EU Wants to Boost EIB Lending Capacity, Katainen Says

The European Union wants to increase the European Investment Bank’s lending capacity to boost investment in Europe, said Jyrki Katainen, the nominated European Commission vice president for jobs, growth, investment and competitiveness.

“We have to look what is the best way to do it, for instance using the European budget as a guarantor could help them to lend more, but at the same time we have to be very careful not to crowd out private money,” Katainen told reporters today before a meeting of EU finance ministers in Luxembourg.

The investment package of 300 billion euros ($381 billion) announced by incoming commission President Jean-Claude Juncker aims to collect national and European public resources in order to “crowd in” as much private money as possible for public-private investments, Katainen said.

Last week the International Monetary Fund cut its euro-area growth forecasts to 0.8 percent for 2014 and 1.3 percent next year. Finance chiefs today will call on the EU to identify investment projects “that could be realized in the short and medium term and lay the foundation for a credible and transparent pipeline of projects,” according to a draft statement obtained by Bloomberg News.

“We need more investment, primarily in the private sector, secondly also in the public sector, but not all of those have to be publicly funded, they can also be privately financed,” German Finance Minister Wolfgang Schaeuble said in Luxembourg yesterday.

Credit Rating

EIB chief Werner Hoyer said Sept. 13 in Milan that “appropriate budgetary arrangements” have to be made for the EU’s development bank to play a bigger role in stimulating the region’s economy. Hoyer said previously that the EIB is “highly sensitive” about maintaining its top credit rating, which is higher than that of most of its shareholders, the 28 EU countries.

“We really lack practical action on investment, we talk very much, there is a huge number of ideas, but we still lack practical implementation,” Lithuanian Finance Minister Rimantas Sadzius said today before the meeting. “The real way forward would be understanding the importance of public investment.”

The EIB is “a very important tool that uses public money” and “the most important instrument in our hands,” Sadzius said. Lithuania would seriously consider an increase of the EIB’s statutory capital if appropriate even though such a step may be difficult for some other EU members, he said.

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