October CSO EIP meeting
- MFF trialogues and any relevant developments around the EFSD+
- Programming of the NDICI
- New department at DEVCO for guarantees
- Court of Auditors Report
- Joint Actions
EIP CSO meeting - 08/10/2020
- MFF trialogues and any relevant developments around the EFSD+
Trialogues were closed on Friday (October 2), but haven’t seen the final agreement
- Latest version from the Council was better
Agreed on the split between the EIB and EC in terms of who gets to operate where, EIB sovereign and sub-sovereign loans (except where they don’t operate) + private sector window with 50/50 split (50% for the EIB, 50% open competition for the other development banks)
- Real issues with how the EIB operates, because of the privileged access to guarantees were trying to push more conditions on them, but not successful
- Due diligence, ILO labour standards and development effectiveness were in recital of council piece, different than before. In articles report criteria for development effectiveness and better definition of development additionality
- EIB aligned with EIP governance, including the operational boards (unclear yet if that will be good or bad).
- Might have a cap on the budget line - but we don’t know what it is yet. Cryptic note that there was “an amount set for limiting the provisioning” (could be the 10 billion cap that we and the EP were asking for - tbd).
Now it’s going through a legal review to make sure it’s compliant with the regulation.
Basically, we need to see the final version of the text to determine how good or bad it is, and to see where we still need to be mindful.
Suggestion: once we have the final text, if it has been greatly improved, would be good to look back and review this as a success, determine best practices for influencing, etc.
Draft programming guidelines released, nothing too surprising in regards to the EFSD+ - was kept quite vague (EFSD+ on page 10, then 16-20, annexe 8). Some key points:
- States the NDICI as “promoting leveraging and de-risking financial operations” – mentions how this should be combined with “reforms to improve the investment climate”.
- Secondly, says programming, will “combine more efficiently different modalities” of implementation, such as budget support, technical assistance, blending and guarantees for sovereign lending, and public and private investment.
With EU assistance “more systematically used as a catalyst to support DRM”
- Would have liked to have seen more than this on DRM
programmed following the same rules as in the current MFF, however, first time programming budgetary guarantees and “the specificities of this modality need to be taken into consideration”.
- the use of the guarantee will thus not only be aligned with EU policy objectives, but also will be planned in coherence with other implementing modalities such as budget support.
- Clear throughout the document that CSOs must be consulted - also intel that Koen Doens already sent a letter to EUDELs on this.
It says that individual operations will ultimately be implemented at partner country level, the bulk of the indicative allocations for provisioning the guarantee will sit in the regional/multi-country MIPs (page 18).
- We were not supposed to have these guidelines and they are not public yet. Will be made public in mid-October. There are already in the inter-service consultation.
- Will be adopted by Q1 2021
Ability to influence? Cannot influence the guidelines. Unlikely at the HQ level now to impact programming, should be done through the country level, with EUDELs. But is that feasible/strategic? Most country offices may not have the knowledge/capcity to engage around this complicated financial instrument. Better to focus on priority areas where the EU should be active, then ask the question about how these priorities will be met.
The guidelines are broad on purpose - because the EFSD+ cannot be fit into spending targets in the same way. It will remain vague in the programming with just an indication of the priorities/amounts, and its unlikely that the programming will have a large impact on the EFSD+. The EC is determined to work through the EIP, now that they have it.
- Concord has created an influencing note for members and partners, and has also hosted 3 webinars about country-level engagement with programming (general, not EFSD+ specific), which can be accessed online.
A5 organising consultations on key priority areas (more information can be had through Concord on how to participate):
- An economy that works for the people: 20 October, 2020
- The green deal: 27 October, 2020
- Digitalisation: 3 November, 2020
3. New department at DEVCO for guarantees
Directorate E - Sustainable Finance, Investment and Jobs; Economy that works for the People
- E4 is External Action Guarantees (Mizzi said will have lots of “fire power”)
Interesting the way they are balancing this, a very wide directorate, covering both public and private finance - however leads it will be quite powerful.
Potentially positive angle - gives us more people to connect with, someone at the EC we can reach out to. Brings the EFSD+ back under the EC, rather than being managed by the EIB. Perhaps better to have it at the EC. They refer to “sustainable finance”, hopefully can be focusing on improving taxonomy, and due-diligence law, director duties legislation, etc. Maybe it means they are eventually going to take into account the progress of domestic legislation and align their actions on private sector with more sustainable business models (but meetings they have seem to imply they want to substantially increase subsidies to PS, so we’ll see!)
- Mission statement along with new organigramme (Karine shared via email). This is provisional and confidential for the moment.
4. Court of Auditors Report
The Court of Auditors published an opinion accompanying the Commission’s report on the EFSD implementation. The conclusion is: The initial functioning of the EFSD, its management and its effectiveness have not been fully assessed and little information is available on additionality and aspects of effectiveness. EC overpromising and under delivering in terms of what this instrument can do.
- The implementation report lacks information on the EFSD’s performance in crowding in private sector funding
- Since the EFSD is at an early stage of implementation, it is not possible to assess the contribution it has made to achieving the SDGs or to addressing the root causes of migration
- Risk-assessment tools for pricing guarantees need to be further developed
- The proposal for establishing the EFSD was not accompanied by an impact assessment
It confirms most of our concerns and really puts into question any scaling up of the EFSD in the EFSD+. Commission report to the EP basically did not fulfill its legal requirements to the Parliament - clearly the EC saying they didn’t care about the EP’s oversight authority.
- There was a hearing on this at the EP last friday, before the trilogue
- its being discussed in coerper as well
- Was on today’s informal CODEV agenda
- Another report by the EIB that shows it doesn't leverage as much as it says it does
- EU will be using guarantees to fund some portion of their COVID response for Vaccine, Therapeutic and Diagnostic development/procurement through the ACT-Accelerator initiative.
- They have already pledged 400 million to the COVAX facility (half loans, half guarantees) - this facility is managed by GAVI - unclear how the modality of guarantees will be suited to Gavi’s funding, which is normally grant-based.
- Potential work around ACTA + guarantees (People’s Alliance, ask Oxfam for more details if interested in joining).
Studying the guarantees, once they are implemented:
- Counterbalance is interested in doing work on this - to see whats actually happening on the ground with the EIB guarantees, since they have begun to unfold (probably late 2021, early 2022). Interested in connecting with others on this.
6. Joint Actions/Next Steps
- Get hold of the final agreement and analyze it/share info
- Vincent Chadwick (DEVEX) wants to write an article about it
- After getting final text and organigramme is official, reach out to E director and also to E4 (Alliance 2015 can follow up on earlier requests) for joint meeting