Session summary and conclusions
Financial instruments will continue to play a prominent role in EU policy post-2020 under both cohesion policy and the proposed InvestEU programme.

Stefan Appel (DG Regio) opened the workshop by pointing out that FIs are a cohesion policy delivery mechanism, suitable only for revenue-generating or cost-saving projects, and not an end in themselves. The most recent data on 2014-20 FIs shows that 243 FIs are in the process of set-up or already operational in 24 MS. By building on the lessons learned in 2007-13, the legislative and policy framework for 2014-20 has encouraged further mainstreaming of FIs as an alternative to traditional grant-based support. Further, adoption of the Omnibus Regulation has already introduced simplifications and clarifications.

Frank Lee provided the EIB perspective, outlining the range of advisory services offered alongside the EC to support MAs in developing and implementing FIs. These initiatives such as the European Investment Advisory Hub, fi-compass and the URBIS platform, have helped address administrative capacity issues. Mr Lee outlined the state of play with ex ante assessments and provided several practical examples of combining ESIF FIs with EFSI. 

There have been several ECA reports on cohesion policy FIs. J. Ignacio González Bastero outlined some of the recent criticisms leveled at FI implementation, including those included in the ECA’s latest Annual Report. Mr González Bastero compared the evolution of cohesion policy regulations applying to FIs to ‘pendulum theory’ – the regulations have swung between ‘light touch’ to very comprehensive – now potentially moving back to a lighter approach in 2021-27. He also stressed the importance of continuing the reporting requirements on FI, as a key tool for transparency and accountability. This becomes more relevant in the context of an increased and widespread use of financial instruments.

Closing the session, Fiona Wishlade (European Policies Research Centre) posed questions about the role of cohesion policy FIs in disadvantaged regions. The results of the ongoing ESPON applied research project “Financial Instruments and Territorial Cohesion” show that little is known about the benefits of ESIF FIs at a territorial scale. Many of the obstacles to development in disadvantaged regions also make the delivery of policy through FIs challenging. Because of the correlation between quality of government and levels of economic development, disadvantaged regions can be doubly disadvantaged.

A lively debate ensued, with points being raised that the leverage effect or management of costs and fees related to FI implementation may not be the best indicator to judge the added value of FIs – what matters is whether FIs generate meaningful (territorial) results and impacts. There is a need to better understand how FIs compare with grants. Lorenzo Palego (t33) invited the audience’s views and the majority (45%) thought that FIs will increase in importance and spend in cohesion policy in future.

Take away message

The regulatory provisions governing FI implementation in cohesion policy have evolved over several programming periods. Implementation has brought many challenges and at the same time opportunities for public authorities to benefit from investing repayable finance in suitable projects. However, the debate has mostly focused on the implementation mechanism and not on what the impact of financial instruments is in terms of economic growth, jobs, etc. This ESPON study is an opportunity to address the ‘territorial gap’ in financial instrument research.

Quotes from speakers

J.IGNACIO GONZALEZ BASTERO: we are moving in the right direction with the regulation on FIs, although some improvements are still needed, i.e. reporting, excluding advances from audit population.
FRANK LEE: we should focus on the combination of FIs with grants, that is a major advantage of using ESIF FIs: there is already a number of good examples of this around Europe
FIONA WISHLADE: many of the obstacles to development in disadvantaged regions are precisely those that make the delivery of policy through FIs challenging
Quote from speaker
STEFAN APPEL: financial instruments are not a policy objective in themselves but an increasingly important and effective delivery tool for Cohesion Policy