about reconciling differing views across Europe of how the fund should operate.