Projects worth €321 billion, creating more than a million new jobs over the next three years, are to be unleashed through a joint European Commission, European Investment Bank plan in a bid to kickstart the EU’s sluggish economy.
Ireland is putting together a raft of shovel-ready projects they hope will be accepted for funding from the special programme.
The Government has indicated that transport, water, renewable energies, together with construction projects are top of the agenda for fresh funding.
However, it will face stiff competition as other countries have said they have around 1,800 projects they would like funding for.
The initial selection will be by the Commission with the EIB making the final choice.
There is sufficient money in the system and interest rates are at a record low, but developers and investors are unwilling to start projects.
With investment in Ireland, and on average across the EU, falling by 15% from 2010 to 2013, the plan, promised by new Commission president Jean Claude Juncker, is designed to reverse the situation. The €315bn would amount to 2% of the EU’s GDP over three years.
The fund should be operational by mid-2015 while the EIB will pre-finance its activities, “giving it a flying start”.
The European Commission will use €16bn of its six-year budget together with €5 bn from the EIB to guarantee or give first loss protection to the EIB for €39bn they are expected to raise to lend to projects.
There will be a provisioning buffer of €8bn.
The money will be offered to member states, developers and investors to cover parts of projects viewed as risky by normal lenders and investors and which may be retarding their progress.
On average the loans from the EIB will cover 20% of a project, and the money will be lent for a long period of around 20 years.
EIB sources said the guarantee from the Commission was essential to allow them retain their Triple A rating on the markets when raising money for the riskier elements of projects.
The money would not deprive any EU project of funding and the buffer will come from €2bn available in the margin of the current budget, and €6bn reallocated from Connecting Europe and Horizon, the research budget, which was not earmarked.
The EIB is the EU’s in-house bank with funds contributed by member states.
Today the plan will be unveiled to the European Parliament.
© Irish Examiner Ltd. All rights reserved