EU ministers agree on plan to boost investments

Brussels, March 10, (dpa/GNA) - EU finance ministers gave their go-ahead Tuesday to the formation of a much-touted investment fund aimed at raising 315 billion euros (342 billion euros) to inject into Europe's struggling economy.

The fund is at the heart of a project touted by the European Commission as key to rekindling growth and employment in the aftermath of the bloc's deep economic crisis.

EU officials have pledged to have the project up and running by mid-2015. EU governments have to hash out a deal with the European Parliament before the fund can start its work.

EU Economy Commissioner Pierre Moscovici on Monday stressed the urgency of the plan, pointing out that investment levels in Europe are 15-20 per cent below where they stood before the crisis.

"If we are not capable of reabsorbing that, in a few years' time Europe - which is the world's number one economy with the United States - will become a second-tier actor," Moscovici warned.

"I see very good prospects for success, provided we act speedily," said Lithuanian Finance Minister Rimantas Sadzius. He called on EU lawmakers to act quickly, noting that many of their ideas have "been taken into account and put into the compromise proposal."

But some parliamentarians have criticized the investment plan for containing little in new financial pledges.

Under the proposal, a 21-billion-euro guarantee fund will be set up, aimed at encouraging investors to back projects that are currently considered too risky. This is hoped to attract funds totalling 315 billion euros.

Member states have so far resisted the calls of European Commission President Jean-Claude Juncker to contribute to the guarantee fund - which would support investments anywhere in Europe - opting instead to make money available for projects in their own countries.

Germany and France, the eurozone's two largest economies, have each pledged 8 billion euros in project co-financing, while Spain has said it will make 1.5 billion euros available.

Italian Prime Minister Matteo Renzi announced Tuesday on Twitter that his country will also contribute 8 billion euros to the plan. Finance Minister Pier Carlo Padoan confirmed the figure during the talks in Brussels with his EU counterparts.

Investment projects are to be selected according to their commercial viability and the added value they will provide to the EU. Member states have put forward around 2,000 proposals, ranging from social housing projects to school refurbishments and a motorway expansion.

But critics argue that most of these are not new, and that many may not be financially viable. Some proposals are contentious, such as nuclear energy projects opposed by Austria and Luxembourg.

On Tuesday however, Austrian Finance Minister Hans Joerg Schelling said the investment plan is a cause for optimism.

"We Europeans sometimes spoil our own happiness. We have a good plan here, which will deliver, and we should make the best of it," Schelling said ahead of the talks with his EU counterparts.

The ministers are also due Tuesday to discuss a commission proposal to give France an additional two years, until 2017, to meet the EU's deficit limit of 3 per cent of gross domestic product. The move has proven controversial, as it will be the third such reprieve granted to Paris.

"France still risks non-compliance" with its economic targets for 2015, the eurozone's 19 finance ministers said in a statement Monday. "More substantial measures have to be taken," they added.

Nonetheless, the EU's 28 finance ministers are expected to back the two-year extension, with possible "micro-modifications," EU diplomats said ahead of the talks.

GNA