REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE COURT OF AUDITORS on the management of the Guarantee Fund of the European Fund for Sustainable Development
1. This is a report on the management of the European Fund for Sustainable Development (‘EFSD’) Guarantee Fund in the previous calendar year, including an assessment of the adequacy of the provisioning and the level of the EFSD Guarantee Fund and of the need for its replenishment.
2. The EFSD covers the financing of operations in Africa and EU Neighbourhood, including both blending operations and the EFSD guarantee. The EFSD guarantee is a key innovative element used to reduce the risks for investment in sustainable development in partner countries, thus helping mobilise investments, foster sustainable and inclusive economic and social development, maximise additionality, as well as to crowd-in private sector funds. The guarantee is intended to serve as a risk mitigation mechanism to leverage private sector financing whilst avoiding market distortions. The EFSD guarantee has been established for an overall amount of EUR 1.5 billion to be covered by the general budget. It was effectively established in 2018 and EUR 600.1 million has been paid to the Fund as of 31 December 2019.
3. The annual performance is calculated on a time-weighted basis so not to be affected by the size of the portfolio, which grew considerably during 2019. In 2019, the Fund delivered an annual absolute performance of 0.242% (time-weighted performance, before any costs and fees). This return is in line with the annual performance of the EFSD benchmark (0.149 %) and was achieved against a background of negative rates in the euro-area.