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Mr Kyriacos Kakouris Senior Economic Officer Ministry of Finance December, 2017

Investment Plan for Europe European Fund for Strategic Investments (EFSI) Response to expectations in Europe and Cyprus. Mr Kyriacos Kakouris Senior Economic Officer Ministry of Finance December, 2017. 2014. 6 th year of the global financial crisis.

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Mr Kyriacos Kakouris Senior Economic Officer Ministry of Finance December, 2017

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  1. Investment Plan for EuropeEuropean Fund for Strategic Investments (EFSI)Response to expectations in Europe and Cyprus MrKyriacos Kakouris Senior Economic Officer Ministry of Finance December, 2017

  2. 2014 • 6th year of the global financial crisis • Weak investment slow economic recovery • EU investment 15% (25%-60% in some countries) • Investment gap of EUR 700 bn

  3. 2014 • Jean-Claude Junker is elected President of the European Commision (15 July, 2014) • announced to present an investment initiative within the first three months of his mandate • Special Task Force (Member States – EC – EIB) on investment in the EU (September, 2014) • It was set up at the request of EU Economic and Finance Ministers and was mandated to identify concrete actions to boost investment, including a pipeline of potentially viable projects of European relevance to be realized in the short and medium term

  4. Task Force Tasks: • Provide an overview of the main investment trends and needs • Analyze the main barriers and bottlenecks to investment • Propose practical solutions to overcome those barriers and bottlenecks • Identify strategic investments with EU-added value, which could be implemented in the short and medium term • Lay the foundation for developing a credible and transparent pipeline of projects to boost EU competitiveness and growth potential in the medium to long-term (EUR 1,3 tn)

  5. SPECIAL TASK FORCECROSS-CUTTING STATISTICS: MS REPLIES

  6. 3 ways to tackle the investment gap EIB - Investment Plan for Europe Mobilise finance for investment European Fund for Strategic Investments Cooperation with National Promotional Banks Give investment advice European Investment Advisory Hub European Investment Project Portal Create an investment friendly environment Improving the regulatory environment Structural reforms Aim: to mobilise at least €315 billion in investment across the EU

  7. An Investment Plan for Europe • Juncker Plan” or “European Fund for Strategic Investments (EFSI)”:an ambitious infrastructure investment programme announced in November 2014. • Aims at unlocking public and private investments in the “real economy” (high risks mature projects) of at least EUR 315 bnover a three years fiscal period (Jan. 2015 – Dec. 2017). • Extension of the Plan through the increase of the target of total investment from €315bn to €500bn – enforced in Jan 2018

  8. European Fund for Strategic Investments EU Guarantee EUR 16bn EIB EUR 5bn EFSI - EuropeanFund for Strategic Investments EUR 21bn Infrastructure and Innovation WindowEUR 15.5bn SME WindowEUR 5.5bn Deployed by EIB Deployed by EIF Final Investment until end 2017: EUR 315bn

  9. EIB Group operations under EFSI • EFSI – total financing amount close to EUR 50bn (49.6) • Total expected investment related to EFSI close to EUR 251.6bn • Total signatures for EIB and EIF stand at ca. EUR 32 bn • Ca. 428,000 SMEs will potentially benefit from EIF financing alone • EFSI multiplier can only be calculated at the end of the investment period, anticipated multiplier effect of EIB Board approved transitional operations is close to target of 15

  10. CYPRUS: • 25 March 2013: The Eurogroup has reached an agreement with the Cypriot authorities on the key elements necessary for a future macroeconomic adjustment programme aiming to: • restore the viability of the domestic financial sector • facilitate a return to sustainable economic growth • sound public finances over the coming years • The Eurogroup requests the Cypriot authorities and the EC, in liaison with the ECB, and the IMF to finalise the MoU at staff level in early April • May 2013:first MoU

  11. Cyprus Entrepreneurship Fund (CYPEF) • Council of Ministers Decision dated 5/12/2013 to establish CYPEF • Risk sharing mechanism with attractive terms of financing • Initial capital EUR 100 mn

  12. Scheme for granting government guarantees to EIB for financing SMEs and Mid-Caps: • Council of Ministers Decision dated 20/2/2014 approved the scheme of EUR 300 mn • Council of Ministers Decision dated 22/10/2015 to increase the scheme up to EUR 500 mn • Council of Ministers Decision dated 25/11/2016 approved the increase of the scheme from EUR 500 mn - EUR 750 mn

  13. Cyprus – EBRD Recipient Country in 2014 - 2020 EBRD in Cyprus: • EBRD Annual Meeting decision that Cyprus become a recipient country in May 2014 • Present with fully staffed Resident Office in Nicosia • Country strategy for Cyprus approved by the shareholders in May 2015 • EBRD operational priorities in Cyprus: • strengthening the financial sector to build up resilience and improve governance • supporting the privatisation programme / public private partnerships (PPPs), including Limassol port concession • supporting non-financial corporations and small and medium-sized enterprises, emphasis on green economy investments

  14. 3 EFSI Operations in Cyprus • Promotion of EIF InnovFin agreements (under EFSI) with: • RCB Bank • Bank of Cyprus • KODAP Strategic Oil Reserves Storage Project

  15. EIF’s InnovFin SME Guarantee Objective: The InnovFin SME Guarantee Facility is a risk sharing instrument managed by EIF. Its final beneficiaries can be research-based and innovative SMEs (up to 249 staff) and Small MidCaps (250 – 499 staff)

  16. EIF’s InnovFin SME Guarantee • Innovation Eligibility Criteria: • investing in the production or development of innovative products, processes and/or services that present a risk of technological or industrial failure; or • that are “fast growing enterprises” i.e. their workforce or turnover has increased by at least 20% p.a. over the last 3 years; or • that have a significant innovation potential or are R&I-intensive enterprises, i.e. satisfying at least one “innovation criterion” out of a set of pre-defined eligibility criteria. • Amount: at least EUR 25K and up to a max of EUR 7.5mn • Maturity: at least 1 year and up to a max of 10 years 17

  17. EIF’s InnovFin SME Guarantee Operationsin Cyprus • With RCB Bank • Implementation in Feb 2017 • Signatures: EUR 10mn • Allocations so far – no.1 for EUR 2mn • With Bank of Cyprus • Signed on 10th Nov 2017 • Signatures: EUR 10mn • No allocations yet 18

  18. KODAP Strategic Oil Reserves Storage Project • Loan to the Cyprus Organisation for the Storage and Management of Oil Stocks (KODAP) for the construction of a 180 kt petroleum tank farm for Cyprus' strategic oil reserves in the Vasilikos Energy Center (construction of the national infrastructure for managing emergency fuel reserves). • First large infrastructure project in Cyprus to benefit from EFSI • Total Project cost: EUR 52.8mn • Implementation Period: 2018-2019 • EIB Loan: EUR 35mn • Tenor: 20 years • Expected to sign the contract between EIB and KODAP in Dec 2017.

  19. Conclusion on EFSI • Cyprus’s participation in the Juncker Plan is limited: • Due to the success of other financial instruments provided by EIB for the private sector, • Due to the lack of sizable high risk mature projects on the island. • Nevertheless, there is room for further participation……………..

  20. Thank you for your attention!!

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