ECOFIN Backs Changing EIB Policy To Allow Financing Of Defence Projects

Wires reporting that according to draft conclusions from the ECOFIN meeting, EU finance ministers are due to sign off on the Commission proposal to alter the lending policy for the European Investment Bank (EIB). This change would allow the EIB to finance defence projects as part of the EU's efforts to ramp up defence production in order to bolster supplies to Ukraine and the EU's own security in the face of Russian aggression.

• On 11 March Reuters reportedon the Commission's push to alter EIB rules. Opponents of the move warn that it could hit the EIB's reputation among investors, "If the EIB touches defence, they will be off-limits to a lot of investors," one senior euro zone official close to the talks said."
• Proponents such as Guntram Wolff, a senior fellow at Bruegel think tank, argues that "...the EIB's gearing ratio, which compares equity and debt issued to raise money for loans, was very conservative at 2.5 times and could be easily raised to 4 or 5 times without any impact on the credit rating." Also, it is a bank owned by EU governments so it has implicit government guarantees behind it anyway," Wolff said".
• Given the significant shortage of ammo in Ukraine, and among EU members having massively degraded supplies to send to Ukraine, there is an increasing groundswell of backing for the EU to have a more well-funded and robust defence procurement programme.