Guidelines for the Use of Financial Instruments in ESIF 2014-2020

The European Commission issued a short reference on Financial Instruments in ESIF programs 2014-2020, which is designed to provide an overview of the main elements of the new legislation as it pertains to financial instruments (FIs). It may be expanded or supplemented with more detailed specific guidance as relevant. 

The benefits linked with FIs can be summarized as follows: 
•  Leverage resources and increased impact of ESIF programmes
•  Efficiency and effectiveness due to revolving nature of funds, which stay in the programme area for future use for similar objectives
•  Better quality of projects as investment must be repaid
•  Access to a wider spectrum of financial tools for policy delivery & private sector involvement and expertise; 
•  Drift away from “grant dependency” culture
•  Attract private sector support (and financing) to public policy objectives. 

Managing authorities will need to go through a step by step process for determining if FIs should be used. In order to use FIs overall programming should be fairly advanced. Programming may give a first inklink of the potential use for FIs at various stages, including analysis of development needs at national and regional level, selection of thematic objectives, focus areas, investment priorities, set up and description of priority axis, measures, etc. There must also be a potential for use of FIs. As mentioned before, the planned activities must be income generating or saving and there must also be interest by financial intermediaries and final recipients. Lastly, if the MA sees the possibility for the use of FIs, this should be further confirmed  by the ex-ante assessment to be carried out at the level of the specific FI. The ex-ante assessment can be funded by the programme's TA from 2007-2013 or 2014-2020. The MA has the choice between carrying out the work itself or externally through a consultant. In general, it is recommended that this process is completed through an external consultant  ín order to ensure independence, high expertise and administrative capacity of the assesment.