Page 20 - ePaper
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therefore, not a matter of crowding out other investment projects, but using the existing
money better to generate additional amounts for investment projects.
48. Why do loans, equity and guarantees have a greater leverage effect than
grants?
The extra leverage is generated by the EIB borrowing against the money, rather than the
money going directly to the end-recipient. The €21 billion from the EFSI allows the EIB to
borrow around three times as much, and then invest/finance the final recipient, rather than
the €21 billion being given directly as grants.
49. Is it a mere coincidence that the same amount from the EIB €5 billion is
also the same amount allocated as risk capital for SME (or is EIB-money
earmarked for this purpose)?
The EIB money is not earmarked for this purpose. This is a coincidence.
50. There is too little capital, too little cash, only financial engineering (as with
the past €120 billion plan)
This is a smart use of public money to help channel private money into investments.
To establish the EFSI, a guarantee of €16 billion will be created under the EU budget. This
money will go to the Fund. The Guarantee, coupled with EIB-resources of €5 billion will
absorb the higher risk in strategic investments and in this way mobilise private resources
that are currently not being invested in the real economy. The Fund will thus start with a
significant firepower while being able to expand its activities further over time. Besides, the
Commission and the EIB have identified a conservative leverage ratio of 15 to 1 as sound and
feasible. The EIB has vast experience in this area.
In addition, and on top of the €315 billion mobilised by the EFSI, European Structural and
Investment Funds need to be deployed in a more efficient way which will multiply the effect
of the Fund. And finally, Member States and private investors can participate directly in the
Fund or at project level.
51. Money will not go to relatively safe projects that would have been
financed anyway. Isn't the Investment Plan crowding out private
investors?
The EFSI targets higher risk projects than the private sector would finance on its own
without the guarantee. It contributes to financing projects that could not be financed solely
by the public or private sectors. It is not the objective of the EFSI to finance projects that
could get access to finance in the private sector, national level or other EU schemes.
20
money better to generate additional amounts for investment projects.
48. Why do loans, equity and guarantees have a greater leverage effect than
grants?
The extra leverage is generated by the EIB borrowing against the money, rather than the
money going directly to the end-recipient. The €21 billion from the EFSI allows the EIB to
borrow around three times as much, and then invest/finance the final recipient, rather than
the €21 billion being given directly as grants.
49. Is it a mere coincidence that the same amount from the EIB €5 billion is
also the same amount allocated as risk capital for SME (or is EIB-money
earmarked for this purpose)?
The EIB money is not earmarked for this purpose. This is a coincidence.
50. There is too little capital, too little cash, only financial engineering (as with
the past €120 billion plan)
This is a smart use of public money to help channel private money into investments.
To establish the EFSI, a guarantee of €16 billion will be created under the EU budget. This
money will go to the Fund. The Guarantee, coupled with EIB-resources of €5 billion will
absorb the higher risk in strategic investments and in this way mobilise private resources
that are currently not being invested in the real economy. The Fund will thus start with a
significant firepower while being able to expand its activities further over time. Besides, the
Commission and the EIB have identified a conservative leverage ratio of 15 to 1 as sound and
feasible. The EIB has vast experience in this area.
In addition, and on top of the €315 billion mobilised by the EFSI, European Structural and
Investment Funds need to be deployed in a more efficient way which will multiply the effect
of the Fund. And finally, Member States and private investors can participate directly in the
Fund or at project level.
51. Money will not go to relatively safe projects that would have been
financed anyway. Isn't the Investment Plan crowding out private
investors?
The EFSI targets higher risk projects than the private sector would finance on its own
without the guarantee. It contributes to financing projects that could not be financed solely
by the public or private sectors. It is not the objective of the EFSI to finance projects that
could get access to finance in the private sector, national level or other EU schemes.
20
