eu-asean connectivity dialogue brussels 27 february 2014 eu regional blending facilities
TRANSCRIPT
EU-ASEAN CONNECTIVITY DIALOGUE
Brussels 27 February 2014
EU REGIONAL BLENDING FACILITIES
INNOVATIVE FINANCIAL
INSTRUMENTSUsing grants strategically
to unlock additional financing for development
The targeted use of grants can address market inefficiencies and can make projects with a high economic and social but insufficient financial return possible.
In public investments, a grant element can speed up processes, increase the sustainability of the investment, bridge financing gaps and reduce the debt burden of the promoting partner.
In private investments, a grant element can set incentives, address factors that hold back investment such as risk and send out positive signals to market actors
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THE EU APPROACH
The EU regional blending facilities
Blending is one of the Commission's instruments to achieve the EU's development objectives (e.g. inclusive growth and poverty reduction).
Seven EU regional blending facilities covering almost all countries in the EU's area of external cooperation have been set up since 2007 (plus an eighth for Western Balkans)
Combine grants from the EU Budget, EDF and MS contributions with additional non-grant resources, taking into account debt sustainability issues.
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FINANCIAL CONTRIBUTION
SFrom the EU budget and
Member States
ITF: € 638 million from the EU and € 109 million from Member States
AIF: € 30 million, 2011 – 2012
IFCA: € 65 million, 2011 - 2013
LAIF: € 192 million, 2009 - 2013
NIF: € 767 million from ENPI & € 70 million from Member States, 2007 – 2013
CIF: € 40 million, 2012-2013
IFP: € 10 million, 2012-2013
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TYPES OF GRANT
SUPPORTGrants as different
"financial tools"
Grants used as direct investment and interest rate subsidy decrease the investment cost for the beneficiary.
Technical assistance can accelerate projects and improve the quality, efficiency as well as sustainability.
Risk capital (i.e. equity & quasi-equity) aims at crowding in additional market financing for development. Currently this is exclusively used to support MSMEs.
Guarantee mechanisms aim at unlocking market financing for development that is held back by high risk perception.
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SUBMISSION OF PROJECTS
Eligible Finance Institutions submit project proposals (standard project submission form) as Lead Financier
Multilateral European Finance Institution (eg EIB, EBRD, …)
European public national development finance institutions from Member States (eg AFD, KfW, SIMEST)
Regional banks are full members in some regional facilities (AfDB in ITF, CDB and IDB in CIF) and observers in others (IADB, CABEI and CAF in LAIF). (Not yet in Asia)
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SCREENING PROCESS
Every project proposal is subject to a peer review among finance institutions and a screening process led by COM.
Decisions taken on a case by case basis, requiring among others the following checks:
project is 100% in line with EU development policy objectives
environmental & social standards have been taken into account
necessity of grant element has been justified
sufficient analysis has been made to avoid market
distortions
EU development objectives are always
paramount
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POTENTIAL FOR BLENDING
2014-2020Carry forward gradual
increase in response to the investment needs of
partner countries
The Commission's intention is to enhance blending activities in all regions.
The decision on actual allocations are being made in the context of the on-going programming exercise.
Blending projects can be financed from national and regional envelopes. Via regional blending facilities, but also standalone
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POTENTIAL FOR BLENDING
2014-2020
Asia Regional Indicative Programme
2014 – 2020
Promotion of a Green Economy
energy, climate change, environment and natural resources management,
including water management, disaster preparedness and risk reduction, better access to finance for Small and Medium Enterprises, support investments in the transport sector and contribute to the
ASEAN Connectivity Master Plan
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USEFUL LINKS
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http://ec.europa.eu/europeaid/where/latin-america/regional-cooperation/laif/index_en.htm
http://ec.europa.eu/europeaid/where/neighbourhood/regional-cooperation/irc/investment_en.htm
http://www.eu-africa-infrastructure-tf.net/
More info