Pact to offer funds to de-risk investments, expand EIB ops outside EU
The guarantee has the potential to unlock up to €10 billion in funding for critical projects in clean energy, green infrastructure and access to finance for small and medium enterprises (SMEs) in partner countries.
The European Commission and the European Investment Bank have announced a new guarantee agreement that will provide up to €5 billion to de-risk investments and expand EIB operations outside the EU. The guarantee can unlock up to €10 billion in funding for critical projects in clean energy, green infrastructure and access to finance for SMEs in partner countries in North Africa and the Middle East.
This new guarantee is designed to support an increased number of companies with a state participation or public organisations that operate at local or regional levels in partner countries outside of the EU.
The guarantee can also apply to entities that borrow money from financial markets on their own terms, without state backing, a release from the Commission said. The previous guarantees used to support only state-backed projects. It will be more flexible and faster now to back up investments.
The announced came at the 4th International Conference on Financing for Development.
The new guarantee will advance Global Gateway investments by financing projects of public interest that are considered too risky for traditional lenders while ensuring affordable borrowing costs for partner countries.
Global Gateway is the EU's strategy to boost global connectivity through sustainable partnerships. Launched in December 2021, it seeks to mobilise up to €300 billion in public and private investments by 2027 to support projects in digital, climate and energy, transport, health and education around the world.
The guarantee will support investments in energy, hard infrastructure, economic resilience and SMEs in the North of Africa and the Middle East.
It will also help finance telecommunication and energy infrastructure projects and support municipalities in the EU's enlargement and Eastern Neighbourhood regions, contributing strongly to the EU's accession priorities.
At the same time, the guarantee will enable for instance the development of the Trans-Caspian Corridor in Central Asia, enhance supply chain security for critical raw materials and advance the Global Gateway Investment Agenda in Latin America and the Caribbean.
The announced guarantee falls under the European Fund for Sustainable Development Plus (EFSD+), a key financing tool for the Global Gateway. It is part of the €26.7-billion guarantee envelope to support EIB lending outside the EU for the period 2021-2027.
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