Portugal to contribute €227 million to €25Bn EIB fund

The European Investment Bank (EIB) has approved the setting up of a pan-European guaranteed fund of €25Bn.

Each Member State will be called upon to pay a part towards the fund which will enable up to €200Bn to be channelled to companies in difficulties because of the Covid-19 pandemic.
Portugal’s contribution towards that emergency relief fund will be paid by the end of the month.
The money will be distributed in proportion to each Member State’s contribution to EIB capital. Governments can opt to not subscribe, so the fund will only be distributed if its is subscribed by 60% or over of the shareholders in order to collect a minimum of €15Bn.
The EIB does not have pre-set quotas per Member State. The projects are evaluated on quality and not nationality. However, this time there is political pressure for France, Italy and Spain – the countries most affected by Covid-19, not to receive more than 45% from the fund.
Portugal could expect an investment of around €400 million according to information collected by the online business news service ECO but cash for companies could be as much as €3Bn.
The EIB explained that the guarantee fund, in addition to foreseeing a “contribution from the 27 Member States” is also open to contributions to third party countries, for example through a community budget”.
The goal is to stimulate investments in Europe. Therefore the fund will be set up by the EIB and European Investment Fund (EIF), an associated entity dedicated to financing SMEs, as well as being a “protective shield for European companies facing cash-flow problems”.
On Thursday, it was also announced that the EU would create a Recovery Fund to kick-start Europe’s stalled economy worth €1.5Bn or more with a duration set for 2 to 3 years. It is not yet known if the funds will take the form of subsidies or loans.
The plan for the Rescue Fund was debated on Thursday in a debate involving heads of government at the European Council. “It will not be a slingshot, but we are discussing if it is an air gun or a bazooka” said Portuguese Prime Minister António Costa referring to the amount that was still being hotly debated, with disagreement over the amount and form the Rescue Fund should take.