Infrastructure is shouldering a large share of last week’s historic cuts to the European Union’s (EU) 2014 to 2020 budget – the first proposed budget cut in the union’s history.
Specifically, the so-called ‘Connecting Europe Facility’, which had aimed to channel up to €50 billion to help fund cross-border infrastructure across the EU’s 27 member states, has now seen its spending capacity cut to €29.3 billion.
Originally, the facility had earmarked €9.1 billion for energy, €9.2 billion for telecommunications and €21.7 billion for transport from the EU budget, with an extra €10 billion from the Cohesion Fund to be channelled for transportation.
Following last week’s proposed 3 percent cut to the EU’s 2014 to 2020 budget, the Connecting Europe Facility will now receive only €1 billion for telecommunications, €5.1 billion for energy and €13.2 billion for transport. However, an extra €10 billion will still be transferred from the Cohesion Fund, taking the total spending available for transportation up to €23.2 billion.
The proposed EU budget cuts will still have to be approved by the European Parliament, leaving the door open for a reversal of some of these measures.
One of the uses of the Connecting Europe Facility will be to fund the European Investment Bank’s (EIB) project bond initiative, which aims to bring the capital markets back into infrastructure financing by credit enhancing project bonds.
Senior EIB sources had previously told Infrastructure Investor that the money to be used for the credit enhancements will come from the Connecting Europe Facility. The project bond initiative is currently going through a pilot phase, during which the EIB plans to use €230 million of grant money from the European Commission to help catalyse up to €4.4 billion of infrastructure deals.