FINANCIAL INSTRUMENTS AND THE RULES OF EU STATE AID
Journal Title: Globalization and Business - Year 2017, Vol 3, Issue 3
Abstract
Financial instruments are a delivery tool to provide financial support from the EU budget. Financial support provided to final recipients through financial instruments may take the form of loans, guarantees and equity investments. If properly implemented, financial instruments provide two specific benefits compared to grants: — the possibility of leveraging the public funds (i.e. mobilising additional private and public funds to complement the initial public funding); and — the revolving nature of their capital endowment (i.e. the use of the same funds in several cycles). The fact that loans have to be paid back and guarantees have to be released or, in the case of equity investments, returned should also have an impact on the behaviour of final recipients, leading to the better use of public funds and reducing the likelihood that the final recipients will become dependent on public support. We analysed the use made of preferential and risk-sharing arrangements with private partners and of tax agreements in this regard. Commission’s measure of leverage for financial instruments does not properly take into account the extent to which public financing mobilises additional funds need for more differentiated leverage ratios to obtain meaningful measurements Difficulties in identifying leverage of additional private and public capital for shared management instruments.
Authors and Affiliations
Natela Vashakidze, Dezdemona Maglakelidze
Keywords
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