ECOFIN COUNCIL: POLICY DEBATE ON THE EIB'S CONTRIBUTION TO GROWTH AND EMPLOYMENT.

PositionEuropean Investment Fund

The Austrian Presidency has recalled as a preamble to discussions scheduled for February 14, that the entire package of EIB proposals must be compatible with the scenario for increasing capital (namely, no increase in capital before 2010 barring unexpected exchange rate fluctuations). The EIB's proposals follow on from its 2010 innovation initiative (i2i) launched in 2000.

Encouraging R&D, innovation and competitiveness.

- The EIB proposes to raise its lending target from euro 50 to 65 billion (and even as much as euro 100 billion by 2013). Loans should be directed towards "RDI projects" (research, development and innovation) alongside private sector investment, public research projects and PPPs (public-private partnerships). The EIB is notably keen to serve as a catalyst for other banks seeking involvement in such projects.

- In the context of the SFF (Structured Finance Facility) the EIB proposes extending funding for "more risky" RDI investment projects. This will require an increase in the EIB's special reserve established to this end. The Bank therefore proposes allocating a part of the EIB's annual surplus to this reserve. In this context, euro 500 million will be fully committed to the fund in 2006 and will be supplemented through the euro 250 million surplus for 2005.

- Additional aid under the 7th Framework Programme for Research and Development (FP7). This proposal concerns risk sharing (RSFF - Risk Sharing Finance Facility) and is designed to improve access to debt funding (private enterprises) for R&D projects, notably those presenting a higher level of risk than others. The EIB proposes transferring almost a billion euros to the FP7, given that the Competitiveness Council on November 28, 2005 has already confirmed that the RSFF will be an ad hoc FP7 instrument.

- French proposal: at the December 2005 European Council, France proposed that the EIB be granted scope to increase R&D assistance by a further euro 10 billion through the RSFF in order to encourage the private sector to get more involved. The final decision lies with the EIB's Board of Governors and will notably need to take account of the uncertain nature of the EIB's surplus, according to the bank.

Energy efficiency, security and diversification.

The Presidency recalls at an EIB contribution of euro 2 billion a year should contribute encouraging better use of energy. To this end, the EIB should mobilise its efforts to fund imports of new sources of energy and...

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