European Commission and the European Investment Bank (EIB) signed an ambitious Guarantee Agreement through which the European Commission will support up to €26.7 billion of EIB financial operations to enable crucial public investments in sectors like clean energy, digital and transport infrastructure, health and education over the next seven years, rolling out Global Gateway worldwide.
Commissioner for Neighbourhood and Enlargement, Oliver Varhelyi, said: “Today’s landmark guarantee agreement with the European Investment Bank will enable to finance the implementation of our Economic and Investment Plans for the Western Balkans, the Southern and Eastern Neighbourhood. We launched these three substantial investment plans to support their post-COVID socio-economic recovery and to speed up the closing of their development gap with the EU. We worked together with the region to identify the key bottlenecks of their development. Although each investment plan is individually designed for the region it aims to build faster and more sustainable road, rail and digital connections, decarbonise the economies, ensure safe energy supplies, create sustainable business opportunities and put conditions in place that make the young generation stay in the region. In the next years together with the EIB we will be able to deliver in the Western Balkans, the Southern Neighbourhood, and the Eastern Partnership countries these much needed and awaited investments, bringing growth and jobs directly and on a larger scale than ever before.”
Commissioner for International Partnerships, Jutta Urpilainen, said: “The EU’s new Global Gateway strategy will help us connect Europe and partners across the globe, with investments in sustainable and high-quality infrastructure. Now more than ever, we need stronger partnerships, supported by ambitious financial instruments such as today’s guarantee agreement. We count on the European Investment Bank as our key strategic partner as we rollout the Global Gateway strategy. Through our powerful tool, the European Fund for Sustainable Development Plus, our guarantees will leverage billions of investments – both from the public and private sectors. This is Team Europe in action, working together to create a transformational impact for our partners.”
President of the European Investment Bank, Werner Hoyer, said: “The agreement signed today is an essential tool to implement the Global Gateway strategy and support a green, digital and inclusive recovery worldwide. Today’s challenges require unprecedented levels of investment. Partnerships, multilateral cooperation, and mobilising private capital are preconditions for success. With EIB Global, our new arm for international partnerships and development finance, we aim to enhance the impact of EU investments across the world, through closer cooperation in a “Team Europe” approach. This will help us all enhance the impact of Europe’s efforts in all our partner countries.”
This Guarantee Agreement will be the largest guarantee agreement signed in the framework of the new European Fund for Sustainable Development Plus ("EFSD+"), established by the NDICI – Global Europe regulation. It will support the green and digital transitions in EU partner countries and the implementation of the Global Gateway strategy, including the Global Gateway Africa-Europe Investment Package.
This Guarantee Agreement will enable the EIB to finance the implementation of key investments identified in the EU’s Economic and Investment Plans for the Western Balkans and the Southern and Eastern Neighbourhood regions. More than two thirds of this guarantee cover is planned for investments in enlargement and neighbourhood countries. It will also contribute to financing Ukraine’s post-war reconstruction. The remaining part will be used for EIB loans for projects in Sub-Saharan Africa, Asia, the Pacific, Latin America and the Caribbean.
Background
The EFSD+ Guarantee Agreement for EIB sovereign lending represents an important part of the implementation of the new European Fund for Sustainable Development Plus ("EFSD+") established by the regulation Neighbourhood, Development and International Cooperation Instrument (“NDICI – Global Europe”), which entered into force in June 2021. The EFSD+ also covers the pre-accession countries.
The EFSD+ is NDICI- Global Europe’s integrated financial arm supplying financing capacity in the form of budgetary guarantees, loans, equity, technical assistance and grants worldwide to support investments supporting the achievement of the Sustainable Development Goals and promoting socio-economic and environmental resilience in partner countries, with a particular focus on the eradication of poverty.
Investment support through the EFSD+ includes up to €40 billion of guarantee cover from the EU’s External Action Guarantee. Of this amount, €26.725 billion is the part of the External Action Guarantee covering investments by the EIB.
The rationale behind the EU budgetary guarantee is to cover the risk of EIB loans outside the EU and thus enable the Bank to finance projects in support of EU policy in higher risk environments. The EU guarantee enables the EIB to undertake public sector investments such as rehabilitation and construction of railways, roads, schools, hospitals or water and sanitation infrastructures, in riskier environments outside the EU.
With the EU guarantee, the EIB will be able to provide loans with longer payback periods, grace periods, and low interest rates. The financing operations undertaken by the EIB thanks to the EU guarantee will respond to EU policies and specific policy priorities of EU cooperation with the partner countries.
In addition to this guarantee specifically reserved for the EIB, the Commission will provide under the EFSD+ open architecture up to €13 billion guarantee cover until 2027. This will be deployed by a range of implementing partners, i.e. International Financial Institutions (including the EIB) and European development finance institutions aiming to mobilise private investments in support of our partner countries achieving the SDGs.
*Source: European Commission
By: N. Peter Kramer
