The head of the European Union’s EIB lending arm has called on the bloc’s member states to scrap a spending cap currently imposed on the development bank.
The European Investment Bank is being urged to do more to fund the EU’s key priorities but it has a rule in its statute book that says it can’t lend more than 2.5 times the value of the “subscribed capital” committed by member states.
That pledged capital is currently 248 billion euros ($265.78 billion) while the bank’s balance sheet has grown to around 600 billion euros in recent years, leaving it only 20 billion off the theoretical 620 billion euro limit.
Nadia Calvino, who took over as the EIB’s president at the start of the year, described the cap on Monday as an outdated constraint from the 1950s that penalised capital investment and the EU’s startup industry.
She called for the EU’s finance and treasury ministers who make up the bank’s governors to do away with the limit at the bank’s annual general meeting on June 21.
“If we remove these constraints, and I hope and I am quite confident that our governors – the member states – will remove it in June at their annual meeting, then… we could increase our ability to invest without any impact on Europe’s tax payers,” Calvino said during a panel discussion in Brussels.
EU policymakers have been urging the EIB to generate more funding for key priorities such climate change and rebuilding and supporting Ukraine in its war against Russia.
Earlier this month, against the backdrop of calls to also beef up Europe’s defence industry, the bank also agreed to loosen rules on lending for “dual use” technologies such as drones and targetting systems which can have civilian but also military uses.
Calvino didn’t say on Monday what would replace the spending cap and it is expected to be a key part of discussions at the June governors’ meeting.
The EIB, which provided 88 billion euros of funding last year, doesn’t want to endanger its prized triple-A credit rating and also wants to avoid the kind of costly capital injections seen at other multilateral lenders such as the World Bank and European Bank for Reconstruction and Development in recent years.
Calvino said that with 32% core ‘tier 1’ capital ratio at present, that type of move shouldn’t be necessary for the EIB.