European investment fund set for September start

[FRANKFURT] A fund to bolster investment in Europe should be up and running by September, an EU official said on Friday, outlining the timetable for a highly leveraged scheme to bolster growth in a moribund EU economy.

The European Fund for Strategic Investments, which can invest in projects from infrastructure building to expansion of small businesses, is the European Union's flagship scheme to help address slack growth.

Jyrki Katainen, Vice President of the European Commission responsible for jobs and growth, told journalists that its set-up could be finalised by European Union leaders in June, with a start date some months later.

"I expect that the fund itself will be up and running, let's say, in September," he said, on a whistle-stop tour of Europe to drum up investor and government interest in the scheme.

Mr Katainen said, however, that it was unclear which governments would invest money in the scheme, intended to be a 315-billion-euro (US$358 billion) investment vehicle based on modest financial guarantees given by states.

"There has been quite a lot of interest towards the fund but nothing has been realised yet," he told journalists.

"We built the fund so that it can operate even without any additional commitments. We don't have any expectations." The late start-date may disappoint some. European Central Bank President Mario Draghi, for example, recently urged EU leaders to speed up the project.

The dire economic outlook prompted Mr Draghi last week to unveil last week a roughly one-trillion-euro plan to print fresh money, chiefly to buy government bonds.

He has told governments to do their part, by pursuing economic reforms.

But finding agreement among the 19 countries in the eurozone, from Germany to Greece, is difficult. This also slows progress on broader EU schemes such as the joint investment fund.

REUTERS