European Union officials have agreed on a plan to raise more private capital for important infrastructure schemes. Special project bonds are to cover some of the risks taken so far by the bloc's EIB lending arm.
The European Union on Tuesday approved a capital-raising scheme which is meant to back large-scale infrastructure programs across the 27-nation bloc. The idea behind it is the provision of so-called project bonds to lower business risks.
The Danish EU Presidency announced in Brussels that 230 million euros ($293 million) would be earmarked from the EU budget to cover some of the risks that are usually taken by the bloc's lending arm, the European Investment Bank (EIB) when providing loans for infrastructure projects.
The joint EU-EIB guarantees would make such projects more attractive to banks, pension and hedge funds looking for safer investment opportunities. "The pilot scheme which is to run until the end of 2013 could that way leverage up to 4.6 billion euros of private investment for a handful of flagship projects," EU Economy Commissioner Olli Rehn told the European Parliament in Strasbourg, France.
No quick fix
The European Commission agreed, though, that the project bonds on their own would not be able to stimulate enough growth on the debt-stricken continent. "They will not do the trick to restore sustainable growth by itself," Rehn's spokesman, Amadeu Altafaj, told reporters on Tuesday.
It became clear that the project bonds would have nothing to do with jointly issued eurobonds, which several European economies had been touting as a decisive solution to the debt dilemma.
But on the eve of an EU summit in Brussels, German leaders on Tuesday continued to resist eurobonds, thus setting the stage for serious friction between German Chancellor Angela Merkel and French President Francois Hollande. He is to throw his weight behind eurobonds at his debut on the Brussels scene on Wednesday.
hg/ng (dapd, dpa)