The role of the European Investment Bank in Times of COVID-19

The European Guarantee Fund (EGF) is spearheading European Investment Bank (EIB) action in response to Covid-19. It will provide guarantees to the EIB and the EIF to reimburse any possible losses incurred in their operations. By pooling credit risk across all of the EIB’s members, the overall average cost of the EGF will be significantly reduced, compared to national schemes. Financially speaking, this appears an efficient solution given the objectives of a Regional Development Bank – which the EIB can be categorised. Most of the EGF funding will be made available through financial intermediaries – National Promotional Banks and commercial banks. Once the funds are made available and the list of financial intermediaries established, companies can file requests directly with financial intermediaries. We argue that especially in view of the public health crisis, it is high time for the EIB to establish a health sector strategy and step up its contribution from its own funds, beyond risk-sharing facilities with the Member States and the Commission as EGF and IDFF respectively. In its response to Covid-19 economic crisis, it is imperative for the EIB to focus squarely on the final beneficiaries (SMEs, innovation, social and environmental projects) rather than the private financial intermediaries. For the EU’s public bank, the need for assuring transparency and accountability, in view of the increasing use of budgetary and Member States’ funds especially in the public good health sector, is higher than ever.