eunbil · GT0N1431 · 2006-07-07 00:00:00 — In this region, the EIB should finance projects of significant interest to the EU in transport, energy, telecommunications and environmental infrastructure. Priority should be given to projects on extended major axes, projects with cross-border implications for one or more Member States and major projects favouring regional integration through increased connectivity. In the environmental sector, the EIB should in give particular priority to projects within the framework of the Northern Dimension Environmental Partnership. In the energy sector, strategic energy supply and energy transport projects are of particular importance. EIB Financing Operations in this region should be carried out in close cooperation with ("the "), in particular according to the terms to be set out in a tripartite Memorandum of Understanding between the Commission, the EIB and the , With regard to countries covered by the DCECI, EIB financing in the Asian and Latin American countries will be progressively aligned with the EU cooperation strategy in those regions and be complementary to instruments financed by Community budgetary resources. The concept of "mutual interest", so far limited in practice to the financing of projects involving EU companies, will be broadened to take into account the promotion of environmental sustainability and regional integration (such as transport, and energy projects favouring interconnectivity). The EIB should endeavour to progressively expand its activities across a larger number of countries in those regions, including in the less prosperous countries. In Central , the EIB should focus on major energy supply and energy transport projects with cross-border implications. EIB financing in Central should be carried out in close cooperation with the , in particular according to the terms to be set out in a tripartite Memorandum of Understanding between the Commission, the EIB and the . To enhance visibility of EU intervention in Latin , a specific amount should be identified for a Latin facility, To complement the EIB activities under the Agreement for the ACP countries, a separate facility for South should be renewed, focusing on infrastructure projects of a public interest (including municipal infrastructure, power and water supply) and private sector support, including SMEs. The implementation of the provisions on economic cooperation under the EU-South Trade and Development Cooperation Agreement will further promote EIB activities in this region, It is important to combine EIB financing with EU budgetary resources in the form of grant support, risk capital and interest rate subsidies alongside technical assistance for project preparation, implementation or enhancement of the legal and regulatory framework, through the IPA, the ENPI, the Instrument for Stability and, for South , the DCECI. In the past, there have been cases of natural disasters or post-conflict reconstruction where the EIB has been called upon to play a significant and unforeseen role. To ensure that such developments do not put a burden on the regional ceilings set out in this Decision, a "Reserve Mandate" should be established. The Reserve mandate should not be specifically attributed to any single region, but should be available for use - where appropriate in combination with EU budgetary resources - in cases of natural disasters, post-conflict reconstruction or developments in strategically important countries. In order to enable the EIB to take urgent action to help re-establish or safeguard normal conditions, measures for the activation of the Reserve Mandate should be adopted by use of the advisory procedure provided for in Article 3 of Council Decision 1999/468/EC of 28 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission , The EIB already closely cooperates with IFIs and with European bilateral institutions. This cooperation is guided by regionally-specific Memoranda of Understanding. In its Financing Operations outside the EU falling within the scope of this Decision, the EIB should endeavour to further enhance coordination and cooperation with IFIs and with European bilateral institutions where relevant, Reporting by the EIB and the Commission on EIB Financing Operations should be strengthened. On the basis of the information received from the EIB, the Commission should report, on an annual basis, to Parliament and carried out under this Decision, The Community guarantee established by this Decision should cover EIB Financing Operations signed during a seven-year period beginning on 1 January 2007. In order to be able to take stock of the developments during the first half of that period, the EIB and the Commission should prepare a mid-term review of the Decision, EIB Financing Operations should continue to be managed in accordance with the Banks own rules and procedures, including appropriate control measures, as well as with the relevant rules and procedures concerning the Court of Auditors and , for External Action (hereinafter referred to as the ""), established by Council Regulation (EC, Euratom) No 2728/94 of 31 October 1994 , should continue to provide a liquidity cushion for the Community budget against losses on EIB Financing Operations. In the Commission presented a proposal to the Council with a view to changing the provisioning system for the so as to ensure a more transparent and efficient system . [to be updated in the event of adoption by the Council], The EIB should prepare, in consultation with the Commission, an indicative multi-annual programming of the volume of signatures of EIB Financing Operations so as to ensure an appropriate budgetary planning for the provisioning of the . The Community shall grant (hereinafter referred to as "the EIB") a global guarantee (hereinafter referred to as the "Community guarantee") in respect of payments not received by the EIB but due to it, in respect of loans and loan guarantees for EIB eligible investment projects carried out in countries covered by this Decision, where the said loan financing or guarantee has been granted according to a signed agreement which has neither expired nor been cancelled (hereinafter referred to as "EIB Financing Operations") and has been granted in accordance with the EIBs own rules and procedures and in support of the relevant external policy objectives of Union. The Community guarantee shall be restricted to of the aggregate amount of credits disbursed and guarantees provided under EIB Financing Operations, less amounts reimbursed, plus all related sums. The overall ceiling of the EIB Financing Operations, less amounts cancelled, shall be equivalent to 000 million. It shall be broken down by region with the following binding regional ceilings: (a) Pre-Accession countries: (b) Neighbourhood and Partnership countries: broken down into the following indicative sub-ceilings: (i) countries: (ii) Eastern Europe, Southern Caucasus and : (c) Development and Economic Cooperation countries: broken down into the following indicative sub-ceilings: (i) Latin : (ii) : (iii) Republic of South : (d) Reserve Mandate: The Community guarantee shall cover EIB Financing Operations signed during the period of seven years beginning on 1 January 2007 and ending on . If, on expiry of the period referred to in paragraph 4, the EIB Financing Operations have not attained the overall amounts referred to in paragraph 3, that period shall be automatically extended by six months. The countries covered by Article 1 and their attribution to regions are set out in the . Individual countries shall become eligible under the regional ceilings and sub-ceilings as and when they fulfil appropriate conditionality consistent with EU high level agreements with the country in question on political and macro-economic aspects. The Commission, in consultation with the EIB, shall determine when an individual country has fulfilled the appropriate conditionality and shall notify the EIB thereof. The Community guarantee shall only cover EIB Financing Operations carried out in countries having concluded a framework agreement with the EIB establishing the legal conditions under which such EIB Financing Operations are to be carried out. In the event of serious concerns over the political or economic situation in a specific country, the Commission and the EIB may decide to suspend EIB Financing Operations in such country. The Community guarantee shall not cover EIB Financing Operations in a specific country, when the agreement concerning such EIB Financing Operations has been signed after that countrys accession to the EU. A Reserve Mandate shall be established to be used in cases where EIB Financing Operations can assist in the financing of reconstruction of infrastructure as well as business and social sector premises and equipment damaged or destroyed by natural disasters or post conflict reconstruction or to be deployed in the case of developments in strategically important countries. The Commission and the EIB shall decide jointly on the use of the Reserve Mandate. The Commission and the EIB shall be assisted by the Economic and set up by Article 114(2) of the Treaty. The advisory procedure laid down in Article 3 of Decision 1999/468/EC shall apply, in compliance with Article 7(3) thereof. Consistency with policies of Union The consistency of EIB external actions with the external policies and objectives of Union shall be strengthened with a view to maximising synergies of EIB lending and budgetary resources of Union, notably through regular dialogue and early consultation on: (a) strategic documents prepared by the Commission, such as country and regional strategy papers, action plans and pre-accession documents; (b) the EIB"s strategic planning documents and project pipelines; (c) other policy and operational aspects. The cooperation shall be carried out on a regionally differentiated basis, taking into consideration the EIB"s role as well as the policies of Union in each region. An EIB Financing Operation will not be included under the cover of the Community guarantee in case the Commission delivers a negative opinion on such operation within the framework of the procedure provided for in Article 21 of the Statutes of the EIB. The consistency of EIB Financing Operations with the external policies and objectives of Union shall be monitored in accordance with Article 7. Cooperation with other International Financial Institutions EIB Financing Operations shall be carried out, where appropriate, in cooperation between and/or by means of co-financing by the EIB and other International Financial Institutions (IFIs), or European bilateral institutions, in order to ensure reasonable sharing of risks and coherent project and sector conditionality. This cooperation shall be facilitated by coordination, carried out notably in the context of Memoranda of Understanding, where appropriate, between the Commission, the EIB and the main IFIs and European bilateral institutions operating in the different regions. Coverage and terms of the Community Guarantee For EIB Financing Operations entered into with a State, or guaranteed by a State, and for other EIB Financing Operations entered into with regional or local authorities or government-owned and/or -controlled public enterprises or institutions, where such other EIB Financing Operations have an appropriate EIB credit risk assessment taking into account the credit risk situation of the country concerned, the Community guarantee shall cover all payments not received by the Bank but due to it (hereinafter the "Comprehensive Guarantee"). For the purposes of Article 6 and Article 7 (4), the notion of State includes the Strip, as represented by the Palestinian Authority, and Kosovo, as represented by the Mission. For EIB Financing Operations other than those indicated in paragraph 1, the Community guarantee shall cover all payments not received by the Bank but due to it where the non-receipt has been caused by the realisation of one of the following political risks (the "Political Risk Guarantee"): (a) non-transfer of currency; (b) expropriation; (c) war or civil disturbance; (d) denial of upon breach of contract. The Commission shall report annually to Parliament and carried out under this Decision. The report shall include an assessment of the contribution of the EIB Financing Operations to the fulfilment of the external policy objectives of Union, taking into account the operational objectives of the EIB. For the purposes of paragraph 1, the EIB shall provide the Commission with yearly reports of EIB Financing Operations carried out under this Decision and of the fulfilment of the external policy objectives of Union, including cooperation with other IFIs. The EIB shall provide the Commission with statistical, financial and accounting data on each of the EIB Financing Operations as necessary to fulfil its reporting duties or requests by Court of Auditors as well as with an auditors certificate on the outstanding amounts of the EIB Financing Operations. For the purposes of the Commissions accounting and reporting of the risks covered by the Comprehensive Guarantee, the EIB shall provide the Commission with the EIB"s risk assessment and grading information concerning EIB Financing Operations with borrowers or guaranteed obligors other than States. The EIB shall provide the information referred to in paragraphs 2, 3 and 4 at its own expense. Recovery of payments made by the Commission If the Commission makes any payment under the Community guarantee, the EIB shall, in the name and on behalf of the Commission, pursue the recovery of claims for the amounts paid. The EIB and the Commission shall enter into an agreement laying down the detailed provisions and procedures relating to recovery of claims no later than the date of conclusion of the agreement referred to in Article 9 below. The EIB and the Commission shall enter into a guarantee agreement laying down the detailed provisions and procedures relating to the Community guarantee. Review of the Decision Drawing inter alia upon an activity report from the EIB as well as an evaluation provided by the independent evaluation department of the EIB, the Commission shall present to the Council and Parliament a midterm report on the application of this Decision by 30 2010 at the latest, accompanied, as appropriate, by a proposal for its amendment, in particular with regard to the ceilings set out in Article 1. The Commission shall present a final report on the application of this Decision by 31 2013 at the latest. This Decision shall take effect on the third day following its publication in the . Regions and countries covered by Article 1 for countries marked with (*) the Commission must still approve eligibility under Article 2(2). A. Pre-accession countries (1) Candidate countries , , the Former Yugoslav Republic of . (2) Potential candidate countries , Bosnia and , , , Kosovo under Resolution . B. NEIGHBOURHOOD AND PARTNERSHIP COUNTRIES (1) countries , , Strip, , , , *, , , . (2) Eastern Europe, Southern Caucasus and Eastern Europe: *, [*], ; Southern Caucasus: Armenia*, *, *; C. DEVELOPMENT AND ECONOMIC COOPERATION COUNTRIES (1) Latin , , , , , , , , , , , , , , , , . (without Central ): *, , , , /*, , , , , , *, *, Republic of (South ), (), , , , , , , , , , Chinese , , , Yemen*. *, Kyrgyz Republic*, *, *, *. (3) South Republic of South . Potentially eligible countries for the Reserve Mandate are those listed in this . NAME OF THE PROPOSAL: Proposal for a Council decision granting a Community guarantee to against losses under loans and guarantees for projects outside the Community. ABM / ABB FRAMEWORK Policy Area(s) concerned and associated Activity/Activities: Policy area : Economic and Financial Affairs ABB activity : Financial Operations and Instruments Budget lines (operational lines and related technical and administrative assistance lines (ex- B.A lines)) including headings: 01 04 01 14 Payments to the in respect of new operations 3.2. Duration of the action and of the financial impact: EIB loans and guarantees under Community guarantee cover ("EIB Financing Operations") can be signed by the EIB from 2007 to 2013. The total duration of the action and of its financial impact will be determined, however, by the maturity of the signed EIB Financing Operations. Budget line Type of expenditure New EFTA contribution Contributions from applicant countries Heading in Financial Framework 01 04 01 14 Comp Non-diff NO NO NO 4 4. Summary of commitment appropriations (CA) and payment appropriations (PA) The following table summarizes the estimated budgetary resources needed for funding the , calculated in line with the new provisioning mechanism proposed by the Commission (COM (2005) 130 of ) and based on the proposed EIB lending mandate of billion and a combined level of other guaranteed loans (Macro-Financial Assistance and Euratom) of billion between 2007 and 2013. The estimates are based on reasonable indicative assumptions (level of signatures of EIB Financing Operations increasing by a year, profile of disbursements and repayments in line with current patterns) and assume that the accession of and would take place in 2007. The figures for the calculations of the "normal" provisioning are detailed in Table 8.1. It is assumed that the new provisioning mechanism will enter into force on 01/01/2007. For 2007: no provisioning shall take place (switching year). However, it should be noted that an estimated lumpsum reimbursement of million from the to the General should take place following the accession of and , in line with Council regulation N° 2273/2204 of . This exceptional operation will be performed through an Amending Budget, thus reimbursing Member States in 2007. For 2008: the calculations for PDB will be based on the target amount as of 31.12.2006. Estimates show that a surplus of million will appear and will be budgeted in 2008 as "revenues". This amount stems from the "ex-ante" provisioning of the current system, still in force in 2006, which will create an "over-provisioning" as of 31.12.2006 as regards the target amount. According to the new provisioning, that amount shall be budgeted as "revenues" in the 2008 budget. the calculations will be based on the target amount as of 31.12.2007. Estimates show a surplus of million. For the years 2010-2013, calculations show a growing provisioning need, in line with the growing outstanding loans amount due to the new mandate. The envelope of billion has been set aside in the financial programming of Heading 4 with a flat profile of million per year. Although the total programmed amount of billion shall be maintained as the "maximum budgetary needs", the profile might be adjusted during the programming period to take into account negative developments such as accumulation of defaults and adverse assets valuation , in order to cope with extreme situations as shown in the total "Maximum budgetary needs" (see table below). On the other hand, in the beginning of the period, practically no financial resources will be necessary due to the shift to the new provisioning system. EUR Million 2007 2008 2009 2010 2011 2012 2013 Total Budgetary revenues 0 157 2 0 0 0 0 159 Budgetary needs for normal provisioning 0 0 0 129 153 160 165 607 Possible adjustments in the market valuation of the assets of the 0 0 37 42 49 56 64 248 Potential impact of possible calls 0 0 100 100 100 100 100 500 Maximum budgetary needs 0 0 135 271 302 316 329 1353 The following budgetary table takes into account the estimated maximum budgetary resources needed to provision the . It should be stressed, however, that the amounts indicated will not necessarily correspond to the amounts to be budgeted each year: the exact budgetary amounts (classified as Compulsory Expenditure) in year n+1 will be determined based on the figures at 31st of year n-1 based on the outstanding amount of the loans covered by the , the corresponding target amount (i.e. of the outstanding loans), the defaults which have occurred during the year, and the valuation of the assets of the Fund. The "maximum budgetary needs" must thus be considered as a worst case scenario which could exceptionally take place in given years. EUR million (1 decimal place) Expenditure type Section no. 2007 2008 2009 2010 2011 2012-13 Total Operational expenditure Commitment Appropriations (CA) 8.1. a 0.0 0.0 135.0 271.0 302.0 645.0 1353.0 Payment Appropriations (PA) b 0.0 0.0 135.0 271.0 302.0 645.0 1353.0 Administrative expenditure within reference amount Technical & administrative assistance (NDA) 8.2.4. c - - - - - - - TOTAL REFERENCE AMOUNT Commitment Appropriations a+c 0.0 0.0 135.0 271.0 302.0 645.0 1353.0 Payment Appropriations b+c 0.0 0.0 135.0 271.0 302.0 645.0 1353.0 Administrative expenditure not included in reference amount Human resources and associated expenditure (NDA) 8.2.5. d 0.8 0.8 0.8 0.8 0.8 1.5 5.3 Administrative costs, other than human resources and associated costs, not included in reference amount (NDA) 8.2.6. e - - - - - - - Total indicative financial cost of intervention TOTAL CA including cost of a+c+d+e 0.8 0.8 135.8 271.8 302.8 646.5 1358.3 TOTAL PA including cost of b+c+d+e 0.8 0.8 135.8 271.8 302.8 646.5 1358.3 Co-financing details No co-financing is foreseen. Compatibility with Financial Programming ( Proposal is compatible with existing financial programming. ( Proposal will entail reprogramming of the relevant heading in the Financial Framework. ( Proposal may require application of the provisions of the Interinstitutional Agreement (i.e. flexibility instrument or revision of the Financial Framework). Financial impact on Revenue ( Proposal has no financial implications on revenue ( Proposal has financial impact - the effect on revenue is as follows: FTE (including officials, temporary and external staff) - see detail under point 8.2.1. Annual requirements 2007 2008 2009 2010 2011 2012-2013 Total number of human resources 7 7 7 7 7 14 5. to be met in the short or long term As detailed in the Explanatory Memorandum, the existing EIB general lending mandate will expire at the end of January 2007, with a possible 6 month extension, in the case that loans granted by the EIB have not attained the overall amounts set out in the Council Decision. The separate EIB mandate for projects in , , and will expire on the same date. There is a need for these mandates to be renewed if the Community is to continue to offer a guarantee for EIB external financing operations in furtherance of EU policy objectives. The new mandate will build upon the existing one, broadening the geographical and sectoral focus of EIB operations in line with the new political priorities of the EU. Value-added of Community involvement and coherence of the proposal with other financial instruments and possible synergy EIB Financing Operations outside the EU represent a highly visible and effective tool in support of EU"s external action. The report accompanying the legislative proposal details the main benefits of EIB intervention in such countries, such as the passing on to project promoters of expertise and the application of EU environmental and procurement standards to the projects financed. In addition to the above benefits, the EIB passes on in full the financial advantages resulting from the Community guarantee and the attractive funding costs of the Bank to final beneficiaries in the form of competitive interest rates. The mandate under Community guarantee cover provides for the necessary political and financial backing by the Community for countries and projects which would not normally fit within EIB"s standard guidelines and criteria. EIB Financing Operations will complement the activities carried out under the new external assistance instruments.