Cyprus about to tap Juncker Plan funds

Financial Mirror (Cyprus) - - FRONT PAGE -

Cyprus is close to tap­ing fi­nanc­ing from the EUR 315 bln Euro­pean Fund for Strate­gic In­vest­ments (EFSI), the so­called Juncker Plan, as projects are in the pipeline for eval­u­a­tion, a se­nior Euro­pean Com­mis­sion of­fi­cial was quoted by the Cyprus News Agency as say­ing.

The plan, named af­ter the EC Pres­i­dent Jean Claude Juncker, was set up in 2014 but so far Cyprus re­mains the only EU mem­ber-state that has not se­cured EFSI fund­ing.

“I know there are some projects in the pipeline for which we can pro­vide fi­nanc­ing as soon as pos­si­ble,” said EC Vice Pres­i­dent, re­spon­si­ble for Jobs, Growth, In­vest­ment and Com­pet­i­tive­ness, Jyrki Katainen dur­ing a press brief­ing in Brus­sels.

Com­mis­sion sources have said that Cypriot projects will get the green light for EFSI fi­nanc­ing be­fore the end of the year.

Ham­pered by a high stock of non per­form­ing loans, in com­bi­na­tion with more strict reg­u­la­tory re­quire­ments, Cypriot banks are re­luc­tant to pro­vide credit to the real econ­omy and es­pe­cially small and medium-sized cor­po­ra­tions (SMEs). The EFSI aims to ad­dress this gap by pro­vid­ing guar­an­tees to banks for SME lend­ing.

As Katainen noted, in some coun­tries where NPLs are hurt­ing the banks’ bal­ance sheets, the banks can­not raise the SME fi­nanc­ing. He pointed out how­ever that “when EFSI pro­vides guar­an­tees to the banks, then the weight of SMEs loans is low­ered in the bal­ance sheet and that banks can lend to SMEs.”

“I am sure that there are lots of needs in Cyprus es­pe­cially in the SME side, the Euro­pean In­vest­ment Bank is do­ing very very much in Cyprus al­ready now, but there are few projects in the pipeline (for EFSI fi­nanc­ing) and I’ve been told they are very good projects,” he added.

Katainen’s re­marks came as the Euro­pean Com­mis­sion took stock of the three separate eval­u­a­tions of the EFSI car­ried out by the EC, the EIB and EY, one of the big four au­dit firms.

Ac­cord­ing to a Com­mis­sion press re­lease, the find­ings of the three eval­u­a­tions are broadly ad­dressed in the Com­mis­sion’s pro­posal to dou­ble the du­ra­tion and ca­pac­ity of the EFSI by ex­tend­ing, in a first step, its du­ra­tion un­til the end of 2020 and in­creas­ing the to­tal in­vest­ment tar­get from EUR 315 bln to EUR 500 bln, in what has been called as “EFSI 2.0.”

“The projects which the EIB ap­proved un­der the EFSI mo­bilise EUR 154 bln in to­tal in­vest­ments across 27 mem­ber-states and sup­port al­most 380,000 SMES,” Katainen said, urg­ing the mem­ber-states and the Euro­pean Par­lia­ment to adopt the EFSI 2.0 pro­posal with­out de­lay to help us sup­port sus­tain­able in­vest­ment in or­der to put Euro­peans back in jobs and to boost EU growth.”

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