Original publication: March 2016
Authors: EPRC – University of Strathclyde: Arno van der Zwet, John Bachtler, Stephen Miller, Phillip Vernon, Viktoriya Dozhdeva
Advisors: EPRC – University of Strathclyde: Fiona Wishlade, Rona Michie
Short link to this post: http://bit.ly/2KcCZWK
The role of the European Investment Bank Group (EIB) – comprising the European Investment Bank and European Investment Fund – in Cohesion Policy has increased dramatically. Set against this background, the objective of this study is to provide a comprehensive analysis and assessment of how the EIB contributes to the achievement of Cohesion Policy objectives.
Roles of the EIB in Cohesion Policy
The EIB fulfils a number of important roles in the implementation of Cohesion Policy:
- advisory and analytical services – JEREMIE ex-ante evaluations, JESSICA evaluation studies, ad-hoc advice to managing authorities, advisory service to the European Commission;
- (b)lending – co-financing Cohesion Policy projects with direct loans, intermediate loans or global loans; providing framework loans (i.e. Structural Programme Lending) for financial intermediaries; and co-financing financial instruments;
- mandate management of holding funds for financial instruments co-financed with Cohesion Policy funding; and
- capacity-building activities – the JASPERS and JASMINE initiatives, and other Technical Assistance activities linked to the Bank’s (b)lending activities.
The effectiveness and efficiency of EIB activities
Based on interview and survey evidence the EIB activities are generally regarded as making a significant contribution to Cohesion Policy objectives and have a high level of added value and complementarity. Its advisory, capacity-building and (b)lending services are highly valued, in particular, by Member States Specifically in relation to Financial Instruments the EIB plays a crucial role in their development and implementation. The EIB’s role is still evolving, and the effectiveness and efficiency of its activities in Cohesion Policies, particularly in quantitative terms, is not always well understood at an aggregate EU level, including its role in mandate management.
Results from the survey for this study demonstrate that gap analyses and evaluations in the context of the JESSICA and JEREMIE initiatives were valued by managing authorities and stakeholders, although the recommendations on FIs were not always taken forward by national or regional authorities. The currently available data provide only limited insights into the comparative performance of HFs managed by the EIB relative to those managed by other institutions. According to these data, it appears that as holding fund manager the EIB absorption rates are lower than for non-EIB holding fund managers. Lower absorption rates may be partly explained by the weaker capacity of Member States where the EIB and EIF operate as well as the particularly severe effects of the financial crisis in these countries.
Management fees for EIB and EIF holding funds are broadly equivalent to those managed by non-EIB institutions. However, a comparison of management fees for holding funds implemented by the EIF (enterprises) and those for the EIB (urban development) indicate that the latter are lower as a proportion of commitments. The reverse is true when comparing enterprise support holding funds of other institutions with those implemented by EIF.
EIB lending makes a major contribution to the EU’s overall Cohesion Policy objectives. However, the scale of EIB lending to Cohesion Policy programmes and projects is not well understood and requires further research.
Accountability, transparency and visibility
The dual role of the EIB (public institution and investment bank) causes some ambiguity in its accountability, transparency and visibility. Overall, Member States regard EIB activities as increasingly accountable, transparent and visible, but there are also some negative assessments. In recent years more information regarding EIB activities in Cohesion Policy has become available but not in relation to all its roles in Cohesion Policy. For example, there is relatively little information available with regard to the (b)lending activities of EIB activities in Cohesion Policy projects and programmes.
The increased use Financial Instruments in Cohesion Policy has required closer working relationships between the EIB and the European Commission (DG Regio). For the Commission, this has meant a steep learning curve and, to a certain extent, a reliance on EIB expertise in the development and implementation of FIs. For its part, the EIB has had to invest time and effort in understanding how FIs can be used efficiently and effectively in the Cohesion Policy context.
The increased involvement of the EIB in Cohesion Policy requires reconsideration of the role of European Parliament and, in particular, the REGI Committee in scrutinising the Bank’s activities. European Parliament respondents interviewed for this study strongly favour more active, systematic and regular scrutiny of the EIB by the REGI Committee. Interviewees in the EP and Member States generally consider that the EIB makes a significant contribution to Europe’s Growth Agenda, and specifically to Cohesion Policy, but that the full implications of increased EIB involvement are not fully understood.
The role of the EIB in Cohesion Policy is increasing in the 2014-20 period, drawing on the lessons learned from the experience of implementing FIs in 2007-13. The CPR provides a more robust framework for financial instruments in which the EIB and EIF will play a major role. Additionally, the provisions for the SME Initiative provide a further basis for EIB involvement in Cohesion Policy. The creation of the EFSI and its potential contribution to Cohesion Policy has also led to increased visibility of the EIB’s responsibilities. These developments provide an opportunity and need for broader and deeper interaction between EIB and the Commission and European Parliament.
The EIB’s increased role in Cohesion Policy, particularly through the greater profile and use of financial instruments, has major implications for the performance and results of Cohesion Policy. EIB lending is a major contributor to economic development expenditure in the Member States and a key component in the viability of many major projects. The problem in assessing the effectiveness and efficiency of these activities – from a Cohesion Policy perspective – is that the evidence base is (so far) relatively limited.
The research for this study suggests a high level of satisfaction with the EIB among Member States, although more detailed analysis is required to provide a better understanding of the EIB’s contribution to Cohesion Policy and its relation in Member States. The overall assessment is that the EIB is effective across most areas of activity, and it appears to be doing well in supporting the objectives of Cohesion Policy. The challenge is to ensure that the largely positive assessment can be substantiated by systematic evaluation – and monitored on an ongoing basis to ensure that where problems exist they are being addressed.
The main recommendation of this study is the need for the European Parliament to support the development of more systematic accountability on the role of the EIB in Cohesion Policy. It proposes that steps are taken for the REGI Committee to become more engaged in EIB Activities by exploring the possibility of a chapter or Annex in the EIB’s Annual Report which specifically reports on those elements that contribute to the delivery of Cohesion Policy objectives and that are linked to Cohesion Policy instruments.
In tandem with formal reporting requirement, a number of ways are suggested that would improve operational dialogue between the European Parliament and EIB:
- at the political level, visits by the REGI Committee to the EIB similar to those to the European Central Bank (ECB);
- regular invitations to the EIB to present the results of their activities in the context of Cohesion Policy to the REGI Committee;
- organisation of seminars and workshops at the administrative level to promote knowledge exchange, improve the visibility of EIB activities and ensure active institutional engagement;
- more detailed studies focussing on specific themes or issues
- recruitment of personnel from other EU institutions/bodies that possess relevant know-how; and
- drawing up own-initiative reports that target or include reflections on the role of the EIB in Cohesion Policy.
Link to the full study: http://bit.ly/563-410
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