BRUSSELS — The European Commission last week released the first assessment of its plan to use billions of taxpayer euros to partially cover investors' losses in development-friendly projects. The verdict? The European Fund for Sustainable Development Guarantee is an innovative tool, but it suffers from monitoring and operational challenges and is not yet ready to be fully assessed.
Launched in 2017, the EFSD combines €2.6 billion in blended finance with €1.54 billion in budget guarantees that are designed to incentivize private investment in areas such as renewable energy and loans to small businesses in Africa and countries neighboring the European Union.
The commission touts the guarantees as its foray into innovative development finance, and the consultants behind the report, released Thursday, lauded the EU as a “new generation donor.”