Juncker investment fund: €50bn mobilised so far

The flagship EU investment fund has mobilised so far €50 billion in investment, the president of the European Investment Bank (EIB i) said Thursday (14 January).

“That is 16 percent of the objective of the €315 billion,” the EIB's Werner Hoyer said at a press conference in Brussels.

The fund was announced by EU Commission president Jean-Claude Juncker i at the beginning of his mandate in 2014, and is his administration's main tool to get the European economy back up and running.

It will consist of €21 billion in guarantees, from the EU budget (€16 billion) and the EIB (€5 billion).

The key attribute of the fund is that by providing guarantees for projects that are otherwise deemed too risky, it is expected to pry loose additional public and private investment, which lenders are hesitant to provide without the fund's involvement.

Juncker announced the investment is to be multiplied by a factor 15.

So far, the fund, operating through the EIB and its sister organisation, the European Investment Fund (EIF), has not been able to reach that multiplier.

The EIB has committed €5.7 billion to 42 projects and mobilised €25 billion, a multiplier of almost 4.4.

The EIF had a higher multiplier rate. It committed €1.8 billion and also mobilised €25 billion - a multiplier of almost 14.

'Not relaxed but optimistic'

EIB secretary-general Klaus Tromel explained the disparity between the EIB and the EIF multipliers.

“EIB predominantly works with the final project promoters directly, but EIF predominantly works through intermediaries,” said Trömel, adding the EIF is a “fund of funds”.

“Hence, at the level of the fund that EIF supports, there will be a multiplier once again.”

Despite the lower than announced multiplier for the first projects, Hoyer said the multiplier effect must be measured after the full duration of the plan.

“We would not say a precise target for six months or twelve months; we have a precise target for [after] three years,” noted Hoyer.

“It's going to be a very big challenge. But on the other hand, after the experiences we've had after these first six months … I'm optimistic this multiplier can be reached on the basis of enough good projects.”

“I'm not relaxed, I'm never relaxed when these challenges are so big, but I'm quite optimistic. Every indication for the time being is there,” the president added.

While the Juncker fund officially only began operating as of 1 January this year, the EIB was asked by governments to get started with approving projects in 2015, before the governance structure was fully set-up.

Half of the approved projects so far have been in the environmental and climate sector. Examples include offshore wind farm projects, the installation of smart meters in homes, and motorways.