The Government is preparing the creation of an investment fund that will serve to channel part of the 70,000 million in European loans that will be requested soon from the EU and that will be included in an addendum to the Recovery and Resilience Plan that the Executive still has to negotiate and the European Commission with new milestones and objectives. The idea is that the autonomous communities can take advantage of this financial instrument for their regional investments and strategic projects, provided that they meet the criteria imposed by Europe, especially related to the green agenda, the digital one and the transformation of the economy.
This vehicle is still in a very embryonic stage. For example, it has not yet been decided whether there will be a distribution by region. But in principle it would provide greater flexibility in management, it would help the communities to participate and provide additional resources or the private sector could also invest. It will not only allow to complete those projects that already have direct aid and that are progressing better. In addition, it will be a new way to finance new plans and emblematic objectives. “Precisely to ensure that these additional resources are allocated to those areas of greatest interest from a strategic point of view, the Government is studying the creation of an investment fund for the Autonomous Communities,” the economic vice president said last Thursday in Congress. Nadia Calvino.
The new guide that the European Commission has written on how to prepare the addenda already says that financial instruments such as an investment fund can be used to vehicle these loans. When dealing with credits, it makes sense to use an instrument that ensures that resources are repaid, he says. In this way, it can be argued that the debt will be repaid on its own as the loans mature. Along these same lines, Calviño stressed in Congress: “No one is unaware that the loans imply an increase in the public debt. For this reason, the appropriations of the recovery plan should be allocated as a priority to financial instruments to guarantee long-term fiscal sustainability and consistency with the structural funds”.
Of the 22 recovery plans adopted in Europe until February 22, 15 have used a total of 53 financial instruments with a volume of 22,000 million, of which almost 20,000 are being financed with loans from the recovery plan created by the pandemic. These can be implemented through equity, quasi-equity, loans, guarantees, soft loans, or even venture capital. And the partners that have launched these funds include the national promotion banks such as the ICO, the EIB, the European Investment Fund, the EBRD, ministries, funds, state agencies and commercial banks.
Some of these instruments have been used as guarantees to de-risk rehabilitation plans that seek to gain energy efficiency, in future purchase agreements (PPAs) to secure investments in renewable energies, or as company capital. Also for social housing, digital transition, innovation or agriculture. In Spain, small funds for science and industry have already been established. And the Next Tech fund, which belongs to the ICO and the Ministry of Economy and is designed to increase the size of companies, has already announced that it will pull European loans.
However, the Community Executive recalls that it is necessary to describe what is the market failure that forces public resources to be allocated for private investment. The fund must comply with the State aid criteria and with the relevant public provisioning regulations. Your investments will have to pass an analysis of environmental damage. And an agreement will have to be signed with the entity in which the management is entrusted, for example, a commercial bank or an investment fund, says the European guide.
He knows in depth all the sides of the coin.
In addition, it will be necessary to establish an investment policy and verify that it complies with the Recovery Plan. The risks, the benefits, the objectives and the instruments to be used, such as capital, guarantees or loans, must be defined. The beneficiaries and the assets and investments where the money can be put must be limited. The flows and provisions that are not consumed must be returned to the Member State. And you have to develop an exit strategy with a timetable.
On the other hand, Calviño will start the consultations to plan the use of these resources: “To identify the programs that have to be reinforced and that have to be developed in this addendum to the plan, we are going to launch a process of close dialogue with the parliamentary groups , social agents and autonomous communities”, he said. The Commission has strongly insisted on this in its talks with the Government. Until now, the autonomies have complained that they have no voice in the design of European funds. They can only execute what the Government marks them, they lament.
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