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06 January 2015

EU Observer: Polish finance minister pokes holes in Juncker fund


Mateusz Szczurek has questioned the model of the EU’s flagship investment vehicle, saying it is "underfunded" and warning that investors might stay away.

Speaking at a European Parliament hearing in Brussels on Tuesday (6 January) alongside the EU commissioner tasked with implementing the new fund, Szczurek said there is very little input money to begin with and that investors may be "crowded out" instead of being attracted by the project.

"I have anecdotal evidence from commercial banks that the European Investment Bank [which is to host the fund] is crowding out private investment," Szczurek, a former chief economist at ING Bank, noted. 

He said the European Fund for Strategic Investments (EFSI) and the European bank (EIB) as a whole are "competing on the private market for funding”, adding that the fund’s five-fold "leverage" will be a turn-off for many investors.

When announced late last year by EU commission chief Jean-Claude Juncker, the new €315 billion investment vehicle was immediately criticised for being based on very little "real" money - €21 billion in guarantees from the EU budget and the EIB.

The start-up capital is to be used by the EIB to raise €63 billion to pay for risky infrastructure initiatives, clean energy, and IT projects, and to attract extra private and public investments to reach the €315 billion figure. 

For each euro the EU chips in, Juncker promised there will be €15 in top-ups from other sources.

But even the commissioner in charge, Jyrki Katainen, is sounding increasingly cautious.

Full article on EU Observer



© EUobserver.com


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