Financial instruments are a resource-efficient way of using cohesion policy resources to support the Europe 2020 strategy. Targeting projects which could potentially become self-sustainable, they provide investment support through loans, guarantees, or equity. These mechanisms can be combined with non-monetary support such as technical assistance and interest rate subsidies.
The aim of using financial instruments is not only to make cohesion policy funding more efficient and sustainable since resources are paid back and can be ‘recycled’. At the same time, they also create incentives for private investors to engage in projects, and for the projects to increase their performance and practice greater financial discipline.Compared to the 2007-13 programming period, the scope for financial instruments has been widened. They can now be used for all thematic objectives, and are more easily combined with other forms of support. In addition, co-financing modalities are now more flexible, and clearer management rules have been implemented.