The Reform Support Programme and the European Investment Stabilisation Function

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  • cooperation
  • economy
date
01-06-2018

On the 31 May European Commission proposed to reform Support Programme and a European Investment Stabilisation Function.

 

Proposals are closely related to the propositions presented by President Juncker in his 2017 State of the Union Address. They also build on the vision set out in the Five Presidents' Report of June 2015, the reflection paper of May 2017 and the Commission's roadmap for deepening Europe's Economic and Monetary Union from last December with three principals at its core: unity, efficiency and democratic accountability.

The Reform Support Programme will focus on the support of priority reforms in all EU Member States, with budget of €25 billion.

The Reform will have three elements:
• Reform Delivery Tool, to provide financial support for reforms m with €22 billion available to all Member States;
• Technical Support Instrument, to offer and share technical expertise, which should help design and make it more effective the administrative capacity of the Member States The instrument is based on the Structural Reform Support Service, that supported over 440 reform projects. The tool is available to all Member States and has a budget of €0.84 billion
• Convergence Facility of €2.16 billion, to help Member States on their way to joining the euro.


Enhanced Stability: European Investment Stabilisation Function regarding to the proposal will
• Aim to protect public investment and help the economy rebound quickly and more flexible in case of the crises it will support the toolbox existing at national and European level to prevent crises from emerging on the one hand, including through the European Semester and corresponding EU funding, and to deal with situations of financial distress, through the European Stability Mechanism and Balance of Payments assistance, on the other.
• Commission to prevent the risk of moral hazard is also planning to provide up to €30 billion in back-to-back loans guaranteed by the EU budget. Member States will have to comply with strict eligibility criteria based on sound financial and macroeconomic policies. The loans will be an extra financial support at a time when public finances become stretched and should be geared towards maintaining growth-friendly public investments, which will in turn keep more people in jobs and enable the economy to recover more quickly.
• Include a grant component to cover the full costs of the interest. A new Stabilisation Support Fund will be set to collect contributions from Member States equivalent to a share of their monetary income from the assets they hold in exchange of the banknotes they supply (commonly known as "seigniorage"). The revenues of this Fund will be assigned to the EU budget to provide the interest rate subsidies to the eligible Member States. Such an interest rate subsidy is important to make the instrument financially meaningful.

EUROCITIES staff contact

Aleksandra Olejnik
aleksandra.olejnik@eurocities.eu