EP wanted more, but was not able to assert itself in the end

As late as November last year, the Parliamentary rapporteur on the micro finance instrument, Kinga Göncz (S&D) demanded that € 150 Million had to be made available for micro credits. In addition, she demanded a separate EU budget line for this amount. This, however, was not proposed by the Commission, nor did the Council agree with Göncz’s request. Commission and Council only wanted to “fork out” € 100 Million from the EU Progress employment and social solidarity programme. Initially, Göncz was very opposed to using funds from the Progress programme, giving the understandable reason that these would already be used for combating poverty. In the end, however, Council and Commission got their way. The agreement with the EP now provides for only € 100 Million being made available - 60 % will come from the Progress programme and only 40 % from other sources.

Aim of micro financing: giving disadvantaged people in the labour market the chance of starting their own business

The objective of the micro finance instrument is to create an additional possibility for financial support, in particular in times of limited loan offers, and in doing so to simplify access to micro credits for start-ups. Credits will be granted up to an amount of maximal € 25,000. Micro financing, however, will also made available in form of guarantees, risk hedging, equity and quasi-equity instruments. This instrument will be administered by the Commission. The EIB Group (European Investment Bank and European Investment Fund) will be responsible for carrying out these measures. This in turn will conclude agreements with banks and other providers of micro financing, which will then be in charge of granting credits and other measures. The € 100 Million will not be subject to quotas per Member State. The banks will distribute the money on the principle “first come, first served”.

Endorsement by the Employment Council only a formality

The result of the informal compromise between Council, Parliament and Commission just needs to be approved at the next Employment Council in March. This, however, is only a formality. This week, the EP already signalled the green light for the achieved result in the Plenum. The supporters won with 511 votes in favour to 95 votes against with 11 abstentions. Among the few ‘no’ voters were also some Austrian MEPs. The micro financing instrument can come into force 20 days following its publication in the EU Official Journal. Somewhat late, if one considers that the initial intention was to put micro financing into practice on 1st January 2010.

Further Information:

Press release of the European Parliament: informal compromise

Press release of the European Parliament: agreement in plenary