Cyprus about to tap Juncker Plan funds

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.”