Inside EFSI: Confronting COVID-19
EFSI has demonstrated the significant potential harboured by the use of public financing via loans and guarantees, which are an important complement to direct grant financing. It also provides a blueprint for how to fight a crisis. The role it played in the EIB’s response to COVID-19 is a telling example.
When the coronavirus struck, the European Commission joined forces with EU Member States and European institutions to prepare a swift and massive relief package for businesses devastated by the pandemic. EFSI was already at work, immediately delivering hundreds of millions of euros in financing for projects aiming to fight COVID-19.
With EFSI backing, the EIB financed a €50 million deal in May 2020 to fund the COVID-19 trials run by German-Israeli company Pluristem for its treatment using placenta cells to fight infections. In June, the Bank used the EFSI guarantee to provide Germany’s BioNTech with €100 million in financing for its COVID-19 vaccine programme.
“EFSI shows what can be achieved with scarce financing when public and private forces are combined,” says Wilhelm Molterer. “This experience is becoming even more important, given the huge challenges ahead of us.”
One such challenge is climate action. Despite the demands of COVID-19, EFSI is surpassing its targets on this front too. With its mandate extended and increased in 2017, EFSI exceeded its final target of supporting €500 billion in investment six months ahead of schedule, even as it adapted to the impact of COVID-19 on Europe’s economy.
Tsanova adds, “I was excited to see how fast we managed to adapt our strategy and respond to the COVID-19 crisis. We were able to quickly provide urgently needed liquidity to support companies impacted by the pandemic as well as funding for companies working on the development of cures and vaccines. Flexibility is the key to success.”