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Summaries of EU Legislation

The European Fund for Sustainable Development

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The European Fund for Sustainable Development

 

SUMMARY OF:

Regulation (EU) 2017/1601 on the European Fund for Sustainable Development (EFSD), the EFSD Guarantee and the EFSD Guarantee Fund

WHAT IS THE AIM OF THE REGULATION?

This regulation establishes the European Fund for Sustainable Development (EFSD), the EFSD Guarantee and the EFSD Guarantee Fund which aims to support investment in Africa and the EU’s neighbouring countries to help achieve the United Nations’ Sustainable Development Goals*, in particular goals aiming to eradicate poverty.

It will also give new impetus to the EU’s development policy. Investment is intended to address specific socioeconomic root causes of migration and to foster sustainable reintegration of migrants returning to their countries of origin, as well as to strengthen transit and host communities.

KEY POINTS

The EFSD’s aims include creating decent jobs, green and inclusive growth, with a focus on gender equality.

28 % of investment should be channelled towards sectors including renewable energy and resource efficiency.

The EFSD comprises 2 regional investment platforms*. Each of these will have an operational board that supports the European Commission in defining regional and sectorial investment goals, formulates opinions on the blending operations and discusses the use of the EFSD Guarantee.

The EFSD is designed to operate as a one-stop-shop, receiving financial proposals from financial institutions and public or private investors, and delivering a wide range of financial support to eligible investments.

The EU should make a €1,500,000,000 guarantee available to establish the EFSD Guarantee. It is designed to leverage additional financing by allowing risk-sharing with private investors, international financial institutions and development banks.

The EFSD Guarantee Fund will be established as a liquidity cushion in the event of a call on the EFSD Guarantee. It will be based on funding of €750 million, including €350 million from the EU budget and €400 million from the European Development Fund, with possible future additional contributions from EU and EFTA countries in the form of cash or guarantees and/or any other contributors in the form of cash. The Guarantee Fund will provide liquidity to compensate, if necessary, losses covered under the guarantee agreement.

FROM WHEN DOES THE REGULATION APPLY?

It applies from 27 September 2017.

BACKGROUND

In September 2016, the EU announced the External Investment Plan which is to be supported by the European Fund for Sustainable Development (EFSD) to encourage investment in Africa and the EU’s Neighbourhood region.

For more information, see:

KEY TERMS

United Nation's Sustainable Development Goals: 17 goals covering a broad range of social issues including poverty, hunger, health, education, climate change, gender equality and social justice. They are part of the ‘Transforming our World: the 2030 Agenda for Sustainable Development’.
Regional investment platforms: regional organisations which accord development finance in order to foster private investment in developing countries.

MAIN DOCUMENTS

Regulation (EU) 2017/1601 of the European Parliament and of the Council of 26 September 2017 establishing the European Fund for Sustainable Development (EFSD), the EFSD Guarantee and the EFSD Guarantee Fund (OJ L 249, 27.9.2017, pp. 1-16)

RELATED DOCUMENTS

Communication from the Commission to the European Parliament, the Council, the European Central Bank, the European Economic and Social Committee, the Committee of the Regions and the European Investment Bank — Strengthening European Investments for jobs and growth: Towards a second phase of the European Fund for Strategic Investments and a new European External Investment Plan (COM(2016) 581 final, 14.9.2016)

Regulation (EU) No 232/2014 of the European Parliament and of the Council of 11 March 2014 establishing a European Neighbourhood Instrument (OJ L 77, 15.3.2014, pp. 27-43)

Regulation (EU) No 233/2014 of the European Parliament and of the Council of 11 March 2014 establishing a financing instrument for development cooperation for the period 2014-2020 (OJ L 77, 15.3.2014, pp. 44-76)

Regulation (EU) No 236/2014 of the European Parliament and of the Council of 11 March 2014 laying down common rules and procedures for the implementation of the Union’s instruments for financing external action (OJ L 77, 15.3.2014, pp. 95-108)

Successive amendments to Regulation (EU) 236/2014 have been incorporated into the original document. This consolidated version is of documentary value only.

last update 20.02.2018

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