The European Union’s infrastructure investment plan will achieve as much as 15 percent of its target volume by year end, even as its organization remains incomplete, European Investment Bank President Werner Hoyer said.
The “Juncker Plan” aims to unlock as much as 315 billion euros ($358 billion) in private and public investments by the end of 2017 that would have struggled to raise financing. Its investment committee is not set up yet and the managing director still needs the European Parliament’s approval, possibly next week, Hoyer said Saturday.
“So the structure is not in place yet and still I can say by the end of this year we will almost have triggered 50 billion euros in additional investment,” Hoyer said in an interview in Lima. “We are already pretty far with the Juncker Plan.”
A pickup in investment would be good news for the 19-nation euro area as it struggles to cement its slow and fragile economic recovery. European Central Bank Executive Board member Peter Praet said Oct. 8 that “seeping pessimism” about long- term growth poses a risk for the bloc’s investment climate.
For now, the EIB is putting the infrastructure projects on its own balance sheet, hoping to “slide them one day under the umbrella of the Juncker Plan,” Hoyer said on the sidelines of the annual meetings of the International Monetary Fund and the World Bank. “Knock on wood, this is working relatively well.”
The fund, called the European Fund for Strategic Investment, seeks to leverage base capital of 16 billion euros in EU guarantees and 5 billion euros in EIB funding. The leverage ratio of private to public investments is 15:1, yielding a 315 billion euro fund in all. Hoyer said as much as 47 billion euros of that will have been reached by year end.
The EIB will seek to boost new lending in Greece from an annual 2 billion to 3 billion euros and will send a larger team to the cash-strapped Mediterranean country, Hoyer also said.
“We’re ready to significantly expand if economically resilient and viable projects are being developed,” he said. “This can range from innovation to tourism, one can imagine a lot, but it has to pay off.”