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EU Blending mechanisms

Caribbean Investment Facility (CIF)

Eleftherios TSIAVOS

Brussels, 6 October 2011

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Definition of blending

Loan grant blending mechanism combine flows with different characteristics and financial terms

(such as grants, loans, guarantees..) to gain financial and qualitative leverage and thereby

increase impact

European Union

resources

European Financial Institutions resources

other resources

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Objectives of blending

• Leverage additional public and private resources to pursue EU development policy objectives

• Provide the missing element that makes additional public and private development activities feasible

• Increase aid effectiveness and promote donor cooperation as well as coordination

• Enhance EU visibility

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EU regional blending mechanisms Overview

• EU-Africa Infrastructure trust fund (ITF) - 2007

• Neighbourhood Investment Facility (NIF) - 2008

• Latin America Investment Facility (LAIF) - 2009

• Investment Facility for Central Asia (IFCA) – 2009

• Asia Investment Facility (AIF) – foreseen for 2011

• Investment Facility for Caribbean – planned for 2011

• Investment Facility for Pacific – planned for 2011

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EU regional blending mechanisms First results

• The EU-Africa Infrastructure Trust Fund (ITF), launched in 2007:o 41 projects approvedo Total potential investment of about € 9 billion o The ITF contribution of about € 226 M.o Investment from European Finance Institutions of about € 950 million

• NIF has obtained significant results since its launch in 2008:o 44 projects approvedo Total potential investment of more than € 10 billion o NIF contribution of € 307.4 M.o Investment from European Finance Institutions of more than € 5 billion

• LAIF has also produced positive results since launch in 2009:o 6 projects approvedo Total potential investment of about €1.5 billion o LAIF contribution of € 24 M.o Investment from European Finance Institutions of about € 940 million

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CIF: Definition

Programme,

subject to approval,

creating a framework to facilitate investment for development in Caribbean ACP countries, with an

initial focus in infrastructure.

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Guiding principles

Mobilise additional financing in the Caribbean (leverage additional loans) to promote key investments.

Advance the priorities of Regional and Country Strategies.

Avoid replacing private financing (additionality).

Increased ownership through cooperation with regional development finance institutions.

Where possible, seek synergies with other initiatives in the region, including LAIF.

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Geographical scope

15 Caribbean ACP countries are directly eligible:

Antigua and Barbuda

Bahamas

Barbados

Belize

Dominica

Dominican Republic

Grenada

Guyana

Haiti

Jamaica

Saint Kitts and Nevis

Saint Lucia

Saint Vincent and the Grenadines

Suriname

Trinidad and Tobago

Cuba has not signed the ACP-EC Partnership Agreement and is

already eligible under LAIF.

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Eligible sectors - Infrastructure

Transport (Road, air and maritime)

Energy

Information and communication technologies (ICT)

Water and sanitation

Infrastructure linked to disaster risk reduction

Infrastructure linked to social services

No fixed allocations per sector are foreseen

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Additional sectors

The following sectors are intended to be covered through additional funding to the CIF:

Support to private sector Small and Medium size Enterprises (SMEs) and job creation.

Increased environmental protection, including biodiversity, integrated water resources management, climate change adaptation technologies etc.

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Financing Instruments

• Technical assistance, financed as part of a specific investment operation or as a global envelope made available to eligible financial institutions.

• Investment co-financing, blended with other grants and loans, in infrastructure projects.

• Loan guarantee cost financing.

• Interest rate subsidy

• Risk capital operations, financed as part of a specific investment operation or as an envelope made available to eligible financial institutions.

Other forms of operations can be approved by the Operational Board at a later stage.

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FIG

Operational Board

•Projects are presented by a Lead Finance Institution…

•… to the Technical Group where they are technically discussed

•They are then submitted for approval to the Executive Board (with Member States)

•The Strategic Board oversees the activities and determines the general strategic orientations (with Member States and Partner Countries)

Strategic Board

Eligible Finance Institutions

EU regional blending mechanisms Project approval process

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Financing Instruments

• Technical assistance, financed as part of a specific investment operation or as a global envelope made available to eligible financial institutions.

• Investment co-financing, blended with other grants and loans, in infrastructure projects.

• Loan guarantee cost financing.

• Interest rate subsidy

• Risk capital operations, financed as part of a specific investment operation or as an envelope made available to eligible financial institutions.

Other forms of operations can be approved by the Operational Board at a later stage.

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Thanks - Merci