EU finance ministers approved on Tuesday (6 December) the extension of the European fund for strategic investment (EFSI) until 2020, provided some changes are made in the way it works.

"We are deliverning on one of our top priorities to boost investment," Slovakia's Peter Kazimir, who chaired the meeting, told journalists.

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He said that the extended fund, which will include projects in the fields of defence and security, was "a crucial step in the right direction," following the so-called Bratislava roadmap set out by EU leaders in September in reaction to the Brexit vote.

The EFSI was launched in 2015 by the European Investment Bank (EIB) and the European Commission to pump up to €315 billion over three years into the EU economy by supporting risky projects that were unable to find financing.

It is also known as the Juncker fund after Commission president Jean-Claude Juncker.

The commission proposed mid-September to extend the fund for two years, in order to raise investment capacities to €500 billion.

Ministers endorsed the plan, but made changes to the way EFSI worked, in order to address shortcomings that were recently highlighted by several reports.

It turned out, for instance, that the EFSI had funded projects that had the same risk profile as others usually funded by the EIB.

This means that it did not trigger additional investments, but only helped projects that would have been financed anyway.

Ministers insisted that the EFSI had to focus on "sub-optimal investment situations", in order not to crowd out private investors from profitable projects that do not need special support.

According to an EIB study, 92 percent of EFSI operations have been located in the 15 richest EU countries.

Ministers also asked the bank to support more countries that needed investment, by setting up advisory services and concluding cooperation agreement with national banks.

They approved the 2020 extension despite the lack of a full impact assessment from the commission, but said that "any new proposal extending the investment period after 2020 should be based on reports" to assess its results.

Member states reached their common position just a few weeks after the commission proposal in September.

They wanted to go quickly because they believed that "this plan works well, even if it is not perfect," a diplomat said.

Another source pointed out that diplomats worked under "pressure from investors and the private sector, who want to have more clarity on the future of the plan."

The extension plan will now be examined by the European Parliament, which will make its own assessment of the Juncker plan between January and April, before setting out its position in May.

Discussions in the parliament, and later with member states and the commission to find a final agreement, could prove difficult.

Difficulties

In a message posted on Twitter after Tuesday's meeting, one the parliament's negotiators, German Social-Democrat Udo Bullmann, said that member states were "closing their eyes to difficulties."

NGOs expressed disappointment at the ministers' plan, which now allows the EFSI to finance motorways in all member states without restrictions. In its original proposal, the commission had limited funds for motorways to the 15 EU poorest countries.

"We thought that it does not make any sense to have a blank exclusion of a specific kind of project," said a diplomat.

He said ministers also proposed a "better" target of at least 40 percent of EFSI projects to contribute to climate action in line with the Paris climate agreement.

The target is only indicative, however, with the plan saying only that the EIB "shall aim" to reach it.

Anna Roggenbuck, from the Bankwatch NGO, said the 40-percent threshold was not enough, and that more precise and binding targets were needed.

Climate Action Network Europe said in a statement that "while [the plan] contains some good elements on climate action, the council still falls short of ensuring EFSI’s investments are in line with the EU’s climate goals."