European Investment Bank and European Commission Announce New Guarantee Agreement Worth €5 Billion

Strategic Insights -

The European Investment Bank and the European Commission have announced a new guarantee agreement worth €5 billion, designed to de-risk investments and expand the bank's operations outside the European Union. This new 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.

Key Takeaways:

  • The new guarantee agreement is worth €5 billion and has the potential to unlock up to €10 billion in funding for critical projects in clean energy, green infrastructure, and access to finance for SMEs in partner countries.
  • The guarantee will support investments in energy, hard infrastructure, economic resilience, and SMEs in the North of Africa and the Middle East.
  • The guarantee will also help finance telecommunication and energy infrastructure projects and support municipalities in the EU's enlargement and Eastern Neighbourhood regions.
  • The agreement is part of the European Fund for Sustainable Development Plus (EFSD+), a key financing tool for the Global Gateway strategy.
  • EFSD+ guarantees act as a safety net for lenders, covering potential losses if projects fail, and can be used in blended finance operations to maximize the impact of projects.
  • The new guarantee will enable the development of the Transcaspian 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 agreement is designed to support an increased number of companies with state participation or public organizations operating at local or regional levels in partner countries.
  • The guarantee can also apply to entities that borrow money from financial markets on their own terms, without state backing, making it more flexible and faster to back up investments.
  • The new agreement 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.
  • The guarantee is an important boost for the Global Gateway, the EU's strategy to support sustainable development, strengthen its presence globally, and deepen international partnerships.

Statistics:

  • €5 billion: the value of the new guarantee agreement
  • €10 billion: the potential funding that can be unlocked by the new guarantee
  • €300 billion: the mobilization target for the Global Gateway by 2027
  • €26.7 billion: the guarantee envelope to support EIB lending outside the EU for the period 2021-2027
  • €100 billion: the investment target of EIB Global by the end of 2027

Sources:

  • "New European Investment Bank and European Commission guarantee agreement" by the European Investment Bank
  • "Global Gateway" by the European Commission
  • "European Fund for Sustainable Development Plus (EFSD+)" by the European Commission
  • "EIB Global" by the European Investment Bank