On 27 January 2022, EIB Vice-President Lilyana Pavlova addressed regional and local leaders during the 148th plenary session of the European Committee of the Regions.

>@Caroline Martin/EIB

Dear President Tzitzikostas, dear Commissioner Ferreira, honourable members of the European Committee of the Regions, ladies and gentlemen,

It is a real pleasure and a huge honour for me to participate in today´s high level debate on cohesion implementation. At the European Investment Bank Group, we value your institution as a constant and close alley for supporting together cohesion objectives on local and regional level – and we are always ready and delighted to contribute to your debates with our pan-European experience of financial markets and successful project delivery.

The current economic “recovery” situation is indeed difficult, as your background paper for this session rightfully points out. We also see the “"scissors effect" of combined falling revenues and rising expenditures throughout Europe. Although the EU has tried to dampen this effect with an unprecedented amount of grant and loan resources from Next Generation EU, and in addition to the “traditional” budget of Cohesion Policy Funds, a significant funding gap still remains in the investment budget of many local, regional and national authorities.

Against this economic backdrop, the new cohesion orientation of the European Investment Bank Group is particularly relevant. Adopted by our Board of Directors in autumn 2021, the cohesion orientation serves as our new guidance on how to achieve even more “cohesion” through our financing, our mandates and financial instruments management and our advisory services.

In the MFF 2014 to 2020, we have already done a lot to help achieving cohesion policy goals. You may remember that we had promised (and delivered!) to devote 30% of our annual total financing volumes to cohesion regions. In the last five years, the EIB provided €90.8 billion to projects supporting cohesion. For 2021 alone, this amounted to €19.8 billion, equivalent to 41% of total EU signatures. This has significantly boosted the economies of cohesion countries.

In the short run, the level of GDP in cohesion regions is estimated to be 2% higher than in the counterfactual situation without EIB supported operations. Even after 20 years, regional GDP in cohesion regions is estimated to be still 0.9% higher than without EIB supported operations.

This means: our financing makes a real difference. However, our financing is also not unlimited. For this reason, we have, in the drafting process of our cohesion orientation, thought very hard about our priorities for the MFF 2021 – 2027. We discussed these upcoming priorities with our key institutional partners – with DG REGIO, with the EP and – of course also with you! Where should we focus more in the future?

The answer is simple and compelling at the same time: We have to concentrate our efforts where we can make the biggest difference, where we provide the largest added value as the EU Bank…and this seems to us to be more focused on the less developed regions.

Less developed regions have more obvious needs and have farther to go to reach the living conditions of the average EU citizen. As EIB, we try to support them on their path to convergence. For this, we have been working to understand the regional needs for investment and technical better, drawing on our unique experience and the results of two EIB surveys of corporates and municipalities. Our analysis is showing that the investment and technical capacity gaps remain considerable, often limiting opportunities of people and firms in less affluent regions. We understand that how investment needs and gaps can be addressed varies across regions - and that we need to do more.

As a consequence, we have created a new target for our financing: gradually increase our financing in less developed regions reaching 23% by 2025.

At the same time, we will not neglect the transition regions with their specific needs– because otherwise they could too fall into the “middle-income” trap and become the less developed regions of tomorrow. Thus we also want to raise our overall ambition for cohesion financing, across both transition and less developed regions, from 30% in 2020 to 40% in 2022, further increasing to 45% by 2025. For us, this is ambitious but still realistic.

The EIBG new cohesion orientation sets not only quantitative but also qualitative targets:

  • We will in future go for “greener” cohesion projects: Supporting cohesion objectives and climate goals at the same time is not only possible but really indispensable if we want to achieve the transition to a better and cleaner future right across the Union. Therefore it is not a restriction, we feel, for cohesion regions that the EIB will – as the EU Climate Bank – devote from 2025 on also at least 50 % of its financing to climate action and environmental sustainability, because these “greener” EIB projects can and will take place also in cohesion regions.
  • We will facilitate innovation investments in less developed regions because we want to help disseminate modern technology and innovation, most often invented in the more developed regions, right across the EU. This means that mid-caps (that is companies with 250 to 3000 employees) can count on our support to deploy a “proven” technology for the first time in their country, provided that this investment creates local economic spill-overs and/or environmental co-benefits at the local level.
  • We also want to make it easier for Mid-caps, since they are usually the backbone of the economy in these regions, to access our financing. In future, we can directly lend to Mid-caps in cohesion regions, under our SME and mid-cap policy objective, thus complementing our traditional intermediated “Loans for SMEs and Mid-caps”. Particular attention will be devoted to mid-caps in LDR regions.
  • We will further increase the support in making an efficient and policy driven use of EU funds resources via our mandate management services and via our subsidiary EIF through the set-up and implementation of bilateral financial instruments on behalf of EU Member States and Regions.
  • Last but not least: We will increase our advisory offer for cohesion regions because we see that successful projects can only be realised where the needed capacity and technical knowledge is present. Building on our well-established technical advisory services like JASPERS, ELENA, our country specific Project Advisory Support, and with the additional support envisaged from the new InvestEU Advisory Hub, we will intensify our efforts to improve the preparation and implementation of projects and to strengthen the administrative capacity of public authorities. In addition, we will provide financial advisory support to help design and implement financial instruments and investment platforms.
  • We have well noted your plea in the background paper for this debate that financial instruments should be made simpler and should be aligned with the economic conditions of the relevant market – something which we of course agree with, and which we try to do through advisory programmes like fi-compass. The new legislative framework for the MFF 2021 – 2027 should help us here because it is simpler and clearer; in addition, it facilitates some new possibilities, for instance regarding the combination of grants and loans!

Ladies and Gentlemen, when you look at all these new features of the EIBG cohesion orientation paper, then you see that it is strengthening substantially the cohesion mission of the EIB Group; a mission which has always been close to our hearts and which was, and remains, the raison d’être of the EU Bank. Therefore, the cohesion orientation is both a vivid encouragement and an ambitious obligation.

An obligation which we cannot achieve alone but which we will only fulfil with the help of our key institutional partners – that means with the help of the European Commission and of course yourselves! We know that we have fortunately in you a reliable partner in reaching out to local and regional authorities, and we count on your strong support to spread the message of our new cohesion orientation to your respective stakeholders as well. Let us therefore continue and intensify our cooperation, let us for example be more ambitious with our next joint action plan for 2022, which is being discussed between our services. Together, we can make even more of a difference for Europe!

Thank you very much for your attention!