The European Fund for Strategic Investments (EFSI) has been effective in raising finance for investments in the EU, but the amounts of investment mobilised may be overstated, according to a new report by the European Court of Auditors.

The auditors, including Maltese member Leo Brincat, also found that some of the EFSI support merely replaced other financing from the EU and the European Investment Bank. Part of the money went to projects that could have used other sources of public or private finance, although on different terms, and most investments went to few larger EU-15 member states with well-established national promotional banks.

EFSI is a joint initiative of the European Commission and the European Investment Bank (EIB). It underlies the EU’s Investment Plan, also known as the “Juncker Plan”, which initially aimed to generate €315 billion in public and private financing for strategic investments.

The auditors concluded that EFSI was effective in raising finance to support additional investment within the EU from its launch in 2015 until July 2018. By mid-July 2018, the EIB had approved €65.5 billion of financing, surpassing the €61 billion target. EFSI support enabled the EIB to achieve a four-fold increase in its higher-risk financing operations compared to 2014.

However, some EFSI projects could have been financed by private and other public sources or by the EIB itself, although on different terms. Project promoters preferred EFSI financing because it was either cheaper or offered a longer payback period.

The auditors also questioned the reported estimate of additional investment mobilised of €335 billion. In some cases, the methodology used overstated the extent to which EFSI support actually induced additional investment in the real economy.

In addition, the reported amounts do not take account of the fact that some EFSI operations replaced other EIB operations and EU financial instruments. The lack of comparable performance and monitoring indicators for all EU financial instruments and budgetary guarantees diminishes transparency and the ability to assess results, say the auditors.

“EFSI has a high profile as a flagship EU programme. This makes it all the more important that any claims for its effectiveness are built on solid foundations,” Mr Brincat, the member responsible for the report, said.

EFSI partly replaced funding from centrally-managed EU financial instruments, in particular in the fields of transport and energy, according to the auditors. They also see a need for the Commission and the EIB to avoid overlaps between EFSI and the European Structural and Investment Funds (ESIF) managed by the member states.

The auditors made a number of recommendations to resolve these issues.