How does the coronavirus impact planning for hospitals, police, transport and other public services? Is this a time for city planners to put on the brakes or seek more aid? Find out from our public finance expert.
Our lives have changed with the coronavirus crisis. But have they changed forever? In Does This Change Everything? European Investment Bank experts examine the implications of the COVID-19 crisis for sectors from education and digitalisation to urban mobility and medicine—and for your everyday life.
To find out what coronavirus means for the public sector, we spoke to Frank Lee, head of the European Investment Advisory Hub at the European Investment Bank. The Advisory Hub is a one-stop shop that helps people plan, prepare and implement projects and explore opportunities for their financing.
Read Does This Change Everything? from the European Investment Bank, the EU bank. Subscribe to the podcast on iTunes, Acast, PlayerFM and Spotify
Does the coronavirus change the way public sector financing works?
It depends on how long this situation continues. Let us all hope this is going to be short-lived and we can get back to normal as quickly as possible. The public sector has many challenges on its plate, some of which are short-term and some of which are long-term. With the crisis, there is going to be a focus on short-term measures – supporting the police, providing unemployment benefits or helping people get by on a day-to-day basis. I expect we will see the public sector neglecting some of its longer-term priorities. Here, I’m talking about infrastructure-type investments – transport links, communication links, energy links, etc. The longer this crisis goes on, the more these investments will be neglected and this will have repercussions.
What is public sector financing and what does it involve?
There are different levels of public sector that we work with to provide advice, ranging from national governments and regional governments down to local authorities and cities. They all have different priorities and different roles. When we talk about helping people, what we generally see is that cities are more focused on citizens and their immediate, short-term needs. Governments and national bodies tend to have a long-term and medium-term focus. Public sector advisory can help all these levels.
How is your team adapting to the new working environment?
We have already experienced a new way of working given that we are all working from home these days. The silver lining in all this is that we are experimenting on new ways of working, using more online tools and our website and various forms of online communication to reach out to our clients. It’s important that we keep communicating with clients. We want to make sure they are aware that we are here to help, that we’re to some extent running business as usual. This is leading to new ways of thinking and new ways of delivering things. I hope, at the end of the day, there will be many benefits from this for the Bank and our clients, perhaps to reduce traveling and the need to have face-to-face meetings and being more efficient through online tools.
What is the role of advisory services in the big package of assistance the Bank is organizing for the coronavirus?
The package is designed to get more liquidity into the market. It’s designed to mainly help small and medium-sized enterprises and to help the health care industry do research and find vaccines. From the public sector side, our role is to reach out to public authorities and give them ideas on how they can use funding during this crisis. One good example is the European Structural and Investment Funds, which is an area that we work a lot with to help the public sector use funding that is available here. We can help the public sector set up more financial instruments, such as loans, guarantees or equity investments. This assistance helps stimulate investment in these difficult times. The European Commission recently announced a package of support where they’re hoping that some of the unspent amount of these European funds will be more easily spent now during the crisis. So the Commission is loosening some of the eligibility criteria for what these funds can do, and we can help give advice on these changes.
Particularly under the fi-compass, which is an advisory platform set up with the Commission, we can help public authorities and give them more ideas around how to use financial instruments. We are hoping that this platform will be used now to reach out to public authorities, educate them, make them aware of the changes coming through and some of the benefits that will apply to them.
And then, in the medium-term, we need to help them set up new instruments that will respond to a longer-term need for more affordable finance or relaxed conditions around collateral, or reduced interest rates, because we perceive that the market is going to react badly to the coronavirus effects.
On the project side, we are already doing quite a lot. In terms of helping in the health care sector, there are a number of projects that we’ve already advised on for hospitals, for example. And we see some new projects coming through, so there’s a range of things that we’re trying to do as part of this assistance package. Advisory is more of a long-term game, so our ability to help people in the very short-term is limited, but nevertheless we're playing our part.
Any tips for people working in the public sector? They might be thinking that this is a good time to put on the brakes for new, long-term projects. What do you think?
That’s a good question. It's obviously difficult for the public sector to think right now in the medium- to long-term and that’s understandable. There are huge pressures on them to react to the new short-term challenges. But what I would plea to them to do is at least not lose sight of the longer-term perspective and of the big picture. If they can keep going with the work that we're doing with them, that would be great, especially for these larger infrastructure projects. If they stop doing these projects, the ramifications in the longer term will be severe. These projects take a long time to implement and any kind of stop in the work can cause significant delays in the project. So we're going to do our part to reach out to our clients and be as proactive as we can and try to keep them focused on some of these more medium- to long-term objectives. If people have any other questions about projects or advisory work, they can always contact the Advisory Hub at eiah.eib.org.
Read Does This Change Everything? from the European Investment Bank, the EU bank. Subscribe to the podcast on iTunes, Acast and Spotify.
