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S&P Global Ratings tells the specialist press that EFSI needs more investment – but certain challenges must be addressed

The Investment Plan for Europe (IPE), or the Juncker Plan, was conceived in 2014 by European Commission (EC) President Jean-Claude Juncker to boost job creation and growth, meet the long-term needs of the economy, increase competitiveness, and help strengthen infrastructure. To bolster the IPE, the European Fund for Strategic Investments (EFSI) was also launched to help mobilise finance for investment and help finance reach the real economy.

6338125076_0c02550fdb_zAs of January 2017, EFSI financing related to approved operations under the EIB Group was set to trigger €168.8 billion of investment or 54% of the €315 billion target amount. In addition, Jyrki Katainen, EC vice president for jobs, growth, investment, and competitiveness, reported that agreements had been concluded with venture capital funds, financial intermediaries, and promotional banks, benefitting over 400,000 SMEs.

Now that the Fund has begun to meet its objectives, the EU is considering extending and enlarging the EFSI. A recent S&P Global Ratings report agrees that greater investment is still needed to lift potential growth in all European economies and address demand in countries on the Eurozone’s periphery. However, implementation of the plan must be sped up before the rise in global and European interest rates pull the attention of investors away.

The report also finds that the geographical coverage and additionality of EFSI must be improved. Projects financed so far are mostly in more developed member states (92% EU-15 vs. 8% EU-13), which can rely on strong administrative capacity and, according to some, tend to be those that could have been financed without EFSI.

More about this report can be read at Delano and the International Project Finance Association (subscription required).

Image credit: CC Search user: Edwin (License)

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