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Understanding the Political Agreement on InvestEU
In December 2020, the European Union (EU) reached a political agreement on InvestEU, a new program to boost investment and sustainable growth in Europe. InvestEU replaces the European Fund for Strategic Investments (EFSI), which was created in 2015 as part of the Juncker Plan to mobilize private and public capital for strategic projects. InvestEU aims to simplify and expand the scope of the EFSI, while addressing some of the criticisms and opportunities detected in the previous program. As a professional, I will explain the key features and benefits of the political agreement on InvestEU.
InvestEU in a Nutshell
InvestEU is a financial instrument that will provide guarantees and technical assistance to support four main areas of investment: sustainable infrastructure, research and innovation, small and medium enterprises (SMEs), and social investment and skills. The EU has allocated a budget of 26.2 billion euros for InvestEU for the period 2021-2027, which is expected to mobilize investments worth at least 372 billion euros. The InvestEU Fund will be managed by the European Investment Bank (EIB) and other implementing partners, such as national promotional banks and international financial institutions.
InvestEU Compared to EFSI
InvestEU builds on the experience and lessons learned from the EFSI, which mobilized more than 500 billion euros of additional investment since its launch. However, the InvestEU program introduces some changes and improvements that respond to the evolving needs and challenges of the EU economy. For example, InvestEU will prioritize projects that contribute to the EU`s climate and environmental goals, such as reducing greenhouse gas emissions, increasing renewable energy capacity, and enhancing the circular economy. InvestEU will also support more social projects, such as those related to education, health, and affordable housing, as well as projects that promote gender equality and social inclusion.
InvestEU also aims to simplify the application, selection, and monitoring processes for projects, making them more user-friendly and transparent. For instance, InvestEU will set up a single point of access for potential beneficiaries, who will be able to apply directly to the EIB or other implementing partners. InvestEU will also use a standardized assessment and rating methodology, based on environmental, social, and governance (ESG) criteria, to evaluate the project`s eligibility and impact. InvestEU will also enhance the reporting and evaluation mechanisms to ensure accountability and effectiveness of the program.
Benefits of InvestEU for the EU
The political agreement on InvestEU is expected to generate several benefits for the EU, such as:
– Fostering sustainable and inclusive growth: by supporting strategic investments that contribute to the EU`s priorities and values, InvestEU can help to create new jobs, improve infrastructure, enhance innovation, and reduce social and environmental inequalities.
– Leveraging public and private financing: by providing guarantees and technical assistance, InvestEU can attract more private and public investors to participate in key projects that may have higher risks or lower returns than the market average.
– Promoting EU values and influence: by focusing on projects that align with the EU`s climate, environmental, social, and economic policies, InvestEU can strengthen the EU`s role as a global player and leader in sustainable development.
– Strengthening the EU financial architecture: by simplifying and harmonizing the financial instruments and procedures, InvestEU can contribute to a more coherent and effective EU financial ecosystem, that serves the needs of both EU citizens and investors.
Conclusion
The political agreement on InvestEU represents a significant step forward in promoting investment and sustainable growth in the EU, by building on the success and shortcomings of the previous EFSI program. InvestEU aims to simplify, expand, and enhance the scope and impact of the EU`s financial instruments, by prioritizing projects that contribute to the EU`s values and priorities. As a professional, I believe that InvestEU offers a useful and relevant topic for a wide range of audiences, from investors and entrepreneurs to policymakers and citizens interested in the future of Europe. By explaining the key features and benefits of InvestEU, we can contribute to a better understanding and appreciation of this important program, and its potential role in shaping the EU`s sustainable future.