# IMMC.COM%282021%29379%20final.ENG.xhtml.1_EN_ACT_part1_v3.docx

european flagEUROPEAN COMMISSION

Brussels, 30.6.2021

COM(2021) 379 final

Communication from the Commission to the European Parliament, the Council and the Court of Auditors - Annual accounts of the European Development Fund 2020

CONTENTS

CERTIFICATION OF THE ACCOUNTS

IMPLEMENTING AND ACCOUNTING FOR THE EDF RESOURCES

FUNDS MANAGED BY THE EUROPEAN COMMISSION

FINANCIAL STATEMENTS OF THE EDF

FINANCIAL STATEMENTS OF THE EU TRUST FUNDS CONSOLIDATED IN EDF

FINANCIAL STATEMENTS OF THE BÊKOU EU TRUST FUND 2020

FINANCIAL STATEMENTS OF THE EUTF AFRICA 2020

CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE EU TRUST FUNDS

EDF REPORT ON FINANCIAL IMPLEMENTATION

ANNUAL REPORT ON IMPLEMENTATION - FUNDS MANAGED BY THE EUROPEAN INVESTMENT BANK

CERTIFICATION OF THE ACCOUNTS

The annual accounts of the European Development Fund for the year 2020 have been prepared in accordance with Title X of the Financial Regulation of the 11th European Development Fund and with the accounting principles, rules and methods set out in the notes to the financial statements.

I acknowledge my responsibility for the preparation and presentation of the annual accounts of the European Development Fund in accordance with Article 18 of the Financial Regulation of the 11th European Development Fund.

I have obtained from the authorising officer and from the EIB, who guarantee its reliability, all the information necessary for the production of the accounts that show the European Development Fund's assets and liabilities and the budgetary implementation.

I hereby certify that based on this information, and on such checks as I deemed necessary to sign off the accounts, I have a reasonable assurance that the accounts present a true and fair view of the financial position of the European Development Fund in all material aspects.

Rosa ALDEA BUSQUETS

Accounting Officer

IMPLEMENTING AND ACCOUNTING FOR THE EDF RESOURCES

1.BACKGROUND

The European Union (hereinafter referred to as the ‘EU’) has cooperative relations with a large number of developing countries. The main objective is to promote economic, social and environmental development, with the primary aim of reducing and eradicating poverty in the long-term by providing beneficiary countries with development aid and technical assistance. To achieve this, the EU draws up, jointly with the partner countries, cooperation strategies and mobilises the financial resources to implement them. These resources allocated to development cooperation come from three sources:

-The EU budget;

-The European Development Fund;

-The European Investment Bank.

The European Development Fund (hereinafter referred to as the ‘EDF’) is the main instrument for providing aid for development cooperation to the African, Caribbean and Pacific (hereinafter referred to as the ‘ACP’) States and Overseas Countries and Territories (hereinafter referred to as the ‘OCTs’).

The EDF is not funded by the EU budget. It is established by an Internal Agreement of the Representatives of the Member States, sitting within the Council, and managed by a specific committee. The European Commission (hereinafter referred to as the ‘Commission’) is responsible for the financial implementation of the operations carried out with EDF resources. The European Investment Bank (hereinafter referred to as the ‘EIB’) manages the Investment Facility.

During the period 2014-2020, the geographic aid granted to ACP States and OCTs will continue to be mainly funded by the EDF. Each EDF is usually concluded for a period of around five years and is governed by its own Financial Regulation, which requires the preparation of financial statements for each individual EDF. Accordingly, financial statements are prepared separately for each EDF in respect of the part that is managed by the Commission. These financial statements are also presented in an aggregated way so as to provide a global view of the financial situation of the resources for which the Commission is responsible.

The Internal Agreement establishing the 11th EDF was signed by the participating Member States, meeting within the Council, in June 2013
  1
  . It came into force on 1 March 2015.

In 2018, the Council adopted the Financial Regulation applicable to the 11th EDF
  2
  . This repealed the previous regulation in force and is applicable to operations financed from previous EDFs without prejudice to existing legal commitments. This Regulation does not apply to the Investment Facility under previous EDFs.

Within the framework of the ACP-EU Partnership Agreement, the Investment Facility was established, managed by the EIB, and used to support private sector development in the ACP States by financing essentially – but not exclusively – private investments. The Facility is designed as a renewable fund, so that loan repayments can be reinvested in other operations, thus resulting in a self-renewing and financially independent facility. As the Investment Facility is not managed by the Commission, it is not consolidated in the first part of the annual accounts – the financial statements of the EDF and the related report on financial implementation. The financial statements of the Investment Facility are included as a separate part of the annual accounts (part II) to provide a full picture of the development aid of the EDF.

2.HOW IS THE EDF FUNDED?

The Council of 2 December 2013 adopted the Regulation 1311/2013 laying down the multiannual financial framework for 2014-2020. In this context, it was decided that geographical cooperation with the ACP States would not be integrated into the EU budget, but would continue to be funded through the existing intergovernmental EDF.

The EU budget is annual and according to the budgetary principle of annuality, expenditure and revenue are planned and authorised in principle for one year. Unlike the EU Budget, the EDF is a fund operating based on multi-annuality, to implement development cooperation during a period of usually five years. As resources are allocated on a multi-annual basis, the allocated funds may be used over the period of the EDF. This multiannual approach in the budgetary reporting, where the budgetary implementation of the EDFs is measured against the total funds.

The EDF resources are "ad hoc" contributions from the EU Member States. Approximately every five years, Member State representatives meet at intergovernmental level to decide on an overall amount that will be allocated to the fund and to oversee its implementation. The Commission then manages the fund in accordance with the Union policy on development cooperation. Since Member States have their own development and aid policies in parallel to the Union policy, the Member States must coordinate their policies with the EU to ensure they are complementary.

In addition to the above mentioned contributions, it is also possible for Member States to enter into co‐financing arrangements or to make voluntary financial contributions to the EDF.

3.EDF ACTIVITIES AFTER 31 DECEMBER 2020

The 11th EDF has reached its final stage as the sunset clause came into effect on 31 December 2020. This clause sets a cut-off date for commitments under the 11th EDF. As of 2021 no further financing agreements can be signed under the 11th EDF. However, specific contracts for the existing financing agreements will still be signed until 31 December 2023.

To ensure continuity of the development programmes, from 2021, the EDF programmes will be included in the EU multi‐annual financial framework (MFF). This means that while so far the EDF programmes were funded by the voluntary contributions of EU Member States as of 2021 development programmes will be funded through the EU budget. This also implies that the funding of development programmes will be subject to the authorisation of the European Parliament and that the transactions will have to comply with the EU financial regulations in the same way as other EU funding programmes.

4.Departure of United Kingdom from the European Union

On 1 February 2020, the United Kingdom ceased to be a Member State of the European Union. Following the conclusion of the Agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (the “Withdrawal Agreement or WA) between the two parties, the United Kingdom committed to pay all its obligations under the current MFF and previous financial perspectives as if it were still a Member State. The UK continued involvement with the EDF is dealt with under Part Five, Chapter 5 of the WA.

According to Article 152 of the WA, the United Kingdom remains party to the EDF until the closure of the 11th EDF and all previous unclosed EDFs, and assumes the same obligations as the Member States in this respect. UK beneficiaries remain eligible to participate in projects under the 11th EDF and previous EDFs under the same conditions as before. The UK may participate, as an observer, without voting rights, in the EDF Committee and the Investment Facility Committee (Art. 152(2) WA). The UK share of the Investment Facility of the EDF shall be reimbursed to the UK as the investment matures. Unless agreed otherwise, the United Kingdom's capital share shall not be recommitted beyond the end of the 11th EDF commitment period or rolled over into subsequent periods (Art. 152(4) WA).

Where the amounts from projects under the 10th EDF or from previous EDFs have not been committed or have been decommitted on the date of entry into force of the Agreement, the United Kingdom's share of those amounts shall not be reused. The same applies to the United Kingdom share of funds not committed or decommitted amounts under the 11th EDF after 31 December 2020 (Art. 153).

The UK remains liable in respect of the guarantees provided under all EDFs. At the same time it is entitled to its share of any amount recovered under the terms of the Member States' guarantees and to the balance of its Member State Call Account in proportion to its respective participation in each guarantee agreement (Art. 154).

At the time of the transmission of these provisional accounts, and based on the WA concluded and already in operation, there is no financial impact to be reported in the EDF annual accounts.

5.YEAR-END REPORTING

5.1.ANNUAL ACCOUNTS

In accordance with Articles 18(3) of the EDF Financial Regulation, the EDF financial statements are prepared based on accrual-based accounting rules that themselves are based on International Public Sector Accounting Standards (IPSAS). The accounting rules adopted by the Accounting Officer of the Commission are applied by all the Institutions and bodies of the EU in order to establish a uniform set of rules for accounting, valuation and presentation of the accounts with a view to harmonising the process for drawing up the financial statements. These EU accounting rules are also applied to the EDF while taking into account the specific nature of its activities.

The preparation of the EDF annual accounts is entrusted to the Commission's Accounting Officer, who is also the Accounting Officer of the EDF. She ensures that the annual accounts of the EDF present a true and fair view of the financial position of the EDF.

The annual accounts are presented as follows:

Part I: Funds managed by the Commission

(I)Financial statements and explanatory notes of the EDF

(II)Financial statements of the EU trust funds consolidated in the EDF

(III)Consolidated financial statements of EDF and the EU trust funds

(IV)Report on financial implementation of the EDF

Part II: Annual report on implementation - Funds managed by the EIB

(I)Financial statements of the Investment Facility

The part 'Financial statements of the European trust funds consolidated in the EDF' includes financial statements of the two trust funds created under the EDF: The Bêkou EU Trust Fund (see section 'Financial statements of the Bêkou EU Trust Fund') and the EU Trust Fund for Africa (see section 'Financial statements of EU Trust Fund for Africa'). The trust funds individual financial statements are prepared under the responsibility of the Commission’s Accounting Officer and are subject to external audit carried out by a private auditor. The trust funds' figures included in these annual accounts are provisional.

The EDF annual accounts must be adopted by the Commission no later than 31 July of the year following the balance sheet date and presented to the European Parliament and to the Council for discharge.

6.AUDIT AND DISCHARGE

6.1.AUDIT

The EDF annual accounts are audited by its external auditor, the European Court of Auditors (hereinafter referred to as the ‘ECA’), which draws up an annual report for the European Parliament and the Council.

6.2.DISCHARGE

The final control of the financial implementation of the EDF resources for a given financial year is the discharge. Following the audit and finalisation of the annual accounts, it falls to the Council to recommend, and then to the European Parliament to decide, whether to grant discharge to the Commission for the financial implementation of the EDF resources for a given financial year. This decision is based on a review of the accounts and the annual report of the ECA (which includes an official statement of assurance) and replies of the Commission to questions and further information requests of the discharge authority.

HIGHLIGHTS OF FINANCIAL IMPLEMENTATION 2020

- Net amount, only 10th & 11th EDF

Budget implementation

In 2020 the financial implementation (10th and 11th EDF) for decisions (global commitments: 2 687 million euros), contracts (individual commitments: 3 670 million euros) and payments (4 599 million euros) were all impacted by the EU response to the unpredicted crisis of COVID-19, which became a priority for the Commission. Therefore 2020 was a record year for payments, due to the increased disbursements to projects contributing to fighting the COVID crisis. This also led to the acceleration of the absorption period, which improved to 3 years in 2020. The sunset clause for the 11th EDF was reached on the 31st of December 2020. This means that as of 2021 there will be no further global commitments of projects under the 11th EDF (for the details please refer to Report on Financial Implementation section).

Impact of the activities in the financial statements

In the financial statements, the impact of the above mentioned activities is most visible when looking at:

•
     Pre-financing (see note 2.2): an increase by EUR 29 million largely as a result of the new contracts signed and advances paid during 2020;

•
     The aid instrumens expenses (see note 3.3): a substantial increase (by EUR 852 million) as a result of the increased activity during the year in order to combat the negative effects of the COVID-19 pandemic, in particular as projects were reoriented to deal with the crisis, but also due to the normal lifecycle of the EDF whereby the activities of the 11th EDF are peaking.

•
     Cash and cash equivalents (see note 2.5): a decrease by EUR 451 million as a result of the significant increase in payments during the year to cover the augmented expenses and advances made on new contracts;

•
     Accrued charges (see note 2.8): an increased by EUR 208 million as a result of the increase in the number of open contracts at the end of the year for which no cost claims were validated at the year end.

EUROPEAN DEVELOPMENT FUND

FINANCIAL YEAR 2020

FUNDS MANAGED BY THE EUROPEAN COMMISSION

CONTENTS

FINANCIAL STATEMENTS OF THE EDF

EDF BALANCE SHEET

EDF STATEMENT OF FINANCIAL PERFORMANCE

EDF CASHFLOW STATEMENT

EDF STATEMENT OF CHANGES IN NET ASSETS

BALANCE SHEET BY EDF

STATEMENT OF FINANCIAL PERFORMANCE BY EDF

STATEMENT OF CHANGES IN NET ASSETS BY EDF

NOTES TO THE FINANCIAL STATEMENTS OF THE EDF

FINANCIAL STATEMENTS OF THE EU TRUST FUNDS CONSOLIDATED IN EDF

FINANCIAL STATEMENTS OF THE BÊKOU EU TRUST FUND 2020

BALANCE SHEET

STATEMENT OF FINANCIAL PERFORMANCE

CASHFLOW STATEMENT

FINANCIAL STATEMENTS OF THE EUTF AFRICA 2020

BALANCE SHEET

STATEMENT OF FINANCIAL PERFORMANCE

CASHFLOW STATEMENT

CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE EU TRUST FUNDS

CONSOLIDATED BALANCE SHEET

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE

CONSOLIDATED CASH FLOW STATEMENT

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

EDF REPORT ON FINANCIAL IMPLEMENTATION

FINANCIAL STATEMENTS OF THE EDF

It should be noted that due to the rounding of figures into millions of euros, some financial data in the tables below may appear not to add-up.

EDF BALANCE SHEET

| | | | EUR million |
| --- | --- | --- | --- |
| | Note | 31.12.2020 | 31.12.2019 |
| NON-CURRENT ASSETS | | | |
| Financial assets | 2.1 | 33 | 36 |
| Pre-financing | 2.2 | 873 | 910 |
| Trust Fund contributions | 2.3 | 394 | 266 |
| | | 1 300 | 1 213 |
| CURRENT ASSETS | | | |
| Pre-financing | 2.2 | 1 355 | 1 288 |
| Exchange receivables and non-exchange recoverables | 2.4 | 140 | 123 |
| Cash and cash equivalents | 2.5 | 728 | 1 179 |
| | | 2 223 | 2 590 |
| TOTAL ASSETS | | 3 523 | 3 803 |
| | | | |
| NON-CURRENT LIABILITIES | | | |
| Financial liabilities | 2.6 | (2) | (19) |
| | | (2) | (19) |
| CURRENT LIABILITIES | | | |
| Payables | 2.7 | (615) | (516) |
| Accrued charges and deferred income | 2.8 | (1 527) | (1 319) |
| | | (2 143) | (1 835) |
| TOTAL LIABILITIES | | (2 145) | (1 854) |
| | | | |
| NET ASSETS | | 1 379 | 1 948 |
| | | | |
| FUNDS & RESERVES | | | |
| Fair value reserve | 2.9 | (5) | (2) |
| Called fund capital - active EDFs | 2.10 | 58 986 | 54 809 |
| Called fund capital from closed EDFs carried forward | 2.10 | 2 252 | 2 252 |
| Economic result carried forward from previous years | | (55 111) | (51 155) |
| Economic result of the year | | (4 744) | (3 956) |
| NET ASSETS | | 1 379 | 1 948 |

EUR million

Note

31.12.2020

31.12.2019

NON-CURRENT ASSETS

Financial assets

2.1

33

36

Pre-financing

2.2

873

910

Trust Fund contributions

2.3

394

266

1 300

1 213

CURRENT ASSETS

Pre-financing

2.2

1 355

1 288

Exchange receivables and non-exchange recoverables

2.4

140

123

Cash and cash equivalents

2.5

728

1 179

2 223

2 590

TOTAL ASSETS

3 523

3 803

NON-CURRENT LIABILITIES

Financial liabilities

2.6

(2)

(19)

(2)

(19)

CURRENT LIABILITIES

Payables

2.7

(615)

(516)

Accrued charges and deferred income

2.8

(1 527)

(1 319)

(2 143)

(1 835)

TOTAL LIABILITIES

(2 145)

(1 854)

NET ASSETS

1 379

1 948

FUNDS & RESERVES

Fair value reserve

2.9

(5)

(2)

Called fund capital - active EDFs

2.10

58 986

54 809

Called fund capital from closed EDFs carried forward

2.10

2 252

2 252

Economic result carried forward from previous years

(55 111)

(51 155)

Economic result of the year

(4 744)

(3 956)

NET ASSETS

1 379

1 948

EDF STATEMENT OF FINANCIAL PERFORMANCE

| | | | EUR million |
| --- | --- | --- | --- |
| | Note | 2020 | 2019 |
| REVENUE | | | |
| Revenue from non-exchange transactions | 3.1 | | |
| Recovery activities | | 92 | 28 |
| | | 92 | 28 |
| Revenue from exchange transactions | 3.2 | | |
| Financial revenue | | 6 | 7 |
| Other revenue | | 37 | 39 |
| | | 43 | 46 |
| Total Revenue | | 135 | 74 |
| EXPENSES | | | |
| Aid instruments | 3.3 | (4 607) | (3 755) |
| Co-financing expenses | 3.4 | (53) | (14) |
| Finance costs | 3.5 | (21) | (1) |
| Other expenses | 3.6 | (197) | (260) |
| Total Expenses | | (4 878) | (4 030) |
| | | | |
| ECONOMIC RESULT OF THE YEAR | | (4 744) | (3 956) |

EUR million

Note

2020

2019

REVENUE

Revenue from non-exchange transactions

3.1

Recovery activities

92

28

92

28

Revenue from exchange transactions

3.2

Financial revenue

6

7

Other revenue

37

39

43

46

Total Revenue

135

74

EXPENSES

Aid instruments

3.3

(4 607)

(3 755)

Co-financing expenses

3.4

(53)

(14)

Finance costs

3.5

(21)

(1)

Other expenses

3.6

(197)

(260)

Total Expenses

(4 878)

(4 030)

ECONOMIC RESULT OF THE YEAR

(4 744)

(3 956)

EDF CASHFLOW STATEMENT

| | | | EUR million |
| --- | --- | --- | --- |
| | Note | 2020 | 2019 |
| Economic result of the year | | (4 744) | (3 956) |
| Operating activities | | | |
| Capital increase - contributions (net) | | 4 177 | 4 385 |
| (Increase)/decrease in trust funds contributions | | (127) | (65) |
| (Increase)/decrease in pre-financing | | (29) | 136 |
| (Increase)/decrease in exchange receivables and non-exchange recoverables | | (17) | 15 |
| Increase/(decrease) in financial liabilities | | (17) | 2 |
| Increase/(decrease) in payables | | 99 | 275 |
| Increase/(decrease) in accrued charges and deferred income | | 209 | 37 |
| Other non-cash movements | | (3) | (2) |
| Investing activities | | | |
| (Increase)/decrease in available for sale financial assets | | 2 | (36) |
| NET CASHFLOW | | (452) | 792 |
| | | | |
| Net increase/(decrease) in cash and cash equivalents | | (451) | 792 |
| Cash and cash equivalents at the beginning of the year | 2.5 | 1 179 | 387 |
| Cash and cash equivalents at year-end | 2.5 | 728 | 1 179 |

EUR million

Note

2020

2019

Economic result of the year

(4 744)

(3 956)

Operating activities

Capital increase - contributions (net)

4 177

4 385

(Increase)/decrease in trust funds contributions

(127)

(65)

(Increase)/decrease in pre-financing

(29)

136

(Increase)/decrease in exchange receivables and non-exchange recoverables

(17)

15

Increase/(decrease) in financial liabilities

(17)

2

Increase/(decrease) in payables

99

275

Increase/(decrease) in accrued charges and deferred income

209

37

Other non-cash movements

(3)

(2)

Investing activities

(Increase)/decrease in available for sale financial assets

2

(36)

NET CASHFLOW

(452)

792

Net increase/(decrease) in cash and cash equivalents

(451)

792

Cash and cash equivalents at the beginning of the year

2.5

1 179

387

Cash and cash equivalents at year-end

2.5

728

1 179

EDF STATEMENT OF CHANGES IN NET ASSETS

| | | | | | | | EUR million |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | Fund capital - active EDFs (A) | Uncalled funds - active EDFs (B) | Called fund capital - active EDFs (C) = (A)-(B) | Cumulative Reserves (D) | Called fund capital from closed EDFs carried forward (E) | Fair value reserve (F) | Total Net Assets (C)+(D)+(E)+(F) |
| BALANCE AS AT 31.12.2018 | 73 264 | 22 840 | 50 423 | (51 155) | 2 252 | – | 1 521 |
| Fair value movements | | | | | | (2) | (2) |
| Capital increase - contributions | – | (4 385) | 4 385 | – | – | | 4 385 |
| Economic result of the year | – | – | – | (3 956) | – | | (3 956) |
| BALANCE AS AT 31.12.2019 | 73 264 | 18 455 | 54 809 | (55 111) | 2 252 | (2) | 1 948 |
| Fair value movements | | | | | | (3) | (3) |
| Capital increase - contributions | (223) | (4 400) | 4 177 | – | – | | 4 177 |
| Economic result of the year | – | – | – | (4 744) | – | | (4 744) |
| BALANCE AS AT 31.12.2020 | 73 041 | 14 055 | 58 986 | (59 854) | 2 252 | (5) | 1 378 |

EUR million

Fund capital - active EDFs (A)

Uncalled funds - active EDFs (B)

Called fund capital - active EDFs (C) = (A)-(B)

Cumulative Reserves (D)

Called fund capital from closed EDFs carried forward (E)

Fair value reserve (F)

Total Net Assets (C)+(D)+(E)+(F)

BALANCE AS AT 31.12.2018

73 264

22 840

50 423

(51 155)

2 252

–

1 521

Fair value movements

(2)

(2)

Capital increase - contributions

–

(4 385)

4 385

–

–

4 385

Economic result of the year

–

–

–

(3 956)

–

(3 956)

BALANCE AS AT 31.12.2019

73 264

18 455

54 809

(55 111)

2 252

(2)

1 948

Fair value movements

(3)

(3)

Capital increase - contributions

(223)

(4 400)

4 177

–

–

4 177

Economic result of the year

–

–

–

(4 744)

–

(4 744)

BALANCE AS AT 31.12.2020

73 041

14 055

58 986

(59 854)

2 252

(5)

1 378

BALANCE SHEET BY EDF

| EUR million |
| --- |
| | | 31.12.2020 | 31.12.2019 | |
| | Note | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | Total | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | Total |
| NON-CURRENT ASSETS | | | | | | | | | | | |
| Financial assets | 2.1 | – | – | (2) | 35 | 33 | – | – | – | 36 | 36 |
| Pre-financing | 2.2 | – | 3 | 292 | 578 | 873 | – | 6 | 325 | 580 | 910 |
| Trust Fund contributions | 2.3 | – | 29 | 9 | 355 | 394 | – | – | – | 266 | 266 |
| | | – | 33 | 299 | 969 | 1 300 | – | 6 | 325 | 882 | 1 213 |
| CURRENT ASSETS | | | | | | | | | | | |
| Pre-financing | 2.2 | – | 9 | 341 | 1 005 | 1 355 | – | 26 | 441 | 821 | 1 288 |
| Exchange receivables and non-exchange recoverables | 2.4 | 181 | (177) | 1 723 | (1 586) | 140 | 183 | 121 | 2 201 | (2 382) | 123 |
| Inter-EDF accounts | | 181 | (246) | 1 663 | (1 598) | – | 182 | 53 | 2 160 | (2 395) | – |
| Cash and cash equivalents | 2.5 | – | – | – | 728 | 728 | – | – | – | 1 179 | 1 179 |
| | | 362 | (414) | 3 726 | (1 451) | 2 224 | 365 | 201 | 4 801 | (2 777) | 2 590 |
| TOTAL ASSETS | | 362 | (381) | 4 025 | (483) | 3 523 | 365 | 207 | 5 127 | (1 896) | 3 803 |
| | | | | | | | | | | | |
| NON-CURRENT LIABILITIES | | | | | | | | | | | |
| Financial liabilities | 2.6 | – | – | – | (2) | (2) | – | – | (1) | (18) | (19) |
| | | – | – | – | (2) | (2) | – | – | (1) | (18) | (19) |
| CURRENT LIABILITIES | | | | | | – | | | | | |
| Payables | 2.7 | – | (1) | (62) | (554) | (615) | – | (5) | (108) | (404) | (516) |
| Accrued charges and deferred income | 2.8 | – | (67) | (217) | (1 244) | (1 527) | – | (96) | (240) | (983) | (1 319) |
| | | – | (67) | (279) | (1 798) | (2 143) | – | (101) | (348) | (1 386) | (1 835) |
| TOTAL LIABILITIES | | – | (67) | (279) | (1 800) | (2 145) | – | (101) | (349) | (1 405) | (1 854) |
| | | | | | | – | | | | | |
| NET ASSETS | | 362 | (448) | 3 747 | (2 282) | 1 379 | 365 | 106 | 4 778 | (3 300) | 1 948 |
| | | | | | | | | | | | |
| Fair value reserves | 2.9 | – | – | (2) | (4) | (5) | – | – | – | (2) | (2) |
| Called fund capital - active EDFs | 2.10 | 12 164 | 10 535 | 20 960 | 15 327 | 58 986 | 12 164 | 10 758 | 20 960 | 10 927 | 54 809 |
| Called fund capital from closed EDFs carried forward | 2.10 | 627 | 1 625 | – | – | 2 252 | 627 | 1 625 | – | – | 2 252 |
| Called fund capital transfers between active EDFs | 2.10 | (2 512) | 2 041 | 188 | 283 | – | (2 510) | 2 109 | 265 | 136 | – |
| Economic result carried forward from previous years | | (10 098) | (14 440) | (18 606) | (11 966) | (55 111) | (10 098) | (14 406) | (18 077) | (8 573) | (51 155) |
| Economic result of the year | | – | 36 | (457) | (4 324) | (4 744) | – | (34) | (529) | (3 393) | (3 956) |
| | | | | | | | | | | | |
| NET ASSETS | | 181 | (203) | 2 084 | (683) | 1 379 | 183 | 53 | 2 618 | (905) | 1 948 |

EUR million

31.12.2020

31.12.2019

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

Total

Eighth EDF

Ninth EDF

10th EDF

11th EDF

Total

NON-CURRENT ASSETS

Financial assets

2.1

–

–

(2)

35

33

–

–

–

36

36

Pre-financing

2.2

–

3

292

578

873

–

6

325

580

910

Trust Fund contributions

2.3

–

29

9

355

394

–

–

–

266

266

–

33

299

969

1 300

–

6

325

882

1 213

CURRENT ASSETS

Pre-financing

2.2

–

9

341

1 005

1 355

–

26

441

821

1 288

Exchange receivables and non-exchange recoverables

2.4

181

(177)

1 723

(1 586)

140

183

121

2 201

(2 382)

123

Inter-EDF accounts

181

(246)

1 663

(1 598)

–

182

53

2 160

(2 395)

–

Cash and cash equivalents

2.5

–

–

–

728

728

–

–

–

1 179

1 179

362

(414)

3 726

(1 451)

2 224

365

201

4 801

(2 777)

2 590

TOTAL ASSETS

362

(381)

4 025

(483)

3 523

365

207

5 127

(1 896)

3 803

NON-CURRENT LIABILITIES

Financial liabilities

2.6

–

–

–

(2)

(2)

–

–

(1)

(18)

(19)

–

–

–

(2)

(2)

–

–

(1)

(18)

(19)

CURRENT LIABILITIES

–

Payables

2.7

–

(1)

(62)

(554)

(615)

–

(5)

(108)

(404)

(516)

Accrued charges and deferred income

2.8

–

(67)

(217)

(1 244)

(1 527)

–

(96)

(240)

(983)

(1 319)

–

(67)

(279)

(1 798)

(2 143)

–

(101)

(348)

(1 386)

(1 835)

TOTAL LIABILITIES

–

(67)

(279)

(1 800)

(2 145)

–

(101)

(349)

(1 405)

(1 854)

–

NET ASSETS

362

(448)

3 747

(2 282)

1 379

365

106

4 778

(3 300)

1 948

Fair value reserves

2.9

–

–

(2)

(4)

(5)

–

–

–

(2)

(2)

Called fund capital - active EDFs

2.10

12 164

10 535

20 960

15 327

58 986

12 164

10 758

20 960

10 927

54 809

Called fund capital from closed EDFs carried forward

2.10

627

1 625

–

–

2 252

627

1 625

–

–

2 252

Called fund capital transfers between active EDFs

2.10

(2 512)

2 041

188

283

–

(2 510)

2 109

265

136

–

Economic result carried forward from previous years

(10 098)

(14 440)

(18 606)

(11 966)

(55 111)

(10 098)

(14 406)

(18 077)

(8 573)

(51 155)

Economic result of the year

–

36

(457)

(4 324)

(4 744)

–

(34)

(529)

(3 393)

(3 956)

NET ASSETS

181

(203)

2 084

(683)

1 379

183

53

2 618

(905)

1 948

STATEMENT OF FINANCIAL PERFORMANCE BY EDF

| EUR million |
| --- |
| | | 2020 | 2019 |
| | Note | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | Total | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | Total |
| | | | | | | | | | | | |
| REVENUE | | | | | | | | | | | |
| Revenue from non-exchange transactions | 3.1 | | | | | | | | | | |
| Recovery activities | | (1) | 5 | 69 | 19 | 92 | – | - | 18 | 10 | 28 |
| | | (1) | 5 | 69 | 19 | 92 | – | – | 18 | 10 | 28 |
| Revenue from exchange transactions | 3.2 | | | | | | | | | | |
| Financial revenue | | – | 5 | 1 | 1 | 6 | – | – | 3 | 4 | 7 |
| Other revenue | | – | 5 | 18 | 13 | 37 | 1 | 6 | 21 | 12 | 39 |
| | | – | 10 | 19 | 13 | 43 | 1 | 6 | 24 | 16 | 46 |
| Total revenue | | (1) | 15 | 88 | 32 | 135 | 1 | 6 | 42 | 26 | 74 |
| EXPENSES | | | | | | | | | | | |
| Aid instruments | 3.3 | – | 34 | (462) | (4 179) | (4 607) | – | (35) | (579) | (3 141) | (3 755) |
| Co-financing expenses | 3.4 | – | – | (41) | (12) | (53) | – | – | (9) | (5) | (14) |
| Finance costs | 3.5 | 1 | (3) | (16) | (4) | (21) | – | 2 | (2) | (1) | (1) |
| Other expenses | 3.6 | - | (9) | (25) | (162) | (197) | (1) | (8) | 20 | (272) | (260) |
| Total expenses | | 1 | 21 | (545) | (4 356) | (4 878) | (1) | (40) | (571) | (3 418) | (4 030) |
| | | | | | | | | | | | |
| ECONOMIC RESULT OF THE YEAR | | - | 36 | (457) | (4 324) | (4 744) | - | (35) | (529) | (3 393) | (3 956) |

EUR million

2020

2019

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

Total

Eighth EDF

Ninth EDF

10th EDF

11th EDF

Total

REVENUE

Revenue from non-exchange transactions

3.1

Recovery activities

(1)

5

69

19

92

–

-

18

10

28

(1)

5

69

19

92

–

–

18

10

28

Revenue from exchange transactions

3.2

Financial revenue

–

5

1

1

6

–

–

3

4

7

Other revenue

–

5

18

13

37

1

6

21

12

39

–

10

19

13

43

1

6

24

16

46

Total revenue

(1)

15

88

32

135

1

6

42

26

74

EXPENSES

Aid instruments

3.3

–

34

(462)

(4 179)

(4 607)

–

(35)

(579)

(3 141)

(3 755)

Co-financing expenses

3.4

–

–

(41)

(12)

(53)

–

–

(9)

(5)

(14)

Finance costs

3.5

1

(3)

(16)

(4)

(21)

–

2

(2)

(1)

(1)

Other expenses

3.6

-

(9)

(25)

(162)

(197)

(1)

(8)

20

(272)

(260)

Total expenses

1

21

(545)

(4 356)

(4 878)

(1)

(40)

(571)

(3 418)

(4 030)

ECONOMIC RESULT OF THE YEAR

-

36

(457)

(4 324)

(4 744)

-

(35)

(529)

(3 393)

(3 956)

STATEMENT OF CHANGES IN NET ASSETS BY EDF

| EUR million |
| --- |
| Eighth EDF | Fund capital - active EDFs (A) | Uncalled funds - active EDFs (B) | Called fund capital - active EDFs (C) = (A)-(B) | Cumulative Reserves (D) | Called fund capital from closed EDFs carried forward (E) | Called fund capital transfers between active EDFs (F) | Total Net Assets (C)+(D)+(E)+(F) |
| BALANCE AS AT 31.12.2018 | 12 164 | – | 12 164 | (10 098) | 627 | (2 509) | 184 |
| Transfers to/from the 10th EDF | | | – | | | (1) | (1) |
| BALANCE AS AT 31.12.2019 | 12 164 | – | 12 164 | (10 098) | 627 | (2 510) | 183 |
| Transfers to/from the 10th EDF | | | – | | | (2) | (2) |
| BALANCE AS AT 31.12.2020 | 12 164 | – | 12 164 | (10 098) | 627 | (2 512) | 181 |

EUR million

Eighth EDF

Fund capital - active EDFs (A)

Uncalled funds - active EDFs (B)

Called fund capital - active EDFs (C) = (A)-(B)

Cumulative Reserves (D)

Called fund capital from closed EDFs carried forward (E)

Called fund capital transfers between active EDFs (F)

Total Net Assets (C)+(D)+(E)+(F)

BALANCE AS AT 31.12.2018

12 164

–

12 164

(10 098)

627

(2 509)

184

Transfers to/from the 10th EDF

–

(1)

(1)

BALANCE AS AT 31.12.2019

12 164

–

12 164

(10 098)

627

(2 510)

183

Transfers to/from the 10th EDF

–

(2)

(2)

BALANCE AS AT 31.12.2020

12 164

–

12 164

(10 098)

627

(2 512)

181

EUR million

| EUR million |
| --- |
| Ninth EDF | Fund capital - active EDFs (A) | Uncalled funds - active EDFs (B) | Called fund capital - active EDFs (C) = (A)-(B) | Cumulative Reserves (D) | Called fund capital from closed EDFs carried forward (E) | Called fund capital transfers between active EDFs (F) | Total Net Assets (C)+(D)+(E)+(F) |
| BALANCE AS AT 31.12.2018 | 10 773 | – | 10 773 | (14 406) | 1 625 | 2 137 | 129 |
| Transfers to/from the 10th EDF | | 15 | (15) | | | | (15) |
| Transfers to/from the 10th EDF | | | – | | | (27) | (27) |
| Economic result of the year | | | – | (34) | | | (34) |
| BALANCE AS AT 31.12.2019 | 10 773 | 15 | 10 758 | (14 440) | 1 625 | 2 109 | 53 |
| Capital increase - contributions | | – | – | | | | – |
| Transfers to/from the 10th EDF | | | – | | | (69) | (69) |
| Refund to Member States | (223) | | (223) | | | | |
| Economic result of the year | | | – | – | | – | – |
| BALANCE AS AT 31.12.2020 | 10 550 | 15 | 10 535 | (14 440) | 1 625 | 2 041 | (203) |

Ninth EDF

Fund capital - active EDFs (A)

Uncalled funds - active EDFs (B)

Called fund capital - active EDFs (C) = (A)-(B)

Cumulative Reserves (D)

Called fund capital from closed EDFs carried forward (E)

Called fund capital transfers between active EDFs (F)

Total Net Assets (C)+(D)+(E)+(F)

BALANCE AS AT 31.12.2018

10 773

–

10 773

(14 406)

1 625

2 137

129

Transfers to/from the 10th EDF

15

(15)

(15)

Transfers to/from the 10th EDF

–

(27)

(27)

Economic result of the year

–

(34)

(34)

BALANCE AS AT 31.12.2019

10 773

15

10 758

(14 440)

1 625

2 109

53

Capital increase - contributions

–

–

–

Transfers to/from the 10th EDF

–

(69)

(69)

Refund to Member States

(223)

(223)

Economic result of the year

–

–

–

–

BALANCE AS AT 31.12.2020

10 550

15

10 535

(14 440)

1 625

2 041

(203)

| EUR million |
| --- |
| 10th EDF | Fund capital - active EDFs (A) | Uncalled funds - active EDFs (B) | Called fund capital - active EDFs (C) = (A)-(B) | Cumulative Reserves (D) | Called fund capital from closed EDFs carried forward (E) | Called fund capital transfers between active EDFs (F) | Total Net Assets (C)+(D)+(E)+(F) |
| BALANCE AS AT 31.12.2018 | 20 960 | – | 20 960 | (18 077) | – | 55 | 2 938 |
| Transfers to/from the Eighth and Ninth EDF | | | – | | | 28 | 28 |
| Transfers to/from the 11th EDF | | | – | | | 181 | 181 |
| Economic result of the year | | | – | (529) | | | (529) |
| BALANCE AS AT 31.12.2019 | 20 960 | – | 20 960 | (18 606) | – | 265 | 2 618 |
| Transfers to/from the Eighth and Ninth EDF | | | – | | | 71 | 71 |
| Transfers to/from the 11th EDF | | | – | | | (147) | (147) |
| Economic result of the year | | | – | (457) | | – | (457) |
| BALANCE AS AT 31.12.2020 | 20 960 | – | 20 960 | (19 063) | – | 188 | 2 084 |

EUR million

10th EDF

Fund capital - active EDFs (A)

Uncalled funds - active EDFs (B)

Called fund capital - active EDFs (C) = (A)-(B)

Cumulative Reserves (D)

Called fund capital from closed EDFs carried forward (E)

Called fund capital transfers between active EDFs (F)

Total Net Assets (C)+(D)+(E)+(F)

BALANCE AS AT 31.12.2018

20 960

–

20 960

(18 077)

–

55

2 938

Transfers to/from the Eighth and Ninth EDF

–

28

28

Transfers to/from the 11th EDF

–

181

181

Economic result of the year

–

(529)

(529)

BALANCE AS AT 31.12.2019

20 960

–

20 960

(18 606)

–

265

2 618

Transfers to/from the Eighth and Ninth EDF

–

71

71

Transfers to/from the 11th EDF

–

(147)

(147)

Economic result of the year

–

(457)

–

(457)

BALANCE AS AT 31.12.2020

20 960

–

20 960

(19 063)

–

188

2 084

EUR million

| EUR million |
| --- |
| 11th EDF | Fund capital - active EDFs (A) | Uncalled funds - active EDFs (B) | Called fund capital - active EDFs (C) = (A)-(B) | Cumulative Reserves (D) | Called fund capital from closed EDFs carried forward (E) | Called fund capital transfers between active EDFs (F) | Fair value reserve (G) | Total Net Assets (C)+(D)+(E)+(F)+(G) |
| BALANCE AS AT 31.12.2018 | 29 367 | 22 840 | 6 527 | (8 573) | – | 317 | – | (1 729) |
| Fair value movements | | | | | | – | (2) | (2) |
| Capital increase - contributions | | (4 400) | 4 400 | | | | | 4 400 |
| Transfers to/from the Eighth, Ninth and 10th EDF | | | – | | – | (181) | | (181) |
| Economic result of the year | | | – | (3 393) | | – | | (3 393) |
| BALANCE AS AT 31.12.2019 | 29 367 | 18 440 | 10 927 | (11 966) | – | 136 | (2) | (905) |
| Fair value movements | | | | | | | (2) | (2) |
| Capital increase - contributions | | (4 400) | 4 400 | | | 147 | | 4 547 |
| Economic result of the year | | | – | (4 324) | | – | | (4 324) |
| BALANCE AS AT 31.12.2020 | 29 367 | 14 040 | 15 327 | (16 290) | – | 283 | (4) | (683) |

11th EDF

Fund capital - active EDFs (A)

Uncalled funds - active EDFs (B)

Called fund capital - active EDFs (C) = (A)-(B)

Cumulative Reserves (D)

Called fund capital from closed EDFs carried forward (E)

Called fund capital transfers between active EDFs (F)

Fair value reserve (G)

Total Net Assets (C)+(D)+(E)+(F)+(G)

BALANCE AS AT 31.12.2018

29 367

22 840

6 527

(8 573)

–

317

–

(1 729)

Fair value movements

–

(2)

(2)

Capital increase - contributions

(4 400)

4 400

4 400

Transfers to/from the Eighth, Ninth and 10th EDF

–

–

(181)

(181)

Economic result of the year

–

(3 393)

–

(3 393)

BALANCE AS AT 31.12.2019

29 367

18 440

10 927

(11 966)

–

136

(2)

(905)

Fair value movements

(2)

(2)

Capital increase - contributions

(4 400)

4 400

147

4 547

Economic result of the year

–

(4 324)

–

(4 324)

BALANCE AS AT 31.12.2020

29 367

14 040

15 327

(16 290)

–

283

(4)

(683)

NOTES TO THE FINANCIAL STATEMENTS OF THE EDF

It should be noted that due to the rounding of figures into millions of euros, some financial data in the tables may appear not to add-up

1.SIGNIFICANT ACCOUNTING POLICIES

1.1.ACCOUNTING PRINCIPLES

The objective of financial statements is to provide information about the financial position, performance and cashflows of an entity that is useful to a wide range of stakeholders.

The overall considerations (or accounting principles) to be followed when preparing the financial statements are laid down in EU Accounting Rule 1 ‘Financial Statements’ and are the same as those described in IPSAS 1: fair presentation, accrual basis, going concern, consistency of presentation, materiality, aggregation, offsetting and comparative information. The qualitative characteristics of financial reporting are relevance, faithful representation (reliability), understandability, timeliness, comparability and verifiability.

1.2.BASIS OF PREPARATION

2.Reporting period

Financial statements are presented annually. The accounting year begins on 1 January and ends on 31 December.

3.Currency and basis for conversion

The annual accounts are presented in thousands of euros, the euro being the EU’s functional currency. Foreign currency transactions are translated into euros using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the re-translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of financial performance. Different conversion methods apply to property, plant and equipment and intangible assets, which retain their value in euros at the date when they were purchased.

Year-end balances of monetary assets and liabilities denominated in foreign currencies are translated into euros on the basis of the European Central Bank (ECB) exchange rates applying on 31 December.

Euro exchange rates

| Currency | 31.12.2020 | 31.12.2019 | Currency | 31.12.2020 | 31.12.2019 |
| --- | --- | --- | --- | --- | --- |
| BGN | 1.9558 | 1.9558 | PLN | 4.5597 | 4.2568 |
| CZK | 26.2420 | 25.4080 | RON | 4.8683 | 4.783 |
| DKK | 7.4409 | 7.4715 | SEK | 10.0343 | 10.4468 |
| GBP | 0.8990 | 0.8508 | CHF | 1.0802 | 1.0854 |
| HRK | 7.5519 | 7.4395 | JPY | 126.4900 | 121.9400 |
| HUF | 363.8900 | 330.5300 | USD | 1.2271 | 1.1234 |

Currency

31.12.2020

31.12.2019

Currency

31.12.2020

31.12.2019

BGN

1.9558

1.9558

PLN

4.5597

4.2568

CZK

26.2420

25.4080

RON

4.8683

4.783

DKK

7.4409

7.4715

SEK

10.0343

10.4468

GBP

0.8990

0.8508

CHF

1.0802

1.0854

HRK

7.5519

7.4395

JPY

126.4900

121.9400

HUF

363.8900

330.5300

USD

1.2271

1.1234

4.Use of estimates

In accordance with IPSAS and generally accepted accounting principles, the financial statements necessarily include amounts based on estimates and assumptions by management based on the most reliable information available. Significant estimates include, but are not limited to: amounts for employee benefit liabilities, accrued and deferred revenue and charges, provisions, financial risk on accounts receivable, contingent assets and liabilities, and degree of impairment of assets. Actual results could differ from those estimates.

Reasonable estimates are an essential part of the preparation of financial statements and do not undermine their reliability. An estimate may need revision if changes occur in the circumstances on which the estimate was based or as a result of new information or more experience. By its nature, the revision of an estimate does not relate to prior periods and is not the correction of an error. The effect of a change in accounting estimate shall be recognised in the surplus or deficit in the periods in which it becomes known.

5.Application of new and amended European Union Accounting Rules (EAR)

New EAR which are effective for annual periods beginning on or after 1 January 2020

There are no new EAR which became effective for annual periods beginning on or after 1 January 2020.

New EAR adopted but not yet effective at 31 December 2020

On 17 December 2020 the Accounting Officer of the European Commission adopted the revised EAR 11 ‘Financial Instruments’, which is effective for accounting periods beginning on or after 1 January 2021. The revised EAR 11 has been updated in line with the new IPSAS 41 ‘Financial Instruments’ and establishes the principles for the financial reporting of the financial assets and financial liabilities held by the EU entities. For more information please refer to the EU annual accounts of 2020. No material impact of this change is expected due to the small amount of financial instruments in the financial statements of the entity.

5.1.BALANCE SHEET

6.Financial assets

Financial assets are classified in the following categories: ‘financial assets at fair value through surplus or deficit’, ‘loans and receivables’, ‘held-to-maturity investments’ and ‘available for sale financial assets’. The classification of the financial instruments is determined at initial recognition and re-evaluated at each balance sheet date.

(I)Financial assets at fair value through surplus or deficit

A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by the entity. Derivatives are also presented in this category. Assets in this category are classified as current assets if they are expected to be realised within 12 months of the balance sheet date. During this financial year, the entity did not hold any investments in this category.

(II)Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the entity provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in non-current assets, except for maturities within 12 months of the balance sheet date. Loans and receivables include term deposits with the original maturity above three months.

(III)Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the entity has the positive intention and ability to hold to maturity. During this financial year, the entity did not hold any investments in this category.

(IV)Available for sale financial assets

Available for sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are classified as either current or non-current assets, depending on the period of time the entity expects to hold them, which is usually the maturity date. During this financial year, the entity did not hold any investments in this category.

Initial recognition and measurement

Purchases and sales of financial assets at fair value through surplus or deficit, held-to-maturity and available for sale are recognised on their trade date, i.e. the date on which the entity commits to purchase or sell the asset. Cash equivalents and loans are recognised when cash is deposited in a financial institution or advanced to borrowers. Financial instruments are initially recognised at fair value. For all financial assets not carried at fair value through surplus or deficit, transaction costs are added to the fair value at initial recognition.

Financial instruments are derecognised when the rights to receive cashflows from the investments have expired or the entity has transferred substantially all risks and rewards of ownership to another party.

Subsequent measurement

Financial assets at fair value through surplus or deficit are subsequently carried at fair value, with gains and losses arising from changes in the fair value being included in the statement of financial performance in the period in which they arise.

Loans and receivables and held-to maturity investments are carried at amortised cost using the effective interest method.

Available for sale financial assets are subsequently carried at fair value. Gains and losses arising from changes in the fair value are recognised in the fair value reserve. Interest on available for sale financial assets, calculated using the effective interest method, is recognised in the statement of financial performance.

The entity assesses at each balance sheet date whether there is objective evidence that a financial asset is impaired and whether an impairment loss should be recorded in the statement of financial performance.

7.Pre-financing amounts

Pre-financing is a payment intended to provide the beneficiary with a cash advance, i.e. a float. It may be split into a number of payments over a period defined in the particular contract, decision, agreement or basic legal act. The float or advance is either used for the purpose for which it was provided during the period defined in the agreement or it is repaid. If the beneficiary does not incur eligible expenditure, he has the obligation to return the pre-financing advance to the entity. Thus, as the entity retains control over the pre-financing and is entitled to a refund for the ineligible part, the amount is recognised as an asset.

Pre-financing is initially recognised on the balance sheet when cash is transferred to the recipient. It is measured at the amount of the consideration given. In subsequent periods pre-financing is measured at the amount initially recognised on the balance sheet less eligible expenses (including estimated amounts where necessary) incurred during the period.

8.Receivables and recoverables

The EU accounting rules require a separate presentation of exchange and non-exchange transactions. To distinguish between the two categories, the term ‘receivable’ is reserved for exchange transactions, whereas for non-exchange transactions, i.e. when the EU receives value from another entity without directly giving approximately equal value in exchange, the term ‘recoverables’ is used (e.g. recoverables from Member States related to own resources).

Receivables from exchange transactions meet the definition of financial instruments and are thus classified as loans and receivables and measured accordingly.

Recoverables from non-exchange transactions are carried at original amount (adjusted for interests and penalties) less write-down for impairment. A write-down for impairment is established when there is objective evidence that the entity will not be able to collect all amounts due according to the original terms of the recoverables. The amount of the write-down is the difference between the asset’s carrying amount and the recoverable amount. The amount of the write-down is recognised in the statement of financial performance.

9.Cash and cash equivalents

Cash and cash equivalents are financial instruments and include cash at hand, deposits held at call or at short notice with banks, and other short-term highly liquid investments with original maturities of three months or less.

10.Payables

Included under accounts payable are both amounts related to exchange transactions such as the purchase of goods and services, and to non-exchange transactions e.g. to cost claims from beneficiaries, grants or other EU funding, or pre-financing received (see note 1.4.1).

Where grants or other funding are provided to the beneficiaries, the cost claims are recorded as payables for the requested amount, at the moment when the cost claim is received. Upon verification and acceptance of the eligible costs, the payables are valued at the accepted and eligible amount.

Payables arising from the purchase of goods and services are recognised at invoice reception for the original amount. The corresponding expenses are entered in the accounts when the supplies or services are delivered and accepted by the entity.

11.Accrued and deferred revenue and charges

Transactions and events are recognised in the financial statements in the period to which they relate. At year-end, if an invoice is not yet issued but the service has been rendered, or the supplies have been delivered by the entity or a contractual agreement exists (e.g. by reference to a contract), an accrued revenue will be recognised in the financial statements. In addition, at year-end, if an invoice is issued but the services have not yet been rendered or the goods supplied have not yet been delivered, the revenue will be deferred and recognised in the subsequent accounting period.

Expenses are also accounted for in the period to which they relate. At the end of the accounting period, accrued expenses are recognised based on an estimated amount of the transfer obligation of the period. The calculation of accrued expenses is done in accordance with detailed operational and practical guidelines issued by the Accounting Officer. These aim at ensuring that the financial statements provide a faithful representation of the economic and other phenomena they purport to represent. By analogy, if a payment has been made in advance for services or goods that have not yet been received, the expense will be deferred and recognised in the subsequent accounting period.

11.1.STATEMENT OF FINANCIAL PERFORMANCE

12.Revenue

Revenue comprises gross inflows of economic benefits or service potential received and receivable by the entity, which represents an increase in net assets, other than increases relating to contributions from owners.

Depending on the nature of the underlying transactions in the statement of financial performance, revenue is distinguished between:

(I)Revenue from non-exchange transactions

Revenue from non-exchange transactions are taxes and transfers, because the transferor provides resources to the recipient entity, without the recipient entity providing approximately equal value directly in exchange. Transfers are inflows of future economic benefits or service potential from non-exchange transactions, other than taxes. For the EU entities, transfers mostly comprise funds received from the Commission (e.g. balancing subsidy to the traditional agencies, operating subsidy for the delegation agreements).

The entity shall recognise an asset in respect of transfers when the entity controls the resources as a result of a past event (the transfer) and expects to receive future economic benefits or service potential from those resources, and when the fair value can be reliably measured. An inflow of resources from a non-exchange transaction recognised as an asset (i.e. cash) is also recognised as revenue, except to the extent that the entity has a present obligation in respect of that transfer (condition), which needs to be satisfied before the revenue can be recognised. Until the condition is met the revenue is deferred and recognised as a liability.

(II)Revenue from exchange transactions

Revenue from the sale of goods and services is recognised when the significant risk and rewards of ownership of the goods are transferred to the purchaser. Revenue associated with a transaction involving the provision of services is recognised by reference to the stage of completion of the transaction at the reporting date.

13.Expenses

Expenses are decreases in economic benefits or service potential during the reporting period in the form of outflows or consumption of assets or the incurring of liabilities that result in decreases in net assets. They include both the expenses from exchange transactions and expenses from non‐exchange transactions.

Expenses from exchange transactions arising from the purchase of goods and services are recognised when the supplies are delivered and accepted by the entity. They are valued at the original invoice amount. Furthermore, at the balance sheet date expenses related to the service delivered during the period for which an invoice has not yet been received or accepted are recognised in the statement of financial performance.

Expenses from non‐exchange transactions relate to transfers to beneficiaries and can be of three types: entitlements, transfers under agreement and discretionary grants, contributions and donations. Transfers are recognised as expenses in the period during which the events giving rise to the transfer occurred, as long as the nature of the transfer is allowed by regulation or an agreement has been signed authorising the transfer; any eligibility criteria have been met by the beneficiary; and a reasonable estimate of the amount can be made.

When a request for payment or cost claim is received and meets the recognition criteria, it is recognised as an expense for the eligible amount. At year-end, incurred eligible expenses due to the beneficiaries but not yet reported are estimated and recorded as accrued expense.

13.1.CONTINGENT ASSETS AND LIABILITIES

14.Contingent assets

A contingent asset is a possible asset that arises from past events and of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. A contingent asset is disclosed when an inflow of economic benefits or service potential is probable.

15.Contingent liabilities

A contingent liability is either a possible obligation of which the existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or a present obligation where it is not probable that an outflow of resources embodying economic benefits or service potential will be required to settle the obligation.

A contingent liability also arises in the rare circumstances where a present obligation exists but cannot be measured with sufficient reliability.

Contingent liabilities are not recognised in the accounts. They are disclosed unless the possibility of an outflow of resources embodying economic benefits or service potential is remote.

15.1.FUND CAPITAL

The EDF member states provide contributions to the Fund for the implementation of EDF programmes as laid down in the Internal Agreement of each EDF. According to the applicable legal basis the capital calls, i.e. the requests for funding for a given year N, are decided by a Council Decision in year N-1, with the funds to be received clearly assigned to specified future periods.

The contributions meet the criteria of contribution from owners (EAR 1) and are thus treated as fund capital in the EDF financial statements. The fund capital represents the total amount of contributions to be received from the EDF members states. As the uncalled fund capital is openly deducted from the total fund capital (see Statement of Changes in Net Assets), only the called fund capital is recognised in the Balance Sheet.

As the agreed contributions are assigned to specified reporting periods, with the EDF’s legal claim against the EDF member states arising only in these periods, any amounts received in advance are recognised as deferred capital contributions under Payables rather than as called capital.

15.2.CO-FINANCING

Co-financing contributions received fulfil the criteria of revenues from non-exchange transactions under conditions and they are presented as payables to Member States, non-Member States and others. The EDF is required to use the contributions to deliver services to third parties or is otherwise required to return the assets (the contributions received). The outstanding payables relating to co-financing agreements represent the co-financing contributions received less the expenses incurred related to the project. The effect on net assets is nil.

Expenses relating to co-financing projects are recognised as they are incurred. The corresponding amount of contributions is recognised as operating revenue and the effect on the economic result of the year is nil.

16.NOTES TO THE BALANCE SHEET

ASSETS

16.1.FINANCIAL ASSETS

The financial assets of the EDF amounted to EUR 33 million at 31 December 2020 (2019: 36 million). They comprise available for sale financial assets that are almost entirely investments in equity instruments.

16.2.PRE-FINANCING

Many contracts provide for payments of advances before the commencement of works, delivery of supplies or the provision of services. Sometimes the payment schedules of contracts foresee payments based on progress reports. Pre-financing is normally paid in the currency of the country or territory where the project is executed.

The timing of use of pre-financing governs whether it is disclosed as a current or a non-current pre‐financing. The use is defined by the project's underlying agreement. Any use due within twelve months after the reporting date are disclosed as current pre‐financing. As many of the EDF projects are long-term in nature, it is necessary that the related advances are available for more than one year. Thus some pre-financing amounts are shown as non‐current assets.

| EUR million |
| --- |
| | Note | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2020 | 31.12.2019 |
| Non-current pre-financing | 2.2.1 | – | 3 | 292 | 578 | 873 | 910 |
| Current pre-financing | 2.2.2 | – | 9 | 341 | 1 005 | 1 355 | 1 288 |
| Total | | – | 12 | 633 | 1 583 | 2 228 | 2 199 |

EUR million

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2020

31.12.2019

Non-current pre-financing

2.2.1

–

3

292

578

873

910

Current pre-financing

2.2.2

–

9

341

1 005

1 355

1 288

Total

–

12

633

1 583

2 228

2 199

The increase in total pre-financing by EUR 29 million at 31 December 2020 is a combined effect of the increase of pre‐financing of the 11th EDF (2019: EUR 1 401 million) and decrease of pre-financing of the 10th EDF (2019: EUR766 million).

The increase of pre-financing in the 11th EDF can be largely explained by increase of advances paid out on new contracts signed during the year. The 11th EDF started in 2015 and in 2020 the contracting for the EDF activities reached a peak. As a result, the number of open contracts increased from around 3 400 in 2019 to 3 550 in 2020. This increase in pre-financing led to an increase in cash outflows and therefore to a decrease in cash and cash equivalents (see note 2.5).

The decrease of pre-financing in the 10th EDF is a consequence of the normal lifecycle of the EDF. As a result of phasing out of the 10th EDF many contracts were completed and closed. The number of open contracts under this EDF dropped from approximately 2 600 in 2019 to circa 2 500 in 2020. Consequently, the level of pre‐financing payments made to beneficiaries decreased while the clearing of pre-financing increased.

17.Non-current pre-financing by management mode

| EUR million |
| --- |
| | 31.12.2020 | 31.12.2019 |
| Direct Management | | |
| Implemented by: | | |
| Commission | 139 | 190 |
| EU executive agencies | 8 | 6 |
| EU delegations | 25 | 49 |
| | 171 | 244 |
| Indirect Management | | |
| Implemented by : | | |
| EIB and EIF | 266 | 313 |
| International organisations | 347 | 291 |
| Private law bodies with a public service mission | 28 | 22 |
| Public law bodies | 49 | 22 |
| Third countries | 11 | 17 |
| EU bodies and Public Private Partnership | 1 | 1 |
| | 702 | 666 |
| Total | 873 | 910 |

EUR million

31.12.2020

31.12.2019

Direct Management

Implemented by:

Commission

139

190

EU executive agencies

8

6

EU delegations

25

49

171

244

Indirect Management

Implemented by :

EIB and EIF

266

313

International organisations

347

291

Private law bodies with a public service mission

28

22

Public law bodies

49

22

Third countries

11

17

EU bodies and Public Private Partnership

1

1

702

666

Total

873

910

18.Current pre-financing

| EUR million |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2020 | 31.12.2019 |
| Pre-financing (gross) | – | 98 | 1 527 | 3 472 | 5 097 | 5 030 |
| Cleared via cut-off | – | (89) | (1 186) | (2 467) | (3 742) | (3 742) |
| Total | – | 9 | 341 | 1 005 | 1 355 | 1 288 |

EUR million

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2020

31.12.2019

Pre-financing (gross)

–

98

1 527

3 472

5 097

5 030

Cleared via cut-off

–

(89)

(1 186)

(2 467)

(3 742)

(3 742)

Total

–

9

341

1 005

1 355

1 288

19.Current pre-financing by management mode

| EUR million |
| --- |
| | 31.12.2020 | 31.12.2019 |
| Direct Management | | |
| Implemented by: | | |
| Commission | (40) | 80 |
| EU executive agencies | 14 | 15 |
| EU delegations | 206 | 188 |
| | 180 | 283 |
| Indirect Management | | |
| Implemented by : | | |
| EIB and EIF | 224 | 50 |
| International organisations | 572 | 569 |
| Private law bodies with a public service mission | 73 | 86 |
| Public law bodies | 146 | 119 |
| Third countries | 155 | 180 |
| EU bodies and Public Private Partnership | 4 | 1 |
| | 1 175 | 1 005 |
| Total | 1 355 | 1 288 |

EUR million

31.12.2020

31.12.2019

Direct Management

Implemented by:

Commission

(40)

80

EU executive agencies

14

15

EU delegations

206

188

180

283

Indirect Management

Implemented by :

EIB and EIF

224

50

International organisations

572

569

Private law bodies with a public service mission

73

86

Public law bodies

146

119

Third countries

155

180

EU bodies and Public Private Partnership

4

1

1 175

1 005

Total

1 355

1 288

20.Guarantees received in respect of pre-financing

Guarantees are held to secure pre-financing and are released when the final claim under a project is paid.

| EUR million |
| --- |
| | | 31.12.2020 | 31.12.2019 |
| Guarantees for Pre-financing | | 49 | 46 |

EUR million

31.12.2020

31.12.2019

Guarantees for Pre-financing

49

46

The increase of the pre-financing guarantees is a consequence of increase of pre-financing.

The majority of pre-financing is paid under the indirect management mode. In this case, the beneficiary of the guarantee is not the EDF but the contracting authority. Even though the EDF is not the beneficiary, those guarantees secure its assets.

20.1.TRUST FUND CONTRIBUTIONS

This heading represents the amount paid as contributions to the EU Trust Fund for Africa and the Bêkou EU Trust Fund. The contributions are net of the costs incurred by the trust funds and attributable to the EDF.

The trust fund contributions are implemented by the Commission under the direct management mode.

| EUR million |
| --- |
| | Net contribution at 31.12.2019 | Contributions paid in 2020 | Allocation of TF's net expenses 2020 | Net contribution at 31.12.2020 |
| Africa | 263 | 771 | (649) | 385 |
| Bêkou | 4 | 29 | (24) | 9 |
| Total | 266 | 800 | (673) | 394 |

EUR million

Net contribution at 31.12.2019

Contributions paid in 2020

Allocation of TF's net expenses 2020

Net contribution at 31.12.2020

Africa

263

771

(649)

385

Bêkou

4

29

(24)

9

Total

266

800

(673)

394

The contributions to the trust funds increased from EUR 600 million in 2019 to EUR 800 million in 2020. The increase of the funding was necessary to cover the increased activity of the trust funds resulting in higher expenses in this area.

20.2.NON-EXCHANGE RECOVERABLES AND EXCHANGE RECEIVABLES

Exchange transactions are transactions in which the entity receives assets or services, or has liabilities extinguished, and directly gives approximately equal value (primarily in the form of goods, services or use of assets) to the other party in exchange. Non-exchange transactions are transactions in which an entity either receives value from another entity without directly giving approximately equal value in exchange, or gives value to another entity without directly receiving approximately equal value in exchange.

| EUR million |
| --- |
| | Note | 31.12.2020 | 31.12.2019 |
| Recoverables from non-exchange transactions | 2.4.1 | 48 | 32 |
| Receivables from exchange transactions | 2.4.2 | 92 | 91 |
| Total | | 140 | 123 |

EUR million

Note

31.12.2020

31.12.2019

Recoverables from non-exchange transactions

2.4.1

48

32

Receivables from exchange transactions

2.4.2

92

91

Total

140

123

21.Recoverables from non-exchange transactions

| EUR million |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2020 | 31.12.2019 |
| Member States | – | – | – | – | – | 1 |
| Customers | – | 5 | 50 | 5 | 61 | 27 |
| Public bodies | – | 11 | 14 | 2 | 27 | 21 |
| Third states | – | 1 | 2 | 1 | 4 | 7 |
| Write down | – | (15) | (28) | (4) | (49) | (27) |
| Inter-company accounts with EU institutions | – | – | – | 4 | 4 | 5 |
| Total | – | 2 | 38 | 8 | 48 | 32 |

EUR million

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2020

31.12.2019

Member States

–

–

–

–

–

1

Customers

–

5

50

5

61

27

Public bodies

–

11

14

2

27

21

Third states

–

1

2

1

4

7

Write down

–

(15)

(28)

(4)

(49)

(27)

Inter-company accounts with EU institutions

–

–

–

4

4

5

Total

–

2

38

8

48

32

22.Receivables from exchange transactions

| | | | | | | EUR million |
| --- | --- | --- | --- | --- | --- | --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2020 | 31.12.2019 |
| Accrued income | – | 67 | 21 | – | 88 | 88 |
| Inter-EDF accounts | 181 | (246) | 1 663 | (1 598) | – | – |
| Other | – | – | – | 4 | 4 | 4 |
| Total | 181 | (179) | 1 684 | (1 594) | 92 | 91 |

EUR million

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2020

31.12.2019

Accrued income

–

67

21

–

88

88

Inter-EDF accounts

181

(246)

1 663

(1 598)

–

–

Other

–

–

–

4

4

4

Total

181

(179)

1 684

(1 594)

92

91

Included under accrued income are amounts of accrued interest on pre-financing, namely an amount of EUR 62.6 million relating to a debt relief project with the World Bank and EUR 18 million relating to the EU Africa Infrastructure Fund with the EIB.

The heading “other” entirely comprises a receivable to the Global Energy Efficiency and Renewable Energy Fund (GEEREF).

For efficiency reasons, the single treasury covering all the EDFs is allocated to the 11th EDF; this leads to operations between the various EDFs, which are balanced out in the inter-EDF accounts between the various EDF balance sheets.

Inter-EDF accounts are presented only in the individual EDFs. The total of inter-EDF accounts is zero.

22.1.CASH AND CASH EQUIVALENTS
  3

| EUR million |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2020 | 31.12.2019 |
| Special accounts | | | | | | |
| Central banks | – | – | – | 693 | 693 | 729 |
| | – | – | – | 693 | 693 | 729 |
| Current accounts | | | | | | |
| Commercial banks | – | – | – | 8 | 8 | 421 |
| Cash belonging to financial instruments | – | – | – | 27 | 27 | 30 |
| | – | – | – | 35 | 35 | 450 |
| Total | – | – | – | 728 | 728 | 1 179 |

EUR million

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2020

31.12.2019

Special accounts

Central banks

–

–

–

693

693

729

–

–

–

693

693

729

Current accounts

Commercial banks

–

–

–

8

8

421

Cash belonging to financial instruments

–

–

–

27

27

30

–

–

–

35

35

450

Total

–

–

–

728

728

1 179

The decrease of amounts under this heading of EUR 451 million can be explained mainly by the increase in payments made from the commercial bank accounts which is in line with the increase in expenses (see note 3.3) and the increase in pre-financing (see note 2.2). EDF net payments reached a record high of EUR 4 605 million in 2020 (2019: EUR 3 910 million), mostly due to the impact of the COVID-19 pandemic. As a response to the pandemic, the EU is adapting its priorities and programmes with partner countries, which led to the increased disbursements, in particular to projects aimed at fighting the COVID crisis.

As in previous years and in order to limit counterparty risk more cash is kept in accounts with central banks than in the commercial banks (see note 5.1).

LIABILITIES

22.2.FINANCIAL LIABILITIES

23.Co-financing payables

Co-financing payables represent funds received by the EDF in relation to the co-financing agreements. The EDF is required to use these contributions to deliver agreed services to third parties and return the unused funds to the contributors. Timing of the use of the co-financing amounts determines whether they are disclosed as current or non-current.

At the year end a case-by-case assessment of all co-financing payables is performed and all amounts that are unlikely to be used in the following 12 months are considered non-current. Current amounts are shown under note 2.7.2.

| EUR million |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2020 | 31.12.2019 |
| Non-current co-financing payables | – | – | – | 2 | 2 | 19 |
| Current co-financing payables | – | – | 10 | 32 | 42 | 69 |
| Total | – | – | 10 | 34 | 44 | 88 |

EUR million

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2020

31.12.2019

Non-current co-financing payables

–

–

–

2

2

19

Current co-financing payables

–

–

10

32

42

69

Total

–

–

10

34

44

88

The decrease in total co-financing payables of EUR 44 million is mainly due to the increase in expenses incurred in respect of co-financed projects (EUR 53.2 million), namely related to 11th EDF (see note 3.4) which was partially offset by new co-financing projects of EUR 9 million. The substantial decrease of the non-current co-financing is in line with the life cycle of the co-financing projects: at the year-end a case by case analysis of the open co-financing is performed and only the amounts that will not be expensed next year are classified under non-current co-financing.

23.1.PAYABLES

| EUR million |
| --- |
| | Note | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2020 | 31.12.2019 |
| Current payables | 2.7.1 | – | 1 | 53 | 291 | 345 | 182 |
| Sundry payables | 2.7.2 | – | – | 8 | 262 | 270 | 334 |
| Total | | – | 1 | 62 | 553 | 615 | 516 |

EUR million

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2020

31.12.2019

Current payables

2.7.1

–

1

53

291

345

182

Sundry payables

2.7.2

–

–

8

262

270

334

Total

–

1

62

553

615

516

24. Current payables

| EUR million |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2020 | 31.12.2019 |
| Suppliers | – | 4 | 44 | 93 | 141 | 97 |
| Member States | – | – | – | – | – | 2 |
| Third states | – | – | 2 | 187 | 189 | 78 |
| Public bodies | – | – | 21 | 79 | 100 | 92 |
| Other current payables | – | (4) | (13) | (68) | (85) | (88) |
| Total | – | – | 53 | 291 | 345 | 182 |

EUR million

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2020

31.12.2019

Suppliers

–

4

44

93

141

97

Member States

–

–

–

–

–

2

Third states

–

–

2

187

189

78

Public bodies

–

–

21

79

100

92

Other current payables

–

(4)

(13)

(68)

(85)

(88)

Total

–

–

53

291

345

182

Payables largely comprise cost statements received by the EDF in relation to grants provided to the beneficiaries. They are recorded at the moment when the cost statement is received and for the full amount of the cost statement. Following an eligibility check only the eligible amounts are paid to the beneficiaries. At the year-end the outstanding cost claims are analysed and the estimated eligible amounts related to those cost claims are recognised in the statement of financial performance. The estimated non-eligible amounts are shown under other current payables.

The increase in payables in particular for suppliers and third states is due to several invoices that have not been validated and paid before year-end.

25.Sundry payables

| EUR million |
| --- |
| | Note | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2020 | 31.12.2019 |
| Co-financing payables | 2.6.1 | – | – | 10 | 32 | 42 | 69 |
| Deferred capital contributions | 2.7.2.1 | – | – | – | 223 | 223 | 264 |
| Other sundry payables | | – | – | (2) | 7 | 5 | 1 |
| Total | | – | – | 8 | 262 | 270 | 334 |

EUR million

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2020

31.12.2019

Co-financing payables

2.6.1

–

–

10

32

42

69

Deferred capital contributions

2.7.2.1

–

–

–

223

223

264

Other sundry payables

–

–

(2)

7

5

1

Total

–

–

8

262

270

334

26.Deferred capital contributions

At 31 December 2020, the entire amount of EUR 223 million relates to a refund to Member States from decommitted or unused funds from projects under the Eight and Ninth EDF (see note 2.10.1). The Member states agreed for the refund to be offset with the contributions from the 11th EDF during the first call for contributions in 2021.

At 31 December 2020 apart from the refund, there were no capital contributions paid in advance.

26.1.ACCRUED CHARGES AND DEFERRED INCOME

| EUR million |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2020 | 31.12.2019 |
| Accrued charges | – | 67 | 217 | 1 243 | 1 526 | 1 318 |
| Other accruals and deferrals | – | – | – | 1 | 1 | 1 |
| Total | – | 67 | 217 | 1 244 | 1 527 | 1 319 |

EUR million

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2020

31.12.2019

Accrued charges

–

67

217

1 243

1 526

1 318

Other accruals and deferrals

–

–

–

1

1

1

Total

–

67

217

1 244

1 527

1 319

Accrued charges comprise estimated operating expenses for on-going or completed contracts without validated cost claims where the eligible expenses incurred by beneficiaries were estimated using the best available information. The portion of the estimated accrued charges, which relates to pre‐financing paid, has been recorded as a reduction of the pre-financing amounts (see note 2.2 above).

The increase under this heading is a combined effect of an increase of accrued charges under the 11th EDF (2019: EUR 983 million) and a decrease of accrued charges under the 10th EDF (2019: EUR 240 million). This is in line with the lifecycle of the EDF and also related to the evolution of the number of open contracts under these EDFs: the 11th EDF was at full cruising speed in 2020 and there were thus significantly more open contracts at 31 December 2020, for which charges had to be estimated and accrued (see note 2.2).

NET ASSETS

26.2.FAIR VALUE RESERVE

In accordance with the accounting rules, the adjustment to fair value of available for sale financial assets is accounted for through the fair value reserve.

| | | EUR million |
| --- | --- | --- |
| | 31.12.2020 | 31.12.2019 |
| Fair value reserve | 5 | 2 |

EUR million

31.12.2020

31.12.2019

Fair value reserve

5

2

26.3.FUND CAPITAL

27.Called fund capital – active EDFs

| EUR million |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | Total |
| Fund capital | 12 164 | 10 773 | 20 960 | 29 367 | 73 264 |
| Uncalled fund capital | – | (15) | - | (18 440) | (18 455) |
| Called fund capital 31.12.2019 | 12 164 | 10 758 | 20 960 | 10 927 | 54 809 |
| Fund capital | 12 164 | 10 550 | 20 960 | 29 367 | 73 041 |
| Uncalled fund capital | – | (15) | - | (14 040) | (14 055) |
| Called fund capital 31.12.2020 | 12 164 | 10 535 | 20 960 | 15 327 | 58 986 |

EUR million

Eighth EDF

Ninth EDF

10th EDF

11th EDF

Total

Fund capital

12 164

10 773

20 960

29 367

73 264

Uncalled fund capital

–

(15)

-

(18 440)

(18 455)

Called fund capital 31.12.2019

12 164

10 758

20 960

10 927

54 809

Fund capital

12 164

10 550

20 960

29 367

73 041

Uncalled fund capital

–

(15)

-

(14 040)

(14 055)

Called fund capital 31.12.2020

12 164

10 535

20 960

15 327

58 986

The fund capital represents the total amount of contributions from Member States for the relevant EDF fund as laid down in each of the Internal Agreements. The uncalled funds represent amounts not yet called from Member States. The called fund capital represents the contributions, which have been called by the EDF and transferred to the treasury accounts by the Member States (see below).

By means of Council Decision (EU) 2020/1708 the Member States' contributions set out in the Internal Agreements of the Eighth and Ninth EDF were reduced accordingly for an amount of EUR 223 million from funds decommitted under the Eighth and the Ninth EDF. As the funds decommitted under the Eighth EDF have been already transferred to the other EDFs, EUR 223 million was deducted from the capital of the Ninth EDF. Refunds arising from this reduction have been compensated against additional call for funds under the 11th EDF. In fact, the refund will be used against the first instalment of 2021 which explains the EUR 223 million of deferred capital (see note 2.7.2).

On 1 February 2020, the United Kingdom ceased to be a Member State of the European Union. While the United Kingdom remains party to the EDF until the closure of all programs, and assumes the same obligations as the Member States, in accordance with Article 153 of the Withdrawal Agreement, its share of uncommitted and decommitted funds from the Eight, Ninth and 10th EDF cannot be reused.

28.Called and uncalled fund capital by Member States and the UK

| EUR million |
| --- |
| Contributions 11th EDF | % | Uncalled capital 31.12.2019 | Capital called in 2020 | Uncalled capital 31.12.2020 |
| Austria | 2.40 | 442 | (105) | 337 |
| Belgium | 3.25 | 599 | (143) | 456 |
| Bulgaria | 0.22 | 40 | (10) | 31 |
| Croatia | 0.23 | 42 | (10) | 32 |
| Cyprus | 0.11 | 21 | (5) | 16 |
| Czech Republic | 0.80 | 147 | (35) | 112 |
| Denmark | 1.98 | 365 | (87) | 278 |
| Estonia | 0.09 | 16 | (4) | 12 |
| Finland | 1.51 | 278 | (66) | 212 |
| France | 17.81 | 3 285 | (784) | 2 501 |
| Germany | 20.58 | 3 795 | (906) | 2 889 |
| Greece | 1.51 | 278 | (66) | 212 |
| Hungary | 0.61 | 113 | (27) | 86 |
| Ireland | 0.94 | 173 | (41) | 132 |
| Italy | 12.53 | 2 311 | (551) | 1 759 |
| Latvia | 0.12 | 21 | (5) | 16 |
| Lithuania | 0.18 | 33 | (8) | 25 |
| Luxemburg | 0.26 | 47 | (11) | 36 |
| Malta | 0.04 | 7 | (2) | 5 |
| Netherlands | 4.78 | 881 | (210) | 671 |
| Poland | 2.01 | 370 | (88) | 282 |
| Portugal | 1.20 | 221 | (53) | 168 |
| Romania | 0.72 | 132 | (32) | 101 |
| Slovakia | 0.38 | 69 | (17) | 53 |
| Slovenia | 0.22 | 41 | (10) | 32 |
| Spain | 7.93 | 1 463 | (349) | 1 114 |
| Sweden | 2.94 | 542 | (129) | 413 |
| United Kingdom | 14.68 | 2 707 | (646) | 2 061 |
| Total | 100.00 | 18 440 | (4 400) | 14 040 |

EUR million

Contributions 11th EDF

%

Uncalled capital 31.12.2019

Capital called in 2020

Uncalled capital 31.12.2020

Austria

2.40

442

(105)

337

Belgium

3.25

599

(143)

456

Bulgaria

0.22

40

(10)

31

Croatia

0.23

42

(10)

32

Cyprus

0.11

21

(5)

16

Czech Republic

0.80

147

(35)

112

Denmark

1.98

365

(87)

278

Estonia

0.09

16

(4)

12

Finland

1.51

278

(66)

212

France

17.81

3 285

(784)

2 501

Germany

20.58

3 795

(906)

2 889

Greece

1.51

278

(66)

212

Hungary

0.61

113

(27)

86

Ireland

0.94

173

(41)

132

Italy

12.53

2 311

(551)

1 759

Latvia

0.12

21

(5)

16

Lithuania

0.18

33

(8)

25

Luxemburg

0.26

47

(11)

36

Malta

0.04

7

(2)

5

Netherlands

4.78

881

(210)

671

Poland

2.01

370

(88)

282

Portugal

1.20

221

(53)

168

Romania

0.72

132

(32)

101

Slovakia

0.38

69

(17)

53

Slovenia

0.22

41

(10)

32

Spain

7.93

1 463

(349)

1 114

Sweden

2.94

542

(129)

413

United Kingdom

14.68

2 707

(646)

2 061

Total

100.00

18 440

(4 400)

14 040

Since the capital of the Eighth, Ninth and 10th EDF has been called up and received in its entirety in previous years, in 2020, an amount of EUR 4 400 million has been called which relates entirely to the 11th EDF.

29.Called fund capital from closed EDFs carried forward

| EUR million |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2020 | 31.12.2019 |
| Funds transferred from closed EDFs | 627 | 1 625 | – | – | 2 252 | 2 252 |

EUR million

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2020

31.12.2019

Funds transferred from closed EDFs

627

1 625

–

–

2 252

2 252

This heading includes the resources transferred from closed EDFs to the Eighth and Ninth EDFs.

30.Called fund capital transfers between active EDFs

| EUR million |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | Total |
| Balance at 31.12.2018 | (2 509) | 2 137 | 55 | 317 | – |
| Transfer of decommitted amounts to the 10th EDF performance reserve from previous EDFs | (1) | (27) | 28 | – | – |
| Transfer of decommitted amounts to the 11th EDF performance reserve from previous EDFs | – | – | 181 | (181) | – |
| Balance at 31.12.2019 | (2 510) | 2 109 | 265 | 136 | – |
| Transfer of decommitted amounts to the 10th EDF performance reserve from previous EDFs | (2) | (69) | 71 | – | – |
| Transfer of decommitted amounts to the 11th EDF performance reserve from previous EDFs | – | – | (147) | 147 | – |
| Balance at 31.12.2020 | (2 512) | 2 041 | 188 | 283 | – |

EUR million

Eighth EDF

Ninth EDF

10th EDF

11th EDF

Total

Balance at 31.12.2018

(2 509)

2 137

55

317

–

Transfer of decommitted amounts to the 10th EDF performance reserve from previous EDFs

(1)

(27)

28

–

–

Transfer of decommitted amounts to the 11th EDF performance reserve from previous EDFs

–

–

181

(181)

–

Balance at 31.12.2019

(2 510)

2 109

265

136

–

Transfer of decommitted amounts to the 10th EDF performance reserve from previous EDFs

(2)

(69)

71

–

–

Transfer of decommitted amounts to the 11th EDF performance reserve from previous EDFs

–

–

(147)

147

–

Balance at 31.12.2020

(2 512)

2 041

188

283

–

This heading includes the resources transferred between the active EDFs.

Since the entry into force of the Cotonou Agreement, all the unspent funds in previous active EDFs are transferred to the most recently opened EDF after decommitment. The resources transferred from other EDFs increase the appropriations of the receiving fund and reduce the appropriations of the fund of origin. Funds transferred to the performance reserve of the 10th and 11th EDFs can be committed only under specific conditions, as set out in the Internal Agreements.

31.NOTES TO THE STATEMENT OF FINANCIAL PERFORMANCE

REVENUE

| EUR million |
| --- |
| | Note | 2020 | 2019 |
| Revenue from non-exchange transactions | 3.1 | 92 | 28 |
| Revenue from exchange transactions | 3.2 | 43 | 46 |
| Total | | 135 | 74 |

EUR million

Note

2020

2019

Revenue from non-exchange transactions

3.1

92

28

Revenue from exchange transactions

3.2

43

46

Total

135

74

31.1.REVENUE FROM NON-EXCHANGE TRANSACTIONS

| EUR million |
| --- |
| | Note | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 2020 | 2019 |
| Recovery of expenses | | (1) | 5 | 28 | 7 | 39 | 13 |
| Co-financing revenue | 3.1.1 | – | – | 41 | 12 | 53 | 14 |
| Total | | (1) | 5 | 69 | 19 | 92 | 28 |

EUR million

Note

Eighth EDF

Ninth EDF

10th EDF

11th EDF

2020

2019

Recovery of expenses

(1)

5

28

7

39

13

Co-financing revenue

3.1.1

–

–

41

12

53

14

Total

(1)

5

69

19

92

28

Non-exchange revenue can be broken down by management mode as follows:

EUR million

| | | EUR million |
| --- | --- | --- |
| | 2020 | 2019 |
| Direct Management | | |
| Implemented by: | | |
| Commission | 2 | 1 |
| EU delegations | 11 | 6 |
| | 13 | 6 |
| Indirect Management | | |
| Implemented by : | | |
| Third countries | 42 | 15 |
| Public law bodies | 13 | |
| International organisations | 17 | 5 |
| Private law bodies with a public service mission | 7 | 2 |
| | 79 | 22 |
| Total | 92 | 28 |

2020

2019

Direct Management

Implemented by:

Commission

2

1

EU delegations

11

6

13

6

Indirect Management

Implemented by :

Third countries

42

15

Public law bodies

13

International organisations

17

5

Private law bodies with a public service mission

7

2

79

22

Total

92

28

32.Co-financing revenue

The co‐financing contributions received fulfil the criteria of revenues from non-exchange transactions under conditions and as such should not affect the statement of financial performance. The contributions remain under liabilities (see note 2.6.1 & 2.7.2) until the conditions attached to the donated funds are met, i.e. eligible expenses are incurred (see note 3.4). The corresponding amount is then recognised in the statement of financial performance as non-exchange revenue from co‐financing. Consequently, the effect on the economic result of the year is zero.

32.1.REVENUE FROM EXCHANGE TRANSACTIONS

| EUR million |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 2020 | 2019 |
| Financial revenue | – | 5 | 1 | 1 | 6 | 7 |
| Other revenue | – | 5 | 18 | 13 | 37 | 39 |
| Total | – | 10 | 19 | 14 | 43 | 46 |

EUR million

Eighth EDF

Ninth EDF

10th EDF

11th EDF

2020

2019

Financial revenue

–

5

1

1

6

7

Other revenue

–

5

18

13

37

39

Total

–

10

19

14

43

46

Financial revenue comprises essentially accrued interest on overdue recovery orders (EUR 1.5 million) and interest on pre-financing (EUR 4.7 million). Other revenue relates mainly to foreign exchange gains. The corresponding foreign exchange losses are recorded under other expenses (see note 3.6).

EXPENSES

Included under this heading are expenses incurred in relation to operational activities.

32.2.AID INSTRUMENTS

| EUR million |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 2020 | 2019 |
| Programmable aid | – | – | 244 | 2 646 | 2 889 | 2 120 |
| Macro-economic support | – | (8) | – | – | (8) | 29 |
| Sectoral policy | – | 3 | – | – | 3 | (0) |
| Intra ACP projects | – | (22) | 212 | 829 | 1 019 | 951 |
| Emergency aid | – | (7) | 5 | 21 | 19 | 112 |
| Institutional support | – | – | 2 | 10 | 13 | 7 |
| Contributions to Trust Funds | – | – | – | 673 | 673 | 535 |
| Total | – | (33) | 462 | 4 179 | 4 607 | 3 755 |

EUR million

Eighth EDF

Ninth EDF

10th EDF

11th EDF

2020

2019

Programmable aid

–

–

244

2 646

2 889

2 120

Macro-economic support

–

(8)

–

–

(8)

29

Sectoral policy

–

3

–

–

3

(0)

Intra ACP projects

–

(22)

212

829

1 019

951

Emergency aid

–

(7)

5

21

19

112

Institutional support

–

–

2

10

13

7

Contributions to Trust Funds

–

–

–

673

673

535

Total

–

(33)

462

4 179

4 607

3 755

The EDF operational expenditure covers various aid instruments and takes different forms, depending on how the money is paid out and managed.

In 2020, operational expenditure increased significantly by EUR 852 million mainly as a result of the increase in expenses under the 11th EDF (kEUR 3 141 in 2019 to kEUR 4 179 in 2020). The COVID-19 crisis led to an increase in expenses under the 11th EDF in particular as projects were reoriented to deal with the crisis. In addition, the changes in expenses under the 10th and 11th EDF are also in line with the lifecycle of the EDF and related to the evolution of the number of open contracts under these EDFs. The 11th EDF has reached maturity in 2020, which means that at year-end there were significantly more contracts under which expenses were incurred (see note 2.2). Conversely, many contracts were completed and closed under the 10th and previous EDF’s in 2020, which resulted in less expenses incurred under those EDF’s.

Under the 11th EDF, the increase in expenses comes mainly from the increase in the programmable aid (increase from kEUR 2 120 in 2019 to kEUR 2 889 in 2020) and the Contributions to the Trust funds (increase from EUR 535 million in 2019 to EUR 673 million in 2020). On the other hand expenses relating to emergency aid decreased by EUR 92 million. As noted above, primarily under the 11th EDF the structure of the aid instruments expenses changed compared to 2019 so as to address the needs triggered by the COVID 19 pandemic.

The negative amount under the Ninth EDF is mainly due to the reversal of 2019 closure bookings.

32.3.CO-FINANCING EXPENSES

| EUR million |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 2020 | 2019 |
| Co-financing | – | – | 41 | 12 | 53 | 14 |

EUR million

Eighth EDF

Ninth EDF

10th EDF

11th EDF

2020

2019

Co-financing

–

–

41

12

53

14

Included under this heading are the expenses incurred on co-financing projects in 2020. It should be noted that the expenses incurred include estimated amounts related to the cut-off exercise (and consequently reversals of the estimated amounts related to last year).

In 2020, many co-financed projects under the 11th EDF have been finalised or reached maturity, which led to an increase in expenses and a decrease in co-financing liabilities (see note 2.6.1 & 2.7.2).

In line with the accounting rules on co-financing, the incurred amounts did not have any impact on the result of the year because they were recognised both in the co‐financing expenses and in the co-financing revenue (note 3.1.1).

AID INSTRUMENTS AND CO-FINANCING EXPENSES BY MANAGEMENT TYPE

| | EUR million |
| --- | --- |
| | 2020 | 2019 |
| Direct Management | | |
| Implemented by: | | |
| Commission | 168 | 86 |
| EU executive agencies | 14 | (13) |
| Trust Funds | 19 | 483 |
| EU delegations | 1 969 | 1 141 |
| | 2 170 | 1 697 |
| Indirect Management | | |
| Implemented by: | | |
| EIB and EIF | (67) | 145 |
| International organisations | 1 268 | 1 003 |
| Private law bodies with a public service mission | 243 | 126 |
| Public law bodies | 248 | 184 |
| Third countries | 795 | 613 |
| EU bodies with Public Private Partnership | 2 | 1 |
| | 2 490 | 2 073 |
| Total | 4 660 | 3 770 |

EUR million

2020

2019

Direct Management

Implemented by:

Commission

168

86

EU executive agencies

14

(13)

Trust Funds

19

483

EU delegations

1 969

1 141

2 170

1 697

Indirect Management

Implemented by:

EIB and EIF

(67)

145

International organisations

1 268

1 003

Private law bodies with a public service mission

243

126

Public law bodies

248

184

Third countries

795

613

EU bodies with Public Private Partnership

2

1

2 490

2 073

Total

4 660

3 770

32.4.FINANCE COSTS

| | EUR million |
| --- | --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 2020 | 2019 |
| Write-down of receivables | (1) | 3 | 16 | 4 | 21 | 1 |

EUR million

Eighth EDF

Ninth EDF

10th EDF

11th EDF

2020

2019

Write-down of receivables

(1)

3

16

4

21

1

The increase under this heading is due to the increase in the estimated expenses on irrecoverable amounts arising from ageing recovery orders (over 2 years), bankruptcies and waivers.

32.5.OTHER EXPENSES

The heading Administrative and IT expenses includes amounts that are based on the EDF internal agreement allocated to the Commission to cover the administrative costs incurred by both the Headquarters and the Delegations in respect to managing the EDF programmes. The so called “support expenditure” relate mainly to expenses for preparation, follow-up, monitoring, and evaluation of projects as well as expenses for computer networks, technical assistance, financial management and forecasting etc.

| EUR million |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 2020 | 2019 |
| Administrative and IT expenses | – | – | – | 120 | 120 | 220 |
| Provision for risks and charges | – | – | – | – | – | – |
| Realised losses on trade debtors | – | 4 | 1 | – | 4 | 3 |
| Exchange losses | – | 6 | 24 | 42 | 72 | 37 |
| Total | (0) | 9 | 25 | 162 | 196 | 260 |

EUR million

Eighth EDF

Ninth EDF

10th EDF

11th EDF

2020

2019

Administrative and IT expenses

–

–

–

120

120

220

Provision for risks and charges

–

–

–

–

–

–

Realised losses on trade debtors

–

4

1

–

4

3

Exchange losses

–

6

24

42

72

37

Total

(0)

9

25

162

196

260

The decrease under this heading is a combined effect of the significant decrease in the year-end estimation of administrative and IT expenses (2019: EUR 220 million) and the increase of expenses relating to exchange losses (2019: EUR 37 million).

33.CONTINGENT ASSETS & LIABILITIES AND OTHER SIGNIFICANT DISCLOSURES

33.1.CONTINGENT ASSETS

| | | | | | | EUR million |
| --- | --- | --- | --- | --- | --- | --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2020 | 31.12.2019 |
| Performance guarantees | – | 7 | 4 | – | 12 | 15 |
| Retention guarantees | – | 5 | 3 | – | 9 | 9 |
| Total | – | 13 | 7 | – | 21 | 24 |

EUR million

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2020

31.12.2019

Performance guarantees

–

7

4

–

12

15

Retention guarantees

–

5

3

–

9

9

Total

–

13

7

–

21

24

Performance guarantees are requested to ensure that beneficiaries of EDF funding meet the obligations of their contracts with the EDF.

Retention guarantees concern only works contracts. Typically, 10% of the interim payments to beneficiaries are withheld to ensure that the contractors fulfil their obligations. These withheld amounts are reflected as amounts payable. Subject to the approval of the contracting authority, the contractor may instead submit a retention guarantee which replaces the amounts withheld on interim payments. These retention guarantees are disclosed as contingent assets.

For contracts managed under indirect management, the guarantees belong to a contracting authority other than the EDF and they are therefore not disclosed by the EDF.

33.2.OTHER SIGNIFICANT DISCLOSURES

34.Outstanding commitments not yet expensed

The amount disclosed below is the budgetary RAL ('Reste à Liquider') less related amounts that have been included as expenses in the statement of financial performance. The budgetary RAL is an amount representing the commitments for which payments and/or de-commitments have not yet been made. This is the normal consequence of the existence of multiannual programmes.

| EUR million |
| --- |
| | Eighth EDF | Ninth EDF | 10th EDF | 11th EDF | 31.12.2020 | 31.12.2019 |
| Outstanding commitments not yet expensed | – | 42 | 580 | 6 602 | 7 224 | 8 564 |

EUR million

Eighth EDF

Ninth EDF

10th EDF

11th EDF

31.12.2020

31.12.2019

Outstanding commitments not yet expensed

–

42

580

6 602

7 224

8 564

At 31 December 2020 the budgetary RAL totalled EUR 9 286 million (2019: EUR 10 270 million).

35.FINANCIAL RISK MANAGEMENT

The following disclosures with regard to the financial risk management of the EDF relate to the treasury operations carried out by the Commission on behalf of the EDF in order to implement its resources.

35.1.RISK MANAGEMENT POLICIES AND HEDGING ACTIVITIES

The rules and principles for the management of the treasury operations are laid down in the 11th EDF Financial Regulation and in the Internal Agreement.

As a result of the above regulation, the following main principles apply:

(a)The EDF contributions are paid by Member States in special accounts opened with the bank of issue of each Member State or the financial institution designated by it. The amounts of the contributions shall remain in those special accounts until the payments of EDF need to be made.

(b)EDF contributions are paid by Member States in EUR, while the EDF's payments are denominated in EUR and in other currencies.

(c)Bank accounts opened by the Commission on behalf of the EDF may not be overdrawn.

In addition to the special accounts, other bank accounts are opened by the Commission in the name of the EDF, with financial institutions (central banks and commercial banks), for the purpose of executing payments and receiving receipts other than the Member State contributions to the budget.

Treasury and payment operations are highly automated and rely on modern information systems. Specific procedures are applied to guarantee system security and to ensure segregation of duties in line with the Financial Regulation, the Commission’s internal control standards, and audit principles.

A written set of guidelines and procedures regulate the management of the treasury and payment operations with the objective of limiting operational and financial risk and ensuring an adequate level of control. They cover the different areas of operation, and compliance with the guidelines and procedures is checked regularly.

35.2.CURRENCY RISK

Exposure of the EDF to currency risk at year end – net position

EUR million

| EUR million |
| --- |
| | 31.12.2020 | 31.12.2019 |
| | USD | GBP | DKK | SEK | EUR | Other | Total | USD | GBP | DKK | SEK | EUR | Other | Total |
| Financial assets | | | | | | | | | | | | | | |
| Receivables and recoverables | 65 | – | – | – | 69 | 6 | 140 | – | – | – | – | 115 | 8 | 123 |
| Cash and cash equivalents | 2 | – | – | – | 726 | – | 728 | 1 | – | – | – | 1 178 | – | 1 179 |
| | 67 | – | – | – | 795 | 6 | 868 | 1 | – | – | – | 1 293 | 8 | 1 302 |
| Financial liabilities | | | | | | | | | | | | | | |
| Non-current financial liabilities | – | – | – | – | (2) | – | (2) | – | – | – | – | (19) | – | (19) |
| Payables | (16) | – | (6) | – | (603) | 10 | (615) | (7) | – | – | – | (509) | – | (516) |
| | (16) | – | (6) | – | (605) | 10 | (617) | (7) | – | – | – | (528) | – | (535) |
| Total | 51 | – | (6) | – | 190 | 16 | 251 | (6) | – | – | – | 765 | 8 | 767 |

31.12.2020

31.12.2019

USD

GBP

DKK

SEK

EUR

Other

Total

USD

GBP

DKK

SEK

EUR

Other

Total

Financial assets

Receivables and recoverables

65

–

–

–

69

6

140

–

–

–

–

115

8

123

Cash and cash equivalents

2

–

–

–

726

–

728

1

–

–

–

1 178

–

1 179

67

–

–

–

795

6

868

1

–

–

–

1 293

8

1 302

Financial liabilities

Non-current financial liabilities

–

–

–

–

(2)

–

(2)

–

–

–

–

(19)

–

(19)

Payables

(16)

–

(6)

–

(603)

10

(615)

(7)

–

–

–

(509)

–

(516)

(16)

–

(6)

–

(605)

10

(617)

(7)

–

–

–

(528)

–

(535)

Total

51

–

(6)

–

190

16

251

(6)

–

–

–

765

8

767

All contributions are held in EUR, and other currencies are purchased only when they are needed for the execution of payments. As a result the EDF's treasury operations are not exposed to currency risk.

35.3.INTEREST RATE RISK

The EDF does not borrow money and consequently it is not exposed to credit interest rate risk. However, since the ECB deposit facility rate is negative (-0.5% since September 2019), deposits in EUR generate negative interests.

Contributions to the EDF budget are credited by each Member State to a special account opened with the financial institution designated by it. In accordance with Council Regulation (EU) 2016/888, any negative remuneration on these accounts is borne by the relevant Member State.

Overnight balances held in commercial bank accounts are however subject to negative interest charges. The Commission, on behalf of the EDF, has therefore put in place cash management procedures to minimise balances kept on these accounts and limit as much as possible the negative interest costs. Interest charges are calculated based on variable market rates to which a contractual margin (positive or negative) is applied. Controls are in place to ensure that these interest charges are in line with contractual agreements.

35.4.CREDIT RISK (COUNTERPARTY RISK)

Financial assets that are neither past due nor impaired:

| EUR million |
| --- |
| | Total | Neither past due nor impaired | Past due but not impaired |
| | | | < 1 year | 1-5 years | > 5 years |
| Exchange receivables and non-exchange recoverables | 140 | 124 | 7 | 9 | – |
| Total at 31.12.2020 | 140 | 124 | 7 | 9 | – |
| Exchange receivables and non-exchange recoverables | 123 | 100 | 16 | 7 | – |
| Total at 31.12.2019 | 123 | 100 | 16 | 7 | – |

EUR million

Total

Neither past due nor impaired

Past due but not impaired

< 1 year

1-5 years

> 5 years

Exchange receivables and non-exchange recoverables

140

124

7

9

–

Total at 31.12.2020

140

124

7

9

–

Exchange receivables and non-exchange recoverables

123

100

16

7

–

Total at 31.12.2019

123

100

16

7

–

Financial assets by risk category:

| EUR million |
| --- |
| | 31.12.2020 | 31.12.2019 |
| | Receivables | Cash | Total | Receivables | Cash | Total |
| Counterparties with external credit rating | | | | | | |
| Prime and high grade | 9 | 372 | 381 | 7 | 958 | 965 |
| Upper medium grade | – | 211 | 211 | – | 220 | 220 |
| Lower medium grade | – | 145 | 145 | – | 1 | 1 |
| Non- investment grade | – | – | – | – | – | – |
| | 9 | 728 | 737 | 7 | 1 179 | 1 186 |
| Counterparties without external credit rating | | | | | | |
| Group 1 (debtors without defaults in the past) | 131 | – | 131 | 116 | – | 116 |
| Group 2 (debtors with defaults in the past) | – | – | – | – | – | – |
| Total | 131 | – | 131 | 116 | – | 116 |
| Total | 140 | 728 | 868 | 123 | 1 179 | 1 302 |

EUR million

31.12.2020

31.12.2019

Receivables

Cash

Total

Receivables

Cash

Total

Counterparties with external credit rating

Prime and high grade

9

372

381

7

958

965

Upper medium grade

–

211

211

–

220

220

Lower medium grade

–

145

145

–

1

1

Non- investment grade

–

–

–

–

–

–

9

728

737

7

1 179

1 186

Counterparties without external credit rating

Group 1 (debtors without defaults in the past)

131

–

131

116

–

116

Group 2 (debtors with defaults in the past)

–

–

–

–

–

–

Total

131

–

131

116

–

116

Total

140

728

868

123

1 179

1 302

Funds in the categories non-investment grade and lower medium grade relate mainly to Member State contributions to the EDF paid to the special accounts opened by Member States in accordance with Article 20(3) of the EDF FR. According to this regulation, the amount of such contributions must remain in those special accounts until the payments need to be made.

Most of the EDF's treasury resources are kept, in accordance with the EDF FR, in the special accounts opened by Member States for the payment of their contributions. The majority of such accounts are held with Member States' treasuries or national central banks. These institutions carry the lowest counterparty risk for the EDF (exposure is with its Member States).

For the part of the EDF's treasury resources kept with commercial banks in order to cover the execution of payments, replenishment of these accounts is executed on a just-in-time basis and is automatically managed by the Commission treasury's cash management system. Minimum cash levels, proportional to the average amount of daily payments made from it, are kept on each account. Therefore the amounts kept overnight on these accounts remain constantly at low levels which ensure the EDF's risk exposure is limited.

In addition, specific guidelines are applied for the selection of commercial banks in order to minimise counterparty risk to which the EDF is exposed.

All commercial banks are selected by calls for tender. The minimum short-term credit rating required for admission to the tendering procedures is Moody's P-1 or equivalent (S&P A-1 or Fitch F1). A lower level may be accepted in specific and duly justified circumstances.

35.5.LIQUIDITY RISK

Maturity analysis of financial liabilities by remaining contractual maturity

| EUR million |
| --- |
| | < 1 year | 1-5 years | > 5 years | Total |
| Financial liabilities at 31.12.2020 | 615 | 2 | – | 617 |
| Financial liabilities at 31.12.2019 | 516 | 2 | 17 | 535 |

EUR million

< 1 year

1-5 years

> 5 years

Total

Financial liabilities at 31.12.2020

615

2

–

617

Financial liabilities at 31.12.2019

516

2

17

535

Budget principles applied to the EDF ensure that overall cash resources for the budgetary period are always sufficient for the execution of payments. Indeed the total Member States' contributions equal the overall amount of payment appropriations for the relevant budgetary period.

Member States contributions to EDF, however, are paid in three instalments per year, while payments are subject to seasonality.

In order to ensure that treasury resources are always sufficient to cover the payments to be executed in any given month, information on the treasury situation is regularly exchanged between the Commission's treasury and the relevant spending departments.

In addition to the above, in the context of the EDF's treasury operations, automated cash management tools ensure that sufficient liquidity is available on each of the EDF's bank accounts, on a daily basis.

36.RELATED PARTY DISCLOSURES

The related parties of the EDF are the Bêkou- and Africa EU Trust Funds and the European Commission. Transactions between these entities take place as part of the normal operations of the EDF and as this is the case, no specific disclosure requirements are necessary for these transactions in accordance with the EU accounting rules.

The EDF has no separate management since it is managed by the Commission. The entitlements of the key management of the EU, including the Commission, have been disclosed in the consolidated annual accounts of the European Union under heading 7.2 "Key management entitlements".

37.EVENTS AFTER THE BALANCE SHEET DATE

At the date of transmission of these accounts, no material issues had come to the attention of or were reported to the Accounting Officer of the EDF that would require separate disclosure under this section. The annual accounts and related notes were prepared using the most recently available information and this is reflected in the information presented above.

38.RECONCILIATION OF ECONOMIC RESULT AND BUDGET RESULT

The economic result of the year is calculated based on accrual accounting principles. The budget result is however based on cash accounting rules. As the economic result and the budget result both cover the same underlying operational transactions, it is a useful control to ensure that they are reconciliable. The table below shows this reconciliation, highlighting the key reconciling amounts, split between revenue and expenditure items. The notes to the table provide additional information on the nature of the key reconciling items.

| | | EUR million |
| --- | --- | --- |
| | 2020 | 2019 |
| ECONOMIC RESULT OF THE YEAR | (4 744) | (3 956) |
| | | |
| Revenue | | |
| Entitlements not affecting the budget result | (2) | – |
| Entitlements established in current year but not yet collected | (23) | (16) |
| Entitlements established in previous years and collected in current year | 13 | 23 |
| Net effect of pre-financing | 61 | 53 |
| Accrued revenue (net) | (33) | (67) |
| Other | – | (3) |
| Expenses | | |
| Expenses of the current year not yet paid | 119 | 107 |
| Expenses of previous years paid in the current year | (817) | (672) |
| Net effect of pre-financing | (281) | (44) |
| Accrued expenses (net) | 1 102 | 719 |
| | | |
| BUDGET RESULT OF THE YEAR | (4 604) | (3 856) |

EUR million

2020

2019

ECONOMIC RESULT OF THE YEAR

(4 744)

(3 956)

Revenue

Entitlements not affecting the budget result

(2)

–

Entitlements established in current year but not yet collected

(23)

(16)

Entitlements established in previous years and collected in current year

13

23

Net effect of pre-financing

61

53

Accrued revenue (net)

(33)

(67)

Other

–

(3)

Expenses

Expenses of the current year not yet paid

119

107

Expenses of previous years paid in the current year

(817)

(672)

Net effect of pre-financing

(281)

(44)

Accrued expenses (net)

1 102

719

BUDGET RESULT OF THE YEAR

(4 604)

(3 856)

38.1.RECONCILING ITEMS - REVENUE

The budgetary revenue of a financial year corresponds to the revenue collected from entitlements established in the course of the year and amounts collected from entitlements established in previous years.

The entitlements not affecting the budget result are recorded in the economic result but from a budgetary perspective cannot be considered as revenues as the cashed amount is transferred to reserves and cannot be recommitted without a Council decision.

The entitlements established in the current year but not yet collected are to be deducted from the economic result for reconciliation purposes, as they do not form part of budgetary revenue. On the contrary, the entitlements established in previous years and collected in the current year must be added to the economic result for reconciliation purposes.

The net effect of pre-financing line refers to clearing of pre-financing with amounts recovered from the beneficiaries. These cash receipts represent budgetary revenue but have no impact on the economic result and must be thus added for reconciliation purposes.

The net accrued revenue mainly consists of accruals made for year-end cut-off purposes. Only the net effect, i.e. the accrued revenue of the current year less the reversal of accrued revenue of the previous year, is taken into consideration.

38.2.RECONCILING ITEMS – EXPENDITURE

Expenses of the current year not yet paid are to be added for reconciliation purposes as they are included in the economic result but do not form part of budgetary expenditure. On the contrary, the expenses of previous years paid in the current year must be deducted from the economic result for reconciliation purposes as they are part of the current year's budgetary expenditure but have either no effect on the economic result or they decrease the expenses in case of corrections.

The cash receipts from payment cancellations do not affect the economic result whereas they affect the budget result.

The net effect of pre-financing is the combination of the new pre-financing amounts paid in the current year (recognised as budgetary expenditure of the year) and the clearing of pre-financing paid in the current year or previous years through the acceptance of eligible costs. The latter represents an expense in accrual terms but not in the budgetary accounts since the payment of the initial pre-financing had already been considered as a budgetary expenditure at the time of its payment.

The net accrued expenses mainly consist of accruals made for year-end cut-off purposes, i.e. eligible expenses incurred by beneficiaries of EDF funds but not yet reported to the EDF. Only the net effect, i.e. the accrued expenses of the current year less the reversal of accrued expenses of the previous year, is taken into consideration.

FINANCIAL STATEMENTS OF THE EU TRUST FUNDS CONSOLIDATED IN EDF

FINANCIAL STATEMENTS OF THE BÊKOU EU TRUST FUND 2020

It should be noted that due to the rounding of figures into thousands of euros (kEUR), some financial data in the tables may appear not to add-up.

BACKGROUND INFORMATION ON THE BÊKOU EU TRUST FUND

1.1.General background on Union Trust Funds

Establishment

In accordance with Articles 234 and 235 of the Financial Regulation applicable to the general budget of the Union (EU FR)
  4
  and Article 35 of the Financial Regulation applicable to the 11th European Development Fund (EDF FR)
  5
  , the European Commission may establish Union trust funds for external actions (‘EU trust funds’). The Union trust funds are constituted under an agreement concluded with other donors for emergency and post-emergency actions necessary to react to a crisis, or for thematic actions.

Union trust funds are established by the European Commission by a decision after consultation or approval of the European Parliament and the Council. This decision includes the constitutive agreement with other donors.

Union trust funds are only established and implemented subject to the following conditions:

•There is added value of the Union intervention: the objectives of Union trust funds, in particular by reason of their scale or potential effects, may be better achieved at Union level than at national level and the use of the existing financing instruments would not be sufficient to achieve policy objectives of the Union;

•Union trust funds bring clear political visibility for the Union and managerial advantages as well as better control by the Union of risks and disbursements of the Union and other donors’ contributions;

•Union trust funds do not duplicate other existing funding channels or similar instruments without providing any additionality;

•The objectives of Union trust funds are aligned with the objectives of the Union instrument or budgetary item from which they are funded.

Current EU Trust Funds

To date, the Commission has set up four EUTFs:

·The EUTF BÊKOU, whose objective is to support all aspects of the Central African Republic's exit from crisis and its reconstruction efforts. Established on 15 July 2014;

·The EUTF MADAD, a European Union Regional Trust Fund in response to the Syrian crisis. Established on 15 December 2014;

·The EUTF AFRICA; a European Union Emergency Trust Fund for stability and addressing root causes of irregular migration and displaced persons in Africa. Established on 12 November 2015;

·The EUTF COLOMBIA; to support the implementation of the peace agreement in the early recovery and stabilisation post conflict. Established on 12 December 2016.

Mission

The EUTF Bêkou, was established, with the aim of promoting the stabilisation and reconstruction of the Central African Republic (CAR). Its main objective, as set out in the Constitutive Agreement, is “to provide consistent, targeted aid for the resilience of vulnerable groups and support for all aspects of the Central African Republic's exit from the crisis and reconstruction, to coordinate actions over the short, medium and long term and to help neighbouring countries cope with the consequences of the crisis”.

Main operational activities

The Union trust fund pools together resources from different donors to finance programmes on the basis of agreed objectives. Since its creation in July 2014, the EUTF Bêkou has adopted 22 programmes and has reached more than 2.5 million beneficiaries. The programmes are to assist the Central African Republic (CAR) and its population in the aftermath of the 2013 crisis. More specifically, the EUTF Bêkou aims to ensure access to basic services (mainly health, water and sanitation), support economic recovery and job creation, and promote social cohesion and reconciliation.

Governance

The management of the EUTF Bêkou is ensured by the European Commission, which also acts as the secretariat of its two governing bodies – the Trust Fund Board and the Operational Board. The Trust Fund Board and the Operational Committee of the EUTF Bêkou are composed of representatives of the donors, of the Commission, of the European Parliament, a representative of the Central African Republic’s authorities and observers. The rules for the composition of the board and its internal rules are laid down in the constitutive agreement of the Union trust fund.

The main task of the Board is to establish and review the overall strategy of the trust fund. The Operational Board is responsible for the selection of the actions financed by the Fund and supervises their implementation. It also approves the annual accounts and the annual reports on the activities financed by the trust fund.

Sources of financing

The EUTF Bêkou is financed through contributions from donors.

Annual accounts

Basis for preparation

The legal framework and the deadlines for the preparation of the annual accounts are set by the “Agreement establishing the European Union trust fund for the Central African Republic, “The Bêkou EU Trust Fund”, and its internal rules” (“Constitutive Agreement”). As per this Constitutive Agreement, the annual accounts are prepared in accordance with the rules adopted by the Accounting Officer of the Commission (EU Accounting Rules, EAR), which are based on internationally accepted accounting standards for the public sector (IPSAS).

Accounting Officer

The Accounting Officer of the Commission serves as the Accounting Officer of the Union trust funds. The Accounting Officer is responsible for laying down accounting procedures and chart of accounts common to all Union trust funds. The Commission’s Internal Auditor, OLAF and the Court of Auditors exercise the same powers over Union trust funds as they do in respect of other actions carried out by the Commission. The Union trust funds are also subject to an independent external audit every year.

Composition of the annual accounts

The annual accounts cover the period from 1 January to 31 December and comprise the financial statements and the reports on the implementation of the budget. While the financial statements and the complementary notes are prepared on an accrual accounting basis, the budget implementation reports are primarily based on movements of cash.

Process from provisional accounts to discharge

The annual accounts are subject to independent external audit. The provisional annual accounts prepared by the Accounting Officer are transmitted, by the 1st of March of the following year, to the audit company selected by the entity following a tender procedure. Following the audit, the Accounting Officer prepares the final annual accounts and submits them to the Operational Committee for approval (Article 8.3.4(c)).

The annual accounts of the EUTF Bêkou are consolidated in the annual accounts of the European Developement Fund.

Operational highlights

Achievements of the year

The EU launched its first ever Trust Fund (EUTF), named Bêkou (meaning hope in Sango language), in July 2014 to assist the Central African Republic (CAR) and its population in the aftermath of the 2013 crisis. The EUTF Bêkou aims to ensure access to basic services (mainly health and water and sanitation), support rural development and economic recovery, and promote reconciliation. Since its creation, the EUTF Bêkou has adopted 23 programmes and has reached more than 2.8 million beneficiaries.

Despite the presence of a democratically elected government and the signature of a peace agreement in February 2019, the security situation in the CAR remains volatile. It is in this complex and fragile context that the EUTF Bêkou deploys its comparative advantages of flexibility and adaptability to changing circumstances. Additionally, the EUTF Bêkou remains currently the only instrument building resilience for both the population and the State, in a true LRRD (linking relief, rehabilitation and development) approach.

Operational highlights of the year 2020 include:

•
     In April, the EUTF Bêkou adopted three new programmes by written procedure. These include the third phase of the Gender programme, the second phase of the Reconciliation action, which envisages the continuation of the support to Central African radios and notably Radio Ndeke Luka, as well as a new programme on Vocational Training in the rural sector.

•
     In response to the COVID-19 outbreak, the EUTF Bêkou made substantial efforts to re-orient, accelerate and prioritise actions for the most effective response to the crisis. In this context, the Health and Water and Sanitation programmes were of critical importance for supporting the Team Europe’s response to the crisis that amplified existing needs in the two sectors. In June, the EUTF Bêkou approved a revision of the two actions, increasing the budget of the Health programme by EUR 2.2 million and that of the Water and Sanitation action by EUR 2 million.

•
     In December, the EUTF Bêkou adopted a programme supporting the deployment of civil protection for a total amount of EUR 4 million. Moreover, in order to avoid any financing gap in the all-important health sector, the EUTF Bêkou increased again the budget of the on-going health programme (phase III) (additional EUR 10 million).

•
     The implementation of EUTF Bêkou projects were marked by the volatile security context (localised conflicts in Bangui and the hinterland followed by periods of relative stability), as well as incertitude as the presidential elections of December 2020 were approaching.

In December 2020, following an official request from the EUTF Board, the EU decided an extension of the EUTF Bêkou until 31 December 2021, thus bringing its total duration from 78 months to 90 months. This will allow the EUTF Bêkou to commit and contract all received contributions in a timely way and responding to CAR’s needs. This is the second and last extension of the EUTF.

Budget and budget implementation

On the financial side, by the end of 2020, pledges by EUTF contributors amounted to nearly EUR 308.3 million. This is an increase of EUR 12.5 million compared to 2019. EUR 1 million out of these EUR 308.3 million is still to be certified.

In terms of contracts, the EUTF Bêkou signed 7 new contracts and 9 cost-extension contract riders in 2020 for a total amount of nearly EUR 53 million. They contribute to the implementation of its programmes in the sectors of health, water and sanitation, rural development and economic recovery, and reconciliation.

Last but not least, more than EUR 46 million was paid in 2020 on top of payments made during previous years; total disbursements have reached nearly EUR 197 million since the creation of the EUTF Bêkou.

The main impact of COVID-19 on the budget implementation of EUTF Bêkou in 2020 is a follows:

•
     Less contracts as a result of difficulties to prepare actions;

•
     Reduced expenses as a result of inability to implement projects and of difficulties to finalise financial reports and expenditure verification reports.

Impact of the activities in the financial statements

In the financial statements, the impact of the above mentioned activities is most visible when looking at:

·Operating expenses (see note 3.3): which have overall decreased by kEUR 661; however the expenses relating to basic health have increased as a result of the increase in the budget in response to the additional challenges brought about by the COVID-19 pandemic;

·Pre-financing (see notes 2.1): decreased by kEUR 3 685 as a result of less advances being paid out due to fewer contracts being signed (7 new contracts in 2020 compared to 11 in 2019);

·Financial liabilities (see note 2.4): decreased by kEUR 11 889 mainly due to the fact that the cashed contributions from the donors are not sufficient to cover the yearly payment outflows. This also led to the shrinking of the cash and cash equivalents (see note 2.3).

BALANCE SHEET

| | | | EUR '000 |
| --- | --- | --- | --- |
| | Note | 31.12.2020 | 31.12.2019 |
| NON-CURRENT ASSETS | | | |
| Pre-financing | 2.1 | 2 418 | 3 273 |
| | | 2 418 | 3 273 |
| CURRENT ASSETS | | | |
| Pre-financing | 2.1 | 15 482 | 18 312 |
| Exchange receivables and non-exchange recoverables | 2.2 | 5 340 | 1 853 |
| Cash and cash equivalents | 2.3 | 7 339 | 17 432 |
| | | 28 161 | 37 597 |
| TOTAL ASSETS | | 30 579 | 40 870 |
| | | | |
| NON-CURRENT LIABILITIES | | | |
| Financial liabilities | 2.4 | (17 838) | (29 727) |
| | | (17 838) | (29 727) |
| CURRENT LIABILITIES | | | |
| Payables | 2.5 | (795) | (10) |
| Accrued charges | 2.6 | (11 947) | (11 133) |
| | | (12 741) | (11 143) |
| TOTAL LIABILITIES | | (30 579) | (40 870) |
| | | | |
| NET ASSETS | | – | – |
| | | | |
| FUNDS & RESERVES | | | |
| Contribution from Members | | – | – |
| Accumulated surplus | | – | – |
| Economic result of the year | | – | – |
| NET ASSETS | | – | – |

EUR '000

Note

31.12.2020

31.12.2019

NON-CURRENT ASSETS

Pre-financing

2.1

2 418

3 273

2 418

3 273

CURRENT ASSETS

Pre-financing

2.1

15 482

18 312

Exchange receivables and non-exchange recoverables

2.2

5 340

1 853

Cash and cash equivalents

2.3

7 339

17 432

28 161

37 597

TOTAL ASSETS

30 579

40 870

NON-CURRENT LIABILITIES

Financial liabilities

2.4

(17 838)

(29 727)

(17 838)

(29 727)

CURRENT LIABILITIES

Payables

2.5

(795)

(10)

Accrued charges

2.6

(11 947)

(11 133)

(12 741)

(11 143)

TOTAL LIABILITIES

(30 579)

(40 870)

NET ASSETS

–

–

FUNDS & RESERVES

Contribution from Members

–

–

Accumulated surplus

–

–

Economic result of the year

–

–

NET ASSETS

–

–

STATEMENT OF FINANCIAL PERFORMANCE

| | | | EUR '000 |
| --- | --- | --- | --- |
| | Note | 2020 | 2019 |
| REVENUE | | | |
| Revenue from non-exchange transactions | | | |
| Revenue from donations | 3.1 | 47 889 | 48 343 |
| Recovery of expenses | 3.2 | 115 | 68 |
| | | 48 004 | 48 410 |
| Revenue from exchange transactions | | | |
| Financial revenue | | – | (2) |
| | | – | (2) |
| Total revenue | | 48 004 | 48 408 |
| EXPENSES | | | |
| Operating expenses | 3.3 | (46 959) | (47 620) |
| Finance costs | 3.4 | (68) | – |
| Other expenses | 3.5 | (978) | (789) |
| Total expenses | | (48 004) | (48 408) |
| ECONOMIC RESULT OF THE YEAR | | | |

EUR '000

Note

2020

2019

REVENUE

Revenue from non-exchange transactions

Revenue from donations

3.1

47 889

48 343

Recovery of expenses

3.2

115

68

48 004

48 410

Revenue from exchange transactions

Financial revenue

–

(2)

–

(2)

Total revenue

48 004

48 408

EXPENSES

Operating expenses

3.3

(46 959)

(47 620)

Finance costs

3.4

(68)

–

Other expenses

3.5

(978)

(789)

Total expenses

(48 004)

(48 408)

ECONOMIC RESULT OF THE YEAR

CASHFLOW STATEMENT

| | | EUR '000 |
| --- | --- | --- |
| | 2020 | 2019 |
| (Increase)/decrease in pre-financing | 3 685 | 11 405 |
| (Increase)/decrease in exchange receivables and non-exchange recoverables | (3 487) | (715) |
| Increase/(decrease) in financial liabilities | (11 889) | (13 010) |
| Increase/(decrease) in payables | 784 | (908) |
| Increase/(decrease) in accrued charges | 814 | 6 734 |
| NET CASHFLOW | (10 093) | 3 506 |
| | | |
| Net increase/(decrease) in cash and cash equivalents | (10 093) | 3 506 |
| Cash and cash equivalents at the beginning of the year | 17 432 | 13 926 |
| Cash and cash equivalents at year-end | 7 339 | 17 432 |

EUR '000

2020

2019

(Increase)/decrease in pre-financing

3 685

11 405

(Increase)/decrease in exchange receivables and non-exchange recoverables

(3 487)

(715)

Increase/(decrease) in financial liabilities

(11 889)

(13 010)

Increase/(decrease) in payables

784

(908)

Increase/(decrease) in accrued charges

814

6 734

NET CASHFLOW

(10 093)

3 506

Net increase/(decrease) in cash and cash equivalents

(10 093)

3 506

Cash and cash equivalents at the beginning of the year

17 432

13 926

Cash and cash equivalents at year-end

7 339

17 432

FINANCIAL STATEMENTS OF THE EUTF AFRICA 2020

It should be noted that due to the rounding of figures into thousands of euros (kEUR), some financial data in the tables may appear not to add-up.

BACKGROUND INFORMATION ON THE EUTF AFRICA

General background on Union Trust Funds

Establishment

In accordance with Articles 234 and 235 of the Financial Regulation applicable to the general budget of the Union (EU FR)
  6
  and Article 35 of the Financial Regulation applicable to the 11th European Development Fund (EDF FR)
  7
  , the European Commission may establish Union trust funds for external actions (‘EU trust funds’). The Union trust funds are constituted under an agreement concluded with other donors for emergency and post-emergency actions necessary to react to a crisis, or for thematic actions.

Union trust funds are established by the European Commission by a decision after consultation or approval of the European Parliament and the Council. This decision includes the constitutive agreement with other donors.

Union trust funds are only established and implemented subject to the following conditions:

•There is added value of the Union intervention: the objectives of Union trust funds, in particular by reason of their scale or potential effects, may be better achieved at Union level than at national level and the use of the existing financing instruments would not be sufficient to achieve policy objectives of the Union;

•Union trust funds bring clear political visibility for the Union and managerial advantages as well as better control by the Union of risks and disbursements of the Union and other donors’ contributions;

•Union trust funds do not duplicate other existing funding channels or similar instruments without providing any additionality;

•The objectives of Union trust funds are aligned with the objectives of the Union instrument or budgetary item from which they are funded.

Current EU Trust Funds

To date, the Commission has set up four EUTFs:

·The EUTF BÊKOU, whose objective is to support all aspects of the Central African Republic's exit from crisis and its reconstruction efforts. Established on 15 July 2014;

·The EUTF MADAD, a European Union Regional Trust Fund in response to the Syrian crisis. Established on 15 December 2014;

·The EUTF AFRICA; a European Union Emergency Trust Fund for stability and addressing root causes of irregular migration and displaced persons in Africa. Established on 12 November 2015;

·The EUTF COLOMBIA; to support the implementation of the peace agreement in the early recovery and stabilisation post conflict. Established on 12 December 2016.

Mission

The main objectives of the EUTF Africa are to support all aspects of stability and contribute to better migration management as well as addressing the root causes of destabilisation, forced displacement and irregular migration, in particular by promoting resilience, economic and equal opportunities, security and development and addressing human rights abuses.

Main operational activities

The Union trust fund pools together resources from different donors to finance an action on the basis of agreed objectives. EUTF Africa operates in three main geographic areas, namely the Sahel region and Lake Chad area, the Horn of Africa and the North of Africa. The neighbouring countries of the eligible countries may benefit, on a case by case basis, from the trust fund's projects. The trust fund is established for a limited period, in order to provide a short and medium-term response to the challenges of the regions.

Governance

The management of the EUTF Africa is ensured by the European Commission, which also acts as the secretariat of its two governing bodies – the Trust Fund Board and the Operational Board. The Trust Fund Board and the Operational Committee of the EUTF Africa are composed of representatives of the donors and of the Commission, as well as representatives of non-contributing EU Member States, authorities of eligible countries' and regional organisations as observers. The rules for the composition of the board and its internal rules are laid down in the constitutive agreement of the Union trust fund.

The main task of the Board is to establish and review the overall strategy of the trust fund. The Operational Board is responsible for the selection of the actions financed by the Fund and supervises their implementation. It also approves the annual accounts and the annual reports on the activities financed by the trust fund.

Sources of financing

The EUTF Africa is financed through contributions from donors.

Annual accounts

Basis for preparation

The legal framework and the deadlines for the preparation of the annual accounts are set by the “Agreement establishing the European Union emergency trust fund for stability and addressing root causes of irregular migration and displaced persons in Africa and its internal rules” (“Constitutive Agreement”). As per this Constitutive Agreement, the annual accounts are prepared in accordance with the rules adopted by the Accounting Officer of the Commission (EU Accounting Rules, EAR), which are based on internationally accepted accounting standards for the public sector (IPSAS).

Accounting Officer

Based on the Constitutive Agreement, the Accounting Officer of the Commission serves as the Accounting Officer of the Trust Fund.

Composition of the annual accounts

The annual accounts cover the period from 1 January to 31 December and comprise the financial statements and the reports on the implementation of the budget. While the financial statements and the complementary notes are prepared on an accrual accounting basis, the budget implementation reports are primarily based on movements of cash.

Process from provisional accounts to discharge

The annual accounts are subject to independent external audit. The provisional annual accounts prepared by the Accounting Officer are transmitted, by the 1st of March of the following year, to the audit company selected by the entity following a tender procedure. Following the audit, the Accounting Officer prepares the final annual accounts and submits them to the Operational Committee for approval.

The annual accounts of the EUTF Africa are consolidated in the annual accounts of the European Developement Fund.

Operational highlights

Achievements of the year

In 2020, EUTF Africa further demonstrated itself to be a swift and effective implementation tool. It facilitated policy dialogue with African partner countries, applied innovative approaches, and produced tangible results across the three regions of the EUTF Africa (Sahel and Lake Chad, Horn of Africa and North of Africa) by pooling funding and expertise from a wide range of stakeholders.

The EUTF Africa further consolidated its achievements in partnership with EU Member States development agencies, UN organisations, NGOs and partner countries, with the approval of an additional 37 programmes and 26 ‘top-ups’ across the three regions by the operational committees for a total of EUR 560 million . This brings the total number of approved programmes to 254 including 4 cross-window programmes, for a total budget of over EUR 4.8 billion. New contracts worth over EUR 1 billion were signed in 2020 with implementing partners, bringing the total amount of signed contracts to over EUR 4.5 billion. By the end of 2020, payments had reached approximately EUR 3 billion.

In 2020, the EUTF Africa continued addressing the twin goals of fostering stability and handling the root causes of forced displacement and irregular migration in the Sahel and Lake Chad, Horn of Africa and North of Africa regions. The EUTF Africa continued to pursue a balanced approach in addressing the challenges of irregular migration, focusing on areas of mutual interest for the EU and Africa. These include the fight against smuggling of migrants and trafficking of human beings, and the support to voluntary return to, and sustainable reintegration of migrants in, their country of origin.

During the past year, the EUTF Africa benefitted from additional financial pledges of EUR 361.9 million, including EUR 29.2 million from EU Member States and other donors. As a result, the overall resources pledged to the EUTF Africa as of 31 December 2020 amounted to over EUR 5 billion, of which EUR 619.7 million were pledged by EU Member States and other donors (Norway and Switzerland).

The EUTF Africa has continued working in solid partnership with a wide range of implementing partners (agencies from Member States, UN and international organisations, local and international NGOs) along the same lines as in 2019.

The Mid-Tem Evaluation of the EUTF for Africa, launched in 2019 to provide the EU external co-operation services and the wider public with an overall independent mid-term assessment of the EUTF for Africa, was fully carried out in the course of 2020. The scope of the evaluation included over 200 out of 600 projects implemented between 2016 and 2019. All relevant Commission services, EEAS and EU Delegations across the three regions were consulted. Field visits were conducted in six countries: Ethiopia, Libya, Morocco, Niger, Senegal, and Somalia. The Final Report completed in 2020 will be published in spring 2021.

Throughout the year, the monitoring and learning system reports on the Sahel and Lake Chad and the Horn of Africa continued to show the tangible results achieved by the EUTF Africa in different areas of work. The Monitoring & Learning system of the North of Africa region generated two Monitoring Reports available on the EUTF website whose purpose is to analyze how EUTF-funded projects are contributing to the five strategic objectives of the EUTF in the North of Africa region

Accountability and transparency have been improved through increased communications including regular updates on the EUTF Africa website, publishing posts on social media and organising communication events.

In 2020, the COVID-19 pandemic had a profound impact, including in Africa. In response to the outbreak of the COVID-19 pandemic, in April 2020 the Commission adopted a Joint Communication on the Global EU response to COVID-19 that called to focus on the most vulnerable people, including migrants, refugees, internally displaced persons and their host communities. The EU and its Member States, acting together as ‘Team Europe’, took comprehensive and decisive actions to tackle the destructive impact of COVID-19, adapting priorities and programmes, including EUTF for Africa programmes, with partner countries to address the crisis.

In the Sahel and Lake Chad region, massive displacement, combined with climate change, uncontrollable population growth, endemic poverty and the COVID-19 pandemic aggravated the pre-existing pressure and had an increasing impact on migration and conflict. Throughout the year, increasing violence and mass forced displacement have led to rising levels of insecurity in the region. Against this background, the EUTF Africa’s operational committee has approved 15 new programmes and 10 top-ups, for a total of EUR 225.9 million . In order to improve governance and enhance social cohesion, 57% of the EUTF for Africa actions approved in 2020 have been directed towards this stabilisation effort. Special attention has been dedicated also to helping stranded migrants and internally displaced populations. 24% of new EUTF for Africa actions have been committed to strengthening resilience of beneficiaries by supporting food and nutrition security, protecting vulnerable livelihoods and promoting social protection schemes for the most vulnerable as well as IDPs, refugees and their host communities.

The onset of the COVID-19 pandemic in early 2020 further exacerbated fragilities across the Horn of Africa region already affected by consecutive droughts and floods; conflicts and insecurity; protracted refugee and internal displacement crises; and the worst desert locust outbreak in decades. All countries in the region suffered from a serious shortage of medical care and equipment, access to basic services was hampered by curfews and lockdowns, and several political developments were postponed, including general elections in Ethiopia. Several existing projects reoriented activities to combat the spread of the virus and mitigate economic effects of the pandemic. New commitments, reallocations and top-ups were made with this challenge in mind. Overall, 12 new programmes and 13 top-ups were approved by the operational committee in 2020 for a total of EUR 212.15 million .

In 2020, the EUTF for Africa had to respond comprehensively to challenges in the North of Africa region to save lives, protect the most vulnerable, support host communities, provide opportunities for safe and organised mobility and tackle the consequences of the COVID-19 pandemic. The North of Africa window has continued to work according to the strands of action agreed by the EUTF Strategic Board including support to improve migration governance; support for labour migration and mobility; protection of vulnerable migrants, voluntary return and sustainable reintegration as well as community stabilisation; and integrated border management. Overall, 10 new actions for a total of EUR 113.6 million were adopted in 2020 by the operational committee. This includes also EUR 30 million re-allocated funds from the Libya Border Management Programme (phase II) whose amount was reduced to EUR 15 million. In addition, EUR 12.3 million were adopted by the operational committee through three budgetary top-ups to existing actions.

Budget and budget implementation

The total amount of budgetary commitments in 2020 amounted to EUR 740.7 million, compared to EUR 722.7 million in 2019. The total amount contracted in 2020 amounted to EUR 1.1 billion, whereas it reached EUR 951.3 million in 2019.

In 2020, the budget implementation in terms of available commitments used by contracts reached 99 %, whereas payments in the reporting period exceeded EUR 1 billion. Total payments in 2020 were EUR 143 million higher than in 2019.

In the Sahel / Lake Chad, the combined effect of COVID-19 and rising violence put a significant strain on health services, and several EUTF programmes have been created or engaged in activities that aimed to support the pandemic response and address its economic consequences. Overall, EUR 377.6 million have been allocated to strengthen the health systems of partner countries, put in place emergency response and prevention and support the economic response to the COVID-19 pandemic.

In the Horn of Africa, right at the start of the pandemic, several EUTF for Africa projects reoriented activities to combat the spread of the virus, mitigate economic effects and support these vulnerable populations, including refugees and stranded migrants. In the region, the EUTF for Africa provided a total of EUR 56.1 million to hold up the health systems and EUR 144.05 million to address the economic impact of COVID-19.

In the face of the challenging situation created by COVID-19, the EUTF Africa has ensured the continuity of its ongoing actions in North Africa, including quick re-allocation of existing actions and adoption of new actions to address the consequences of the pandemic. In particular, the EUTF Africa has adopted very quickly a EUR 20 million COVID-19 response programme for Libya and a EUR 10 million Emergency Response Facility to coronavirus to cover North African countries focusing on the most vulnerable populations.

Impact of the activities in the financial statements

In the financial statements, the impact of the above mentioned activities is most visible when looking at:

·Pre-financing (see note 2.1): an increase by kEUR 184 933 as a result of the new contracts signed and advances paid during 2020;

·Operating expenses (see note 3.4): an increase by kEUR 133 110 as a result of the increased activity during the year in particular to combat the negative effects of the COVID pandemic;

·Revenue from donations (see note 3.1): increased substiantially (increase of kEUR 146 923 compared to 2019) to fund the increase in expenses;

·Financial liabilities (see note 2.4): increased by kEUR 161 968 mainly due to the increase in the cashed contributions received from donors during the year.

BALANCE SHEET

| | | | EUR '000 |
| --- | --- | --- | --- |
| | Note | 31.12.2020 | 31.12.2019 |
| NON-CURRENT ASSETS | | | |
| Pre-financing | 2.1 | 92 655 | 48 539 |
| | | 92 655 | 48 539 |
| CURRENT ASSETS | | | |
| Pre-financing | 2.1 | 559 386 | 418 569 |
| Exchange receivables and non-exchange recoverables | 2.2 | 6 346 | 18 471 |
| Cash and cash equivalents | 2.3 | 57 971 | 26 915 |
| | | 623 703 | 463 955 |
| TOTAL ASSETS | | 716 359 | 512 495 |
| | | | |
| NON-CURRENT LIABILITIES | | | |
| Financial liabilities | 2.4 | (546 379) | (384 411) |
| | | (546 379) | (384 411) |
| CURRENT LIABILITIES | | | |
| Payables | 2.5 | (45 377) | (25 969) |
| Accrued charges | 2.6 | (124 602) | (102 114) |
| | | (169 979) | (128 083) |
| TOTAL LIABILITIES | | (716 359) | (512 495) |
| | | | |
| NET ASSETS | | – | – |
| | | | |
| FUNDS & RESERVES | | | |
| Contribution from Members | | – | – |
| Accumulated surplus | | – | – |
| Economic result of the year | | – | – |
| NET ASSETS | | – | – |

EUR '000

Note

31.12.2020

31.12.2019

NON-CURRENT ASSETS

Pre-financing

2.1

92 655

48 539

92 655

48 539

CURRENT ASSETS

Pre-financing

2.1

559 386

418 569

Exchange receivables and non-exchange recoverables

2.2

6 346

18 471

Cash and cash equivalents

2.3

57 971

26 915

623 703

463 955

TOTAL ASSETS

716 359

512 495

NON-CURRENT LIABILITIES

Financial liabilities

2.4

(546 379)

(384 411)

(546 379)

(384 411)

CURRENT LIABILITIES

Payables

2.5

(45 377)

(25 969)

Accrued charges

2.6

(124 602)

(102 114)

(169 979)

(128 083)

TOTAL LIABILITIES

(716 359)

(512 495)

NET ASSETS

–

–

FUNDS & RESERVES

Contribution from Members

–

–

Accumulated surplus

–

–

Economic result of the year

–

–

NET ASSETS

–

–

STATEMENT OF FINANCIAL PERFORMANCE

| | | | EUR '000 |
| --- | --- | --- | --- |
| | Note | 2020 | 2019 |
| REVENUE | | | |
| Revenue from non-exchange transactions | | | |
| Recovery of expenses | | – | 467 |
| Revenue from donations | 3.1 | 921 014 | 774 090 |
| | | 921 014 | 774 557 |
| Revenue from exchange transactions | | | |
| Financial revenue | | – | (7) |
| Other exchange revenue | 3.2 | 2 883 | 1 855 |
| | | 2 883 | 1 848 |
| Total revenue | | 923 897 | 776 405 |
| EXPENSES | | | |
| Operating expenses | 3.3 | (889 014) | (755 904) |
| Finance cost | 3.4 | (518) | (9) |
| Other expenses | 3.5 | (34 365) | (20 492) |
| Total expenses | | (923 897) | (776 405) |
| ECONOMIC RESULT OF THE YEAR | | – | – |

EUR '000

Note

2020

2019

REVENUE

Revenue from non-exchange transactions

Recovery of expenses

–

467

Revenue from donations

3.1

921 014

774 090

921 014

774 557

Revenue from exchange transactions

Financial revenue

–

(7)

Other exchange revenue

3.2

2 883

1 855

2 883

1 848

Total revenue

923 897

776 405

EXPENSES

Operating expenses

3.3

(889 014)

(755 904)

Finance cost

3.4

(518)

(9)

Other expenses

3.5

(34 365)

(20 492)

Total expenses

(923 897)

(776 405)

ECONOMIC RESULT OF THE YEAR

–

–

CASHFLOW STATEMENT

| | | EUR '000 |
| --- | --- | --- |
| | 2020 | 2019 |
| Economic result of the year | – | – |
| Operating activities | | |
| (Increase)/decrease in pre-financing | (184 933) | (159 750) |
| (Increase)/decrease in exchange receivables and non-exchange recoverables | 12 125 | (1 815) |
| Increase/(decrease) in financial liabilities | 161 968 | 14 412 |
| Increase/(decrease) in payables | 19 408 | 13 236 |
| Increase/(decrease) in accrued charges | 22 488 | 13 968 |
| NET CASHFLOW | 31 056 | (119 949) |
| | | |
| Net increase/(decrease) in cash and cash equivalents | 31 056 | (119 949) |
| Cash and cash equivalents at the beginning of the year | 26 915 | 146 864 |
| Cash and cash equivalents at year-end | 57 971 | 26 915 |

EUR '000

2020

2019

Economic result of the year

–

–

Operating activities

(Increase)/decrease in pre-financing

(184 933)

(159 750)

(Increase)/decrease in exchange receivables and non-exchange recoverables

12 125

(1 815)

Increase/(decrease) in financial liabilities

161 968

14 412

Increase/(decrease) in payables

19 408

13 236

Increase/(decrease) in accrued charges

22 488

13 968

NET CASHFLOW

31 056

(119 949)

Net increase/(decrease) in cash and cash equivalents

31 056

(119 949)

Cash and cash equivalents at the beginning of the year

26 915

146 864

Cash and cash equivalents at year-end

57 971

26 915

CONSOLIDATED FINANCIAL STATEMENTS OF THE EDF AND THE EU TRUST FUNDS

It should be noted that due to the rounding of figures into millions of euros, some financial data in the tables may appear not to add-up.

CONSOLIDATED BALANCE SHEET

| | | EUR million |
| --- | --- | --- |
| | 31.12.2020 | 31.12.2019 |
| NON-CURRENT ASSETS | | |
| Financial assets | 33 | 36 |
| Trust Funds contributions | (2) | - |
| Pre-financing | 968 | 962 |
| | 999 | 998 |
| CURRENT ASSETS | | |
| Pre-financing | 1 930 | 1 725 |
| Exchange receivables and non-exchange recoverables | 152 | 143 |
| Cash and cash equivalents | 793 | 1 223 |
| | 2 875 | 3 092 |
| TOTAL ASSETS | 3 874 | 4 090 |
| | | |
| NON-CURRENT LIABILITIES | | |
| Financial liabilities | (173) | (167) |
| | (173) | (167) |
| CURRENT LIABILITIES | | |
| Payables | (661) | (542) |
| Accrued charges and deferred income | (1 664) | (1 432) |
| | (2 325) | (1 974) |
| TOTAL LIABILITIES | (2 498) | (2 141) |
| | | |
| NET ASSETS | 1 376 | 1 948 |
| | | |
| FUNDS & RESERVES | | |
| Fair value reserve | (5) | (2) |
| Called fund capital - active EDFs | 58 986 | 54 809 |
| Called fund capital from closed EDFs carried forward | 2 252 | 2 252 |
| Economic result carried forward from previous years | (55 111) | (51 155) |
| Economic result of the year | (4 746) | (3 956) |
| NET ASSETS | 1 376 | 1 948 |

EUR million

31.12.2020

31.12.2019

NON-CURRENT ASSETS

Financial assets

33

36

Trust Funds contributions

(2)

-

Pre-financing

968

962

999

998

CURRENT ASSETS

Pre-financing

1 930

1 725

Exchange receivables and non-exchange recoverables

152

143

Cash and cash equivalents

793

1 223

2 875

3 092

TOTAL ASSETS

3 874

4 090

NON-CURRENT LIABILITIES

Financial liabilities

(173)

(167)

(173)

(167)

CURRENT LIABILITIES

Payables

(661)

(542)

Accrued charges and deferred income

(1 664)

(1 432)

(2 325)

(1 974)

TOTAL LIABILITIES

(2 498)

(2 141)

NET ASSETS

1 376

1 948

FUNDS & RESERVES

Fair value reserve

(5)

(2)

Called fund capital - active EDFs

58 986

54 809

Called fund capital from closed EDFs carried forward

2 252

2 252

Economic result carried forward from previous years

(55 111)

(51 155)

Economic result of the year

(4 746)

(3 956)

NET ASSETS

1 376

1 948

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE

| | | EUR million |
| --- | --- | --- |
| | 2020 | 2019 |
| REVENUE | | |
| Revenue from non-exchange transactions | | |
| Recovery activities | 92 | 28 |
| Revenue from trust funds donations | 296 | 287 |
| | 388 | 316 |
| Revenue from exchange transactions | | |
| Financial revenue | 6 | 7 |
| Other revenue | 40 | 41 |
| | 46 | 48 |
| Total Revenue | 434 | 364 |
| EXPENSES | | |
| Aid instruments | (3 937) | (3 220) |
| Expenses implemented by trust funds | (936) | (804) |
| Co-financing expenses | (53) | (14) |
| Finance costs | (22) | (1) |
| Other expenses | (232) | (282) |
| Total Expenses | (5 180) | (4 320) |
| | | |
| ECONOMIC RESULT OF THE YEAR | (4 746) | (3 956) |

EUR million

2020

2019

REVENUE

Revenue from non-exchange transactions

Recovery activities

92

28

Revenue from trust funds donations

296

287

388

316

Revenue from exchange transactions

Financial revenue

6

7

Other revenue

40

41

46

48

Total Revenue

434

364

EXPENSES

Aid instruments

(3 937)

(3 220)

Expenses implemented by trust funds

(936)

(804)

Co-financing expenses

(53)

(14)

Finance costs

(22)

(1)

Other expenses

(232)

(282)

Total Expenses

(5 180)

(4 320)

ECONOMIC RESULT OF THE YEAR

(4 746)

(3 956)

CONSOLIDATED CASH FLOW STATEMENT

| | | EUR million |
| --- | --- | --- |
| | 2020 | 2019 |
| Economic result of the year | (4 746) | (3 956) |
| Operating activities | | |
| Capital increase - contributions | 4 177 | 4 385 |
| (Increase)/decrease in pre-financing | (210) | (12) |
| (Increase)/decrease in exchange receivables and non-exchange recoverables | (7) | 13 |
| Increase/(decrease) in financial liabilities | 6 | (62) |
| Increase/(decrease) in payables | 119 | 288 |
| Increase/(decrease) in accrued charges and deferred income | 232 | 58 |
| Other non-cash movements | (3) | (2) |
| | | |
| Investing activities | | |
| (Increase)/decrease in available for sale financial assets | 2 | (36) |
| | | |
| NET CASHFLOW | (431) | 676 |
| | | |
| Net increase/(decrease) in cash and cash equivalents | (430) | 676 |
| Cash and cash equivalents at the beginning of the year | 1 223 | 548 |
| Cash and cash equivalents at year-end | 793 | 1 223 |

EUR million

2020

2019

Economic result of the year

(4 746)

(3 956)

Operating activities

Capital increase - contributions

4 177

4 385

(Increase)/decrease in pre-financing

(210)

(12)

(Increase)/decrease in exchange receivables and non-exchange recoverables

(7)

13

Increase/(decrease) in financial liabilities

6

(62)

Increase/(decrease) in payables

119

288

Increase/(decrease) in accrued charges and deferred income

232

58

Other non-cash movements

(3)

(2)

Investing activities

(Increase)/decrease in available for sale financial assets

2

(36)

NET CASHFLOW

(431)

676

Net increase/(decrease) in cash and cash equivalents

(430)

676

Cash and cash equivalents at the beginning of the year

1 223

548

Cash and cash equivalents at year-end

793

1 223

CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS

| | | | | | | | EUR million |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | Fund capital - active EDFs (A) | Uncalled funds - active EDFs (B) | Called fund capital - active EDFs (C) = (A)-(B) | Cumulative Reserves (D) | Called fund capital from closed EDFs carried forward (E) | Fair value reserve (F) | Total Net Assets (C)+(D)+(E)+(F) |
| BALANCE AS AT 31.12.2018 | 73 264 | 22 840 | 50 423 | (51 155) | 2 252 | – | 1 521 |
| Fair value movements | | | | | | (2) | (2) |
| Capital increase - contributions | | (4 385) | 4 385 | – | – | | 4 385 |
| Economic result of the year | – | – | – | (3 956) | – | | (3 956) |
| BALANCE AS AT 31.12.2019 | 73 264 | 18 455 | 54 809 | (55 111) | 2 252 | (2) | 1 948 |
| Fair value movements | | | | | | (3) | (3) |
| Capital increase - contributions | | (4 400) | 4 400 | | | | 4 400 |
| Refund to the Member States | (223) | | | | | | – |
| Economic result of the year | | | – | (4 746) | | | (4 746) |
| BALANCE AS AT 31.12.2020 | 73 041 | 14 055 | 58 986 | (59 857) | 2 252 | (5) | 1 376 |

EUR million

Fund capital - active EDFs (A)

Uncalled funds - active EDFs (B)

Called fund capital - active EDFs (C) = (A)-(B)

Cumulative Reserves (D)

Called fund capital from closed EDFs carried forward (E)

Fair value reserve (F)

Total Net Assets (C)+(D)+(E)+(F)

BALANCE AS AT 31.12.2018

73 264

22 840

50 423

(51 155)

2 252

–

1 521

Fair value movements

(2)

(2)

Capital increase - contributions

(4 385)

4 385

–

–

4 385

Economic result of the year

–

–

–

(3 956)

–

(3 956)

BALANCE AS AT 31.12.2019

73 264

18 455

54 809

(55 111)

2 252

(2)

1 948

Fair value movements

(3)

(3)

Capital increase - contributions

(4 400)

4 400

4 400

Refund to the Member States

(223)

–

Economic result of the year

–

(4 746)

(4 746)

BALANCE AS AT 31.12.2020

73 041

14 055

58 986

(59 857)

2 252

(5)

1 376

EDF REPORT ON FINANCIAL IMPLEMENTATION

CONTENTS

BACKGROUND

Previous EDFs

10th and 11th EDF

FINANCIAL IMPLEMENTATION

Financial outturn

Revenue

Operational Expenditure and specific programmes

GLOSSARY

1.BACKGROUND

Launched in 1959, the European Development Fund is the main instrument for providing EU aid for development cooperation to the African, Caribbean and Pacific (ACP) States and Overseas Countries and Territories (OCTs). Its primary objective is to reduce and ultimately eradicate poverty.

The EDF is established by an Internal Agreement of the Representatives of the Member States and managed by a specific committee. The EDF resources are "ad hoc" contributions from the EU Member States, who decide on an overall amount that will be allocated to the fund (over a period of five years). In addition to these contributions, it is also possible for Member States to enter into co-financing arrangements or to make voluntary financial contributions to the EDF. The European Commission is responsible for the financial implementation of the operations carried out with EDF resources. The European Investment Bank manages the Investment Facility.

The EDF is a fund operating based on multiannuality. Each EDF is concluded for a period of around five years and it is governed by its own Financial Regulation, which requires the preparation of financial statements for each individual EDF. Accordingly, financial statements are prepared separately for each EDF in respect of the part that is managed by the Commission.

The Internal Agreement establishing the last EDF, the 11th EDF (2014-2020), came into force on 1 March 2015. As of 2021, the cooperation with the ACP countries is included in the Neighbourhood, Development and International Cooperation Instrument (NDICI). However, the ongoing projects, funded under the EDF, will continue their implementation, under the respective EDF legal basis.

This report is produced in accordance with Article 39 of the Financial Regulation of 11th EDF
  8
  . It presents a true and fair view of the revenue and expenditure operations of the EDF, with the focus on important events that had a significant impact on financial implementation of year 2020.

Given that there are no ongoing operations under previous EDFs
  9
  , this report includes figures only for the 10th and 11th EDF.

1.1Previous EDFs

The 6th EDF was closed in 2006 and the 7th EDF was closed in 2008. In 2019, the Commission closed the remaining outstanding transactions of the 8th EDF projects. A final report on the financial implementation of the 8th EDF is available with the 2019 annual accounts. The Commission aims to close the 9th EDF at the end of 2021.

In accordance with article 1(2)(b) of the Internal Agreement of the 9th EDF, balances and decommitments of previous EDFs have been transferred to the 9th EDF.

1.210th and 11th EDF

The ACP-EC Partnership Agreement was signed on 23 June 2000 in Cotonou by the Member States of the European Community and the States of Africa, the Caribbean and the Pacific (ACP States). It entered into force on 1 April 2003 (establishing the 9th EDF). The Cotonou Agreement was amended twice, firstly by the agreement signed in Luxembourg on 25 June 2005 (establishing the 10th EDF), secondly by the agreement signed in Ouagadougou on 22 June 2010 (establishing the 11th EDF).

The EU Council Decision of 27 November 2001 (2001/822/EC) on the association of the overseas countries and territories (OCT) with the European Union entered into force on 2 December 2001. This Decision was amended on 19 March 2007 (Decision 2007/249/EC).

The Internal Agreement on the financing of Community aid under the multi-annual financial framework for the period 2014-2020 in accordance with the revised Cotonou Agreement, adopted by the Representatives of the Governments of the Member States of the European Community on August 2013, entered into force on March 2015.

Under the Cotonou Agreement, for the second period (2008-2013), the 10th EDF an overall budget of EUR22 682 million. Of this amount,

·EUR 21 966 million were allocated to the ACP countries,

·EUR 286 million to the OCT and

·EUR 430 million to the Commission as support expenditure for programming and implementation of the EDF.

The amount for the ACP countries is divided accordingly:

·EUR 17 766 million to national and regional indicative programmes,

·EUR 2 700 million to intra-ACP and intra-regional cooperation and

·EUR 1 500 million to Investment Facilities.

Notably, an increased share of the budget is devoted to regional programmes, thereby emphasising the importance of regional economic integration as the basic framework for national and local development. An innovation in the 10th EDF was the creation of ‘incentive amounts’ for each country.

Under the Cotonou Agreement, the third period (2014-2020) of Community aid to the ACP States and OCTs is funded by the 11th EDF for an amount of EUR 30 506 million, of which:

EUR 29 089 million is allocated to the ACP countries in accordance with Article 1.2(a) and Article 2(d) of the Internal Agreement, of which EUR 27 955 million is managed by the European Commission;

EUR 364.5 million is allocated to the OCTs in accordance with Article 1.2(a) and Article 3.1 of the Internal Agreement, of which 359.5 million is managed by the European Commission;

EUR 1 052.5 million is for the Commission to finance the costs arising from the programming and implementation of 11th EDF resources, in accordance with Article 1.2(a) of the Internal Agreement.

2.FINANCIAL IMPLEMENTATION

2.1Financial outturn

EVOLUTION OF 10th EDF APPROPRIATIONS

| | | | | | |
| --- | --- | --- | --- | --- | --- |
| 10th EDF
  EVOLUTION OF APPROPRIATIONS: 31 December 2020
  ANALYSIS OF CREDITS PER INSTRUMENT |
| | | | | | (EUR million) |
| INSTRUMENT | INITIAL APPROPRIATION | INCREASES/DECREASES IN CUMULATIVE RESOURCES AT 31 DECEMBER 2019 | INCREASE OR DECREASE IN RESOURCES IN 2020 | Notes | CURRENT LEVEL APPROPRIATION |
| ACP | Regular MS Contributions | 20.896 | 60 | (340) | | 20.616 |
| | Co-financing | 0 | 202 | (0) | | 202 |
| | SUB TOTAL ACP | 20.896 | 262 | (340) | | 20.818 |
| | | | | | | |
| OCT | Regular MS Contributions | 0 | 271 | (28) | | 243 |
| | SUB TOTAL OCT | 0 | 271 | (28) | | 243 |
| | | | | | | |
| | TOTAL 10th EDF | 20.896 | 533 | (368) | | 21.061 |

10th EDF
  EVOLUTION OF APPROPRIATIONS: 31 December 2020
  ANALYSIS OF CREDITS PER INSTRUMENT

(EUR million)

INSTRUMENT

INITIAL APPROPRIATION

INCREASES/DECREASES IN CUMULATIVE RESOURCES AT 31 DECEMBER 2019

INCREASE OR DECREASE IN RESOURCES IN 2020

Notes

CURRENT LEVEL APPROPRIATION

ACP

Regular MS Contributions

20.896

60

(340)

20.616

Co-financing

0

202

(0)

202

SUB TOTAL ACP

20.896

262

(340)

20.818

OCT

Regular MS Contributions

0

271

(28)

243

SUB TOTAL OCT

0

271

(28)

243

TOTAL 10th EDF

20.896

533

(368)

21.061

EVOLUTION OF 11th EDF APPROPRIATIONS

| | | | | | |
| --- | --- | --- | --- | --- | --- |
| 11th EDF
  EVOLUTION OF APPROPRIATIONS: 31 December 2020
  ANALYSIS OF CREDITS PER INSTRUMENT |
| | | | | | (EUR million) |
| INSTRUMENT | INITIAL APPROPRIATION | INCREASES/DECREASES IN CUMULATIVE RESOURCES AT 31 DECEMBER 2019 | INCREASE OR DECREASE IN RESOURCES IN 2020 | Notes | CURRENT LEVEL APPROPRIATION |
| ACP | Regular MS Contributions | 29.008 | 172 | 124 | | 29.304 |
| | Co-financing | 0 | 73 | 3 | | 75 |
| | EC Internal SLA | 0 | 1 | | | 1 |
| | SUB TOTAL ACP | 29.008 | 246 | 127 | | 29.381 |
| | | | | | | |
| OCT | Regular MS Contributions | 0 | 355 | (4) | | 351 |
| | Co-financing | 0 | 0 | | | 0 |
| | EC Internal SLA | 0 | 0 | | | 0 |
| | SUB TOTAL OCT | 0 | 355 | (4) | | 351 |
| | | | | | | |
| | TOTAL 11th EDF | 29.008 | 601 | 123 | | 29.731 |

11th EDF
  EVOLUTION OF APPROPRIATIONS: 31 December 2020
  ANALYSIS OF CREDITS PER INSTRUMENT

(EUR million)

INSTRUMENT

INITIAL APPROPRIATION

INCREASES/DECREASES IN CUMULATIVE RESOURCES AT 31 DECEMBER 2019

INCREASE OR DECREASE IN RESOURCES IN 2020

Notes

CURRENT LEVEL APPROPRIATION

ACP

Regular MS Contributions

29.008

172

124

29.304

Co-financing

0

73

3

75

EC Internal SLA

0

1

1

SUB TOTAL ACP

29.008

246

127

29.381

OCT

Regular MS Contributions

0

355

(4)

351

Co-financing

0

0

0

EC Internal SLA

0

0

0

SUB TOTAL OCT

0

355

(4)

351

TOTAL 11th EDF

29.008

601

123

29.731

EVOLUTION OF COMMITMENTS, ASSIGNED FUNDS AND PAYMENTS FOR 10TH EDF

| | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2020
  CLASS OF AID |
| ACP + PTOM - 10 th EDF |
| | | | | | | | | | | | (EUR million) |
| | CREDITS | DECISIONS | ASSIGNED FUNDS | PAYMENTS |
| | | AGGREG. | ANNUAL | % | AGGREG. | ANNUAL | % | AGGREG. | ANNUAL | % |
| | (1) | (2) | | (2) : (1) | (3) | | (3) : (2) | (4) | | (4) : (3) |
| | | | | | | | | | | | |
| | Regular MS Contributions | | | | | | | | | | |
| ACP | NATIONAL ALLOCATIONS (enveloppe A) (programmed) | 12.513 | 12.500 | (150) | 100% | 12.382 | (57) | 99% | 12.047 | 193 | 97% |
| | NATIONAL ALLOCATIONS (enveloppe B)(emergency) | 1.980 | 1.980 | (11) | 100% | 1.968 | (2) | 99% | 1.955 | 5 | 99% |
| | IMPLEMENTATION COSTS AND INTERESTS REVENUES | 529 | 526 | 18 | 99% | 522 | 15 | 99% | 507 | | 97% |
| | INTRA-ACP ALLOCATIONS | 3.691 | 3.683 | 83 | 100% | 3.460 | 321 | 94% | 3.074 | 100 | 89% |
| | REGIONAL ALLOCATIONS | 1.857 | 1.851 | (45) | 100% | 1.807 | (20) | 98% | 1.667 | 43 | 92% |
| | Co-financing | | | | | | | | | | |
| | NATIONAL ALLOCATIONS | 185 | 180 | (0) | 97% | 177 | 0 | 98% | 161 | 9 | 91% |
| | IMPLEMENTATION COSTS AND INTERESTS REVENUES | 5 | 5 | 0 | 111% | 3 | 0 | 65% | 3 | 0 | 87% |
| | INTRA-ACP ALLOCATIONS | 12 | 11 | (0) | 91% | 11 | 0 | 100% | 11 | | 100% |
| | Non-mobilisable reserve | | | | | | | | | | |
| | NON-MOBILISABLE RESERVE | 46 | | | | | | | | | |
| | | | | | | | | | | | |
| | Regular MS Contributions | | | | | | | | | | |
| OCT | NATIONAL ALLOCATIONS | 186 | 186 | (0) | 100% | 183 | 1 | 98% | 167 | 10 | 91% |
| | NATIONAL ALLOCATIONS | 15 | 15 | 0 | 100% | 14 | 0 | 99% | 14 | 0 | 100% |
| | IMPLEMENTATION COSTS AND INTERESTS REVENUES | 5 | 5 | 0 | 100% | 5 | | 100% | 5 | | 100% |
| | REGIONAL ALLOCATIONS | 36 | 35 | (3) | 98% | 34 | (2) | 96% | 34 | (0) | 99% |
| | Non-mobilisable reserve | | | | | | | | | | |
| | NON-MOBILISABLE RESERVE | 1 | | | | | | | | | |
| | | | | | | | | | | | |
| | TOTAL: ACP+OCT (INCL. RESERVES) (A+B) | 21.061 | 20.978 | (110) | 100% | 20.567 | 256 | 98% | 19.645 | 360 | 96% |

EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2020
  CLASS OF AID

ACP + PTOM - 10 th EDF

(EUR million)

CREDITS

DECISIONS

ASSIGNED FUNDS

PAYMENTS

AGGREG.

ANNUAL

%

AGGREG.

ANNUAL

%

AGGREG.

ANNUAL

%

(1)

(2)

(2) : (1)

(3)

(3) : (2)

(4)

(4) : (3)

Regular MS Contributions

ACP

NATIONAL ALLOCATIONS (enveloppe A) (programmed)

12.513

12.500

(150)

100%

12.382

(57)

99%

12.047

193

97%

NATIONAL ALLOCATIONS (enveloppe B)(emergency)

1.980

1.980

(11)

100%

1.968

(2)

99%

1.955

5

99%

IMPLEMENTATION COSTS AND INTERESTS REVENUES

529

526

18

99%

522

15

99%

507

97%

INTRA-ACP ALLOCATIONS

3.691

3.683

83

100%

3.460

321

94%

3.074

100

89%

REGIONAL ALLOCATIONS

1.857

1.851

(45)

100%

1.807

(20)

98%

1.667

43

92%

Co-financing

NATIONAL ALLOCATIONS

185

180

(0)

97%

177

0

98%

161

9

91%

IMPLEMENTATION COSTS AND INTERESTS REVENUES

5

5

0

111%

3

0

65%

3

0

87%

INTRA-ACP ALLOCATIONS

12

11

(0)

91%

11

0

100%

11

100%

Non-mobilisable reserve

NON-MOBILISABLE RESERVE

46

Regular MS Contributions

OCT

NATIONAL ALLOCATIONS

186

186

(0)

100%

183

1

98%

167

10

91%

NATIONAL ALLOCATIONS

15

15

0

100%

14

0

99%

14

0

100%

IMPLEMENTATION COSTS AND INTERESTS REVENUES

5

5

0

100%

5

100%

5

100%

REGIONAL ALLOCATIONS

36

35

(3)

98%

34

(2)

96%

34

(0)

99%

Non-mobilisable reserve

NON-MOBILISABLE RESERVE

1

TOTAL: ACP+OCT (INCL. RESERVES) (A+B)

21.061

20.978

(110)

100%

20.567

256

98%

19.645

360

96%

EVOLUTION OF COMMITMENTS, ASSIGNED FUNDS AND PAYMENTS FOR 11TH EDF

| | | | | | | | | | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2020
  CLASS OF AID |
| ACP + PTOM - 11 th EDF |
| | | | | | | | | | | | (EUR million) |
| | CREDITS | DECISIONS | ASSIGNED FUNDS | PAYMENTS |
| | | AGGREG. | ANNUAL | % | AGGREG. | ANNUAL | % | AGGREG. | ANNUAL | % |
| | (1) | (2) | | (2) : (1) | (3) | | (3) : (2) | (4) | | (4) : (3) |
| | | | | | | | | | | | |
| | Regular MS Contributions | | | | | | | | | | |
| ACP | A ENVELOPE - NATIONAL ALLOCATIONS (programmed) | 15.582 | 15.555 | 1.294 | 100% | 13.093 | 1.960 | 84% | 8.332 | 2.204 | 64% |
| | B ENVELOPE - NATIONAL ALLOCATIONS (emergency) | 1.072 | 1.064 | 219 | 99% | 926 | 200 | 87% | 744 | 107 | 80% |
| | IMPLEMENTATION COSTS AND INTERESTS REVENUES | 1.071 | 1.070 | 206 | 100% | 873 | 42 | 82% | 803 | 27 | 92% |
| | INTRA-ACP ALLOCATIONS | 4.014 | 3.912 | 389 | 97% | 3.443 | 423 | 88% | 2.701 | 445 | 78% |
| | REGIONAL ALLOCATIONS | 7.317 | 7.296 | 647 | 100% | 6.398 | 754 | 88% | 3.971 | 1.380 | 62% |
| | Co-financing | | | | | | | | | | |
| | A ENVELOPE - NATIONAL ALLOCATIONS | 42 | 42 | 10 | 100% | 41 | 10 | 98% | 6 | 4 | 15% |
| | IMPLEMENTATION COSTS AND INTERESTS REVENUES | 4 | 4 | 1 | 100% | 1 | 0 | 21% | 0 | 0 | 47% |
| | INTRA-ACP ALLOCATIONS | 26 | 26 | 4 | 100% | 24 | 2 | 91% | 22 | 5 | 93% |
| | REGIONAL ALLOCATIONS | 4 | 4 | 2 | 100% | 4 | 2 | 100% | 4 | 2 | 100% |
| | Mobilisable reserves | | | | | | | | | | |
| | INTRA-ACP RESERVE | 1 | | | | | | | | | |
| | NIP/RIP RESERVE | (100) | | | | | | | | | |
| | Non-mobilisable reserve | | | | | | | | | | |
| | NON-MOBILISABLE RESERVE | 347 | | | | | | | | | |
| | EC Internal SLA | | | | | | | | | | |
| | A ENVELOPE - NATIONAL ALLOCATIONS | 1 | 1 | (0) | 52% | 1 | 0 | 100% | 1 | | 100% |
| | | | | | | | | | | | |
| | Regular MS Contributions | | | | | | | | | | |
| OCT | A ENVELOPE - NATIONAL ALLOCATIONS | 213 | 213 | 17 | 100% | 193 | 1 | 91% | 171 | 51 | 88% |
| | B ENVELOPE - NATIONAL ALLOCATIONS | 12 | 12 | 4 | 100% | 9 | 1 | 79% | 8 | 1 | 84% |
| | BRIDGING FACILITY | 0 | | | | | | | | | |
| | IMPLEMENTATION COSTS AND INTERESTS REVENUES | 9 | 8 | 1 | 100% | 5 | 0 | 56% | 4 | 0 | 90% |
| | REGIONAL ALLOCATIONS | 103 | 103 | 4 | 100% | 99 | 19 | 97% | 25 | 12 | 25% |
| | Non-mobilisable reserve | | | | | | | | | | |
| | NON-MOBILISABLE RESERVE | 15 | | | | | | | | | |
| | | | | | | | | | | | |
| | TOTAL: ACP+OCT (INCL. RESERVES) (A+B) | 29.731 | 29.309 | 2.798 | 99% | 25.110 | 3.413 | 86% | 16.791 | 4.239 | 67% |

EDF AGGREGATED ACCOUNTS AT 31 DECEMBER 2020
  CLASS OF AID

ACP + PTOM - 11 th EDF

(EUR million)

CREDITS

DECISIONS

ASSIGNED FUNDS

PAYMENTS

AGGREG.

ANNUAL

%

AGGREG.

ANNUAL

%

AGGREG.

ANNUAL

%

(1)

(2)

(2) : (1)

(3)

(3) : (2)

(4)

(4) : (3)

Regular MS Contributions

ACP

A ENVELOPE - NATIONAL ALLOCATIONS (programmed)

15.582

15.555

1.294

100%

13.093

1.960

84%

8.332

2.204

64%

B ENVELOPE - NATIONAL ALLOCATIONS (emergency)

1.072

1.064

219

99%

926

200

87%

744

107

80%

IMPLEMENTATION COSTS AND INTERESTS REVENUES

1.071

1.070

206

100%

873

42

82%

803

27

92%

INTRA-ACP ALLOCATIONS

4.014

3.912

389

97%

3.443

423

88%

2.701

445

78%

REGIONAL ALLOCATIONS

7.317

7.296

647

100%

6.398

754

88%

3.971

1.380

62%

Co-financing

A ENVELOPE - NATIONAL ALLOCATIONS

42

42

10

100%

41

10

98%

6

4

15%

IMPLEMENTATION COSTS AND INTERESTS REVENUES

4

4

1

100%

1

0

21%

0

0

47%

INTRA-ACP ALLOCATIONS

26

26

4

100%

24

2

91%

22

5

93%

REGIONAL ALLOCATIONS

4

4

2

100%

4

2

100%

4

2

100%

Mobilisable reserves

INTRA-ACP RESERVE

1

NIP/RIP RESERVE

(100)

Non-mobilisable reserve

NON-MOBILISABLE RESERVE

347

EC Internal SLA

A ENVELOPE - NATIONAL ALLOCATIONS

1

1

(0)

52%

1

0

100%

1

100%

Regular MS Contributions

OCT

A ENVELOPE - NATIONAL ALLOCATIONS

213

213

17

100%

193

1

91%

171

51

88%

B ENVELOPE - NATIONAL ALLOCATIONS

12

12

4

100%

9

1

79%

8

1

84%

BRIDGING FACILITY

0

IMPLEMENTATION COSTS AND INTERESTS REVENUES

9

8

1

100%

5

0

56%

4

0

90%

REGIONAL ALLOCATIONS

103

103

4

100%

99

19

97%

25

12

25%

Non-mobilisable reserve

NON-MOBILISABLE RESERVE

15

TOTAL: ACP+OCT (INCL. RESERVES) (A+B)

29.731

29.309

2.798

99%

25.110

3.413

86%

16.791

4.239

67%

2.2Revenue

Nature of Revenue

The main revenue of the EDF is the Member States contributions. Three times per year, the European Commission and the European Investment Bank call the Member States to contribute to the EDF. The amount of the contributions called each year reflects the amount of payment to be covered during the year.

Overview of contributions by Member State

2.3Operational Expenditure and specific programmes

Nature of Expenditure

The amount available under the multiannual financial framework consists of 3% allocated to Commission for support expenditure and 97% allocated to the implementation of EDF projects. Amounts are set by each Internal Agreement and can be increased by voluntary contributions and income yielded from operations.

Breakdown of committed, contracted and paid amount per nature of expenditure:

| | CREDITS | DECISIONS | ASSIGNED FUNDS | PAYMENTS |
| --- | --- | --- | --- | --- |
| | | AGGREG. | ANNUAL | % | AGGREG. | ANNUAL | % | AGGREG. | ANNUAL | % |
| | (1) | (2) | | (2) : (1) | (3) | | (3) : (2) | (4) | | (4) : (3) |
| | TOTAL: ADMINISTRATIVE IMPLEMENTATION COSTS AND INTERESTS REVENUES | 1.622 | 1.619 | 226 | 100% | 1.409 | 57 | 87% | 1.322 | 28 | 81% |
| | TOTAL: OPERATIONNAL IMPLEMENTATION | 49.170 | 48.668 | 2.461 | 99% | 44.268 | 3.613 | 90% | 35.114 | 4.571 | 71% |
| | TOTAL 10+11th EDF: ACP+OCT (INCL. RESERVES) (A+B) | 50.792 | 50.287 | 2.687 | 99% | 45.677 | 3.670 | 91% | 36.436 | 4.599 | 80% |

CREDITS

CREDITS

DECISIONS

DECISIONS

ASSIGNED FUNDS

ASSIGNED FUNDS

PAYMENTS

PAYMENTS

AGGREG.

AGGREG.

ANNUAL

ANNUAL

%

%

AGGREG.

AGGREG.

ANNUAL

ANNUAL

%

%

AGGREG.

AGGREG.

ANNUAL

ANNUAL

%

%

(1)

(1)

(2)

(2)

(2) : (1)

(2) : (1)

(3)

(3)

(3) : (2)

(3) : (2)

(4)

(4)

(4) : (3)

(4) : (3)

TOTAL: ADMINISTRATIVE IMPLEMENTATION COSTS AND INTERESTS REVENUES

TOTAL: ADMINISTRATIVE IMPLEMENTATION COSTS AND INTERESTS REVENUES

1.622

1.622

1.619

1.619

226

226

100%

100%

1.409

1.409

57

57

87%

87%

1.322

1.322

28

28

81%

81%

TOTAL: OPERATIONNAL IMPLEMENTATION

TOTAL: OPERATIONNAL IMPLEMENTATION

49.170

49.170

48.668

48.668

2.461

2.461

99%

99%

44.268

44.268

3.613

3.613

90%

90%

35.114

35.114

4.571

4.571

71%

71%

TOTAL 10+11th EDF: ACP+OCT (INCL. RESERVES) (A+B)

TOTAL 10+11th EDF: ACP+OCT (INCL. RESERVES) (A+B)

50.792

50.792

50.287

50.287

2.687

2.687

99%

99%

45.677

45.677

3.670

3.670

91%

91%

36.436

36.436

4.599

4.599

80%

80%

Breakdown of committed, contracted and paid amount per region and country

Breakdown of committed, contracted and paid amount per region and country

| | | EDF CUMULATIVE ACCOUNTS AT 31 DECEMBER 2020 BY COUNTRY % APPR. |
| --- | --- | --- |
| 10+11th EDF | TOTAL 10th and 11th EDF (EUR in million) |
| Cumulative 2020 | Appropriations | Decisions | % of Appr. | Assigned funds | % of Appr. | Payments | % of Appr. |
| ACP | Administrative and financial expenditure | 1.609 | 1.605 | 100% | 1.399 | 87% | 1.313 | 82% |
| | All ACP countries | 2.846 | 2.553 | 90% | 2.553 | 90% | 1.821 | 64% |
| | Administrative and financial expenditure+ All ACP countries | 4.455 | 4.158 | 93% | 3.952 | 89% | 3.134 | 70% |
| | Angola | 349 | 349 | 100% | 309 | 88% | 239 | 68% |
| | Benin | 741 | 739 | 100% | 685 | 92% | 623 | 84% |
| | Botswana | 130 | 130 | 100% | 128 | 98% | 119 | 91% |
| | Burkina Faso | 1.310 | 1.310 | 100% | 1.293 | 99% | 1.183 | 90% |
| | Burundi | 579 | 572 | 99% | 544 | 94% | 425 | 73% |
| | Cabo Verde | 147 | 147 | 100% | 146 | 99% | 144 | 98% |
| | Cameroon | 522 | 522 | 100% | 489 | 94% | 384 | 74% |
| | Central African Republic | 626 | 625 | 100% | 612 | 98% | 475 | 76% |
| | Chad | 940 | 940 | 100% | 794 | 84% | 663 | 71% |
| | Comoros | 80 | 80 | 99% | 68 | 85% | 62 | 78% |
| | Congo (Brazzaville) | 164 | 164 | 100% | 145 | 88% | 99 | 60% |
| | Democratic Republic of Congo | 1.430 | 1.430 | 100% | 1.223 | 85% | 996 | 70% |
| | Djibouti | 186 | 186 | 100% | 148 | 80% | 112 | 60% |
| | Eritrea | 215 | 215 | 100% | 215 | 100% | 35 | 16% |
| | Ethiopia | 1.656 | 1.655 | 100% | 1.530 | 92% | 1.301 | 79% |
| | Gabon | 35 | 35 | 100% | 33 | 92% | 26 | 75% |
| | Gambia | 316 | 316 | 100% | 307 | 97% | 226 | 72% |
| | Ghana | 796 | 793 | 100% | 722 | 91% | 676 | 85% |
| | Guinea Bissau | 186 | 186 | 100% | 185 | 99% | 141 | 76% |
| | Guinea (Conakry) | 506 | 506 | 100% | 453 | 89% | 372 | 74% |
| | Ivory Coast | 715 | 713 | 100% | 694 | 97% | 603 | 84% |
| | Kenya | 881 | 881 | 100% | 834 | 95% | 583 | 66% |
| | Lesotho | 259 | 259 | 100% | 241 | 93% | 165 | 64% |
| | Liberia | 495 | 495 | 100% | 432 | 87% | 373 | 75% |
| | Madagascar | 792 | 791 | 100% | 684 | 86% | 448 | 57% |
| | Malawi | 1.026 | 1.026 | 100% | 893 | 87% | 726 | 71% |
| | Mali | 1.425 | 1.424 | 100% | 1.390 | 98% | 1.147 | 80% |
| | Mauritania | 349 | 349 | 100% | 319 | 91% | 246 | 70% |
| | Mauritius | 83 | 83 | 100% | 81 | 98% | 77 | 93% |
| | Mozambique | 1.476 | 1.470 | 100% | 1.135 | 77% | 866 | 59% |
| | Namibia | 189 | 189 | 100% | 174 | 92% | 155 | 82% |
| | Niger | 1.294 | 1.289 | 100% | 1.258 | 97% | 1.102 | 85% |
| | Nigeria | 1.187 | 1.175 | 99% | 1.138 | 96% | 920 | 78% |
| | Rwanda | 841 | 841 | 100% | 812 | 96% | 750 | 89% |
| | Sao Tome & Principe | 56 | 56 | 100% | 44 | 79% | 39 | 70% |
| | Senegal | 671 | 670 | 100% | 625 | 93% | 564 | 84% |
| | Seychelles | 23 | 23 | 100% | 21 | 95% | 21 | 92% |
| | Sierra Leone | 663 | 663 | 100% | 600 | 90% | 502 | 76% |
| | Somalia | 905 | 902 | 100% | 898 | 99% | 653 | 72% |
| | South Soudan | 92 | 91 | 100% | 91 | 100% | 91 | 100% |
| | Sudan | 298 | 298 | 100% | 228 | 76% | 128 | 43% |
| | Swaziland | 135 | 135 | 100% | 107 | 80% | 92 | 68% |
| | Tanzania | 1.179 | 1.179 | 100% | 1.003 | 85% | 844 | 72% |
| | Togo | 379 | 378 | 100% | 354 | 93% | 315 | 83% |
| | Uganda | 1.000 | 1.000 | 100% | 943 | 94% | 647 | 65% |
| | Zambia | 837 | 837 | 100% | 682 | 81% | 498 | 59% |
| | Zimbabwe | 472 | 472 | 100% | 466 | 99% | 409 | 87% |
| | * Total Africa | 28.638 | 28.589 | 100% | 26.176 | 91% | 21.266 | 74% |
| | Antigua & Barbuda | 16 | 16 | 98% | 15 | 97% | 13 | 83% |
| | Barbados | 22 | 22 | 100% | 18 | 83% | 17 | 79% |
| | Belize | 43 | 43 | 100% | 28 | 67% | 21 | 48% |
| | Dominica | 41 | 41 | 100% | 41 | 99% | 37 | 90% |
| | Dominican Republic | 283 | 283 | 100% | 277 | 98% | 262 | 92% |
| | Grenada | 21 | 21 | 100% | 20 | 97% | 20 | 95% |
| | Guyana | 84 | 81 | 97% | 78 | 93% | 69 | 82% |
| | Haiti | 1.031 | 1.030 | 100% | 829 | 80% | 690 | 67% |
| | Jamaica | 243 | 243 | 100% | 236 | 97% | 202 | 83% |
| | Saint Kitts & Nevis | 9 | 9 | 100% | 8 | 90% | 6 | 66% |
| | Saint Lucia | 32 | 32 | 100% | 32 | 99% | 25 | 76% |
| | Saint Vincent & the Grenadines | 27 | 27 | 100% | 26 | 96% | 22 | 80% |
| | Suriname | 27 | 27 | 100% | 27 | 97% | 20 | 73% |
| | Trinidad & Tobago | 29 | 29 | 100% | 28 | 99% | 22 | 75% |
| | * Total Caribbean | 1.909 | 1.905 | 100% | 1.665 | 87% | 1.425 | 75% |
| | Cook Islands | 5 | 5 | 100% | 5 | 99% | 5 | 99% |
| | East Timor | 175 | 174 | 99% | 172 | 98% | 129 | 74% |
| | Fiji | 49 | 49 | 100% | 46 | 95% | 36 | 73% |
| | Kiribati | 42 | 42 | 100% | 41 | 97% | 25 | 59% |
| | Marshall Islands | 17 | 17 | 100% | 17 | 98% | 11 | 66% |
| | Micronesia | 23 | 23 | 100% | 21 | 89% | 10 | 43% |
| | Nauru | 4 | 4 | 100% | 4 | 96% | 4 | 89% |
| | Niue | 3 | 3 | 100% | 3 | 98% | 3 | 96% |
| | Palau | 5 | 5 | 100% | 4 | 70% | 3 | 60% |
| | Papua New Guinea | 246 | 246 | 100% | 202 | 82% | 126 | 51% |
| | Solomon Islands | 69 | 69 | 100% | 60 | 87% | 56 | 82% |
| | Tonga | 29 | 28 | 100% | 28 | 99% | 28 | 98% |
| | Tuvalu | 14 | 14 | 100% | 13 | 99% | 10 | 74% |
| | Vanuatu | 55 | 55 | 100% | 49 | 90% | 35 | 65% |
| | Western Samoa | 67 | 67 | 100% | 67 | 99% | 66 | 98% |
| | * Total Pacific | 804 | 803 | 100% | 732 | 91% | 548 | 68% |
| | Caribbean Region | 540 | 531 | 98% | 429 | 80% | 283 | 52% |
| | Central Africa Region | 556 | 556 | 100% | 461 | 83% | 291 | 52% |
| | Eastern, Southern Africa and the Indian Ocean | 3.040 | 3.032 | 100% | 2.617 | 86% | 1.727 | 57% |
| | Intra ACP Allocations | 7.744 | 7.632 | 99% | 6.938 | 90% | 5.808 | 75% |
| | Multiregional PALOP | 62 | 62 | 99% | 59 | 94% | 45 | 72% |
| | Pacific Region | 324 | 324 | 100% | 253 | 78% | 170 | 52% |
| | Southern Africa Region | 142 | 142 | 100% | 142 | 100% | 134 | 95% |
| | West Africa Region | 1.959 | 1.951 | 100% | 1.696 | 87% | 1.171 | 60% |
| | * Total regional cooperation ACP | 14.369 | 14.230 | 99% | 12.594 | 88% | 9.629 | 67% |
| | ACP | 50.174 | 49.686 | 99% | 45.118 | 90% | 36.002 | 72% |
| | | | | | | | | |
| OCT | All OCT countries | 30 | 14 | 46% | 10 | 33% | 9 | 31% |
| | All OCT countries | 30 | 14 | 46% | 10 | 33% | 9 | 31% |
| | Anguilla | 28 | 28 | 100% | 27 | 97% | 26 | 95% |
| | | 2 | 2 | 100% | 2 | 98% | 2 | 90% |
| | Falkland Islands | 10 | 10 | 100% | 10 | 100% | 8 | 77% |
| | Montserrat | 33 | 33 | 100% | 33 | 100% | 29 | 88% |
| | Pitcairn Islands | 5 | 5 | 99% | 5 | 99% | 5 | 99% |
| | Saint Helena | 38 | 38 | 100% | 38 | 100% | 35 | 92% |
| | Turks & Caicos Islands | 33 | 33 | 100% | 32 | 100% | 31 | 95% |
| | * Total British OCT | 148 | 148 | 100% | 146 | 99% | 135 | 92% |
| | Aruba | 21 | 21 | 100% | 21 | 99% | 14 | 66% |
| | Antilles néerlandaises - Bonaire | 4 | 4 | 100% | 4 | 91% | 0 | 0% |
| | Antilles néerlandaises - Saba | 4 | 4 | 100% | 3 | 97% | 3 | 97% |
| | Antilles néerlandaises - Sint-Eustatius | 2 | 2 | 100% | 2 | 97% | 2 | 97% |
| | Netherlands Antilles | 41 | 41 | 100% | 23 | 57% | 18 | 43% |
| | Sint Maarten | 14 | 14 | 100% | 6 | 45% | 0 | 0% |
| | * Total Dutch OCT | 86 | 86 | 100% | 60 | 70% | 38 | 44% |
| | French Polynesia | 51 | 51 | 100% | 49 | 97% | 45 | 89% |
| | Mayotte | 29 | 29 | 100% | 29 | 100% | 29 | 100% |
| | New Caledonia | 50 | 50 | 100% | 49 | 98% | 48 | 96% |
| | Saint Pierre & Miquelon | 47 | 47 | 100% | 46 | 98% | 46 | 98% |
| | Wallis & Futuna | 39 | 39 | 100% | 36 | 94% | 25 | 64% |
| | * Total French OCT | 215 | 215 | 100% | 209 | 97% | 193 | 90% |
| | Regional cooperation OCT | 139 | 138 | 99% | 133 | 96% | 59 | 42% |
| | * Total regional cooperation OCT | 139 | 138 | 99% | 133 | 96% | 59 | 42% |
| | OCT | 618 | 601 | 97% | 559 | 90% | 434 | 70% |
| | | | | | | | | |
| TOTAL:


  ACP+OCT | | 50.792 | 50.287 | 99% | 45.677 | 90% | 36.436 | 72% |

EDF CUMULATIVE ACCOUNTS AT 31 DECEMBER 2020 BY COUNTRY % APPR.

EDF CUMULATIVE ACCOUNTS AT 31 DECEMBER 2020 BY COUNTRY % APPR.

10+11th EDF

10+11th EDF

TOTAL 10th and 11th EDF (EUR in million)

TOTAL 10th and 11th EDF (EUR in million)

Cumulative 2020

Cumulative 2020

Appropriations

Appropriations

Decisions

Decisions

% of Appr.

% of Appr.

Assigned funds

Assigned funds

% of Appr.

% of Appr.

Payments

Payments

% of Appr.

% of Appr.

ACP

ACP

Administrative and financial expenditure

Administrative and financial expenditure

1.609

1.609

1.605

1.605

100%

100%

1.399

1.399

87%

87%

1.313

1.313

82%

82%

All ACP countries

All ACP countries

2.846

2.846

2.553

2.553

90%

90%

2.553

2.553

90%

90%

1.821

1.821

64%

64%

Administrative and financial expenditure+ All ACP countries

Administrative and financial expenditure+ All ACP countries

4.455

4.455

4.158

4.158

93%

93%

3.952

3.952

89%

89%

3.134

3.134

70%

70%

Angola

Angola

349

349

349

349

100%

100%

309

309

88%

88%

239

239

68%

68%

Benin

Benin

741

741

739

739

100%

100%

685

685

92%

92%

623

623

84%

84%

Botswana

Botswana

130

130

130

130

100%

100%

128

128

98%

98%

119

119

91%

91%

Burkina Faso

Burkina Faso

1.310

1.310

1.310

1.310

100%

100%

1.293

1.293

99%

99%

1.183

1.183

90%

90%

Burundi

Burundi

579

579

572

572

99%

99%

544

544

94%

94%

425

425

73%

73%

Cabo Verde

Cabo Verde

147

147

147

147

100%

100%

146

146

99%

99%

144

144

98%

98%

Cameroon

Cameroon

522

522

522

522

100%

100%

489

489

94%

94%

384

384

74%

74%

Central African Republic

Central African Republic

626

626

625

625

100%

100%

612

612

98%

98%

475

475

76%

76%

Chad

Chad

940

940

940

940

100%

100%

794

794

84%

84%

663

663

71%

71%

Comoros

Comoros

80

80

80

80

99%

99%

68

68

85%

85%

62

62

78%

78%

Congo (Brazzaville)

Congo (Brazzaville)

164

164

164

164

100%

100%

145

145

88%

88%

99

99

60%

60%

Democratic Republic of Congo

Democratic Republic of Congo

1.430

1.430

1.430

1.430

100%

100%

1.223

1.223

85%

85%

996

996

70%

70%

Djibouti

Djibouti

186

186

186

186

100%

100%

148

148

80%

80%

112

112

60%

60%

Eritrea

Eritrea

215

215

215

215

100%

100%

215

215

100%

100%

35

35

16%

16%

Ethiopia

Ethiopia

1.656

1.656

1.655

1.655

100%

100%

1.530

1.530

92%

92%

1.301

1.301

79%

79%

Gabon

Gabon

35

35

35

35

100%

100%

33

33

92%

92%

26

26

75%

75%

Gambia

Gambia

316

316

316

316

100%

100%

307

307

97%

97%

226

226

72%

72%

Ghana

Ghana

796

796

793

793

100%

100%

722

722

91%

91%

676

676

85%

85%

Guinea Bissau

Guinea Bissau

186

186

186

186

100%

100%

185

185

99%

99%

141

141

76%

76%

Guinea (Conakry)

Guinea (Conakry)

506

506

506

506

100%

100%

453

453

89%

89%

372

372

74%

74%

Ivory Coast

Ivory Coast

715

715

713

713

100%

100%

694

694

97%

97%

603

603

84%

84%

Kenya

Kenya

881

881

881

881

100%

100%

834

834

95%

95%

583

583

66%

66%

Lesotho

Lesotho

259

259

259

259

100%

100%

241

241

93%

93%

165

165

64%

64%

Liberia

Liberia

495

495

495

495

100%

100%

432

432

87%

87%

373

373

75%

75%

Madagascar

Madagascar

792

792

791

791

100%

100%

684

684

86%

86%

448

448

57%

57%

Malawi

Malawi

1.026

1.026

1.026

1.026

100%

100%

893

893

87%

87%

726

726

71%

71%

Mali

Mali

1.425

1.425

1.424

1.424

100%

100%

1.390

1.390

98%

98%

1.147

1.147

80%

80%

Mauritania

Mauritania

349

349

349

349

100%

100%

319

319

91%

91%

246

246

70%

70%

Mauritius

Mauritius

83

83

83

83

100%

100%

81

81

98%

98%

77

77

93%

93%

Mozambique

Mozambique

1.476

1.476

1.470

1.470

100%

100%

1.135

1.135

77%

77%

866

866

59%

59%

Namibia

Namibia

189

189

189

189

100%

100%

174

174

92%

92%

155

155

82%

82%

Niger

Niger

1.294

1.294

1.289

1.289

100%

100%

1.258

1.258

97%

97%

1.102

1.102

85%

85%

Nigeria

Nigeria

1.187

1.187

1.175

1.175

99%

99%

1.138

1.138

96%

96%

920

920

78%

78%

Rwanda

Rwanda

841

841

841

841

100%

100%

812

812

96%

96%

750

750

89%

89%

Sao Tome & Principe

Sao Tome & Principe

56

56

56

56

100%

100%

44

44

79%

79%

39

39

70%

70%

Senegal

Senegal

671

671

670

670

100%

100%

625

625

93%

93%

564

564

84%

84%

Seychelles

Seychelles

23

23

23

23

100%

100%

21

21

95%

95%

21

21

92%

92%

Sierra Leone

Sierra Leone

663

663

663

663

100%

100%

600

600

90%

90%

502

502

76%

76%

Somalia

Somalia

905

905

902

902

100%

100%

898

898

99%

99%

653

653

72%

72%

South Soudan

South Soudan

92

92

91

91

100%

100%

91

91

100%

100%

91

91

100%

100%

Sudan

Sudan

298

298

298

298

100%

100%

228

228

76%

76%

128

128

43%

43%

Swaziland

Swaziland

135

135

135

135

100%

100%

107

107

80%

80%

92

92

68%

68%

Tanzania

Tanzania

1.179

1.179

1.179

1.179

100%

100%

1.003

1.003

85%

85%

844

844

72%

72%

Togo

Togo

379

379

378

378

100%

100%

354

354

93%

93%

315

315

83%

83%

Uganda

Uganda

1.000

1.000

1.000

1.000

100%

100%

943

943

94%

94%

647

647

65%

65%

Zambia

Zambia

837

837

837

837

100%

100%

682

682

81%

81%

498

498

59%

59%

Zimbabwe

Zimbabwe

472

472

472

472

100%

100%

466

466

99%

99%

409

409

87%

87%

- Total Africa

- Total Africa

28.638

28.638

28.589

28.589

100%

100%

26.176

26.176

91%

91%

21.266

21.266

74%

74%

Antigua & Barbuda

Antigua & Barbuda

16

16

16

16

98%

98%

15

15

97%

97%

13

13

83%

83%

Barbados

Barbados

22

22

22

22

100%

100%

18

18

83%

83%

17

17

79%

79%

Belize

Belize

43

43

43

43

100%

100%

28

28

67%

67%

21

21

48%

48%

Dominica

Dominica

41

41

41

41

100%

100%

41

41

99%

99%

37

37

90%

90%

Dominican Republic

Dominican Republic

283

283

283

283

100%

100%

277

277

98%

98%

262

262

92%

92%

Grenada

Grenada

21

21

21

21

100%

100%

20

20

97%

97%

20

20

95%

95%

Guyana

Guyana

84

84

81

81

97%

97%

78

78

93%

93%

69

69

82%

82%

Haiti

Haiti

1.031

1.031

1.030

1.030

100%

100%

829

829

80%

80%

690

690

67%

67%

Jamaica

Jamaica

243

243

243

243

100%

100%

236

236

97%

97%

202

202

83%

83%

Saint Kitts & Nevis

Saint Kitts & Nevis

9

9

9

9

100%

100%

8

8

90%

90%

6

6

66%

66%

Saint Lucia

Saint Lucia

32

32

32

32

100%

100%

32

32

99%

99%

25

25

76%

76%

Saint Vincent & the Grenadines

Saint Vincent & the Grenadines

27

27

27

27

100%

100%

26

26

96%

96%

22

22

80%

80%

Suriname

Suriname

27

27

27

27

100%

100%

27

27

97%

97%

20

20

73%

73%

Trinidad & Tobago

Trinidad & Tobago

29

29

29

29

100%

100%

28

28

99%

99%

22

22

75%

75%

- Total Caribbean

- Total Caribbean

1.909

1.909

1.905

1.905

100%

100%

1.665

1.665

87%

87%

1.425

1.425

75%

75%

Cook Islands

Cook Islands

5

5

5

5

100%

100%

5

5

99%

99%

5

5

99%

99%

East Timor

East Timor

175

175

174

174

99%

99%

172

172

98%

98%

129

129

74%

74%

Fiji

Fiji

49

49

49

49

100%

100%

46

46

95%

95%

36

36

73%

73%

Kiribati

Kiribati

42

42

42

42

100%

100%

41

41

97%

97%

25

25

59%

59%

Marshall Islands

Marshall Islands

17

17

17

17

100%

100%

17

17

98%

98%

11

11

66%

66%

Micronesia

Micronesia

23

23

23

23

100%

100%

21

21

89%

89%

10

10

43%

43%

Nauru

Nauru

4

4

4

4

100%

100%

4

4

96%

96%

4

4

89%

89%

Niue

Niue

3

3

3

3

100%

100%

3

3

98%

98%

3

3

96%

96%

Palau

Palau

5

5

5

5

100%

100%

4

4

70%

70%

3

3

60%

60%

Papua New Guinea

Papua New Guinea

246

246

246

246

100%

100%

202

202

82%

82%

126

126

51%

51%

Solomon Islands

Solomon Islands

69

69

69

69

100%

100%

60

60

87%

87%

56

56

82%

82%

Tonga

Tonga

29

29

28

28

100%

100%

28

28

99%

99%

28

28

98%

98%

Tuvalu

Tuvalu

14

14

14

14

100%

100%

13

13

99%

99%

10

10

74%

74%

Vanuatu

Vanuatu

55

55

55

55

100%

100%

49

49

90%

90%

35

35

65%

65%

Western Samoa

Western Samoa

67

67

67

67

100%

100%

67

67

99%

99%

66

66

98%

98%

- Total Pacific

- Total Pacific

804

804

803

803

100%

100%

732

732

91%

91%

548

548

68%

68%

Caribbean Region

Caribbean Region

540

540

531

531

98%

98%

429

429

80%

80%

283

283

52%

52%

Central Africa Region

Central Africa Region

556

556

556

556

100%

100%

461

461

83%

83%

291

291

52%

52%

Eastern, Southern Africa and the Indian Ocean

Eastern, Southern Africa and the Indian Ocean

3.040

3.040

3.032

3.032

100%

100%

2.617

2.617

86%

86%

1.727

1.727

57%

57%

Intra ACP Allocations

Intra ACP Allocations

7.744

7.744

7.632

7.632

99%

99%

6.938

6.938

90%

90%

5.808

5.808

75%

75%

Multiregional PALOP

Multiregional PALOP

62

62

62

62

99%

99%

59

59

94%

94%

45

45

72%

72%

Pacific Region

Pacific Region

324

324

324

324

100%

100%

253

253

78%

78%

170

170

52%

52%

Southern Africa Region

Southern Africa Region

142

142

142

142

100%

100%

142

142

100%

100%

134

134

95%

95%

West Africa Region

West Africa Region

1.959

1.959

1.951

1.951

100%

100%

1.696

1.696

87%

87%

1.171

1.171

60%

60%

- Total regional cooperation ACP

- Total regional cooperation ACP

14.369

14.369

14.230

14.230

99%

99%

12.594

12.594

88%

88%

9.629

9.629

67%

67%

ACP

ACP

50.174

50.174

49.686

49.686

99%

99%

45.118

45.118

90%

90%

36.002

36.002

72%

72%

OCT

OCT

All OCT countries

All OCT countries

30

30

14

14

46%

46%

10

10

33%

33%

9

9

31%

31%

All OCT countries

All OCT countries

30

30

14

14

46%

46%

10

10

33%

33%

9

9

31%

31%

Anguilla

Anguilla

28

28

28

28

100%

100%

27

27

97%

97%

26

26

95%

95%

2

2

2

2

100%

100%

2

2

98%

98%

2

2

90%

90%

Falkland Islands

Falkland Islands

10

10

10

10

100%

100%

10

10

100%

100%

8

8

77%

77%

Montserrat

Montserrat

33

33

33

33

100%

100%

33

33

100%

100%

29

29

88%

88%

Pitcairn Islands

Pitcairn Islands

5

5

5

5

99%

99%

5

5

99%

99%

5

5

99%

99%

Saint Helena

Saint Helena

38

38

38

38

100%

100%

38

38

100%

100%

35

35

92%

92%

Turks & Caicos Islands

Turks & Caicos Islands

33

33

33

33

100%

100%

32

32

100%

100%

31

31

95%

95%

- Total British OCT

- Total British OCT

148

148

148

148

100%

100%

146

146

99%

99%

135

135

92%

92%

Aruba

Aruba

21

21

21

21

100%

100%

21

21

99%

99%

14

14

66%

66%

Antilles néerlandaises - Bonaire

Antilles néerlandaises - Bonaire

4

4

4

4

100%

100%

4

4

91%

91%

0

0

0%

0%

Antilles néerlandaises - Saba

Antilles néerlandaises - Saba

4

4

4

4

100%

100%

3

3

97%

97%

3

3

97%

97%

Antilles néerlandaises - Sint-Eustatius

Antilles néerlandaises - Sint-Eustatius

2

2

2

2

100%

100%

2

2

97%

97%

2

2

97%

97%

Netherlands Antilles

Netherlands Antilles

41

41

41

41

100%

100%

23

23

57%

57%

18

18

43%

43%

Sint Maarten

Sint Maarten

14

14

14

14

100%

100%

6

6

45%

45%

0

0

0%

0%

- Total Dutch OCT

- Total Dutch OCT

86

86

86

86

100%

100%

60

60

70%

70%

38

38

44%

44%

French Polynesia

French Polynesia

51

51

51

51

100%

100%

49

49

97%

97%

45

45

89%

89%

Mayotte

Mayotte

29

29

29

29

100%

100%

29

29

100%

100%

29

29

100%

100%

New Caledonia

New Caledonia

50

50

50

50

100%

100%

49

49

98%

98%

48

48

96%

96%

Saint Pierre & Miquelon

Saint Pierre & Miquelon

47

47

47

47

100%

100%

46

46

98%

98%

46

46

98%

98%

Wallis & Futuna

Wallis & Futuna

39

39

39

39

100%

100%

36

36

94%

94%

25

25

64%

64%

- Total French OCT

- Total French OCT

215

215

215

215

100%

100%

209

209

97%

97%

193

193

90%

90%

Regional cooperation OCT

Regional cooperation OCT

139

139

138

138

99%

99%

133

133

96%

96%

59

59

42%

42%

- Total regional cooperation OCT

- Total regional cooperation OCT

139

139

138

138

99%

99%

133

133

96%

96%

59

59

42%

42%

OCT

OCT

618

618

601

601

97%

97%

559

559

90%

90%

434

434

70%

70%

TOTAL:

TOTAL:

ACP+OCT

ACP+OCT

50.792

50.792

50.287

50.287

99%

99%

45.677

45.677

90%

90%

36.436

36.436

72%

72%

Breakdown of committed, contracted and paid amount by spending area for the 11th EDF

Breakdown of committed, contracted and paid amount by spending area for the 11

th

EDF

11TH EDF Breakdown of committed, contracted and paid amount by spending area (DAC sector codes)
  10

| 11TH EDF Breakdown of committed, contracted and paid amount by spending area (DAC sector codes)
  10 |
| --- |
| (EUR million) |
| Sector | Committed4 | Contracted4 | Paid
  11 |
| Social infrastructure and services | | | |
| 110-Education | 1.197,26 | 1.038,76 | 758,36 |
| 120-Health | 2.226,42 | 2.323,60 | 1.907,70 |
| 130-Population policies/programmes and reproductive health | 352,44 | 38,39 | 20,24 |
| 140-Water and sanitation | 775,90 | 639,26 | 283,71 |
| 150-Government and civil society | 5.905,39 | 5.450,64 | 4.156,20 |
| 160-Other social infrastructure and services | 979,35 | 1.339,34 | 1.128,02 |
| Social infrastructure and services TOTAL | 11.436,77 | 10.829,99 | 8.254,24 |
| Economic infrastructure and services | | | |
| 210-Transport and storage | 1.445,48 | 1.827,48 | 595,21 |
| 220-Communications | 140,96 | 99,39 | 64,78 |
| 230-Energy | 2.016,01 | 1.566,30 | 675,00 |
| 240-Banking and financial services | 93,93 | 96,23 | 38,59 |
| 250-Business and other services | 346,23 | 178,15 | 84,80 |
| Economic infrastructure and services TOTAL | 4.042,59 | 3.767,55 | 1.458,38 |
| Production sectors | | | |
| 310-Agriculture, forestry and fishing | 3.187,79 | 2.509,57 | 1.478,27 |
| 320-Industry, mineral resources and mining, construction | 623,58 | 356,84 | 115,46 |
| 330-Trade and tourism | 497,21 | 353,36 | 138,53 |
| Production sectors TOTAL | 4.308,58 | 3.219,77 | 1.732,26 |
| Multisector/Cross-cutting | | | |
| 410-General environmental protection | 999,94 | 760,45 | 390,13 |
| 430-Other multisector | 3.841,16 | 2.343,95 | 609,07 |
| Multisector/Cross-cutting TOTAL | 4.841,10 | 3.104,40 | 999,19 |
| Commodity aid and general programme assistance | | | |
| 510-General budget support | 3.116,32 | 3.059,65 | 2.345,18 |
| 520-Developmental food assistance | 614,50 | 385,27 | 332,91 |
| Commodity aid and general programme assistance TOTAL | 3.730,82 | 3.444,92 | 2.678,10 |
| Action relating to debt | | | |
| 600-Action relating to debt | 91,50 | - | - |
| Action relating to debt TOTAL | 91,50 | - | - |
| Humanitarian aid | | | |
| 720-Emergency response | 746,19 | 505,17 | 458,31 |
| 730-Reconstruction relief and rehabilitation | 137,83 | 43,40 | 33,36 |
| 740-Disaster preparedness | 133,29 | 106,16 | 69,14 |
| Humanitarian aid TOTAL | 1.017,31 | 654,72 | 560,80 |
| Administrative costs of donors / Unallocated / Unspecified | | | |
| 910-Administrative costs of donors | 978,02 | 786,39 | 739,89 |
| 998-Unallocated / Unspecified | 586,30 | 434,28 | 421,68 |
| N/A-Not Available | 214,40 | 0,64 | - |
| Administrative costs of donors / Unallocated / Unspecified TOTAL | 1.778,72 | 1.221,31 | 1.161,57 |
| GRAND TOTAL OF 11TH EDF of committed, contracted and paid amount | 31.247,39 | 26.242,65 | 16.844,55 |

(EUR million)

Sector

Committed4

Contracted4

Paid
  11

Social infrastructure and services

110-Education

1.197,26

1.038,76

758,36

120-Health

2.226,42

2.323,60

1.907,70

130-Population policies/programmes and reproductive health

352,44

38,39

20,24

140-Water and sanitation

775,90

639,26

283,71

150-Government and civil society

5.905,39

5.450,64

4.156,20

160-Other social infrastructure and services

979,35

1.339,34

1.128,02

Social infrastructure and services TOTAL

11.436,77

10.829,99

8.254,24

Economic infrastructure and services

210-Transport and storage

1.445,48

1.827,48

595,21

220-Communications

140,96

99,39

64,78

230-Energy

2.016,01

1.566,30

675,00

240-Banking and financial services

93,93

96,23

38,59

250-Business and other services

346,23

178,15

84,80

Economic infrastructure and services TOTAL

4.042,59

3.767,55

1.458,38

Production sectors

310-Agriculture, forestry and fishing

3.187,79

2.509,57

1.478,27

320-Industry, mineral resources and mining, construction

623,58

356,84

115,46

330-Trade and tourism

497,21

353,36

138,53

Production sectors TOTAL

4.308,58

3.219,77

1.732,26

Multisector/Cross-cutting

410-General environmental protection

999,94

760,45

390,13

430-Other multisector

3.841,16

2.343,95

609,07

Multisector/Cross-cutting TOTAL

4.841,10

3.104,40

999,19

Commodity aid and general programme assistance

510-General budget support

3.116,32

3.059,65

2.345,18

520-Developmental food assistance

614,50

385,27

332,91

Commodity aid and general programme assistance TOTAL

3.730,82

3.444,92

2.678,10

Action relating to debt

600-Action relating to debt

91,50

-

-

Action relating to debt TOTAL

91,50

-

-

Humanitarian aid

720-Emergency response

746,19

505,17

458,31

730-Reconstruction relief and rehabilitation

137,83

43,40

33,36

740-Disaster preparedness

133,29

106,16

69,14

Humanitarian aid TOTAL

1.017,31

654,72

560,80

Administrative costs of donors / Unallocated / Unspecified

910-Administrative costs of donors

978,02

786,39

739,89

998-Unallocated / Unspecified

586,30

434,28

421,68

N/A-Not Available

214,40

0,64

-

Administrative costs of donors / Unallocated / Unspecified TOTAL

1.778,72

1.221,31

1.161,57

GRAND TOTAL OF 11TH EDF of committed, contracted and paid amount

31.247,39

26.242,65

16.844,55

Evolution of cumulative Committed, Contracted and Paid amount by spending area for the 11th EDF

3.GLOSSARY

ABAC

This is the name given to the Commission’s accounting system, which since 2005 has been enriched by accrual accounting rules. Apart from the cash-based budget accounts, the Commission produces accrual-based accounts which recognise revenue when earned, rather than when collected. Expenses are recognised when incurred rather than when paid. This contrasts with cash basis budgetary accounting that recognises transactions and other events only when cash is received or paid.

Accounting

The act of recording and reporting financial transactions, including the creation of the transaction, its recognition, processing, and summarisation in the financial statements.

Accounting Officer

The role, powers and responsibilities of the accounting officer are set out in the Financial Regulation:

·proper implementation of payments,

·collection of revenue,

·recovery of amounts and offsetting,

·keeping, preparing and presenting the accounts,

·laying down the accounting rules and methods and the chart of accounts,

·laying down and validating the accounting systems and validating systems laid down by the authorising officer to supply or justify accounting information (local systems),

·treasury management,

·designation of the Imprest Administrators,

·opening and closing bank accounts in the name of the Institution.

Administrative appropriations

Administrative appropriations cover the running costs of the Institutions and entities (staff, buildings, office equipment).

Adjustment

Amending budget or transfer of funds from one budget item to another.

Adopted budget

Draft budget becomes the adopted budget as soon as approved by the Budgetary Authority.

Cf. Budget

Agencies

EU bodies having a distinct legal personality, and to whom budget implementing powers may be delegated under strict conditions. They are subject to a distinct discharge from the discharge authority.

Amending budget

Decision adopted during the budget year to amend (increase, decrease, transfer) aspects of the adopted budget of that year.

Annuality

The budgetary principle according to which expenditure and revenue is programmed and authorised for one year, starting on 1 January and ending on 31 December.

Appropriations

Budget funding.

The budget forecasts both commitments (legal pledges to provide finance, provided that certain conditions are fulfilled) and payments (cash or bank transfers to the beneficiaries). Appropriations for commitments and payments often differ — differentiated appropriations — because multiannual programmes and projects are usually fully committed in the year they are decided and are paid over the years as the implementation of the programme and project progresses. Non-differentiated appropriations apply to administrative expenditure and commitment appropriations equal payment appropriations.

Assigned revenue External/Internal

Dedicated revenue received to finance specific items of expenditure.

Main sources of external assigned revenue are financial contributions from third countries to programmes financed by the Union.

Main sources of internal assigned revenue are revenue from third parties in respect of goods, services or work supplied at their request, revenue arising from the repayment of amounts wrongly paid and revenue from the sale of publications and films, including those on an electronic medium.

The complete list of items constituting assigned revenue is given in the Financial Regulation Art. 21.

Authorising Officer by Delegation (AOD)

The AOD is responsible in each entity for authorising revenue and expenditure operations in accordance with the principles of sound financial management and for ensuring that the requirements of legality and regularity are complied with.

The AOD is responsible for taking all financial decision concerning actions under his/her responsibility. Particularly, he/she must take decisions to implement the budget based on his/her risk analysis.

Budget

Annual financial plan, drawn up according to budgetary principles, that provides forecasts and authorises, for each financial year, an estimate of future costs and revenue and expenditures and their detailed description and justification, the latter included in budgetary remarks.

Budget result

The difference between income received and amounts paid, including adjustments for carry-overs, cancellations and exchange rate differences.

For agencies, the resulting amount will have to be reimbursed to the funding authority as provided in the Financial Regulation for agencies.

Budget implementation

Consumption of the budget through expenditure and revenue operations.

Budget item / Budget line / Budget position

As far as the budget structure is concerned, revenue and expenditure are shown in the budget in accordance with a binding nomenclature, which reflects the nature and purpose of each item, as imposed by the budgetary authority. The individual headings (title, chapter, article or item) provide a formal description of the nomenclature.

Budgetary authority

Institutions with decisional powers on budgetary matters: for the EU institutions, the European Parliament and the Council of Ministers.

For the agencies and joint undertakings, their board is the budgetary authority.

Budgetary commitment

A budgetary commitment is a reservation of appropriations to cover for subsequent expenses.

Cancellation of appropriations

Unused appropriations that may no longer be used.

Carryover of appropriations

Exception to the principle of annuality in so far as appropriations that could not be used in a given budget year may, under strict conditions, be exceptionally carried over for use during the following year.

Commitment appropriations

Commitment appropriations cover the total cost of legal obligations (contracts, grant agreements/decisions) that could be signed in the current financial year. Financial Regulation Art. 7: Commitment appropriations cover the total cost in the current financial year of legal obligations (contracts, grant agreements/decisions) entered into for operations extending over more than one year.

De-commitment

An act whereby a previous commitment (or part of it) is cancelled.

Differentiated appropriations

Differentiated appropriations are used to finance multiannual operations; they cover, for the current financial year, the total cost of the legal obligations entered into for operations whose implementation extends over more than one financial year. Financial Regulation Art. 7: Differentiated appropriations are entered for multiannual operations. They consist of commitment appropriations and payment appropriations.

Earmarked revenue

Revenue earmarked for a specific purpose, such as income from foundations, subsidies, gifts and bequests, including the earmarked revenue specific to each institution.

Cf. Assigned revenue

Economic result

Impact on the balance sheet of expenditure and revenue based on accrual accounting rules.

Entitlements established

Entitlements are recovery orders that the European Union must establish for collecting income.

Exchange rate difference

The difference resulting from currency exchange rates applied to the transactions concerning countries outside the euro area, or from the revaluation of assets and liabilities in foreign currency at the closure.

Expenditure

Term used to describe spending the budget from all types of funds sources.

Financial regulation (FR)

Adopted through the ordinary legislative procedure after consulting the European Court of Auditors, this regulation lays down the rules for the establishment and implementation of the general budget of the European Union.

For reference, Regulation (EU, Euratom) No 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union

Funds Source

Type of appropriations

Grants

Direct financial contributions, by way of donation, from the budget in order to finance either an action intended to help achieve an objective part of an EU policy or the functioning of a body, which pursues an aim of general European interest or has an objective forming part of an EU policy.

Implementation

Cf. Budget implementation

Income

Cf. Revenue

Joint Undertakings (JUs)

A legal EU-body established under the Treaty on the Functioning of the European Union. The term can be used to describe any collaborative structure proposed for the "efficient execution of Union research, technological development and demonstration programmes".

Lapsing appropriations

Unused appropriations to be cancelled at the end of the financial year. Lapsing means the cancellation of all or part of the authorisation to make expenditures and/or incur liabilities, which is represented by an appropriation.

Only for joint undertakings, as specified in theirs Financial Rules, any unused appropriations may be entered in the estimate of revenue and expenditure of up to the following three financial years (the so-called "N+3" rule). Hence, lapsing appropriations for JUs could be re-activated until financial year "N+3".

Legal base (basic act)

The legal base or basis is, as a general rule, a law based on an article in the Treaty on the Functioning of the European Union giving competence to the Community for a specific policy area and setting out the conditions for fulfilling that competence including budget implementation. Certain articles from the treaty authorise the Commission to undertake certain actions, which imply spending, without there being a further legal act.

Legal commitment

A legal commitment establishes a legal obligation towards third parties.

Non-differentiated appropriations

Non-differentiated appropriations are for operations of an annual nature. (Financial Regulation Art. 9). In the EU Budget, non-differentiated appropriations apply to administrative expenditure, for agricultural market support and direct payments.

Operational appropriations

Operational appropriations finance the different policies, mainly in the form of grants or procurement.

Outstanding commitment

Outstanding commitments (or RAL, from the French ‘reste à liquider’) are defined as the amount of appropriations committed that have not yet been paid or legal commitments having not fully given rise to liquidation by payments. They stem directly from the existence of multiannual programmes and the dissociation between commitment and payment appropriations.

Outturn

Cf. Budget result

Payment

A payment is a disbursement to honour legal obligations.

Payment appropriations

Payment appropriations cover expenditure due in the current year, arising from legal commitments entered in the current year and/or earlier years (Financial Regulation Art. 7).

RAL

Sum of outstanding commitments. Cf. Outstanding commitments

Recovery

The recovery order is the procedure by which the Authorising officer by Delegation (AOD) registers an entitlement by the Commission in order to retrieve the amount, which is due. The entitlement is the right that the Commission has to claim the sum, which is due by a debtor, usually a beneficiary.

Result

Cf. Budget result

Revenue

Term used to describe income from all sources financing the budget.

Rules of application

Detailed rules for the implementation of the financial regulation. They are set out in a Commission regulation adopted after consulting all institutions and cannot alter the financial regulation upon which they depend.

Surplus

Positive difference between revenue and expenditure (Cf. Budget result) which has to be returned to the funding authority as provided in the Financial Regulation.

Transfer

Transfers between budget lines imply the relocation of appropriations from one budget line to another, in the course of the financial year, and thereby they constitute an exception to the budgetary principle of specification. However, they are expressly authorised by the Treaty on the Functioning of the European Union under the conditions laid down in the Financial Regulation. The Financial Regulation identifies different types of transfers depending on whether they are between or within budget titles, chapters, articles or headings and require different levels of authorisation.

ANNUAL REPORT ON IMPLEMENTATION - FUNDS MANAGED BY THE EUROPEAN INVESTMENT BANK

| EUROPEAN INVESTMENT BANK | CA/541/21 |
| --- | --- |
| | 11 March 2021 |
| | Document 21/101 |
| | |
| | |
| BOARD OF DIRECTORS |
| Investment Facility |
| financial statements |
| as at 31 december 2020 |
| | | |
| | a)Statement of financial position


  b)Statement of profit or loss and other comprehensive income


  c)Statement of changes in contributors’ resources


  d)Statement of cash flows


  e)Notes to the financial statements


  f)Independent auditor’s report | |
| | |
| | |
| | |
| ORG.: E | |

EUROPEAN INVESTMENT BANK

CA/541/21

11 March 2021

Document 21/101

BOARD OF DIRECTORS

Investment Facility

financial statements

as at 31 december 2020

a)Statement of financial position

b)Statement of profit or loss and other comprehensive income

c)Statement of changes in contributors’ resources

d)Statement of cash flows

e)Notes to the financial statements

f)Independent auditor’s report

ORG.: E

STATEMENT OF FINANCIAL POSITION

| | Notes | 31.12.2020 | 31.12.2019 |
| --- | --- | --- | --- |
| | | | |
| ASSETS | | | |
| Cash and cash equivalents | 5 | 923,940 | 837,777 |
| Amounts receivable from contributors | 9/17 | 68,908 | 86,330 |
| Treasury financial assets | 10 | 351,873 | 330,587 |
| Derivative financial instruments | 6 | 33,584 | 14,184 |
| Loans and advances | 7 | 1,673,445 | 1,518,675 |
| Shares and other variable yield securities | 8 | 526,810 | 619,928 |
| Other assets | 11 | 109 | - |
| | | | |
| Total assets | | 3,578,669 | 3,407,481 |
| | | | |
| | | | |
| LIABILITIES AND CONTRIBUTORS' RESOURCES | | | |
| | | | |
| LIABILITIES | | | |
| Derivative financial instruments | 6 | 642 | 191 |
| Deferred income | 12 | 29,732 | 32,566 |
| Provisions for guarantees issued | 13 | 851 | 628 |
| Provisions for loan commitments | 14 | 33,152 | 37,269 |
| Amounts owed to third parties | 15 | 152,378 | 147,438 |
| Other liabilities | 16 | 3,446 | 2,353 |
| | | | |
| Total liabilities | | 220,201 | 220,445 |
| | | | |
| CONTRIBUTORS' RESOURCES | | | |
| Facility Member States Contribution called | 17 | 3,221,695 | 2,967,000 |
| Retained earnings | | 136,773 | 220,036 |
| | | | |
| Total contributors' resources | | 3,358,468 | 3,187,036 |
| | | | |
| Total liabilities and contributors' resources | | 3,578,669 | 3,407,481 |

Notes

Notes

31.12.2020

31.12.2020

31.12.2019

31.12.2019

ASSETS

ASSETS

Cash and cash equivalents

Cash and cash equivalents

5

5

923,940

923,940

837,777

837,777

Amounts receivable from contributors

Amounts receivable from contributors

9/17

9/17

68,908

68,908

86,330

86,330

Treasury financial assets

Treasury financial assets

10

10

351,873

351,873

330,587

330,587

Derivative financial instruments

Derivative financial instruments

6

6

33,584

33,584

14,184

14,184

Loans and advances

Loans and advances

7

7

1,673,445

1,673,445

1,518,675

1,518,675

Shares and other variable yield securities

Shares and other variable yield securities

8

8

526,810

526,810

619,928

619,928

Other assets

Other assets

11

11

109

109

-

-

Total assets

Total assets

3,578,669

3,578,669

3,407,481

3,407,481

LIABILITIES AND CONTRIBUTORS' RESOURCES

LIABILITIES AND CONTRIBUTORS' RESOURCES

LIABILITIES

LIABILITIES

Derivative financial instruments

Derivative financial instruments

6

6

642

642

191

191

Deferred income

Deferred income

12

12

29,732

29,732

32,566

32,566

Provisions for guarantees issued

Provisions for guarantees issued

13

13

851

851

628

628

Provisions for loan commitments

Provisions for loan commitments

14

14

33,152

33,152

37,269

37,269

Amounts owed to third parties

Amounts owed to third parties

15

15

152,378

152,378

147,438

147,438

Other liabilities

Other liabilities

16

16

3,446

3,446

2,353

2,353

Total liabilities

Total liabilities

220,201

220,201

220,445

220,445

CONTRIBUTORS' RESOURCES

CONTRIBUTORS' RESOURCES

Facility Member States Contribution called

Facility Member States Contribution called

17

17

3,221,695

3,221,695

2,967,000

2,967,000

Retained earnings

Retained earnings

136,773

136,773

220,036

220,036

Total contributors' resources

Total contributors' resources

3,358,468

3,358,468

3,187,036

3,187,036

Total liabilities and contributors' resources

Total liabilities and contributors' resources

3,578,669

3,578,669

3,407,481

3,407,481

STATEMENT OF profit or loss and other COMPREHENSIVE INCOME

| | Notes | From 01.01.2020 | From 01.01.2019 |
| --- | --- | --- | --- |
| | | to 31.12.2020 | to 31.12.2019 |
| | | | |
| Interest and similar income* | 19 | 84,783 | 93,923 |
| Interest and similar expenses | 19 | -5,250 | -2,948 |
| | | | |
| Net interest and similar income | | 79,533 | 90,975 |
| | | | |
| Fee and commission income | 20 | 353 | 4,438 |
| Fee and commission expenses | 20 | -225 | -721 |
| | | | |
| Net fee and commission income | | 128 | 3,717 |
| | | | |
| Fair value change of derivative financial instruments | | 18,949 | 12,611 |
| Net result on shares and other variable yield securities | 21 | -46,717 | 9,904 |
| Net result on loans and advances measured at FVTPL | 7 | -29,621 | -8,331 |
| Sale of loans and proceeds from recovery actions | | 2,362 | 2,064 |
| Net foreign exchange result | | -48,545 | -61,998 |
| | | | |
| Net result on financial operations | | -103,572 | -45,750 |
| | | | |
| Change in impairment on loans and advances, net of reversals | 7 | -4,312 | 17,243 |
| Change in provisions for guarantees, net of reversals | 13 | -228 | 107 |
| Change in provisions for loan commitments, net of reversals | 14 | 3,715 | -13,244 |
| General administrative expenses | 22 | -58,527 | -50,009 |
| | | | |
| (Loss) / profit for the year | | -83,263 | 3,039 |
| | | | |
| Other comprehensive income | | - | - |
| | | | |
| Total comprehensive income (loss) / profit for the year | | -83,263 | 3,039 |
| * For the year ended 31 December 2020, interest and similar income included EUR 77.9 million (2019: EUR 93.9 million) calculated on assets held at amortised cost based on effective interest method. |

Notes

Notes

From 01.01.2020

From 01.01.2020

From 01.01.2019

From 01.01.2019

to 31.12.2020

to 31.12.2020

to 31.12.2019

to 31.12.2019

Interest and similar income*

Interest and similar income*

19

19

84,783

84,783

93,923

93,923

Interest and similar expenses

Interest and similar expenses

19

19

-5,250

-5,250

-2,948

-2,948

Net interest and similar income

Net interest and similar income

79,533

79,533

90,975

90,975

Fee and commission income

Fee and commission income

20

20

353

353

4,438

4,438

Fee and commission expenses

Fee and commission expenses

20

20

-225

-225

-721

-721

Net fee and commission income

Net fee and commission income

128

128

3,717

3,717

Fair value change of derivative financial instruments

Fair value change of derivative financial instruments

18,949

18,949

12,611

12,611

Net result on shares and other variable yield securities

Net result on shares and other variable yield securities

21

21

-46,717

-46,717

9,904

9,904

Net result on loans and advances measured at FVTPL

Net result on loans and advances measured at FVTPL

7

7

-29,621

-29,621

-8,331

-8,331

Sale of loans and proceeds from recovery actions

Sale of loans and proceeds from recovery actions

2,362

2,362

2,064

2,064

Net foreign exchange result

Net foreign exchange result

-48,545

-48,545

-61,998

-61,998

Net result on financial operations

Net result on financial operations

-103,572

-103,572

-45,750

-45,750

Change in impairment on loans and advances, net of reversals

Change in impairment on loans and advances, net of reversals

7

7

-4,312

-4,312

17,243

17,243

Change in provisions for guarantees, net of reversals

Change in provisions for guarantees, net of reversals

13

13

-228

-228

107

107

Change in provisions for loan commitments, net of reversals

Change in provisions for loan commitments, net of reversals

14

14

3,715

3,715

-13,244

-13,244

General administrative expenses

General administrative expenses

22

22

-58,527

-58,527

-50,009

-50,009

(Loss) / profit for the year

(Loss) / profit for the year

-83,263

-83,263

3,039

3,039

Other comprehensive income

Other comprehensive income

-

-

-

-

Total comprehensive income (loss) / profit for the year

Total comprehensive income (loss) / profit for the year

-83,263

-83,263

3,039

3,039

- For the year ended 31 December 2020, interest and similar income included EUR 77.9 million (2019: EUR 93.9 million) calculated on assets held at amortised cost based on effective interest method.

- For the year ended 31 December 2020, interest and similar income included EUR 77.9 million (2019: EUR 93.9 million) calculated on assets held at amortised cost based on effective interest method.

STATEMENT OF CHANGES IN CONTRIBUTORS’ RESOURCES

| | | Contribution called | Retained earnings | Total |
| --- | --- | --- | --- | --- |
| At 1 January 2020 | Notes | 2,967,000 | 220,036 | 3,187,036 |
| | | | | |
| Member States contribution called during the year | 17 | 209,614 | - | 209,614 |
| Reallocation of 9th EDF Contribution to interest subsidies and technical assistance to Contributor’s resources | 17 | 45,081 | - | 45,081 |
| (Loss) for the year 2020 | | - | -83,263 | -83,263 |
| Changes in contributors’ resources | | 254,695 | -83,263 | 171,432 |
| | | | | |
| At 31 December 2020 | | 3,221,695 | 136,773 | 3,358,468 |
| | | | | |
| | | Contribution called | Retained earnings | Total |
| At 1 January 2019 | | 2,697,000 | 216,997 | 2,913,997 |
| | | | | |
| Member States contribution called during the year | 17 | 270,000 | - | 270,000 |
| Profit for the year 2019 | | - | 3,039 | 3,039 |
| Changes in contributors’ resources | | 270,000 | 3,039 | 273,039 |
| | | | | |
| At 31 December 2019 | | 2,967,000 | 220,036 | 3,187,036 |
| | | | | |

Contribution called

Retained earnings

Total

At 1 January 2020

Notes

2,967,000

220,036

3,187,036

Member States contribution called during the year

17

209,614

-

209,614

Reallocation of 9th EDF Contribution to interest subsidies and technical assistance to Contributor’s resources

17

45,081

-

45,081

(Loss) for the year 2020

-

-83,263

-83,263

Changes in contributors’ resources

254,695

-83,263

171,432

At 31 December 2020

3,221,695

136,773

3,358,468

Contribution called

Retained earnings

Total

At 1 January 2019

2,697,000

216,997

2,913,997

Member States contribution called during the year

17

270,000

-

270,000

Profit for the year 2019

-

3,039

3,039

Changes in contributors’ resources

270,000

3,039

273,039

At 31 December 2019

2,967,000

220,036

3,187,036

STATEMENT OF Cash FlowS

| | Notes | From 01.01.2020 to 31.12.2020 | From 01.01.2019 to 31.12.2019 |
| --- | --- | --- | --- |
| OPERATING ACTIVITIES | | | |
| (Loss) / Profit for the year | | -83,263 | 3,039 |
| Adjustments made for | | | |
| Net result in fair value on shares and other variable yield securities | 8 | 47,909 | -8,629 |
| Change in impairment on loans and advances, net of reversals | 7 | 4,312 | -17,243 |
| Net result on loans and advances measured at FVTPL | | 29,621 | 8,331 |
| Change in accrued interest and amortised cost on loans and advances | 7 | -5,202 | -5,087 |
| Net change in provisions for guarantees issued, net of reversals | 13 | 228 | -107 |
| Net change in provisions for loan commitments, net of reversals | | -4,117 | 13,447 |
| Fair value changes on derivatives | | -18,949 | -12,611 |
| Change in accrued interest and amortised cost on treasury financial assets | 10 | 1,067 | 331 |
| Change in deferred income | | -2,834 | -1,198 |
| Effect of exchange rate changes on loans | 7 | 90,878 | -17,752 |
| Effect of exchange rate changes on shares and other variable yield securities | 8 | 33,616 | -6,812 |
| Effect of exchange rate changes on cash held | | 9,233 | 2,369 |
| Profit / (Loss) on operating activities before changes in operating assets and liabilities | | 102,499 | -41,922 |
| Loan disbursements | 7 | -560,291 | -311,185 |
| Repayments of loans | 7 | 276,101 | 355,078 |
| Sale of loans and proceeds from recovery actions | | 2,362 | 2,194 |
| Change in accrued interest on cash and cash equivalents | 5 | 66 | -93 |
| (Increase) in treasury financial assets | 10 | -2,710,009 | -2,948,021 |
| Maturities of treasury financial assets | 10 | 2,689,790 | 2,952,905 |
| Decrease in shares and other variable yield securities | 8 | -85,305 | -106,943 |
| Net proceeds from shares and other variable yield securities | | 85,477 | 71,024 |
| Increase / (Decrease) in other assets | | 109 | -171 |
| (Increase) / Decrease in other liabilities | | -1,093 | 140 |
| Increase in amounts payable to the European Investment Bank | | 8,543 | 2,187 |
| Net cash flows used in operating activities | | -191,751 | -24,807 |
| FINANCING ACTIVITIES | | | |
| Contribution received from Member States | | 227,035 | 284,820 |
| Amounts received from Member States with regard to interest subsidies and technical assistance | | 60,387 | 30,000 |
| Amounts paid on behalf of Member States with regard to interest subsidies and technical assistance | | -18,807 | -28,220 |
| Net cash flows from financing activities | | 268,615 | 286,600 |
| Net increase in cash and cash equivalents | | 76,864 | 261,793 |
| Summary statement of cash flows: | | | |
| Cash and cash equivalents at the beginning of financial year | | 837,980 | 573,818 |
| Net cash flows (used in) / from : | | | |
| Operating activities | | -191,751 | -24,937 |
| Financing activities | | 268,615 | 286,730 |
| Effects of exchange rate changes on cash and cash equivalents | | 9,233 | 2,369 |
| Cash and cash equivalents at the end of financial year | | 924,077 | 837,980 |
| Cash and cash equivalents are composed of: | | | |
| Cash in hand | 5 | 398,991 | 72,166 |
| Term deposits (excluding accrued interest) | 5 | 380,000 | 622,991 |
| Commercial papers | 5 | 145,086 | 142,823 |
| | | 924,077 | 837,980 |

Notes

Notes

From 01.01.2020 to 31.12.2020

From 01.01.2020 to 31.12.2020

From 01.01.2019 to 31.12.2019

From 01.01.2019 to 31.12.2019

OPERATING ACTIVITIES

OPERATING ACTIVITIES

(Loss) / Profit for the year

(Loss) / Profit for the year

-83,263

-83,263

3,039

3,039

Adjustments made for

Adjustments made for

Net result in fair value on shares and other variable yield securities

Net result in fair value on shares and other variable yield securities

8

8

47,909

47,909

-8,629

-8,629

Change in impairment on loans and advances, net of reversals

Change in impairment on loans and advances, net of reversals

7

7

4,312

4,312

-17,243

-17,243

Net result on loans and advances measured at FVTPL

Net result on loans and advances measured at FVTPL

29,621

29,621

8,331

8,331

Change in accrued interest and amortised cost on loans and advances

Change in accrued interest and amortised cost on loans and advances

7

7

-5,202

-5,202

-5,087

-5,087

Net change in provisions for guarantees issued, net of reversals

Net change in provisions for guarantees issued, net of reversals

13

13

228

228

-107

-107

Net change in provisions for loan commitments, net of reversals

Net change in provisions for loan commitments, net of reversals

-4,117

-4,117

13,447

13,447

Fair value changes on derivatives

Fair value changes on derivatives

-18,949

-18,949

-12,611

-12,611

Change in accrued interest and amortised cost on treasury financial assets

Change in accrued interest and amortised cost on treasury financial assets

10

10

1,067

1,067

331

331

Change in deferred income

Change in deferred income

-2,834

-2,834

-1,198

-1,198

Effect of exchange rate changes on loans

Effect of exchange rate changes on loans

7

7

90,878

90,878

-17,752

-17,752

Effect of exchange rate changes on shares and other variable yield securities

Effect of exchange rate changes on shares and other variable yield securities

8

8

33,616

33,616

-6,812

-6,812

Effect of exchange rate changes on cash held

Effect of exchange rate changes on cash held

9,233

9,233

2,369

2,369

Profit / (Loss) on operating activities before changes in operating assets and liabilities

Profit / (Loss) on operating activities before changes in operating assets and liabilities

102,499

102,499

-41,922

-41,922

Loan disbursements

Loan disbursements

7

7

-560,291

-560,291

-311,185

-311,185

Repayments of loans

Repayments of loans

7

7

276,101

276,101

355,078

355,078

Sale of loans and proceeds from recovery actions

Sale of loans and proceeds from recovery actions

2,362

2,362

2,194

2,194

Change in accrued interest on cash and cash equivalents

Change in accrued interest on cash and cash equivalents

5

5

66

66

-93

-93

(Increase) in treasury financial assets

(Increase) in treasury financial assets

10

10

-2,710,009

-2,710,009

-2,948,021

-2,948,021

Maturities of treasury financial assets

Maturities of treasury financial assets

10

10

2,689,790

2,689,790

2,952,905

2,952,905

Decrease in shares and other variable yield securities

Decrease in shares and other variable yield securities

8

8

-85,305

-85,305

-106,943

-106,943

Net proceeds from shares and other variable yield securities

Net proceeds from shares and other variable yield securities

85,477

85,477

71,024

71,024

Increase / (Decrease) in other assets

Increase / (Decrease) in other assets

109

109

-171

-171

(Increase) / Decrease in other liabilities

(Increase) / Decrease in other liabilities

-1,093

-1,093

140

140

Increase in amounts payable to the European Investment Bank

Increase in amounts payable to the European Investment Bank

8,543

8,543

2,187

2,187

Net cash flows used in operating activities

Net cash flows used in operating activities

-191,751

-191,751

-24,807

-24,807

FINANCING ACTIVITIES

FINANCING ACTIVITIES

Contribution received from Member States

Contribution received from Member States

227,035

227,035

284,820

284,820

Amounts received from Member States with regard to interest subsidies and technical assistance

Amounts received from Member States with regard to interest subsidies and technical assistance

60,387

60,387

30,000

30,000

Amounts paid on behalf of Member States with regard to interest subsidies and technical assistance

Amounts paid on behalf of Member States with regard to interest subsidies and technical assistance

-18,807

-18,807

-28,220

-28,220

Net cash flows from financing activities

Net cash flows from financing activities

268,615

268,615

286,600

286,600

Net increase in cash and cash equivalents

Net increase in cash and cash equivalents

76,864

76,864

261,793

261,793

Summary statement of cash flows:

Summary statement of cash flows:

Cash and cash equivalents at the beginning of financial year

Cash and cash equivalents at the beginning of financial year

837,980

837,980

573,818

573,818

Net cash flows (used in) / from :

Net cash flows (used in) / from :

Operating activities

Operating activities

-191,751

-191,751

-24,937

-24,937

Financing activities

Financing activities

268,615

268,615

286,730

286,730

Effects of exchange rate changes on cash and cash equivalents

Effects of exchange rate changes on cash and cash equivalents

9,233

9,233

2,369

2,369

Cash and cash equivalents at the end of financial year

Cash and cash equivalents at the end of financial year

924,077

924,077

837,980

837,980

Cash and cash equivalents are composed of:

Cash and cash equivalents are composed of:

Cash in hand

Cash in hand

5

5

398,991

398,991

72,166

72,166

Term deposits (excluding accrued interest)

Term deposits (excluding accrued interest)

5

5

380,000

380,000

622,991

622,991

Commercial papers

Commercial papers

5

5

145,086

145,086

142,823

142,823

924,077

924,077

837,980

837,980

Notes to the financial statements as at 31 December 2020

Notes to the financial statements as at 31 December 2020

1
     General information

1

The Investment Facility (“the Facility” or “IF”) has been established within the framework of the Cotonou Agreement (the “Agreement”) on co-operation and development assistance negotiated between the African, Caribbean and Pacific Group of States (the “ACP States”) and the European Union and its Member States on 23 June 2000, revised on 25 June 2005 and 22 June 2010.

The Investment Facility (“the Facility” or “IF”) has been established within the framework of the Cotonou Agreement (the “Agreement”) on co-operation and development assistance negotiated between the African, Caribbean and Pacific Group of States (the “ACP States”) and the European Union and its Member States on 23 June 2000, revised on 25 June 2005 and 22 June 2010.

The Facility is not a separate legal entity and the European Investment Bank (“EIB” or “the Bank”) manages the contributions on behalf of the Member States (“Donors”) in accordance with the terms of the Agreement and acts as an administrator of the Facility.

The Facility is not a separate legal entity and the European Investment Bank (“EIB” or “the Bank”) manages the contributions on behalf of the Member States (“Donors”) in accordance with the terms of the Agreement and acts as an administrator of the Facility.

Financing under the Agreement is provided from EU Member States’ budgets. EU Member States contribute with the amounts allocated to finance the IF and grants for the financing of the interest subsidies as provided for under the multi-annual financial frameworks (First Financial Protocol covering the period 2000 - 2007 and referred to as the 9th European Development Fund (EDF), Second Financial Protocol covering the period 2008 - 2013 and referred to as the 10th EDF and the Third Financial Protocol covering the period 2014 - 2020 referred to as the 11th EDF). The EIB is entrusted with the management of:

Financing under the Agreement is provided from EU Member States’ budgets. EU Member States contribute with the amounts allocated to finance the IF and grants for the financing of the interest subsidies as provided for under the multi-annual financial frameworks (First Financial Protocol covering the period 2000 - 2007 and referred to as the 9

th

European Development Fund (EDF), Second Financial Protocol covering the period 2008 - 2013 and referred to as the 10

th

EDF and the Third Financial Protocol covering the period 2014 - 2020 referred to as the 11

th

EDF). The EIB is entrusted with the management of:

(1)the Facility, a EUR 3,685.5 million risk-bearing revolving fund geared to fostering private sector investment in ACP States of which EUR 48.5 million are allocated to Overseas Countries and territories (“OCT countries”);

(1)

the Facility, a EUR 3,685.5 million risk-bearing revolving fund geared to fostering private sector investment in ACP States of which EUR 48.5 million are allocated to Overseas Countries and territories (“OCT countries”);

-grants for the financing of interest subsidies worth max. EUR 1,220.85 million for ACP States and max. EUR 8.5 million for OCT countries. Up to 15% of these subsidies can be used to fund project-related technical assistance (“TA”).

-

grants for the financing of interest subsidies worth max. EUR 1,220.85 million for ACP States and max. EUR 8.5 million for OCT countries. Up to 15% of these subsidies can be used to fund project-related technical assistance (“TA”).

The EU and ACP sides have agreed transitional arrangements that would allow the EIB to carry on signing operations in ACP region until the end of November 2021, or until the entry into force of a new ACP-EU Agreement, or the provisional application between the Union and the ACP States of the new Agreement, whichever comes first (Decision No 2/2020 of the ACP-EU Committee of Ambassadors of 4 December 2020 to amend Decision No 3/2019 of the ACP-EU Committee of Ambassadors to adopt transitional measures pursuant to Article 95(4) of the ACP-EU Partnership Agreement - OJ L 420, 14.12.2020, p. 32).

The EU and ACP sides have agreed transitional arrangements that would allow the EIB to carry on signing operations in ACP region until the end of November 2021, or until the entry into force of a new ACP-EU Agreement, or the provisional application between the Union and the ACP States of the new Agreement, whichever comes first (Decision No 2/2020 of the ACP-EU Committee of Ambassadors of 4 December 2020 to amend Decision No 3/2019 of the ACP-EU Committee of Ambassadors to adopt transitional measures pursuant to Article 95(4) of the ACP-EU Partnership Agreement - OJ L 420, 14.12.2020, p. 32).

Agreement was reached on 15 December 2020 on the Neighbourhood, Development and International Cooperation Instrument (“NDICI”), covering external action of the EU for the period 2021-2027. This includes the integration of the current extra-budgetary EDF into the EU budget. The NDICI Regulation will provide the legal basis for the Commission to entrust future EU mandates to the EIB for its activity outside the EU. It will also provide the external investment framework for the Union to cooperate with partner institutions through grants or guarantees from the EU budget. The NDICI legal text is expected to be formally adopted in the spring of 2021.

Agreement was reached on 15 December 2020 on the Neighbourhood, Development and International Cooperation Instrument (“NDICI”), covering external action of the EU for the period 2021-2027. This includes the integration of the current extra-budgetary EDF into the EU budget. The NDICI Regulation will provide the legal basis for the Commission to entrust future EU mandates to the EIB for its activity outside the EU. It will also provide the external investment framework for the Union to cooperate with partner institutions through grants or guarantees from the EU budget. The NDICI legal text is expected to be formally adopted in the spring of 2021.

On 23 December 2020, the Council decided to extend the current ACP Investment Facility commitment period by at least six months. Going forward, reflows from the ACP IF shall be deployed within the NDICI framework through a combination of a dedicated ACP private sector window under the European Fund for Sustainable Development (EFSD+) and a Trust Fund, both to be implemented by the EIB.

Following, the extension of the Investment Facility commitment period, the Bank will continue approving operations in line with its Mandate until 30 June 2021, or until the entry into force of a regulation establishing the external financing instrument, whichever is the later, and in any case no later than 30 November 2021 (Council Decision 2020/2233 of 23 December 2020 concerning the commitment of the funds stemming from reflows under the ACP Investment Facility from operations under the 9th, 10th and 11th European Development Funds - L 437/188, 28.12.2020).

The financial statements have been prepared on a going concern basis, which assumes that the Investment Facility will be able to meet all monies payables under any operations. The duration of the Investment Facility is not determined. The 11th EDF Internal Agreement remains in force (pursuant to Article 14(3) thereof) so long as is necessary for all the operations financed under the ACP-EU Partnership Agreement, the Overseas Association Decision and the multi-annual financial framework to be fully executed.

The present financial statements cover the period from 1 January 2020 to 31 December 2020.

On a proposal from the EIB Management Committee and the EIB Board of Directors adopted the Financial Statements on 11 March 2021, and authorised their submission to the EIB Board of Governors for approval by 23 April 2021.

2 Significant accounting policies

`.Basis of preparation – Statement of compliance

The Facility’s financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

a.Significant accounting judgments and estimates

The preparation of financial statements requires the use of accounting estimates. It also requires the Bank’s Management to exercise its judgment in the process of applying the Investment Facility’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed hereafter.

The most significant use of judgments and estimates are as follows:

(d)Measurement of fair value of financial instruments

Fair values of financial assets (“FA”) and financial liabilities (“FL”) that are traded in active markets are based on quoted market prices or broker price quotations. Where the fair values cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The input to these models is taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The valuations are categorised into different levels in the fair value hierarchy based on the inputs used in the valuation techniques as described and disclosed in Notes 2.4.2 and 4.

(e)Impairment losses on loans and advances

The expected credit loss (”ECL”) measurement requires management to apply significant judgments, in particular, the assessment of a significant increase in credit risk since initial recognition, the incorporation of forward looking information and further the estimation of the amount and timing of future cash flows and collateral values when determining impairment losses. These estimates are driven by a number of factors, which can result in significant changes to the timing and amount of allowance for credit loss to be recognized (Note 2.4.2). Relevant assumptions on the effects on impairment resulting from COVID–19 are detailed under Note 2.4.2 and Note 3.2.3.7.

(f)Valuation of unquoted equity investments

Valuation of unquoted equity investments is normally based on one of the following:

-recent arm’s length market transactions;

-current fair value of another instrument that is substantially the same;

-the expected cash flows discounted at current rates applicable for items with similar terms and risk characteristics;

-adjusted net assets method; or

-other valuation models.

The determination of the cash flows and discount factors for unquoted equity investments requires significant estimation. The Facility calibrates the valuation techniques periodically and tests them for validity using either price from observable current market transactions in the same instrument or from other available observable market data.

(g)Consolidation of entities in which the Facility holds interest

The EIB made significant judgements that none of the entities in which it holds interest, are controlled by the Facility. This is due to the fact that in all such entities, either the General Partner or the Fund Manager or the Management Board have the sole responsibility for the management and control of the activities and affairs of the partnership and have the power and authority to do all things necessary to carry out the purpose and objectives of the partnership complying with the investment and policy guidelines.

b.Changes in accounting policies

Except for the changes below, the Facility has consistently applied the accounting policies set out in Note 2.4 to all periods presented in these financial statements. The Facility has adopted the following new standards and amendments to standards.

Standards adopted

The following interpretations as well as the amendments to and revision of existing standards became effective for the Facility`s financial statements as of 1 January 2020:

Interest Rate Benchmark Reform - Amendments to IFRS 9, IAS 39 and IFRS 7

In September 2019, the IASB issued amendments to IFRS 9, IAS 39 and IFRS 7, which provide temporary reliefs that would enable hedge accounting to continue during the period of uncertainty before the replacement of an existing interest rate benchmark with an alternative nearly risk-free interest rate (a RFR).

The amendments to IFRS 9 include a number of reliefs, which apply to all hedging relationships that are directly affected by the interest rate benchmark reform. The first three reliefs provide for:

-The assessment of whether a forecast transaction (or component thereof) is highly probable;

-Assessing when to reclassify the amount in the cash flow hedge reserve to profit and loss;

-The assessment of the economic relationship between the hedged item and the hedging instrument.

For each of these reliefs, it is assumed that the benchmark on which the hedged cash flows are based are not altered as a result of IBOR reform.

The fourth relief provides that a non-contractually specified risk component only needs to be separately identifiable need at initial hedge designation and not on ongoing basis.

Application of the reliefs is mandatory and the reliefs continue indefinitely in the absence of any of the events described in the amendments. The amendments also introduce specific disclosure requirements for hedging relationships to which the reliefs are applied. The amendments must be applied retrospectively. However, any hedge relationships that have previously been de-designated cannot be reinstated upon application, nor can any hedge relationships be designated with the benefit of hindsight.

The adoption of the amendments had no material impacts on the Facility’s financial statements.

Definition of Material - Amendments to IAS 1 'Presentation of financial statements' and lAS 8 'Accounting policies, changes in accounting estimates and errors'.

The amendments clarify the definition of ‘material’ and align the definition used in the Conceptual Framework and the standards themselves. The amended definition states that 'Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.' The amendment also clarifies the meaning of 'primary users of general purpose financial statements' to whom those financial statements are directed, by defining them as 'existing and potential investors, lenders and other creditors' that must rely on general purpose financial statements for much of the financial information they need.

The amendments did not have a significant impact on the Facility’s financial statements.

Amendments to References to Conceptual Framework in IFRS Standards

The revised Conceptual Framework for Financial Reporting is not a standard, and none of the concepts override those in any standard or any requirements in a standard, but mainly has the purpose to assist the Board in developing standards, to help preparers develop consistent accounting policies if there is no applicable standard in place and to assist all parties to understand and interpret the standards. The Conceptual Framework includes some new concepts, provides updated definitions and recognition criteria for assets and liabilities and clarifies some important concepts.

The Facility adopted the revised Conceptual Framework from 1 January 2020. The revised Conceptual Framework did not have a significant impact on the Facility’s financial statements.

Standards issued but not yet adopted

Interest Rate Benchmark Reform – Phase 2 – Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16

On 27 August 2020, the IASB published Interest Rate Benchmark Reform – Phase 2, Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16. With publication of the phase two amendments, the IASB has completed its work in response to IBOR reform.

The amendments provide temporary reliefs which address the financial reporting effects when an interbank offered rate (IBOR) is replaced with an alternative nearly risk-free interest rate (RFR).

The amendments are effective for annual periods beginning on or after 1 January 2021. The Facility did not adopt these amendments early and a cross services IBOR working group is in place to assess the impact and manage its transition.

c.Summary of significant accounting policies

The statement of financial position represents assets and liabilities in decreasing order of liquidity and does not distinguish between current and non-current items.

I. 
     Foreign currency translation

The Facility uses the Euro (EUR) for presenting its financial statements, which is also the functional currency. Except as otherwise indicated, financial information presented in EUR has been rounded to the nearest thousand.

Foreign currency transactions are translated, at the exchange rate prevailing on the date of the transaction.

Monetary assets and liabilities denominated in currencies other than Euro are translated into Euro at the exchange rate prevailing at the statement of financial position date. The gain or loss arising from such translation is recorded in the statement of profit or loss and other comprehensive income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of transactions at rates different from those at the date of the transaction, and unrealised foreign exchange differences on unsettled foreign currency monetary assets and liabilities, are recognised in the statement of profit or loss and other comprehensive income.

II. 
     Financial assets other than derivatives

Non-derivative financial instruments are initially recognised using the settlement date basis.

Classification and measurement

Financial assets

On initial recognition, a financial asset is classified as measured at amortized cost (“AC”), fair value through other comprehensive income (“FVOCI”) or fair value through P&L (“FVTPL”) and a financial liability is classified as measured at AC or FVTPL.

Under IFRS 9, classification starts with determining whether the financial asset shall be considered as a debt or equity instrument. IFRS 9 refers to the definitions in IAS 32 Financial Instruments: Presentation.

Debt instruments are those instruments that meet the definition of a financial liability from the counterparty’s perspective, loans and debt securities including bonds, notes or certificates issued by structured entities, government or corporates.

A debt instrument is classified at AC if it meets both of the following conditions and is not designated as at FVTPL:

-the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and

-the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding (SPPI criteria).

A debt instrument is classified at FVOCI only if it meets both of the following conditions and is not designated as at FVTPL:

-the asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and

-the contractual terms of the financial asset give rise on specific dates to cash flows that are fulfilling the SPPI criteria.

The above requirements should be applied to an entire financial asset, even if it contains an embedded derivative.

Equity instruments are instruments that meet the definition of equity from the issuer’s perspective; that is, instruments that do not contain a contractual obligation to pay and that evidence a residual interest in the issuer’s net assets. Equity instruments are measured at FVTPL.

On initial recognition of an equity investment that is not held for trading, the Facility may irrevocably elect to present subsequent changes in other comprehensive income. This election is made on an investment-by-investment basis.

All other financial assets are classified as measured at FVTPL.

Business model assessment

The EIB, as a manager of the Facility, makes an assessment of the objective of a business model in which a debt instrument is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:

-the stated policies and objectives for the portfolio and the operation of those policies in practice. In particular, whether management ́s strategy focuses on earning contractual interest revenue, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of the liabilities that are funding those assets or realising cash flows through the sale of the assets;

-how the performance of the portfolio is evaluated and reported to the Facility’s management;

-the risks that affect the performance of the business model (and the financial assets held within that business model) and how those risks are managed; and

-the frequency, volume and timing of sales in prior periods, the reasons for such sales and its expectation about future sales activity.

However, information about sales activity is not considered in isolation, but as part of an overall assessment of how the Facility stated objective for managing the financial assets is achieved and how cash flows are realised.

The business model for the Impact Financing Envelope direct loan operations has been described and disclosed in Note 24.

Solely payment of principal and interests (“SPPI”) criteria

For the purpose of this assessment, ‘principal’ is defined as the fair value of the debt instrument on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the contractual terms of the instrument are considered. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition.

Derecognition

The Facility derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or the rights to receive the contractual cash flow are transferred in a transaction in which either the Facility transfers the risks and rewards of ownership of the financial asset or it retains substantially all of the risks and rewards of ownership but does not retain control of the financial asset.

On derecognition of a financial asset or financial liability (Note 2.4.4), the difference between the carrying amount of the asset or liability (or the carrying amount allocated to the portion of the asset or liability derecognised) and the sum of (i) the consideration received or paid and (ii) any cumulative gain or loss that had been recognised in other comprehensive income is recognised in profit or loss except for the cumulative gains or losses recognised in other comprehensive income for equity investments measured at fair value through other comprehensive income which are transferred to the reserve fund rather than profit or loss on disposal.

Reclassification

Financial assets are not reclassified subsequent to their initial recognition, except in the period after the Facility changes its business model for managing financial assets.

Modification

A financial asset measured at amortised cost is considered modified when its contractual cash flows are renegotiated or otherwise modified. Renegotiation or modification may or may not lead to derecognition of the old and recognition of the new financial instrument.

A substantial contractual modification on the cash flows of a financial asset measured at amortised cost which results in the derecognition of the financial asset, leads to the recognition of the new financial asset at its fair value, and the recording of the modification gain or loss impact in the consolidated income statement under “Result on financial operations”.

A contractual modification is deemed substantial if the discounted present value of the cash flows under the revised terms (discounted using the original effective interest rate) is at least 10% different from the discounted present value of the remaining cash flows of the original financial asset. Qualitative factors such as a change in the currency on which the financial asset is denominated and conversion features are also considered.

Measurement of fair values of financial instruments

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal, or in its absence, the most advantageous market to which the Facility has access at that date.

When applicable, the EIB on behalf of the Facility measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an on-going basis.

Where the fair values of financial assets and financial liabilities recorded on the statement of financial position cannot be derived from active markets, they are determined using a variety of valuation techniques that include the use of mathematical models. The input to these models is taken from observable markets where possible, but where this is not feasible, a degree of judgement is required in establishing fair values. The chosen valuation technique incorporates all the factors that market participants would take into account in pricing a transaction.

These valuation techniques may include net present value and discounted cash flow models, comparison to similar instruments for which market observable prices exist, Black-Scholes and polynomial option pricing models and other valuation models. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates, credit spreads used in estimating discount rates, bond and equity prices, foreign currency exchange rates, equity and equity index prices and expected price volatilities and correlations.

The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that would be received to sell the asset or paid to transfer the liability in an orderly transaction between market participants at the measurement date.

The Bank uses widely recognised valuation models for determining the fair value of common and more simple financial instruments, like interest rate and currency swaps that use only observable market data and require limited management judgement and estimation. Observable prices and model inputs are usually available in the market for listed debt and equity securities, exchange traded derivatives and simple over the counter derivatives like interest rate swaps. Availability of observable market prices and model inputs reduces the need for management judgement and estimation and also reduces the uncertainty associated with determination of fair values. Availability of observable market prices and inputs varies depending on the products and markets and is prone to changes based on specific events and general conditions in the financial markets.

For more complex instruments, the Bank uses its own valuation models, which are developed from recognised valuation models. Some or all of the significant inputs into these models may not be observable in the market, and are derived from market prices or rates or are estimated based on assumptions. Example of instruments involving significant unobservable inputs includes certain loans and guarantees for which there is no active market. Valuation models that employ significant unobservable inputs require a higher degree of management judgement and estimation in the determination of fair value. Management judgement and estimation are usually required for selection of the appropriate valuation model to be used, determination of expected future cash flows on the financial instrument being valued, determination of probability or counterparty default and prepayments and selection of appropriate discount rates.

The Facility measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:

-Level 1: inputs that are unadjusted quoted market prices in active markets for identical instruments to which the Facility has access.

-Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e. as prices) or indirectly (i.e. derived from prices). This category includes instruments valued using quoted market prices in active markets for similar instruments, quoted prices for identical or similar instruments in markets that are considered less than active or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

-Level 3: inputs that are not observable. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

The Facility recognises transfers between levels of the fair value hierarchy as of the end of the reporting period during which the change has occurred.

Impairment on financial assets

IFRS 9 is based on a forward-looking expected credit loss (“ECL”) model. The EIB has established a framework to calculate “expected credit loss” conditional on the state of the macro-economy. It involves the construction of point-in-time (“PIT””) credit risk parameters (Probability of default – “PD” and Loss given default – “ LGD”) based on a systematic factor (credit cycle) that is driven by the macro-economy and projected via macroeconomic forecasts or scenarios. The final ECL is a probability weighted average of the respective macro-economic scenario ECLs. This forward-looking impairment model is applied to financial assets measured at AC, to financial guarantee contracts, as well as to off-balance sheet commitments.

Under IFRS 9, loss allowances are measured on either of the following bases:

-12-month ECL’s: these are the ECLs that result from possible default events within the 12 months after the reporting date; and

-Lifetime ECL’s: these are the ECLs that result from all possible default events over the expected life of a financial instrument.

The IFRS 9 Standard sets out a “three-stage” model for impairment based on changes in credit quality since initial recognition. Financial instruments are classified in Stage 1 except for those instruments for which significant increase in credit risk (“SICR”) since initial recognition is identified. This includes both quantitative and qualitative information and analysis, based on the Bank’s expertise, including forward-looking information.

Purchased or originated credit-impaired assets (“POCI”) are the financial assets which are, from the moment of initial recognition, deemed to be classified as Stage 3. For POCI financial assets, the cumulative changes in lifetime ECL since initial recognition are recognised in the statement of profit or loss.

The Bank’s assessment of the Stage is based on a sequential approach which is consistent with the Credit Risk Guidelines (“CRG”) and the Financial Monitoring Guidelines and Procedures (“FMGPs”), notably covering early warning triggers, Watch List (“WL”), internal rating and arrears.

In line with guidance issued by standard setters and market practises, the EIB considers that the application of COVID-19 short-term forbearance measures to performing counterparties, aimed at addressing the adverse systemic economic impact of the COVID-19 pandemic, should not be considered by themselves as an automatic trigger to conclude that SICR has occurred. As disclosed under Note 3.2.3.8, the EIB applies expert judgement when assessing the credit risk of such counterparties.

The EIB considers that the COVID-19 pandemic effect is reflected within the existing forward-looking ECL model which is deemed sufficiently robust to factor in such extreme events. Notably, the respective impacts have been directly captured through the macroeconomic projections and the PD terms structures.

If significant increase in credit risk has occurred, the financial instrument is moved to Stage 2 but is not yet deemed to be credit-impaired. If the financial instrument is credit-impaired, the financial instrument is then moved to Stage 3.

To identify Stage 3 exposures, the Bank determines whether or not there is objective evidence of a non-performing exposure. A financial asset is considered to be in default when the borrower is unlikely to pay its credit obligations to the Facility in full, without recourse by the Facility or the borrower is past due more than 90 days on any material credit obligation to the Facility.

In this respect, a financial asset is considered impaired when it is determined that it is probable that the Facility will not be able to collect all amounts due according to the original contractual terms or an equivalent value. Individual credit exposures are evaluated based upon the borrower’s characteristics, overall financial condition, resources and payment record, the prospects for support from any financially responsible guarantors and, where applicable, the realisable value of any collateral.

All impaired claims are reviewed and analysed at least semi-annually. Any subsequent changes to the amounts and timing of the expected future cash flows compared to the prior estimates will result in a change in the provision for credit losses and be charged or credited to the income statement. An allowance for impairment is reversed only when the credit quality has improved such that there is reasonable assurance of timely collection of principal and interest in accordance with the original contractual terms of the claim agreement. A write- off is made when all or part of a claim is deemed uncollectible or forgiven. Write-offs are charged against previously established impairments or directly to the income statement and reduce the principal amount of a claim. Recoveries in part or in full of amounts previously written- off are credited to the income statement.

Measuring ECL – Inputs, Assumptions and Techniques

Lifetime ECL measurement applies to Stage 2 and Stage 3 assets, while 12-month ECL measurement applies to Stage 1 assets.

The expected credit losses were calculated based on the following variables:

-Credit rating and PIT Probability of default (“PD”),

-PIT Loss Given default (“LGD”),

-Exposure at default (“EAD”).

The credit rating of a counterpart is determined at a certain date, using score-sheet models tailored to the various categories of counterparties and exposures.

Each credit rating maps to a specific PD that represents the likelihood of a counterpart defaulting on its financial obligation, either over the next 12 months, or over the remaining lifetime of the obligation. Hence, ratings are primary input into the determination of the PIT term structure of PD for exposures. The EIB collects performance and default information about the Facility’s credit risk exposures. The collected data are segmented by type of industry and by type of region. Different industries and regions reacting in a homogenous manner to credit cycles are analysed together.

The EIB employs statistical models to analyse the data collected and generate estimates of the remaining lifetime PD of exposures and how these are expected to change as a result of the passage of time and given specific macro-economic scenarios.

The LGD represents the EIB’s expectation of the ratio of the loss on an exposure due to the default of a counterparty to the amount outstanding at default. LGD can be also defined as “1 - Recovery Rate”. LGD estimates are determined mainly by geography and by type of counterparty, with five main exposure classes: Sovereigns, Public Institutions, Financial Institutions, Corporate and Project Finance. LGD values can be further adjusted based on the product and contract specific features of the exposure.

The EIB incorporates PIT and forward-looking information into both its assessment of whether the credit risk of an instrument has increased significantly since its initial recognition and its measurement of expected credit losses.

For the measurement of ECL, the EIB has developed a conditional modelling approach for calculating PD term structures involving:

-the definition of an economically reasonable link function between the credit cycle and macroeconomic variables, and

-a set of three macro-economic scenarios (one baseline and two scenarios reflecting downturn and upturn in the economy) with multi-year potential realisation for the GDP and their associated likelihoods.

To generate macroeconomic scenarios, the EIB uses a macro semi-structural multi-country and multi-equation model of the global economy with country specific blocks. The central / baseline scenario is designed to be consistent with the most recent European Commission forecasts. The positive and negative scenarios are designed around the central scenario by the deployment of the multi-country/multi-equation model. The scenarios are derived shocking GDP, which is the key measure of economic activity. The shocks to real GDP are calibrated to replicate the past volatility of the variable. Also expert judgment is applied, when appropriate, to refine the size and persistency of GDP shocks. As a result, shocks are determined together with a decay function to determine the impact of the shocks over time. Probabilities attached to each scenario are defined reflecting market (volatility) indicators and internally developed indicators/trackers deployed in a consistent manner over time to capture uncertainty.

The EAD represents the expected exposure in the event of a default and is based on the current exposure to the counterparty and potential changes to the current amount allowed under the contract including amortisation. The EAD of a financial asset is its gross carrying amount. For lending commitments and financial guarantees, the EAD includes the amount drawn.

In 2020, and in line with its ongoing model review and maintenance, the EIB has updated its PIT, PD and LGD models used to calculate the estimates of ECL. The nature of the update relates mostly to a change in data input sources, more specifically, credit and macroeconomic data used for credit cycle modelling to support the calculation of PIT ECL (lifetime and 12M). The credit cycle is now constructed from an external rating agency’s downgrade and default rates data and projected via annual growth rates of real GDP and spread between long and short-term interest rates, namely interest rate term premium, while the previous model version extracted the credit cycle from PIT PD measures provided by external data provider and included one single macroeconomic variable only, namely quarterly growth rates of real GDP.

The model update brings several upgrades, namely, the new credit cycle definition which comes with increased discrimination power across industry and region segments, the link to the macro-economic variables is stronger and allows for the incorporation of a second external explanatory variable (term premium). The model upgrade impact is disclosed in Notes 7.2 and 14.

1.Cash and cash equivalents

The Facility defines cash and cash equivalents as current accounts, short-term deposits or commercial papers with original maturities of three months or less. Cash and cash equivalents are carried at AC in the statement of financial position.

2.Treasury financial assets

Treasury financial assets comprise quoted and unquoted bonds with the intention of holding them to maturity, and commercial papers with original maturities of more than three months and are consequently classified at AC.

Those bonds and commercial papers are initially measured at cost, which is the fair value plus any directly attributable transaction cost. The difference between entry price and redemption value is amortised in accordance with the effective interest method over the remaining life of the instrument.

3.Loans and advances

The loan and advances portfolio may consist of debt instruments such as loans and debt securities including bonds, notes or certificates issued by structured entities with the intention of holding them to maturity and to collect the contractual cash flows.

Loans and advances include:

-Loans and advances measured at AC

-Loans and advances mandatorily measured at FVTPL.

Loans originated by the Facility are recognised in the assets of the Facility when cash is advanced to borrowers. Undisbursed parts of loans are recorded in the off-balance at their nominal value. Loans passing the SPPI test are initially recorded at cost (their net disbursed amounts), which is the fair value of the cash given to originate the loan, including any transaction costs, and are subsequently measured at AC using the effective interest rate method.

Debt securities are recognised in the assets of the Facility when cash is advanced to the issuer and can take the form of a contractually linked or single tranche debt instrument. Undisbursed parts of debt securities are recorded in the off-balance at their nominal value. Debt securities are initially measured at cost, which is the fair value plus any directly attributable transaction cost, and are subsequently measured at AC using the effective interest rate method. The difference between entry price and redemption value is amortised in accordance with the effective interest method over the remaining life of the instrument.

The impairment policy on loans and advances is described under Note 2.4.2.

Loans and advances not fulfilling the SPPI criterion are mandatorily measured at FVTPL. The fair value measurement technique used is based on a discounted cash flow technique or liquidation value.

4.Shares and other variable yield securities

There are two types of equity investments at the Facility: (i) direct equity investments and (ii) venture capital funds. The shares and other variable yield securities are initially recognised at fair value plus transactions costs. Subsequently changes in fair value, including foreign currency translation gains and losses, are recognised in the statement of profit or loss and other comprehensive income under the caption net result on shares and other variable yield securities.

For unquoted investment, when the fair value cannot be derived from active markets, the fair value is determined by applying recognised valuation techniques (Note 4.2.1).

The participations acquired by the Facility typically represent investments in private equity or venture capital funds. According to industry practice, such investments are generally investments jointly subscribed by a number of investors, none of whom is in a position to individually influence the daily operations and the investment activity of such fund. As a consequence, any membership by an investor in a governing body of such fund does not in principle entitle such investor to influence the day-to-day operations of the fund. In addition, individual investors in a private equity or a venture capital fund do not determine policies of a fund such as distribution policies on dividends or other distributions. Such decisions are typically taken by the management of a fund on the basis of the shareholders agreement governing the rights and obligations of the management and all shareholders of the fund. The shareholders’ agreement also generally prevents individual investors from bilaterally executing material transactions with the fund, interchanging managerial personnel or obtaining privileged access to essential technical information. The Facility’s investments are executed in line with the above stated industry practice, ensuring that the Facility neither controls nor exercises any form of significant influence within the meaning of IFRS 10 and IAS  28 over any of these investments, including those investments in which the Facility holds over 20 % of the voting rights.

III. 
      Financial guarantees

Financial guarantee contracts are contracts that require the Facility to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.

Under the existing rules, these guarantees do not meet the definition of an insurance contract (IFRS 4 Insurance Contracts).

Financial guarantees are accounted for under IFRS 9 – Financial Instruments, either as “Derivatives” or as “Financial Guarantees”, depending on their features and characteristics as defined by IFRS 9.

The accounting policy for derivatives is disclosed under Note 2.4.5.

Financial guarantees are initially recognised in the statement of financial position under “Provisions for guarantees issued” at fair value plus transaction costs that are directly attributable to the issuance of the financial guarantees. At initial recognition the obligation to pay corresponds to the Net Present Value (NPV) of expected premium inflows or the initial expected loss.

Subsequent to initial recognition, financial guarantees are measured at the higher of:

- The amount of the loss allowance as determined under IFRS 9; and

- The premium initially recognised less income recognised in accordance with the principles of IFRS 15.

Any increase or decrease in the net liability (as measured per IFRS 9) relating to financial guarantees other than the payment of guarantee calls is recognised in the statement of profit or loss and other comprehensive income under “Change in provisions for guarantees”.

The premium received is recognised in the statement of profit or loss and other comprehensive income in “Fee and commission income” on the basis of an amortisation schedule in accordance with IFRS 15 over the life of the financial guarantee.

IV.
     Financial liabilities other than derivatives

Classification and measurement

Financial liabilities

A financial liability is measured at amortised cost except for financial liabilities that meet the definition of held for trading (e.g. derivative liabilities).

The Facility derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.

V. 
     Derivative financial instruments

Derivative financial instruments include cross currency swaps, cross currency interest rate swaps, short-term currency swaps (“FX swaps”) and interest rate swaps.

Derivative financial instruments are initially recognised using the trade date basis.

In the normal course of its activity, the Facility may enter into swap contracts with a view to hedge specific lending operations or into currency forward contract with a view to hedge its currency positions, denominated in actively traded currencies other than the Euro, in order to offset any gain or loss caused by foreign exchange rate fluctuations.

All derivatives are measured at FVTPL and are reported as derivative financial instruments. Fair values are derived primarily from discounted cash-flow models, option-pricing models and from third party quotes.

Derivatives are recorded at fair value and carried as assets when their fair value is positive and as liabilities when their fair value is negative. Changes in the fair value of derivative financial instruments are shown in the statement of profit and loss and other comprehensive income under “Fair value change of derivative financial instruments”.

Under IFRS 9, bifurcation requirements regarding embedded derivatives have been eliminated for financial assets or financial liabilities and therefore, the hybrid contract is treated as a whole for classification of financial assets or financial liability accordingly.

VI. 
     Contributions

Contributions from Member States are recognised as receivables in the statement of financial position on the date of the Council Decision fixing the financial contribution to be paid by the Member States to the Facility.

The Member States contributions meet the following conditions and are consequently classified as equity:

-as defined in the contribution agreement, they entitle the Member States to decide on the utilisation of the Facility’s net assets in the events of the Facility’s liquidation;

-they are in the class of instruments that is subordinated to all other classes of instruments;

-all financial instruments in the class of instruments that are subordinated to all other classes of instruments have identical features;

-the instrument does not include any features that would require classification as a liability; and

-the total expected cash flows attributable to the instrument over its life are based substantially on the profit or loss, the change in the recognised net assets or the change in the fair value of the recognised and unrecognised net assets of the Facility over the life of the instrument.

Contributions are classified and measured at AC in the financial statements.

VII. 
     Interest and similar income

Interest on loans originated by the Facility is recorded in the statement of profit or loss and other comprehensive income (‘Interest and similar income’) and in the statement of financial position (‘Loans and advances’) on an accrual basis using the effective interest rate, which is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the loan to the net carrying amount of the loan. Once the recorded value of a loan has been reduced due to impairment, interest income continues to be recognised using the original effective interest rate applied to the new carrying amount.

Interest on the POCI loans is recorded in the statement of profit or loss and other comprehensive income (‘Interest and similar income’) and in the statement of financial position (‘Loans and advances’) on an accrual basis using the credit- adjusted  effective interest rate through the whole life of the loan, which is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the loan to the amortised cost of the loan.

Interest subsidies received for the Facility’s resources are deferred and recognised as an adjustment to the effective yield, being recorded under “Interest and similar income” in the income statement over the period from disbursement to repayment of the subsidised loan.

Commitment fees are deferred and recognised in income using the effective interest method over the period from disbursement to repayment of the related loan, and are presented in the statement of profit or loss and other comprehensive income within interest and similar income.

VIII. 
     Interest subsidies and technical assistance

As part of its activity, the Facility manages interest subsidies and technical assistance (“TA”)on behalf of the Member States.

The part of the Member States contributions allocated to the payment of interest subsidies and TA is not accounted for in the Facility’s contributors’ resources but is classified as amounts owed to third parties. The Facility operates the disbursement to the final beneficiaries and then decreases the amounts owed to third parties.

When amounts contributed with regard to interest subsidies and TA are not fully granted, they are reclassified as contribution to the Facility.

IX. 
     Interest income on cash and cash equivalents

Interest income on cash and cash equivalents is recognised in the statement of profit or loss and other comprehensive income of the Facility on an accrual basis.

X.Fees, commissions and dividends

Fees received in respect of services provided over a period of time are recognised as income as the services are provided, while fees that are earned on the execution of a significant act are recognised as income when the significant act has been completed. These fees are presented in the statement of profit or loss and other comprehensive income within fee and commission income.

Dividends relating to shares and other variable yield securities are recognised when received and presented in the statement of profit or loss and other comprehensive income within net realised gains on shares and other variable yield securities.

XI.Taxation

The Protocol on the Privileges and Immunities of the European Union, appended to the treaty on the European Union and the treaty of the functioning of the European Union, stipulates that the assets, revenues and other property of the Institutions of the Union are exempt from all direct taxes.

3
     Risk Management

This note presents information about the Facility’s exposure to and its management and control of credit and financial risks, in particular the primary risks associated with its use of financial instruments. These are:

-credit risk – the risk of loss resulting from client or counterparty default and arising on credit exposure in all forms, including settlement risk;

-liquidity risk – the risk that an entity is not able to fund increases in assets and meet obligations as they come due, without incurring unacceptable losses;

-market risk – the risk that changes in market prices and rates, such as interest rates, equity prices and foreign exchange rates will affect an entity’s income or the value of its holdings in financial instruments.

3.1Risk management organisation

The EIB adapts the IF`s risk management framework on an ongoing basis.

The Risk Management Directorate of the EIB independently identifies, assesses, monitors and reports the risks to which the Facility is exposed. Within a framework whereby the segregation of duties is preserved, the Risk Management is independent of the Front Office.

At EIB level, the Group Chief Risk Officer (“GCRO”) reports on Group Risks to the EIB Management Committee under the oversight of the MC member in charge of risk. The GCRO has direct access to the Risk Policy Committee and can write directly to and communicate with the EIB Board of Directors on any matter of his/her field of attribution.

0.0Credit risk

Credit risk is the potential loss that could result from client or counterparty default and arising on credit exposure in all forms, including settlement.

0.0.0Credit risk policy

In carrying out the credit analysis on loan counterparts, the EIB assesses the credit risk and expected loss with a view to quantify and price the risk. The EIB has developed an Internal Rating Methodology (“IRM”) to determine the Internal Ratings of its credit-relevant borrower/guarantor counterparts. The methodology is based on a system of scoring sheets tailored for each major credit counterpart type (e.g. Corporates, Financial Institutions, etc.). Taking into consideration both, Best Banking Practice applicable to the EIB and the principles set under the Basel International Capital Accord (Basel II), all counterparts that are material to the credit profile of a specific transaction are classified into internal rating categories using the IRM for the specific counterpart type. Each counterpart is assigned an Internal Rating reflecting its PD following an in-depth analysis of the counterpart’s business and financial risk profile and its country risk operating context. Expert adjustments are made when necessary under the consideration of the legal entities’ parental or government support, and the final rating allows for overrides to reflect information (e.g. market pricing) not considered in the scoring sheet.

The credit assessment of project finance and other structured limited recourse operations uses credit risk tools relevant for the sector, focused mainly on cash flow availability and debt service capacity. These tools include the analysis of projects’ contractual framework, counterpart’s analysis and cash flow simulations. Similarly to corporates and financial institutions, each project is assigned an internal risk rating. Finally, Non-EU sovereigns are rated by the Economics Department based on a statistical model.

All Internal Ratings are monitored over loan life, and periodically updated.

All non-sovereign (or non sovereign guaranteed/assimilated) operations are subject to specific transaction-level and counterpart size limits. Counterpart limits are set at consolidated group exposure level, where applicable. Such limits typically reflect e.g. the size of counterparts own funds.

In order to mitigate credit risk the EIB uses, where appropriate and on a case by case basis, various credit enhancements which are:

-Counterparty or project related securities (e.g. pledge over the shares; pledge over the assets; assignment of rights; pledge over the accounts); or/and

-guarantees, generally provided by the sponsor of the financed project (e.g. completion guarantees, first demand guarantees) or bank guarantees.

The Facility does not use any credit derivatives to mitigate credit risk.

3.2.2Maximum exposure to credit risk without taking into account any collateral and other credit enhancements

The following table shows the maximum exposure to credit risk for the components of the statement of financial position, including derivatives. The maximum exposure is shown gross, before the effect of mitigation through the use of collateral.

| Maximum exposure (in EUR’000) | 31.12.2020 | 31.12.2019 |
| --- | --- | --- |
| ASSETS | | |
| Cash and cash equivalents | 923,940 | 837,777 |
| Amounts receivable from contributors | 68,908 | 86,330 |
| Treasury financial assets | 351,873 | 330,587 |
| Derivative financial instruments | 33,584 | 14,184 |
| Loans and advances | 1,673,445 | 1,518,675 |
| Other assets | 109 | - |
| Total | 3,051,859 | 2,787,553 |
| | | |
| Provisions for loan commitments | -33,152 | -37,269 |
| | | |
| OFF BALANCE SHEET | | |
| Contingent liabilities | | |
| - Issued Guarantees | 998,560 | 200,013 |
| Commitments | | |
| - Undisbursed loans | 1,722,618 | 1,357,320 |
| - Non-issued guarantees | 554,686 | 1,359,818 |
| Total off balance sheet | 3,275,864 | 2,917,151 |
| | | |
| Total credit exposure | 6,294,571 | 5,667,435 |

Maximum exposure (in EUR’000)

31.12.2020

31.12.2019

ASSETS

Cash and cash equivalents

923,940

837,777

Amounts receivable from contributors

68,908

86,330

Treasury financial assets

351,873

330,587

Derivative financial instruments

33,584

14,184

Loans and advances

1,673,445

1,518,675

Other assets

109

-

Total

3,051,859

2,787,553

Provisions for loan commitments

-33,152

-37,269

OFF BALANCE SHEET

Contingent liabilities

- Issued Guarantees

998,560

200,013

Commitments

- Undisbursed loans

1,722,618

1,357,320

- Non-issued guarantees

554,686

1,359,818

Total off balance sheet

3,275,864

2,917,151

Total credit exposure

6,294,571

5,667,435

3.2.3Credit risk on loans and advances

3.2.3.1Credit risk measurement for loans and advances

Loans and advances or guarantee undertaken by the Facility benefits from a comprehensive risk assessment and quantification of expected loss estimates that are reflected in a Loan Grading (“LG”). Operations under the IFE (as described in Note 24), with the exception of intermediated loans, are not subject to the Credit Risk Policy Guidelines and are subject to a different procedure. LGs are established according to generally accepted criteria, based on the quality of the borrower, the maturity of the loan, the guarantee and, where appropriate, the guarantor.

The loan grading system comprises the methodologies, processes, databases and IT systems supporting the assessment of credit risk in lending operations and the quantification of expected loss estimates. It summarises a large amount of information with the purpose of offering a relative ranking of loans’ credit risks. LGs reflect the present value of the estimated level of the “expected loss”, this being the product of the PD of the main obligors, the EAD and the loss severity in the case of default. LGs are used for the following purposes:

-as an aid to a finer and more quantitative assessment of lending risks;

-as an indicator of credit risk variations for the purposes of prioritising monitoring efforts;

-as a description of the loan’s portfolio quality at any given date;

-as a benchmark for calculating the annual additions to the General loan reserve; and

-as an input in risk-pricing decisions.

The following factors enter into the determination of an LG:

I)The borrower’s creditworthiness: Risk Management independently reviews borrowers and assesses their creditworthiness based on internal methodologies and external data. In line with the Basel III Internal Ratings Based Approach chosen, the Bank has developed an internal rating methodology (IRM) to determine the internal ratings of borrowers and guarantors. This is based on a set of scoring sheets specific to defined counterparty types.

II)The default correlation: it quantifies the chances of simultaneous financial difficulties arising for both the borrower and the guarantor. The higher the correlation between the borrower and the guarantor’s default probabilities, the lower the value of the guarantee and therefore the lower (worse) the LG.

III)The value of guarantee instruments and of securities: this value is assessed on the basis of the combination of the issuer’s creditworthiness and the type of instrument used.

IV)The applicable recovery rate: being the amount assumed to be recovered following a default by the relevant counterpart expressed as a percentage of the relevant loan exposure

V)The contractual framework: a sound contractual framework will add to the loan’s quality and enhance its LG.

VI)The duration of the loan or, more generally, the cash-flows of the loan: all else being equal, the longer the loan, the higher the risk of incurring difficulties in the servicing of the loan.

A loan’s expected loss is computed by combining the five elements discussed above. Depending on the level of this loss, a loan is assigned to one of the following LG classes listed below:

“A” Prime quality loans of which there are three sub-categories:

“A0” comprising loans to or guaranteed by an EU Member State which have an expected loss of 0%.

“A+” comprising loans granted to (or guaranteed by) entities other than EU Member States in respect of which there is no expectation of deterioration in quality over their term.

“A-“ includes those lending operations where there is some doubt about the maintenance of their current status but where any downside is expected to be limited.

“B” High quality loans: these represent an asset class with which the Bank feels comfortable, although a minor deterioration is not ruled out in the future. B+ and B- are used to denote the relative likelihood of the possibility of such deterioration occurring.

“C” Good quality loans: an example could be unsecured loans to solid banks and corporates with a 7-year bullet, or equivalent amortising, maturity at disbursement.

“D” This rating class represents the borderline between “acceptable quality” loans and those that have experienced some difficulties. This watershed in loan grading is more precisely determined by the sub-classifications D+ and D-. Loans rated D- require heightened monitoring.

“E” This LG category includes loans with a risk profile greater than generally accepted. It also includes loans which in the course of their lives have experienced severe problems and their sliding into a situation of loss cannot be excluded. For this reason, the loans are subject to close and high monitoring. The sub-classes E+ and E- differentiate the intensity of this special monitoring process, with those operations graded E- being in a position where there is a strong possibility that debt service cannot be maintained on a timely basis and therefore some form of debt restructuring is required, possibly leading to an impairment loss.

“F” F (fail) denotes loans representing unacceptable risks. F- graded loans can only arise out of outstanding transactions that have experienced, after signature, unforeseen, exceptional and dramatic adverse circumstances. All operations where there is a loss of principal to the Facility are graded F and a specific provision is applied.

Generally, loans internally graded D- or below are placed on the internal loan grading based Watch List. However, if a loan was originally approved with a risk profile of D- or weaker, it will only be placed on the Watch List as a result of a material credit event causing a further deterioration of its LG classification below the one at approval.

The table in section 3.2.3.3 shows the credit quality analysis of the Facility’s loan portfolio based on the various LG classes as described above.

3.2.3.2Analysis of lending credit risk exposure

The following table shows the maximum exposure (net carrying amount) to credit risk on loans and advances signed (disbursed and undisbursed) nature of borrower taking into account guarantees provided by guarantors:

| At 31.12.2020 | Guaranteed | Other credit enhancements | Not guaranteed | Total | % of Total disbursed |
| --- | --- | --- | --- | --- | --- |
| In EUR’000 | | | | | |
| Financial institutions | 87,269 | - | 963,366 | 1,050,635 | 64% |
| Corporates | 203,772 | 27,026 | 177,321 | 408,119 | 24% |
| Public institutions | 21,866 | - | 1,057 | 22,923 | 1% |
| States | - | 1,506 | 190,262 | 191,768 | 11% |
| Total disbursed | 312,907 | 28,532 | 1,332,006 | 1,673,445 | 100% |
| Undisbursed | 196,692 | - | 1,492,774 | 1,689,466 | - |
| Total disbursed and undisbursed | 509,599 | 28,532 | 2,824,780 | 3,362,911 | - |
| | | | | | |
| At 31.12.2019 | Guaranteed | Other credit enhancements | Not guaranteed | Total | % of Total disbursed |
| In EUR’000 | | | | | |
| Financial institutions | 111,806 | - | 803,861 | 915,667 | 60% |
| Corporates | 190,006 | 36,704 | 172,082 | 398,792 | 26% |
| Public institutions | 26,908 | - | 1,686 | 28,594 | 2% |
| States | - | 2,085 | 173,537 | 175,622 | 12% |
| Total disbursed | 328,720 | 38,789 | 1,151,166 | 1,518,675 | 100% |
| Undisbursed | 191,191 | - | 1,128,860 | 1,320,051 | - |
| Total disbursed and undisbursed | 519,911 | 38,789 | 2,280,026 | 2,838,726 | - |

At 31.12.2020

Guaranteed

Other credit enhancements

Not guaranteed

Total

% of Total disbursed

In EUR’000

Financial institutions

87,269

-

963,366

1,050,635

64%

Corporates

203,772

27,026

177,321

408,119

24%

Public institutions

21,866

-

1,057

22,923

1%

States

-

1,506

190,262

191,768

11%

Total disbursed

312,907

28,532

1,332,006

1,673,445

100%

Undisbursed

196,692

-

1,492,774

1,689,466

-

Total disbursed and undisbursed

509,599

28,532

2,824,780

3,362,911

-

At 31.12.2019

Guaranteed

Other credit enhancements

Not guaranteed

Total

% of Total disbursed

In EUR’000

Financial institutions

111,806

-

803,861

915,667

60%

Corporates

190,006

36,704

172,082

398,792

26%

Public institutions

26,908

-

1,686

28,594

2%

States

-

2,085

173,537

175,622

12%

Total disbursed

328,720

38,789

1,151,166

1,518,675

100%

Undisbursed

191,191

-

1,128,860

1,320,051

-

Total disbursed and undisbursed

519,911

38,789

2,280,026

2,838,726

-

3.2.3.3Credit quality analysis per type of borrower

3.2.3.3

Credit quality analysis per type of borrower

The tables below show the credit quality analysis of the Facility’s loan portfolio as at 31 December 2020 and 31 December 2019 by the Loan Grading applications, based on the exposure signed (disbursed and undisbursed):

The tables below show the credit quality analysis of the Facility’s loan portfolio as at 31 December 2020 and 31 December 2019 by the Loan Grading applications, based on the exposure signed (disbursed and undisbursed):

| At 31.12.2020 | | High Grade | Standard Grade | Min. Accept. Risk | High Risk | No grading* | Total | % of Total |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| in EUR’000 | | | | | | | | |
| | | A to B- | C | D+ | D- and below | | | |
| Borrower | Financial institutions | 290,565 | 90,445 | 475,331 | 815,120 | - | 1,671,461 | 50% |
| | Corporates | 118,990 | 46,861 | 14,433 | 512,142 | 313,762 | 1,006,188 | 30% |
| | Public institutions | - | 21,866 | - | - | 1,057 | 22,923 | 1% |
| | States | - | 4,865 | 3,926 | 653,548 | - | 662,339 | 19% |
| Total | | 409,555 | 164,037 | 493,690 | 1,980,810 | 314,819 | 3,362,911 | 100% |
| *Loan operations measured at FVTPL. | | | | | | |
| At 31.12.2019 | | High Grade | Standard Grade | Min. Accept. Risk | High Risk | No grading* | Total | % of Total |
| in EUR’000 | | | | | | | | |
| | | A to B- | C | D+ | D- and below | | | |
| Borrower | Financial institutions | 234,072 | 219,467 | 335,841 | 817,894 | - | 1,607,274 | 57% |
| | Corporates | 100,115 | 49,458 | - | 524,532 | 95,925 | 770,030 | 27% |
| | Public institutions | - | 26,908 | - | - | 1,686 | 28,594 | 1% |
| | States | - | 6,285 | 4,486 | 422,057 | - | 432,828 | 15% |
| Total | | 334,187 | 302,118 | 340,327 | 1,764,483 | 97,611 | 2,838,726 | 100% |
| *Loan operations measured at FVTPL. | | | | | | |

At 31.12.2020

At 31.12.2020

High Grade

High Grade

Standard Grade

Standard Grade

Min. Accept. Risk

Min. Accept. Risk

High Risk

High Risk

No grading*

No grading*

Total

Total

% of Total

% of Total

in EUR’000

in EUR’000

A to B-

A to B-

C

C

D+

D+

D- and below

D- and below

Borrower

Borrower

Financial institutions

Financial institutions

290,565

290,565

90,445

90,445

475,331

475,331

815,120

815,120

-

-

1,671,461

1,671,461

50%

50%

Corporates

Corporates

118,990

118,990

46,861

46,861

14,433

14,433

512,142

512,142

313,762

313,762

1,006,188

1,006,188

30%

30%

Public institutions

Public institutions

-

-

21,866

21,866

-

-

-

-

1,057

1,057

22,923

22,923

1%

1%

States

States

-

-

4,865

4,865

3,926

3,926

653,548

653,548

-

-

662,339

662,339

19%

19%

Total

Total

409,555

409,555

164,037

164,037

493,690

493,690

1,980,810

1,980,810

314,819

314,819

3,362,911

3,362,911

100%

100%

*Loan operations measured at FVTPL.

*Loan operations measured at FVTPL.

At 31.12.2019

At 31.12.2019

High Grade

High Grade

Standard Grade

Standard Grade

Min. Accept. Risk

Min. Accept. Risk

High Risk

High Risk

No grading*

No grading*

Total

Total

% of Total

% of Total

in EUR’000

in EUR’000

A to B-

A to B-

C

C

D+

D+

D- and below

D- and below

Borrower

Borrower

Financial institutions

Financial institutions

234,072

234,072

219,467

219,467

335,841

335,841

817,894

817,894

-

-

1,607,274

1,607,274

57%

57%

Corporates

Corporates

100,115

100,115

49,458

49,458

-

-

524,532

524,532

95,925

95,925

770,030

770,030

27%

27%

Public institutions

Public institutions

-

-

26,908

26,908

-

-

-

-

1,686

1,686

28,594

28,594

1%

1%

States

States

-

-

6,285

6,285

4,486

4,486

422,057

422,057

-

-

432,828

432,828

15%

15%

Total

Total

334,187

334,187

302,118

302,118

340,327

340,327

1,764,483

1,764,483

97,611

97,611

2,838,726

2,838,726

100%

100%

*Loan operations measured at FVTPL.

*Loan operations measured at FVTPL.

3.2.3.4Risk concentrations of loans and advances

3.2.3.4

Risk concentrations of loans and advances

3.2.3.4.1Geographical analysis

3.2.3.4.1

Geographical analysis

Based on the country of borrower, the Facility’s loan portfolio can be analysed by the following geographical regions (in EUR‘000):

Based on the country of borrower, the Facility’s loan portfolio can be analysed by the following geographical regions (in EUR‘000):

| Country of borrower | 31.12.2020 | 31.12.2019 |
| --- | --- | --- |
| Egypt | 319,040 | 101,316 |
| Nigeria | 236,149 | 179,499 |
| Kenya | 195,917 | 230,837 |
| Ethiopia | 92,346 | 62,005 |
| Mauritius | 76,419 | 96,014 |
| Barbados | 75,037 | 75,342 |
| Uganda | 61,869 | 64,882 |
| Tanzania | 60,058 | 96,640 |
| Rwanda | 59,114 | 48,839 |
| Congo (Democratic Republic) | 56,527 | 66,754 |
| Zambia | 42,553 | 43,036 |
| New Caledonia | 41,224 | 43,980 |
| Mauritania | 38,131 | 49,139 |
| Regional-ACP | 37,497 | 14,674 |
| Cameroon | 36,749 | 32,238 |
| Senegal | 32,850 | 42,750 |
| Dominican Republic | 30,741 | 45,393 |
| Jamaica | 23,411 | 33,436 |
| Ghana | 21,249 | 31,635 |
| Guinea | 18,534 | 20,399 |
| Malawi | 17,349 | 21,800 |
| Cape Verde | 14,952 | 17,226 |
| Angola | 14,654 | 19,269 |
| Mali | 12,918 | 4,234 |
| Mozambique | 10,775 | 12,709 |
| Togo | 10,625 | 18,022 |
| French Polynesia | 8,783 | 12,556 |
| Cayman Islands | 8,027 | 12,203 |
| Benin | 3,932 | 59 |
| Seychelles | 3,359 | 4,201 |
| Micronesia | 3,073 | 648 |
| Haiti | 2,617 | 3,345 |
| Niger | 2,243 | 5,399 |
| Samoa | 1,898 | 3,036 |
| Burkina Faso | 1,267 | 1,861 |
| Vanuatu | 1,200 | 1,527 |
| Palau | 358 | 768 |
| Botswana | - | 1,004 |
| Total | 1,673,445 | 1,518,675 |

Country of borrower

Country of borrower

31.12.2020

31.12.2020

31.12.2019

31.12.2019

Egypt

Egypt

319,040

319,040

101,316

101,316

Nigeria

Nigeria

236,149

236,149

179,499

179,499

Kenya

Kenya

195,917

195,917

230,837

230,837

Ethiopia

Ethiopia

92,346

92,346

62,005

62,005

Mauritius

Mauritius

76,419

76,419

96,014

96,014

Barbados

Barbados

75,037

75,037

75,342

75,342

Uganda

Uganda

61,869

61,869

64,882

64,882

Tanzania

Tanzania

60,058

60,058

96,640

96,640

Rwanda

Rwanda

59,114

59,114

48,839

48,839

Congo (Democratic Republic)

Congo (Democratic Republic)

56,527

56,527

66,754

66,754

Zambia

Zambia

42,553

42,553

43,036

43,036

New Caledonia

New Caledonia

41,224

41,224

43,980

43,980

Mauritania

Mauritania

38,131

38,131

49,139

49,139

Regional-ACP

Regional-ACP

37,497

37,497

14,674

14,674

Cameroon

Cameroon

36,749

36,749

32,238

32,238

Senegal

Senegal

32,850

32,850

42,750

42,750

Dominican Republic

Dominican Republic

30,741

30,741

45,393

45,393

Jamaica

Jamaica

23,411

23,411

33,436

33,436

Ghana

Ghana

21,249

21,249

31,635

31,635

Guinea

Guinea

18,534

18,534

20,399

20,399

Malawi

Malawi

17,349

17,349

21,800

21,800

Cape Verde

Cape Verde

14,952

14,952

17,226

17,226

Angola

Angola

14,654

14,654

19,269

19,269

Mali

Mali

12,918

12,918

4,234

4,234

Mozambique

Mozambique

10,775

10,775

12,709

12,709

Togo

Togo

10,625

10,625

18,022

18,022

French Polynesia

French Polynesia

8,783

8,783

12,556

12,556

Cayman Islands

Cayman Islands

8,027

8,027

12,203

12,203

Benin

Benin

3,932

3,932

59

59

Seychelles

Seychelles

3,359

3,359

4,201

4,201

Micronesia

Micronesia

3,073

3,073

648

648

Haiti

Haiti

2,617

2,617

3,345

3,345

Niger

Niger

2,243

2,243

5,399

5,399

Samoa

Samoa

1,898

1,898

3,036

3,036

Burkina Faso

Burkina Faso

1,267

1,267

1,861

1,861

Vanuatu

Vanuatu

1,200

1,200

1,527

1,527

Palau

Palau

358

358

768

768

Botswana

Botswana

-

-

1,004

1,004

Total

Total

1,673,445

1,673,445

1,518,675

1,518,675

3.2.3.4.2Industry sector analysis

The table below analyses the Facility’s loan portfolio by industry sector of the borrower. Operations which are first disbursed to a financial intermediary before being disbursed to the final beneficiary are reported under ”Tertiary and other” (in EUR’000):

| Industry sector of borrower | 31.12.2020 | 31.12.2019 |
| --- | --- | --- |
| Tertiary and other | 1,079,088 | 932,901 |
| Electricity, coal and others | 207,940 | 226,314 |
| Urban development, renovation and transport | 206,201 | 195,042 |
| Chemicals, plastics and pharmaceuticals | 89,495 | 51,865 |
| Basic material and mining | 34,292 | 44,746 |
| Airports and air traffic management systems | 21,866 | 26,908 |
| Telecommunications | 14,964 | 21,546 |
| Investment goods, Consumer durables | 11,531 | 4,186 |
| Waste recuperation | 6,063 | 6,812 |
| Food chain | 2,005 | 8,355 |
| Total | 1,673,445 | 1,518,675 |

Industry sector of borrower

31.12.2020

31.12.2019

Tertiary and other

1,079,088

932,901

Electricity, coal and others

207,940

226,314

Urban development, renovation and transport

206,201

195,042

Chemicals, plastics and pharmaceuticals

89,495

51,865

Basic material and mining

34,292

44,746

Airports and air traffic management systems

21,866

26,908

Telecommunications

14,964

21,546

Investment goods, Consumer durables

11,531

4,186

Waste recuperation

6,063

6,812

Food chain

2,005

8,355

Total

1,673,445

1,518,675

3.2.3.5Credit risk exposure for each internal risk rating

The EIB uses an internal rating methodology in line with the Internal ratings based approach under Basel III. The majority of the Facility’s counterparties have been assigned an internal rating according to this methodology. The table below shows a breakdown of the Facility’s loan portfolio by the better of the borrower’s or guarantor’s internal ratings, where available. In cases where an internal rating is not available, the external rating has been used for this analysis.

The table shows both the exposures signed (disbursed and undisbursed) and the risk-weighted exposures, based on an internal methodology that the Facility uses for limit management.

| | | 2020 |
| --- | --- | --- |
| in EUR’000 | Moody’s equiv. grade | 12-month ECL | Lifetime ECL not credit-impaired | Lifetime ECL credit-impaired | POCI | FVTPL | Total |
| Loans and advances at AC | | | | | | | |
| Internal Rating 1 -  minimal credit risk | Aaa | - | 73,545 | - | - | - | 73,545 |
| Internal Rating  2 - very low credit risk | Aa1 - Aa3 | 75,048 | - | - | - | - | 75,048 |
| Internal Rating  3 - low credit risk | A1 - A3 | 2,087 | - | - | - | - | 2,087 |
| Internal Rating  4 - moderate credit risk | Baa1 - Baa3 | 54,412 | 6,087 | - | - | - | 60,499 |
| Internal Rating  5 - financially weak counterpart | Ba1 - Ba3 | 392,787 | 19,761 | - | - | - | 412,548 |
| Internal Rating  6 - high credit risk | B1 - B3 | 581,607 | 193,877 | 32,032 | - | - | 807,516 |
| Internal Rating  7 - very high credit risk | below Caa1 | 70,495 | 177,919 | 1,493 | - | - | 249,907 |
| Internal Rating  8 - counterpart in default | below Caa1 but in default | - | 5,693 | 45,000 | - | - | 50,693 |
| Loans and advances at FVTPL | | - | - | - | - | 92,436 | 92,436 |
| Loss allowance and FV adjustment | | -16,389 | -43,976 | -44,538 | - | -45,931 | -150,834 |
| Carrying amount of loans and advances | | 1,160,047 | 432,906 | 33,987 | - | 46,505 | 1,673,445 |
| | | | | | | | |
| Loan commitments | | | | | | | |
| Internal Rating  1 -  minimal credit risk | Aaa | - | - | - | - | - | - |
| Internal Rating  2 - very low credit risk | Aa1 - Aa3 | 95,067 | - | - | - | - | 95,067 |
| Internal Rating  3 - low credit risk | A1 - A3 | 87,000 | - | - | - | - | 87,000 |
| Internal Rating  4 - moderate credit risk | Baa1 - Baa3 | 57,282 | - | - | - | - | 57,282 |
| Internal Rating  5 - financially weak counterpart | Ba1 - Ba3 | 152,264 | - | - | - | - | 152,264 |
| Internal Rating  6 - high credit risk | B1 - B3 | 675,365 | 8,964 | - | - | - | 684,329 |
| Internal Rating  7 - very high credit risk | below Caa1 | 72,500 | 110,331 | - | - | - | 182,831 |
| Internal Rating  8 - counterpart in default | below Caa1 but in default | - | - | 38,497 | - | - | 38,497 |
| No internal rating* | | 129,669 | 27,365 | - | - | - | 157,034 |
| Loans and advances at FVTPL | | - | - | - | - | 268,314 | 268,314 |
| Loss allowance and FV adjustment | | -6,817 | -26,335 | - | - | - | -33,152 |
| Carrying amount of loan commitments | | 1,262,330 | 120,325 | 38,497 | - | 268,314 | 1,689,466 |
| * Agency agreements for which there are no underlying counterparts at reporting date |

2020

in EUR’000

Moody’s equiv. grade

12-month ECL

Lifetime ECL not credit-impaired

Lifetime ECL credit-impaired

POCI

FVTPL

Total

Loans and advances at AC

Internal Rating 1 -  minimal credit risk

Aaa

-

73,545

-

-

-

73,545

Internal Rating  2 - very low credit risk

Aa1 - Aa3

75,048

-

-

-

-

75,048

Internal Rating  3 - low credit risk

A1 - A3

2,087

-

-

-

-

2,087

Internal Rating  4 - moderate credit risk

Baa1 - Baa3

54,412

6,087

-

-

-

60,499

Internal Rating  5 - financially weak counterpart

Ba1 - Ba3

392,787

19,761

-

-

-

412,548

Internal Rating  6 - high credit risk

B1 - B3

581,607

193,877

32,032

-

-

807,516

Internal Rating  7 - very high credit risk

below Caa1

70,495

177,919

1,493

-

-

249,907

Internal Rating  8 - counterpart in default

below Caa1 but in default

-

5,693

45,000

-

-

50,693

Loans and advances at FVTPL

-

-

-

-

92,436

92,436

Loss allowance and FV adjustment

-16,389

-43,976

-44,538

-

-45,931

-150,834

Carrying amount of loans and advances

1,160,047

432,906

33,987

-

46,505

1,673,445

Loan commitments

Internal Rating  1 -  minimal credit risk

Aaa

-

-

-

-

-

-

Internal Rating  2 - very low credit risk

Aa1 - Aa3

95,067

-

-

-

-

95,067

Internal Rating  3 - low credit risk

A1 - A3

87,000

-

-

-

-

87,000

Internal Rating  4 - moderate credit risk

Baa1 - Baa3

57,282

-

-

-

-

57,282

Internal Rating  5 - financially weak counterpart

Ba1 - Ba3

152,264

-

-

-

-

152,264

Internal Rating  6 - high credit risk

B1 - B3

675,365

8,964

-

-

-

684,329

Internal Rating  7 - very high credit risk

below Caa1

72,500

110,331

-

-

-

182,831

Internal Rating  8 - counterpart in default

below Caa1 but in default

-

-

38,497

-

-

38,497

No internal rating*

129,669

27,365

-

-

-

157,034

Loans and advances at FVTPL

-

-

-

-

268,314

268,314

Loss allowance and FV adjustment

-6,817

-26,335

-

-

-

-33,152

Carrying amount of loan commitments

1,262,330

120,325

38,497

-

268,314

1,689,466

- Agency agreements for which there are no underlying counterparts at reporting date

3.2.3.5Credit risk exposure for each internal risk rating (continued)

| | | 2019 | |
| --- | --- | --- | --- |
| in EUR’000 | Moody’s equiv. grade | 12-month ECL | Lifetime ECL not credit-impaired | Lifetime ECL credit-impaired | POCI | FVTPL | Total | |
| Loans and advances at AC | | | | | | | | |
| Internal Rating 1 -  minimal credit risk | Aaa | - | 82,211 | - | - | - | 82,211 | |
| Internal Rating  2 - very low credit risk | Aa1 - Aa3 | 75,352 | - | - | - | - | 75,352 | |
| Internal Rating  3 - low credit risk | A1 - A3 | 5,399 | - | - | - | - | 5,399 | |
| Internal Rating  4 - moderate credit risk | Baa1 - Baa3 | 60,385 | 16,449 | - | - | - | 76,834 | |
| Internal Rating  5 - financially weak counterpart | Ba1 - Ba3 | 192,201 | 6,199 | - | - | - | 198,400 | |
| Internal Rating  6 - high credit risk | B1 - B3 | 708,162 | 159,858 | - | - | - | 868,020 | |
| Internal Rating  7 - very high credit risk | below Caa1 | 79,411 | 145,176 | - | - | - | 224,587 | |
| Internal Rating  8 - counterpart in default | below Caa1 but in default | - | - | 136,749 | - | - | 136,749 | |
| Loans and advances at FVTPL | | - | - | - | - | 37,366 | 37,366 | |
| Loss allowance and FV adjustment | | -17,191 | -38,509 | -114,307 | - | -16,236 | -186,243 | |
| Carrying amount of loans and advances | | 1,103,719 | 371,384 | 22,442 | - | 21,130 | 1,518,675 | |
| | | | | | | | | |
| Loan commitments | | | | | | | | |
| Internal Rating  2 - very low credit risk | Aa1 - Aa3 | 102,092 | - | - | - | - | 102,092 | |
| Internal Rating  3 - low credit risk | A1 - A3 | 12,000 | - | - | - | - | 12,000 | |
| Internal Rating  4 - moderate credit risk | Baa1 - Baa3 | 61,461 | - | - | - | - | 61,461 | |
| Internal Rating  5 - financially weak counterpart | Ba1 - Ba3 | 323,080 | - | - | - | - | 323,080 | |
| Internal Rating  6 - high credit risk | B1 - B3 | 405,773 | 126,076 | - | - | - | 531,849 | |
| Internal Rating  7 - very high credit risk | below Caa1 | 14,883 | 104,328 | - | - | - | 119,211 | |
| Internal Rating  8 - counterpart in default | below Caa1 but in default | - | - | 51,377 | - | - | 51,377 | |
| No internal rating* | | 79,669 | - | - | - | - | 79,669 | |
| Loans and advances at FVTPL | | - | - | - | - | 76,581 | 76,581 | |
| Loss allowance and FV adjustment | | -3,943 | -33,326 | - | - | - | -37,269 | |
| Carrying amount of loan commitments | | 995,015 | 197,078 | 51,377 | - | 76,581 | 1,320,051 | |
| * Agency agreements for which there are no underlying counterparts at reporting date



  The EIB continually monitors events affecting its borrowers and guarantors, especially banks. In particular, the EIB is assessing on a case by case basis its contractual rights in case of rating deterioration and is seeking mitigating measures. It is also closely following the renewals of bank guarantees received for its loans to ensure that these are replaced or action is taken in a timely manner if need be. | |

2019

in EUR’000

Moody’s equiv. grade

12-month ECL

Lifetime ECL not credit-impaired

Lifetime ECL credit-impaired

POCI

FVTPL

Total

Loans and advances at AC

Internal Rating 1 -  minimal credit risk

Aaa

-

82,211

-

-

-

82,211

Internal Rating  2 - very low credit risk

Aa1 - Aa3

75,352

-

-

-

-

75,352

Internal Rating  3 - low credit risk

A1 - A3

5,399

-

-

-

-

5,399

Internal Rating  4 - moderate credit risk

Baa1 - Baa3

60,385

16,449

-

-

-

76,834

Internal Rating  5 - financially weak counterpart

Ba1 - Ba3

192,201

6,199

-

-

-

198,400

Internal Rating  6 - high credit risk

B1 - B3

708,162

159,858

-

-

-

868,020

Internal Rating  7 - very high credit risk

below Caa1

79,411

145,176

-

-

-

224,587

Internal Rating  8 - counterpart in default

below Caa1 but in default

-

-

136,749

-

-

136,749

Loans and advances at FVTPL

-

-

-

-

37,366

37,366

Loss allowance and FV adjustment

-17,191

-38,509

-114,307

-

-16,236

-186,243

Carrying amount of loans and advances

1,103,719

371,384

22,442

-

21,130

1,518,675

Loan commitments

Internal Rating  2 - very low credit risk

Aa1 - Aa3

102,092

-

-

-

-

102,092

Internal Rating  3 - low credit risk

A1 - A3

12,000

-

-

-

-

12,000

Internal Rating  4 - moderate credit risk

Baa1 - Baa3

61,461

-

-

-

-

61,461

Internal Rating  5 - financially weak counterpart

Ba1 - Ba3

323,080

-

-

-

-

323,080

Internal Rating  6 - high credit risk

B1 - B3

405,773

126,076

-

-

-

531,849

Internal Rating  7 - very high credit risk

below Caa1

14,883

104,328

-

-

-

119,211

Internal Rating  8 - counterpart in default

below Caa1 but in default

-

-

51,377

-

-

51,377

No internal rating*

79,669

-

-

-

-

79,669

Loans and advances at FVTPL

-

-

-

-

76,581

76,581

Loss allowance and FV adjustment

-3,943

-33,326

-

-

-

-37,269

Carrying amount of loan commitments

995,015

197,078

51,377

-

76,581

1,320,051

- Agency agreements for which there are no underlying counterparts at reporting date

The EIB continually monitors events affecting its borrowers and guarantors, especially banks. In particular, the EIB is assessing on a case by case basis its contractual rights in case of rating deterioration and is seeking mitigating measures. It is also closely following the renewals of bank guarantees received for its loans to ensure that these are replaced or action is taken in a timely manner if need be.

3.2.3.6Arrears on loans and impairments

Amounts in arrears are identified, monitored and reported according to the procedures defined into the Bank wide “Finance Monitoring Guidelines and Procedures”. These procedures are in line with best banking practices and are adopted for all loans managed by the EIB.

The monitoring process is structured in order to make sure that (i) potential arrears are detected and reported to the services in charge with minimum delay; (ii) critical cases are promptly escalated to the right operational and decision level; (iii) regular reporting to the Facility management is provided on the overall status.

The arrears and impairments on loans and advances can be analysed as follows (in EUR’000):

| | Loans and advances | Loans and advances |
| --- | --- | --- |
| | 31.12.2020 | 31.12.2019 |
| Carrying amount | 1,673,445 | 1,518,675 |
| | | |
| Lifetime ECL credit- impaired | | |
| Gross amount | 45,000 | 136,749 |
| Impairment- loss allowance | -44,538 | -114,307 |
| Carrying amount of lifetime ECL credit-impaired | 462 | 22,442 |
| | | |
| | | |
| Past due but not credit- impaired | | |
| | | |
| Past due comprises | | |
| 0-30 days | 2,008 | 61 |
| 30-60 days | - | 924 |
| 60-90 days | - | - |
| 90-180 days | 174 | 135 |
| more 180 days | - | 26 |
| Carrying amount past due but not credit- impaired | 2,182 | 1,146 |
| | | |
| Carrying amount neither past due nor credit- impaired | 1,670,801 | 1,495,087 |
| | | |
| Total carrying amount loans and advances | 1,673,445 | 1,518,675 |

Loans and advances

Loans and advances

31.12.2020

31.12.2019

Carrying amount

1,673,445

1,518,675

Lifetime ECL credit- impaired

Gross amount

45,000

136,749

Impairment- loss allowance

-44,538

-114,307

Carrying amount of lifetime ECL credit-impaired

462

22,442

Past due but not credit- impaired

Past due comprises

0-30 days

2,008

61

30-60 days

-

924

60-90 days

-

-

90-180 days

174

135

more 180 days

-

26

Carrying amount past due but not credit- impaired

2,182

1,146

Carrying amount neither past due nor credit- impaired

1,670,801

1,495,087

Total carrying amount loans and advances

1,673,445

1,518,675

3.2.3.7
     Sensitivity on ECL to future economic conditions (in EUR’000)

The ECL is sensitive to judgments and assumptions made regarding formulation of forward-looking scenarios. The EIB performs a sensitivity analysis on the ECL recognised on material classes of its assets.

The forecasts of future economic conditions (via macroeconomic scenarios) are inputs to forecasting model producing conditional risk parameters, which are an input to loss allowance calculation.

The scenarios are derived shocking GDP, which is the key measurement of economic activity. The shocks to real GDP are calibrated to replicate the past volatility of the variable. In addition, expert judgment is applied, when appropriate, to refine the size and persistency of GDP shocks. As a result, shocks are determined together with a decay function to determine the impact of the shocks over time. Probabilities attached to each scenario are defined reflecting market (volatility) indicators and internally developed indicators/trackers consistently deployed over time to capture uncertainty. The weighting of positive and negative shocks depends on the balance of risks in the economy, on average negative and positive shocks EUR -20,533 (2019: EUR -2,670) and EUR 17,658 (2019: EUR 2,396) were respectively applied on quarterly projections in the past exercise.

The table below shows the loss allowance on loans and advances under Stage 1 and 2. Each forward-looking scenario (e.g. baseline, positive and negative) was weighted 100% instead of applying scenario probability weights across the three scenarios.

| | 2020 |
| --- | --- |
| (in EUR’000) | Positive | Baseline | Negative |
| | | | |
| Gross exposure | 3,063,652 | 3,063,652 | 3,063,652 |
| Loss allowance | 70,645 | 88,303 | 108,836 |
| | | | |
| | 2019 |
| (in EUR’000) | Positive | Baseline | Negative |
| | | | |
| Gross exposure | 2,748,523 | 2,748,523 | 2,748,523 |
| Loss allowance | 89,255 | 91,651 | 94,321 |

2020

2020

(in EUR’000)

(in EUR’000)

Positive

Positive

Baseline

Baseline

Negative

Negative

Gross exposure

Gross exposure

3,063,652

3,063,652

3,063,652

3,063,652

3,063,652

3,063,652

Loss allowance

Loss allowance

70,645

70,645

88,303

88,303

108,836

108,836

2019

2019

(in EUR’000)

(in EUR’000)

Positive

Positive

Baseline

Baseline

Negative

Negative

Gross exposure

Gross exposure

2,748,523

2,748,523

2,748,523

2,748,523

2,748,523

2,748,523

Loss allowance

Loss allowance

89,255

89,255

91,651

91,651

94,321

94,321

3.2.3.8Loan renegotiation and forbearance

3.2.3.8

Loan renegotiation and forbearance

The EIB considers loans to be forborne loans (i.e. loans, debt securities and loan commitments) in respect of which forbearance measures have been extended. Forbearance measures consist of “concessions” that the EIB decides to make towards an obligor who is considered unable to comply with the contractual debt service terms and conditions due to its financial difficulties, in order to enable the obligor to service the debt or to refinance, totally or partially, the contract. Exposures shall be treated as forborne if a concession has been made, irrespective of whether any amount is past-due, or the exposure is classified as defaulted. Exposures shall not be treated as forborne when the obligor is not in financial difficulties.

The EIB considers loans to be forborne loans (i.e. loans, debt securities and loan commitments) in respect of which forbearance measures have been extended. Forbearance measures consist of “concessions” that the EIB decides to make towards an obligor who is considered unable to comply with the contractual debt service terms and conditions due to its financial difficulties, in order to enable the obligor to service the debt or to refinance, totally or partially, the contract. Exposures shall be treated as forborne if a concession has been made, irrespective of whether any amount is past-due, or the exposure is classified as defaulted. Exposures shall not be treated as forborne when the obligor is not in financial difficulties.

In the normal course of business, the LG of the loans in question would have deteriorated, the loans would have been included in the Watch List before renegotiation and the financial instrument would move from Stage 1 to Stage 2 in the three-stage model for impairment. Once renegotiated, the EIB would continue to closely monitor these loans and the financial instrument would be credit impaired and moved to Stage 3. If subsequently the LG of a loan improves sufficiently, the loan would be removed from the Watch List in line with the EIB’s procedures.

In the normal course of business, the LG of the loans in question would have deteriorated, the loans would have been included in the Watch List before renegotiation and the financial instrument would move from Stage 1 to Stage 2 in the three-stage model for impairment. Once renegotiated, the EIB would continue to closely monitor these loans and the financial instrument would be credit impaired and moved to Stage 3. If subsequently the LG of a loan improves sufficiently, the loan would be removed from the Watch List in line with the EIB’s procedures.

As part of its response to the economic effects of the COVID-19 pandemic, the Bank has decided to make a number of supportive measures available to its clients in certain circumstances, which include, among other things, (i) the temporary easing (including waivers) of financial covenants and other key clauses, (ii) the re-profiling of cash flows by setting new repayment schedules or the temporary standstill of repayment obligations and (iii) certain other complementary supportive measures, such as the signing of new contracts, accelerating loan disbursements and increasing amounts lent to borrowers. The Bank is assessing requests for such measures on a case-by-case basis within the limits of certain specific conditions. These measures are intended to be extended to clients who are temporarily affected by the economic effects of the COVID-19 pandemic but who are not experiencing any structural financial difficulties or solvency issues and are considered to be a going concern at the time of granting such measures. If, as a result of the assessment, a client does not meet these requirements or the Facility identifies risks for the long-term sustainability of the client’s business model, it will consider any other appropriate measures and, if necessary, follow the EIB’s standard restructuring processes.

As part of its response to the economic effects of the COVID-19 pandemic, the Bank has decided to make a number of supportive measures available to its clients in certain circumstances, which include, among other things, (i) the temporary easing (including waivers) of financial covenants and other key clauses, (ii) the re-profiling of cash flows by setting new repayment schedules or the temporary standstill of repayment obligations and (iii) certain other complementary supportive measures, such as the signing of new contracts, accelerating loan disbursements and increasing amounts lent to borrowers. The Bank is assessing requests for such measures on a case-by-case basis within the limits of certain specific conditions. These measures are intended to be extended to clients who are temporarily affected by the economic effects of the COVID-19 pandemic but who are not experiencing any structural financial difficulties or solvency issues and are considered to be a going concern at the time of granting such measures. If, as a result of the assessment, a client does not meet these requirements or the Facility identifies risks for the long-term sustainability of the client’s business model, it will consider any other appropriate measures and, if necessary, follow the EIB’s standard restructuring processes.

Forbearance measures and practices undertaken by the EIB during the reporting period include, but are not limited to, extension of maturities, deferral of capital only, deferral of capital and interest, breach of material covenants and capitalisation of arrears.

Forbearance measures and practices undertaken by the EIB during the reporting period include, but are not limited to, extension of maturities, deferral of capital only, deferral of capital and interest, breach of material covenants and capitalisation of arrears.

3.2.3.8
     Loan renegotiation and forbearance (continued)

3.2.3.8

Loan renegotiation and forbearance (continued)

Operations subject to forbearance measures are reported as such in the table below:

Operations subject to forbearance measures are reported as such in the table below:

| in EUR’000 | 31.12.2020 | 31.12.2019 |
| --- | --- | --- |
| | Performing | Non-Performing | Performing | Non-Performing |
| Number of contracts subject to forbearance practices | 12 | 14 | 19 | 9 |
| Carrying values (incl. interest and amounts in arrears) | 169,274 | 58,748 | 182,619 | 62,915 |
| ECL allowance recognised | 19,311 | 28,934 | 7,916 | 57,321 |
| Interest income in respect of forborne contracts | 7,729 | 5,099 | 8,130 | 854 |
| Exposures written-off / derecognised (following the termination/sale of the operation) | - | 49,472 | - | 280 |

in EUR’000

in EUR’000

31.12.2020

31.12.2020

31.12.2019

31.12.2019

Performing

Performing

Non-Performing

Non-Performing

Performing

Performing

Non-Performing

Non-Performing

Number of contracts subject to forbearance practices

Number of contracts subject to forbearance practices

12

12

14

14

19

19

9

9

Carrying values (incl. interest and amounts in arrears)

Carrying values (incl. interest and amounts in arrears)

169,274

169,274

58,748

58,748

182,619

182,619

62,915

62,915

ECL allowance recognised

ECL allowance recognised

19,311

19,311

28,934

28,934

7,916

7,916

57,321

57,321

Interest income in respect of forborne contracts

Interest income in respect of forborne contracts

7,729

7,729

5,099

5,099

8,130

8,130

854

854

Exposures written-off / derecognised (following the termination/sale of the operation)

Exposures written-off / derecognised (following the termination/sale of the operation)

-

-

49,472

49,472

-

-

280

280

Forbearance measures

| | | | Forbearance measures | | | |
| --- | --- | --- | --- | --- | --- | --- |
| in EUR’000 | 31.12.2019 | Extension of maturities | Deferral of capital and interest | Breach of material financial covenants | Other | Contractual repayment, termination and/or
  write off* | 31.12.2020 |
| Financial institutions | 51,468 | -1,995 | 11,989 | 43,746 | - | -14,683 | 90,525 |
| Corporates | 194,066 | -1,074 | - | -3,515 | - | -51,980 | 137,497 |
| Total | 245,534 | -3,069 | 11,989 | 40,231 | - | -66,663 | 228,022 |
| * Decreases are explained by repayments of capital occurred during the year on operations already considered as forborne as of
  31 December 2020 and by termination of forborne measures during the year. |

in EUR’000

31.12.2019

Extension of maturities

Deferral of capital and interest

Breach of material financial covenants

Other

Contractual repayment, termination and/or
  write off*

31.12.2020

Financial institutions

51,468

-1,995

11,989

43,746

-

-14,683

90,525

Corporates

194,066

-1,074

-

-3,515

-

-51,980

137,497

Total

245,534

-3,069

11,989

40,231

-

-66,663

228,022

- Decreases are explained by repayments of capital occurred during the year on operations already considered as forborne as of
  31 December 2020 and by termination of forborne measures during the year.

3.2.4Credit risk on cash and cash equivalents

Available funds are invested in accordance with the Facility’s schedule of contractual disbursement obligations. As of 31 December 2020, and 31 December 2019, investments were in the form of bank deposits, certificates of deposit and commercial papers.

The authorized entities have a rating similar to the short-term and long-term ratings required for the EIB’s own treasury placements. In case of different ratings being granted by more than one credit rating agency, the lowest rating governs. The maximum authorized limit for each authorised bank is currently EUR 50,000,000 (fifty million euro). An exception to this rule has been granted to Societe Generale where the Facility has its operational cash accounts. The short-term credit limit for Societe Generale as at 31 December 2020 and 31 December 2019 amounts to EUR 110,000,000 (one hundred and ten million euro). The increased limit applies to the sum of the cash held at the operational cash accounts and the instruments issued by this counterpart and held by the treasury portfolio.

All investments have been done with authorised entities with a maximum tenor of three months from value date. All credit exposure limit breaches have been reported to the mandators. As at 31 December 2020 and as at 31 December 2019 all term deposits, commercial papers and cash in hand held by the treasury portfolio of the Facility had a minimum rating of at least P-2 (Moody’s equivalent) at settlement day.

The following table shows the situation of cash and cash equivalents including accrued interest (in EUR’000):

| Minimum short-term rating | Minimum long-term rating | 31.12.2020 | | 31.12.2019 | |
| --- | --- | --- | --- | --- | --- |
| (Moody’s term) | (Moody’s term) | | | | |
| P-1 | Aaa | 49,988 | 5% | 98,945 | 12% |
| P-1 | Aa2 | 25,022 | 3% | 67,799 | 8% |
| P-1 | Aa3 | 130,024 | 14% | 89,983 | 11% |
| P-1 | A1 | 99,969 | 11% | 213,914 | 26% |
| P-1 | A2 | 119,972 | 13% | 212,199 | 25% |
| P-1 | A3 | 498,965 | 54% | 104,944 | 12% |
| P-2 | A3 | - | - | 49,993 | 6% |
| Total | | 923,940 | 100% | 837,777 | 100% |
| | | | | | |

Minimum short-term rating

Minimum long-term rating

31.12.2020

31.12.2019

(Moody’s term)

(Moody’s term)

P-1

Aaa

49,988

5%

98,945

12%

P-1

Aa2

25,022

3%

67,799

8%

P-1

Aa3

130,024

14%

89,983

11%

P-1

A1

99,969

11%

213,914

26%

P-1

A2

119,972

13%

212,199

25%

P-1

A3

498,965

54%

104,944

12%

P-2

A3

-

-

49,993

6%

Total

923,940

100%

837,777

100%

3.2.5Credit risk on derivatives

3.2.5.1Credit risk policy of derivatives

The credit risk with respect to derivatives is represented by the loss which a given party would incur where the other counterparty to the deal would be unable to honour its contractual obligations. The credit risk associated with derivatives varies according to a number of factors (such as interest and exchange rates) and generally corresponds to only a small portion of their notional value.

In the normal course of its activity, the Facility may enter into swap contracts with a view to hedge specific lending operations or into currency forward contracts, with a view to hedge its currency positions denominated in actively traded currencies other than the Euro. All the swaps are executed by the EIB with an external counterpart. The swaps are arranged by the same Master Swap Agreements and Credit Support Annexes signed between the EIB and its external counterparts.

3.2.5.2Credit risk measurement for derivatives

All the swaps executed by the EIB that are related to the Facility are treated within the same contractual framework and methodologies applied for the derivatives negotiated by the EIB for its own purposes. In particular, eligibility of swap counterparts is determined by the EIB based on the same eligibility conditions applied for its general swap purposes.

The EIB measures the credit risk exposure related to swaps and derivatives transactions using the Net Market Exposure (“NME”) and Potential Future Exposure (“PFE”) approach for reporting and limit monitoring. The NME and the PFE fully include the derivatives related to the Investment Facility.

The Facility enters into foreign exchange short-term currency swaps (“FX swaps”) contracts in order to hedge currency risk on loan disbursements in currencies other than EUR. FX swaps have a maturity of maximum three months and are regularly rolled-over. The notional amount of FX swaps stood at EUR 1,480.0 million as at 31 December 2020 against EUR 1,545.0 million as at 31 December 2019. The fair value of FX swaps amounts to EUR 33.6 million as at 31 December 2020 against EUR 14.1 million as at 31 December 2019.

The Facility enters into interest rate swap contracts in order to hedge the interest rate risk on loans disbursed. As at 31 December 2020, there are two interest rate swaps outstanding with a notional amount of EUR 17.7 million (2019: EUR 24.2 million) and a fair value of
  EUR -0.6 million (2019: EUR -0.1 million).

3.2.6Credit risk on treasury financial assets

3.2.6

Credit risk on treasury financial assets

The following table shows the situation of the treasury portfolio entirely composed of commercial papers issued by sub-sovereigns, banks and non-bank entities with remaining maturities of up to three months. EU Member States, their agencies, banks and non-bank entities are eligible issuers. The maximum authorized limit for each authorised issuer is EUR 50,000,000 (fifty million euro). Investments in medium and long-term bonds could also be eligible, according to the investment guidelines and depending on liquidity requirements:

The following table shows the situation of the treasury portfolio entirely composed of commercial papers issued by sub-sovereigns, banks and non-bank entities with remaining maturities of up to three months. EU Member States, their agencies, banks and non-bank entities are eligible issuers. The maximum authorized limit for each authorised issuer is EUR 50,000,000 (fifty million euro). Investments in medium and long-term bonds could also be eligible, according to the investment guidelines and depending on liquidity requirements:

| 1In EUR ‘000 | 2 | 3 | 4 | 5 | 6 |
| --- | --- | --- | --- | --- | --- |
| 7Minimum short-term rating | 8Minimum long-term rating | 931.12.2020 | 10 | 1131.12.2019 | 12 |
| 13(Moody’s term) | 14(Moody’s term) | 15 | 16 | 17 | 18 |
| 19P-1 | 20Aa1 | 2150,006 | 2214% | 2350,046 | 2415% |
| 25P-1 | 26Aa2 | 2750,040 | 2814% | 2919,997 | 306% |
| 31P-1 | 32Aa3 | 3350,016 | 3414% | 3550,025 | 3615% |
| 37P-1 | 38Aaa | 3951,705 | 4015% | 41- | 420% |
| 43P-1 | 44A1 | 45- | 460% | 4755,050 | 4817% |
| 49P-1 | 50A2 | 5150,058 | 5215% | 53- | 540% |
| 55P-2 | 56A3 | 57- | 580% | 5985,027 | 6026% |
| 61P-2 | 62Baa1 | 6350,035 | 6414% | 6530,433 | 669% |
| 67P-2 | 68Baa3 | 6950,013 | 7014% | 7140,009 | 7212% |
| 73Total | 74 | 75351,873 | 76100% | 77330,587 | 78100% |

1In EUR ‘000

1

In EUR ‘000

2

2

3

3

4

4

5

5

6

6

7Minimum short-term rating

7

Minimum short-term rating

8Minimum long-term rating

8

Minimum long-term rating

931.12.2020

9

31.12.2020

10

10

1131.12.2019

11

31.12.2019

12

12

13(Moody’s term)

13

(Moody’s term)

14(Moody’s term)

14

(Moody’s term)

15

15

16

16

17

17

18

18

19P-1

19

P-1

20Aa1

20

Aa1

2150,006

21

50,006

2214%

22

14%

2350,046

23

50,046

2415%

24

15%

25P-1

25

P-1

26Aa2

26

Aa2

2750,040

27

50,040

2814%

28

14%

2919,997

29

19,997

306%

30

6%

31P-1

31

P-1

32Aa3

32

Aa3

3350,016

33

50,016

3414%

34

14%

3550,025

35

50,025

3615%

36

15%

37P-1

37

P-1

38Aaa

38

Aaa

3951,705

39

51,705

4015%

40

15%

41-

41

-

420%

42

0%

43P-1

43

P-1

44A1

44

A1

45-

45

-

460%

46

0%

4755,050

47

55,050

4817%

48

17%

49P-1

49

P-1

50A2

50

A2

5150,058

51

50,058

5215%

52

15%

53-

53

-

540%

54

0%

55P-2

55

P-2

56A3

56

A3

57-

57

-

580%

58

0%

5985,027

59

85,027

6026%

60

26%

61P-2

61

P-2

62Baa1

62

Baa1

6350,035

63

50,035

6414%

64

14%

6530,433

65

30,433

669%

66

9%

67P-2

67

P-2

68Baa3

68

Baa3

6950,013

69

50,013

7014%

70

14%

7140,009

71

40,009

7212%

72

12%

73Total

73

Total

74

74

75351,873

75

351,873

76100%

76

100%

77330,587

77

330,587

78100%

78

100%

3.3Liquidity risk

3.3

Liquidity risk

Liquidity risk refers to an entity’s ability to fund increases in assets and meet obligations as they come due, without incurring unacceptable losses. It can be split into funding liquidity risk and market liquidity risk. Funding liquidity risk is the risk that an entity will not be able to meet efficiently both expected and unexpected current and future cash flow needs without affecting its daily operations or its financial condition. Market liquidity risk is the risk that an entity cannot easily offset or eliminate a position at the market price because of inadequate market depth or market disruption.

Liquidity risk refers to an entity’s ability to fund increases in assets and meet obligations as they come due, without incurring unacceptable losses. It can be split into funding liquidity risk and market liquidity risk. Funding liquidity risk is the risk that an entity will not be able to meet efficiently both expected and unexpected current and future cash flow needs without affecting its daily operations or its financial condition. Market liquidity risk is the risk that an entity cannot easily offset or eliminate a position at the market price because of inadequate market depth or market disruption.

3.3.1.1Liquidity risk management

3.3.1.1

Liquidity risk management

The Facility is primarily funded by annual contributions from Member States as well as by reflows stemming from the Facility’s operations. The Facility manages its funding liquidity risk primarily by planning its net liquidity needs and the required Member States annual contributions.

In order to calculate Member States’ annual contributions, disbursement patterns of the existing and pipelined portfolio is analysed and followed up throughout the year. Special events, such as early reimbursements, sales of shares or default cases are taken into account to correct annual liquidity requirements.

To further minimize the liquidity risk, the Facility maintains a liquidity reserve sufficient to cover at any PIT forecasted cash disbursements, as communicated periodically by the EIB’s Lending Department. Funds are invested on the money market and bond markets in the form of interbank deposits and other short-term financial instruments by taking into consideration the Facility’s cash disbursement obligations. The Facility’s liquid assets are managed by the Bank’s Treasury Department with a view to maintain appropriate liquidity to enable the Facility to meet its obligations.

In accordance with the principle of segregation of duties between the Front and Back Office, settlement operations related to the investment of these assets are under the responsibility of the EIB’s Planning and Settlement of Operations Department. Furthermore, the authorisation of counterparts and limits for treasury investments, as well as the monitoring of such limits, are the responsibility of the Bank’s Risk Management Directorate.

3.3.1.2Liquidity risk measurement

The tables in this section analyse the financial liabilities of the Facility by maturity on the basis of the period remaining between the balance sheet date and the contractual maturity date (based on undiscounted cash flows).

In terms of non-derivative financial liabilities, the Facility holds commitments in form of undisbursed portions of the credit under signed loan agreements, of undisbursed portions of signed capital subscription/investment agreements, of loan guarantees granted, or of committed interest subsidies and TA.

Loans under the IF have a disbursement deadline. However, disbursements are made at times and in amounts reflecting the progress of underlying investment projects. Moreover, the IF’s loans are transactions performed in a relatively volatile operating environment, hence their disbursement schedule is subject to a significant degree of uncertainty.

Capital investments become due when and as soon as equity fund managers issue valid calls for capital, reflecting the progress in their investment activities. The drawdown period is usually of 3 years, with frequent prolongation by one or two years. Some disbursement commitments usually survive the end of the drawdown period until full disposal of the fund’s underlying investments, as the fund’s liquidity may be insufficient from time to time to meet payment obligations arising in respect of fees or other expenses.

Guarantees are not subject to specific disbursement commitments unless a guarantee is called. The amount of guarantees outstanding is reduced alongside the repayment schedule of guaranteed loans.

Committed interest subsidies’ cash outflows occur in the case of subsidized loans financed by the Bank’s own resources. Therefore, reported outflows represent only commitments related to these loans rather than the total amount of committed undisbursed interest subsidies. As in the case of loans, their disbursement schedule is uncertain.

Committed TA “gross nominal outflow” in the “Maturity profile of non-derivative financial liabilities” table refers to the total undisbursed portion of signed TA contracts. The disbursement time pattern is subject to a significant degree of uncertainty. Cash outflows classified in the “3 months or less” bucket represent the amount of outstanding invoices received by the reporting date.

Commitments for non-derivative financial liabilities for which there is no defined contractual maturity date are classified under “Maturity Undefined”. Commitments, for which there is a recorded cash disbursement request at the reporting date, are classified under the relevant time bucket.

In terms of derivative financial liabilities, the maturity profile represents the contractual undiscounted gross cash flows of swap contracts including cross currency swaps (CCS), cross currency interest rate swaps (CCIRS), short-term currency swaps and interest rate swaps.

3.3.2
     Liquidity risk measurement (continued)

| Maturity profile of non-derivative financial liabilities | 3 months or less | More than 3 months to 1 year | More than 1 year to
  5 years | More than 5 years | Maturity Undefined | Gross nominal outflow |
| --- | --- | --- | --- | --- | --- | --- |
| in EUR’000 as at 31.12.2020 | | | | | | |
| Outflows for committed but undisbursed loans | 199,006 | - | - | - | 1,523,612 | 1,722,618 |
| Outflows for committed investment funds and share subscription | 1,043 | - | - | - | 377,303 | 378,347 |
| Others (signed non-issued guarantees, issued guarantees) | - | - | - | - | 1,553,246 | 1,553,246 |
| Outflows for committed interest subsidies | 18,494 | - | - | - | 356,391 | 374,885 |
| Outflows for committed TA | 2,504 | - | - | - | 43,029 | 45,533 |
| Total | 221,047 | - | - | - | 3,853,581 | 4,074,629 |
| | | | | | | |
| Maturity profile of non-derivative financial liabilities | 3 months or less | More than 3 months to 1 year | More than 1 year to
  5 years | More than 5 years | Maturity Undefined | Gross nominal outflow |
| in EUR’000 as at 31.12.2019 | | | | | | |
| Outflows for committed but undisbursed loans | 33,038 | - | - | - | 1,324,282 | 1,357,320 |
| Outflows for committed investment funds and share subscription | 369 | - | - | - | 405,551 | 405,920 |
| Others (signed non-issued guarantees, issued guarantees) | - | - | - | - | 1,559,831 | 1,559,831 |
| Outflows for committed interest subsidies | - | - | - | - | 350,678 | 350,678 |
| Outflows for committed TA | 3,898 | - | - | - | 21,166 | 25,064 |
| Total | 37,305 | - | - | - | 3,661,508 | 3,698,813 |
| | | | | | | |
| | | | | | | |

Maturity profile of non-derivative financial liabilities

3 months or less

More than 3 months to 1 year

More than 1 year to
  5 years

More than 5 years

Maturity Undefined

Gross nominal outflow

in EUR’000 as at 31.12.2020

Outflows for committed but undisbursed loans

199,006

-

-

-

1,523,612

1,722,618

Outflows for committed investment funds and share subscription

1,043

-

-

-

377,303

378,347

Others (signed non-issued guarantees, issued guarantees)

-

-

-

-

1,553,246

1,553,246

Outflows for committed interest subsidies

18,494

-

-

-

356,391

374,885

Outflows for committed TA

2,504

-

-

-

43,029

45,533

Total

221,047

-

-

-

3,853,581

4,074,629

Maturity profile of non-derivative financial liabilities

3 months or less

More than 3 months to 1 year

More than 1 year to
  5 years

More than 5 years

Maturity Undefined

Gross nominal outflow

in EUR’000 as at 31.12.2019

Outflows for committed but undisbursed loans

33,038

-

-

-

1,324,282

1,357,320

Outflows for committed investment funds and share subscription

369

-

-

-

405,551

405,920

Others (signed non-issued guarantees, issued guarantees)

-

-

-

-

1,559,831

1,559,831

Outflows for committed interest subsidies

-

-

-

-

350,678

350,678

Outflows for committed TA

3,898

-

-

-

21,166

25,064

Total

37,305

-

-

-

3,661,508

3,698,813

Maturity profile of derivative financial liabilities

| Maturity profile of derivative financial liabilities | 3 months or less | More than
  3 months
  to 1 year | More than
  1 year to
  5 years | Gross nominal inflow/outflow |
| --- | --- | --- | --- | --- |
| in EUR’000 as at 31.12.2020 | | | | |
| Short-term currency swaps – Inflows | 1,480,000 | - | - | 1,480,000 |
| Short-term currency swaps – Outflows | -1,448,077 | - | - | -1,448,077 |
| Interest Rate Swaps – Inflows | 147 | 394 | 775 | 1,317 |
| Interest Rate Swaps - Outflows | - | -815 | -1,142 | -1,957 |
| Total | 32,070 | -421 | 367 | 31,283 |
| | | | | |
| Maturity profile of derivative financial liabilities | 3 months or less | More than
  3 months
  to 1 year | More than
  1 year to
  5 years | Gross nominal inflow/outflow |
| in EUR’000 as at 31.12.2019 | | | | |
| Short-term currency swaps – Inflows | 1,545,000 | - | - | 1,545,000 |
| Short-term currency swaps – Outflows | -1,535,571 | - | - | -1,535,571 |
| Interest Rate Swaps – Inflows | 310 | 820 | 2,045 | 3,175 |
| Interest Rate Swaps - Outflows | - | -1,128 | -2,138 | -3,266 |
| Total | 9,739 | -308 | -93 | 9,338 |
| | | | | |

3 months or less

More than
  3 months
  to 1 year

More than
  1 year to
  5 years

Gross nominal inflow/outflow

in EUR’000 as at 31.12.2020

Short-term currency swaps – Inflows

1,480,000

-

-

1,480,000

Short-term currency swaps – Outflows

-1,448,077

-

-

-1,448,077

Interest Rate Swaps – Inflows

147

394

775

1,317

Interest Rate Swaps - Outflows

-

-815

-1,142

-1,957

Total

32,070

-421

367

31,283

Maturity profile of derivative financial liabilities

3 months or less

More than
  3 months
  to 1 year

More than
  1 year to
  5 years

Gross nominal inflow/outflow

in EUR’000 as at 31.12.2019

Short-term currency swaps – Inflows

1,545,000

-

-

1,545,000

Short-term currency swaps – Outflows

-1,535,571

-

-

-1,535,571

Interest Rate Swaps – Inflows

310

820

2,045

3,175

Interest Rate Swaps - Outflows

-

-1,128

-2,138

-3,266

Total

9,739

-308

-93

9,338

3.3.3
     Long term financial assets and liabilities

The following table sets out the non-derivative financial assets and financial liabilities expected to be recovered or settled more than 12 months after the reporting date.

| in EUR’000 | 31.12.2020 | 31.12.2019 |
| --- | --- | --- |
| | | |
| Financial assets: | | |
| Loans and advances | 1,812,807 | 1,636,520 |
| Shares and other variable yield securities | 526,810 | 619,928 |
| Other assets | 109 | - |
| Total | 2,339,726 | 2,256,448 |
| | | |
| Financial liabilities: | | |
| Provisions for guarantees issued | 851 | 628 |
| Amount owed to third parties* | 81,371 | 93,531 |
| Provisions for loan commitments | 33,152 | 37,269 |
| Total | 115,374 | 131,428 |
| * The amounts owed to third parties are including the Interest subsidies and TA not yet disbursed owed to Member States, where the maturity is mainly undefined. |

in EUR’000

31.12.2020

31.12.2019

Financial assets:

Loans and advances

1,812,807

1,636,520

Shares and other variable yield securities

526,810

619,928

Other assets

109

-

Total

2,339,726

2,256,448

Financial liabilities:

Provisions for guarantees issued

851

628

Amount owed to third parties*

81,371

93,531

Provisions for loan commitments

33,152

37,269

Total

115,374

131,428

- The amounts owed to third parties are including the Interest subsidies and TA not yet disbursed owed to Member States, where the maturity is mainly undefined.

3.4
     Market risk

Market risk represents the risk that changes in market prices and rates, such as interest rates, equity prices and foreign exchange rates will affect an entity’s income or the value of its holdings in financial instruments.

3.4.1
     Interest rate risk

Interest rate risk arises from the volatility in the economic value of, or in the income derived from, interest rate bearing positions due to adverse movements in interest rates.

The Facility is not directly impacted by the fluctuation of its economic value or to pricing mismatches between different assets, liabilities and hedge instruments because (i) it does not have any direct borrowing costs or interest rate bearing liabilities and (ii) it accepts the impact of interest rate fluctuations on the revenues from its investments.

The Facility measures the sensitivity of its loan portfolio and micro hedging swaps to interest rate fluctuations via a Basis Point Value (“BPV“) calculation.

The BPV measures the gain or loss in the net present value of the relevant portfolio, due to a 1 basis point (0.01%) increase in interest rates tenors ranging within a specified time bucket “money market – up to one year”, “very short – 2 to 3 years”, “short – 4 to 6 years”, “medium – 7 to 11 years”, “long – 12 to 20 years” or “extra-long – more than 21 years”.

To determine the net present value (“NPV“) of the loans’ cash flows denominated in EUR, the Facility uses the EIB’s EUR base funding curve (EUR swap curve adjusted with the EIB’s global funding spread). The EIB’s USD funding curve is used for the calculation of the NPV of loan’s cash flows denominated in USD. The NPV of the loans’ cash flows denominated in currencies for which a reliable and sufficiently complete discount curve is not available, is determined by using the EIB’s EUR base funding curve as a proxy.

To calculate the net present value of the micro hedging swaps, the Facility uses the EUR swap curve for cash flows denominated in EUR and the USD swap curve for cash flows denominated in USD.

As shown in the following table the net present value of the loan portfolio including related micro-hedging swaps as at 31 December 2020 would decrease by EUR 697k (as at 31 December 2019: decrease by EUR 533k) if all relevant interest rates curves are simultaneously shifted upwards in parallel by 1 basis point.

| Basis point value | Money | Very Short | Short | Medium | Long | Extra Long | Total |
| --- | --- | --- | --- | --- | --- | --- | --- |
| in EUR’000 | Market | | | | | | |
| As at 31.12.2020 | 1 year | 2 to 3 years | 4 to 6 years | 7 to 11 years | 12 to 20 years | 21 years | |
| Total sensitivity of loans and micro hedging swaps | -45 | -113 | -313 | -215 | -11 | - | -697 |
| | | | | | | | |
| Basis point value | Money | Very Short | Short | Medium | Long | Extra Long | Total |
| in EUR’000 | Market | | | | | | |
| As at 31.12.2019 | 1 year | 2 to 3 years | 4 to 6 years | 7 to 11 years | 12 to 20 years | 21 years | |
| Total sensitivity of loans and micro hedging swaps | -42 | -99 | -172 | -163 | -57 | - | -533 |

Basis point value

Money

Very Short

Short

Medium

Long

Extra Long

Total

in EUR’000

Market

As at 31.12.2020

1 year

2 to 3 years

4 to 6 years

7 to 11 years

12 to 20 years

21 years

Total sensitivity of loans and micro hedging swaps

-45

-113

-313

-215

-11

-

-697

Basis point value

Money

Very Short

Short

Medium

Long

Extra Long

Total

in EUR’000

Market

As at 31.12.2019

1 year

2 to 3 years

4 to 6 years

7 to 11 years

12 to 20 years

21 years

Total sensitivity of loans and micro hedging swaps

-42

-99

-172

-163

-57

-

-533

3.4.2Foreign exchange risk

Foreign exchange (“FX”) risk for the IF is the risk of loss in earnings or economic value due to adverse movements of FX rates.

Given a reference accounting currency (EUR for the IF), the Facility is exposed to FX risk whenever there is a mismatch between assets and liabilities denominated in a non-reference accounting currency. FX risk also includes the effect of changes in the value of future cash flows denominated in non-reference accounting currency, e.g. interest and dividend payments, due to fluctuations in exchange rates.

3.4.2.1Foreign exchange risk and treasury assets

The IF’s treasury assets are denominated in either EUR or USD.

FX risk is hedged by means of FX cross currency spot or forward transactions, FX swaps or cross-currency swaps. The EIB’s Treasury Department can, where deemed necessary and appropriate, use any other instrument, in line with the Bank’s policy, that provide protection against market risks incurred in connection with the IF’s financial activities.

3.4.2.2Foreign exchange risk and operations financed or guaranteed by the IF

Member States’ IF contributions are received in EUR. The operations financed or guaranteed by the IF as well as interest subsidies can be denominated in EUR, USD or any other authorized currency.

A foreign exchange risk exposure (against the EUR reference currency) arises whenever transactions denominated in currencies other than the EUR are left un-hedged. The IF’s foreign exchange risk hedging guidelines are set out below.

3.4.2.2.1.Hedging of operations denominated in USD

The FX risk generated by IF operations denominated in USD shall be covered on an aggregated basis via the use of EUR/USD FX swaps, rolled over and adjusted in terms of amount on a periodic basis. The use of FX swaps serves a dual purpose. On one side the necessary liquidity for new disbursements (loans and equity) is generated and on the other side an FX macro hedge is maintained.

At the beginning of each period, the cash flows to be received or paid in USD during the next period shall be estimated on the basis of planned or expected reflows/disbursements. Subsequently, the maturing FX swaps shall be rolled over, their amount being adjusted to cover at least the USD liquidity needs projected over the next period.

On a monthly basis, the USD FX position shall be hedged, if exceeding the relevant limits, by means of a spot or forward operation.

Within a roll-over period, unexpected USD liquidity deficits shall be covered by means of ad hoc FX swap operations while liquidity surpluses shall either be invested in treasury assets or converted into EUR if occurred from an increase of the FX position.

3.4.2.2.2.Hedging of operations denominated in currencies other than EUR or USD

IF operations denominated in currencies other than EUR and USD shall be hedged through cross-currency swap contracts with the same financial profile as the underlying Loan, provided that a swap market is operational.

IF has operations denominated in currencies for which hedging possibilities are either not efficiently available or available at a high cost. These operations are denominated in local currencies (“LCs“) but settled in EUR or USD. IF’s financial risk framework, which was approved by the IF Committee on 22 January 2015, offers the possibility to hedge the FX exposure in LCs that exhibit a significant positive correlation with the USD synthetically via USD-denominated derivatives. The LCs hedged synthetically with USD denominated derivatives are reported in the table in section 3.4.2.2.3 below under item “Local currencies (under synthetic hedge)”, while the LCs not hedged synthetically with the USD are reported in the same table under item “Local currencies (not under synthetic hedge)”.

3.4.2.2.3Foreign exchange position (in EUR’000)

The tables of this note show the Facility’s foreign exchange position.

The foreign exchange position is presented in the tables below in accordance with the IF’s Risk Policies (as described in the IF’s financial risk framework). The FX position as per Risk Policies is based on accounting figures and defined as the balance between selected assets and liabilities. The assets and liabilities defined in the FX position as per Risk Policies are selected to ensure that the earnings will only be converted into the reporting currency (EUR) when received.

The fair value change on shares and other variable yield securities are included in the FX position as per Risk Policies, as well as impairments on loans and advances. Derivatives included in the FX position as per Risk Policies are considered at their nominal value instead of their fair value, in order to be aligned with the retained value of the assets, considered also at their nominal value adjusted by the impairment for loans.

In the tables below, the remaining part of the assets and liabilities, which includes mainly interest accruals on loans, derivatives and subsidies, are presented under “FX position excluded from Risk Policies”.

| As at 31 December 2020 | Assets and liabilities | | Commitments and contingent liabilities |
| --- | --- | --- | --- |
| Currencies | FX position as per Risk Policies | FX position excluded from Risk Policies | Balance sheet FX position | | |
| USD | -117,144 | -51,893 | -169,037 | | 479,103 |
| Local currencies


  (under synthetic hedge)* | | | | | |
| KES | 23,439 | -960 | 22,479 | | - |
| TZS | 27,302 | 272 | 27,574 | | - |
| DOP | 14,538 | 320 | 14,858 | | - |
| UGX | 44,997 | 572 | 45,569 | | - |
| RWF | 44,523 | -872 | 43,651 | | - |
| Local currencies


  (not under synthetic hedge)* | | | | | - |
| HTG, MUR, MZN, XOF, ZMW, BWP, JMD, NGN, ZAR | 98,509 | -1,512 | 96,997 | | - |
| Total non-EUR currencies | 136,164 | -54,073 | 82,091 | | 479,103 |
| EUR | - | 3,276,377 | 3,276,377 | | 1,661,939 |
| Total EUR and non-EUR | 136,164 | 3,222,304 | 3,358,468 | | 2,141,042 |
| * See section 3.4.2.2.2 for explanations on synthetic hedge. |
| | | | | | |
| | | | | | |
| | | | | | |
| | | | | | |

As at 31 December 2020

Assets and liabilities

Commitments and contingent liabilities

Currencies

FX position as per Risk Policies

FX position excluded from Risk Policies

Balance sheet FX position

USD

-117,144

-51,893

-169,037

479,103

Local currencies

(under synthetic hedge)*

KES

23,439

-960

22,479

-

TZS

27,302

272

27,574

-

DOP

14,538

320

14,858

-

UGX

44,997

572

45,569

-

RWF

44,523

-872

43,651

-

Local currencies

(not under synthetic hedge)*

-

HTG, MUR, MZN, XOF, ZMW, BWP, JMD, NGN, ZAR

98,509

-1,512

96,997

-

Total non-EUR currencies

136,164

-54,073

82,091

479,103

EUR

-

3,276,377

3,276,377

1,661,939

Total EUR and non-EUR

136,164

3,222,304

3,358,468

2,141,042

- See section 3.4.2.2.2 for explanations on synthetic hedge.

As at 31 December 2019

| As at 31 December 2019 | Assets and liabilities | Commitments and contingent liabilities |
| --- | --- | --- |
| Currencies | FX position as per Risk Policies | FX position excluded from Risk Policies | Balance sheet FX position | |
| USD | -103,746 | -56,632 | -160,378 | 637,693 |
| Local currencies


  (under synthetic hedge)* | | | | |
| KES | 29,472 | 464 | 29,936 | - |
| TZS | 48,092 | 354 | 48,446 | - |
| DOP | 25,383 | 602 | 25,985 | - |
| UGX | 37,132 | 574 | 37,706 | - |
| RWF | 30,766 | 47 | 30,813 | - |
| Local currencies


  (not under synthetic hedge)* | | | | |
| HTG, MUR, MZN, XOF, ZMW, BWP, JMD, NGN, ZAR | 99,864 | -530 | 99,334 | - |
| Total non-EUR currencies | 166,963 | -55,121 | 111,842 | 637,693 |
| EUR | - | 3,075,194 | 3,075,194 | 2,741,023 |
| Total EUR and non-EUR | 166,963 | 3,020,073 | 3,187,036 | 3,378,716 |
| * See section 3.4.2.2.2 for explanations on synthetic hedge. |

Assets and liabilities

Commitments and contingent liabilities

Currencies

FX position as per Risk Policies

FX position excluded from Risk Policies

Balance sheet FX position

USD

-103,746

-56,632

-160,378

637,693

Local currencies

(under synthetic hedge)*

KES

29,472

464

29,936

-

TZS

48,092

354

48,446

-

DOP

25,383

602

25,985

-

UGX

37,132

574

37,706

-

RWF

30,766

47

30,813

-

Local currencies

(not under synthetic hedge)*

HTG, MUR, MZN, XOF, ZMW, BWP, JMD, NGN, ZAR

99,864

-530

99,334

-

Total non-EUR currencies

166,963

-55,121

111,842

637,693

EUR

-

3,075,194

3,075,194

2,741,023

Total EUR and non-EUR

166,963

3,020,073

3,187,036

3,378,716

- See section 3.4.2.2.2 for explanations on synthetic hedge.

3.4.2.2.3Foreign exchange position (in EUR’000) (continued)

3.4.2.3Foreign exchange sensitivity analysis

As at 31 December 2020, a 10 percent depreciation of EUR versus all non EUR currencies would result in an increase of the contributors’ resources amounting to EUR 9.1million (31 December 2019: EUR 14.0million). A 10 percent appreciation of the EUR versus all non EUR currencies would result in a decrease of the contributors’ resources amounting to EUR -7.5 million (31 December 2019: EUR 11.4 million).

3.4.2.4Conversion rates

The following conversion rates were used for establishing the balance sheet at 31 December 2020 and 31 December 2019:

| | 31 December 2020 | 31 December 2019 |
| --- | --- | --- |
| Non-EU currencies | | |
| Botswana Pula (BWP) | 13.2045 | 11.8376 |
| Dominican Republic Pesos (DOP) | 71.2661 | 59.3644 |
| Fiji Dollars (FJD) | 2.4584 | 2.4045 |
| Haitian Gourde (HTG) | 87.33 | 100.99 |
| Jamaican Dollar (JMD) | 172.0954 | 147.6966 |
| Kenya Shillings (KES) | 133.8 | 113.63 |
| Mauritania Ouguiyas (MRU) | 44.1396 | 42.2135 |
| Mauritius Rupees (MUR) | 48.52 | 40.63 |
| Mozambican Metical (MZN) | 91.02 | 68.64 |
| Nigerian Naira (NGN) | 466.78 | 343.45 |
| Rwanda Francs (RWF) | 1210.77 | 1051.12 |
| Tanzania Shillings (TZS) | 2838.58 | 2573.66 |
| Uganda Shillings (UGX) | 4474 | 4108 |
| United States Dollars (USD) | 1.2271 | 1.1234 |
| Franc CFA Francs (XAF/XOF) | 655.957 | 655.957 |
| South Africa Rand (ZAR) | 18.0219 | 15.7773 |
| Zambia Kvacha (ZMW) | 25.9324 | 15.7894 |

31 December 2020

31 December 2019

Non-EU currencies

Botswana Pula (BWP)

13.2045

11.8376

Dominican Republic Pesos (DOP)

71.2661

59.3644

Fiji Dollars (FJD)

2.4584

2.4045

Haitian Gourde (HTG)

87.33

100.99

Jamaican Dollar (JMD)

172.0954

147.6966

Kenya Shillings (KES)

133.8

113.63

Mauritania Ouguiyas (MRU)

44.1396

42.2135

Mauritius Rupees (MUR)

48.52

40.63

Mozambican Metical (MZN)

91.02

68.64

Nigerian Naira (NGN)

466.78

343.45

Rwanda Francs (RWF)

1210.77

1051.12

Tanzania Shillings (TZS)

2838.58

2573.66

Uganda Shillings (UGX)

4474

4108

United States Dollars (USD)

1.2271

1.1234

Franc CFA Francs (XAF/XOF)

655.957

655.957

South Africa Rand (ZAR)

18.0219

15.7773

Zambia Kvacha (ZMW)

25.9324

15.7894

3.4.3Equity price risk

Equity price risk refers to the risk that the fair values of equity investments decrease as the result of changes in the levels of equity prices and/or the value of equity investments.

The IF is exposed to equity price risk via its investments in direct equity and venture capital funds.

The value of non-listed equity positions is not readily available for the purpose of monitoring and control on a continuous basis. For such positions, the best indications available include prices derived from any relevant valuation techniques.

The effect on the Facility’s contributors’ resources (as a result of a change in the fair value of the equity instruments portfolio) due to a +/-10% change in the value of individual direct equity and venture capital investments, with all other variables held constant, is
  EUR 52.7 million and EUR -52.7 million respectively as at 31 December 2020 (EUR 62.0 million and EUR -62.0 million respectively as at 31  December 2019).

4
     Fair values of financial instruments

4.1Accounting classifications and fair values

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. These do not include fair value information for financial assets and financial liabilities not carried at fair value if the carrying amount is a reasonable approximation of fair value.

| At 31 December 2020 | Carrying amount | | Fair value |
| --- | --- | --- | --- |
| In EUR’000 | Derivative financial instruments | Shares and other variable yield securities | Cash, loans and advances | Treasury financial assets | Other financial assets/liabilities | Total | | Level 1 | Level 2 | Level 3 | Total |
| Financial assets mandatorily measured at FVTPL | | | | | | | | | | | |
| Derivative financial instruments | 33,584 | - | - | - | - | 33,584 | | - | 33,584 | - | 33,584 |
| Venture Capital Fund | - | 437,142 | - | - | - | 437,142 | | - | - | 437,142 | 437,142 |
| Direct Equity Investments | - | 89,668 | - | - | - | 89,668 | | - | - | 89,668 | 89,668 |
| Loans and advances | - | - | 47,309 | - | - | 47,309 | | - | - | 47,309 | 47,309 |
| Total financial assets mandatorily measured at FVTPL | 33,584 | 526,810 | 47,309 | - | - | 607,703 | | - | 33,584 | 574,119 | 607,703 |
| Financial assets measured at AC | | | | | | | | | | | |
| Cash and cash equivalents | - | - | 923,940 | - | - | 923,940 | | - | - | - | - |
| Loans and advances | - | - | 1,626,136 | - | - | 1,626,136 | | - | 1,757,593 | - | 1,757,593 |
| Amounts receivable from contributors | - | - | 68,908 | - | - | 68,908 | | - | - | - | - |
| Treasury financial assets | - | - | - | 351,873 | - | 351,873 | | 300,174 | 50,032 | - | 350,206 |
| Other assets | - | - | - | - | 109 | 109 | | - | - | - | - |
| Total financial assets measured at AC | - | - | 2,618,984 | 351,873 | 109 | 2,970,966 | | 300,174 | 1,807,625 | - | 2,107,799 |
| Total financial assets | 33,584 | 526,810 | 2,666,293 | 351,873 | 109 | 3,578,669 | | | | | |
| | | | | | | | | | | | |
| Financial liabilities measured at FVTPL | | | | | | | | | | | |
| Derivative financial instruments | -642 | - | - | - | - | -642 | | - | -642 | - | -642 |
| Total financial liabilities measured at FVTPL | -642 | - | - | - | - | -642 | | - | -642 | - | -642 |
| Financial liabilities at AC | | | | | | | | | | | |
| Provisions for guarantees issued | - | - | - | - | -851 | -851 | | | | | |
| Provisions for loan commitments | - | - | - | - | -33,152 | -33,152 | | | | | |
| Amounts owed to third parties | - | - | - | - | -152,378 | -152,378 | | | | | |
| Other liabilities | - | - | - | - | -3,446 | -3,446 | | | | | |
| Total financial liabilities measured at AC | - | - | - | - | -189,827 | -189,827 | | | | | |
| Total financial liabilities | -642 | - | - | - | -189,827 | -190,469 | | | | | |

At 31 December 2020

Carrying amount

Fair value

In EUR’000

Derivative financial instruments

Shares and other variable yield securities

Cash, loans and advances

Treasury financial assets

Other financial assets/liabilities

Total

Level 1

Level 2

Level 3

Total

Financial assets mandatorily measured at FVTPL

Derivative financial instruments

33,584

-

-

-

-

33,584

-

33,584

-

33,584

Venture Capital Fund

-

437,142

-

-

-

437,142

-

-

437,142

437,142

Direct Equity Investments

-

89,668

-

-

-

89,668

-

-

89,668

89,668

Loans and advances

-

-

47,309

-

-

47,309

-

-

47,309

47,309

Total financial assets mandatorily measured at FVTPL

33,584

526,810

47,309

-

-

607,703

-

33,584

574,119

607,703

Financial assets measured at AC

Cash and cash equivalents

-

-

923,940

-

-

923,940

-

-

-

-

Loans and advances

-

-

1,626,136

-

-

1,626,136

-

1,757,593

-

1,757,593

Amounts receivable from contributors

-

-

68,908

-

-

68,908

-

-

-

-

Treasury financial assets

-

-

-

351,873

-

351,873

300,174

50,032

-

350,206

Other assets

-

-

-

-

109

109

-

-

-

-

Total financial assets measured at AC

-

-

2,618,984

351,873

109

2,970,966

300,174

1,807,625

-

2,107,799

Total financial assets

33,584

526,810

2,666,293

351,873

109

3,578,669

Financial liabilities measured at FVTPL

Derivative financial instruments

-642

-

-

-

-

-642

-

-642

-

-642

Total financial liabilities measured at FVTPL

-642

-

-

-

-

-642

-

-642

-

-642

Financial liabilities at AC

Provisions for guarantees issued

-

-

-

-

-851

-851

Provisions for loan commitments

-

-

-

-

-33,152

-33,152

Amounts owed to third parties

-

-

-

-

-152,378

-152,378

Other liabilities

-

-

-

-

-3,446

-3,446

Total financial liabilities measured at AC

-

-

-

-

-189,827

-189,827

Total financial liabilities

-642

-

-

-

-189,827

-190,469

4
     Fair values of financial instruments (continued)

4.1Accounting classifications and fair values (continued)

| As at 31 December 2019 | Carrying amount | | Fair value |
| --- | --- | --- | --- |
| in EUR’000 | Derivative financial instruments | Shares and other variable yield securities | Cash, loans and advances | Treasury financial assets | Other financial liabilities | Total | | Level 1 | Level 2 | Level 3 | Total |
| Financial assets mandatorily measured at FVTPL | | | | | | | | | | | |
| Derivative financial instruments | 14,184 | - | - | - | - | 14,184 | | - | 14,184 | - | 14,184 |
| Venture Capital Fund | - | 504,694 | - | - | - | 504,694 | | 362 | - | 504,332 | 504,694 |
| Direct Equity Investment | - | 115,234 | - | - | - | 115,234 | | 15,255 | - | 99,979 | 115,234 |
| Loans and advances | - | - | 21,702 | - | - | 21 702 | | - | - | 21,702 | 21,702 |
| Total financial assets mandatorily measured at FVTPL | 14,184 | 619,928 | 21,702 | - | - | 655,814 | | 15,617 | 14,184 | 626,013 | 655,814 |
| Financial assets at AC | | | | | | | | | | | |
| Cash and cash equivalents | - | - | 837,777 | - | - | 837,777 | | - | - | - | - |
| Loans and advances | - | - | 1,496,973 | - | - | 1,496,973 | | - | 1,699,057 | - | 1,699,057 |
| Amounts receivable from contributors | - | - | 86,330 | - | - | 86,330 | | - | - | - | - |
| Treasury financial assets | - | - | - | 330,587 | - | 330,587 | | 144,097 | 186,083 | - | 330,180 |
| Other assets | - | - | - | - | - | - | | - | - | - | - |
| Total financial assets measured at AC | - | - | 2,421,080 | 330,587 | - | 2,751,667 | | 144,097 | 1,885,140 | - | 2,029,237 |
| Total financial assets | 14,184 | 619,928 | 2,442,782 | 330,587 | - | 3,407,481 | | | | | |
| | | | | | | | | | | | |
| Financial liabilities mandatorily measured at FVTPL | | | | | | | | | | | |
| Derivative financial instruments | -191 | - | - | - | - | -191 | | - | -191 | - | -191 |
| Total financial liabilities measured at FVTPL | -191 | - | - | - | - | -191 | | - | -191 | - | -191 |
| Financial liabilities at AC | | | | | | | | | | | |
| Provisions for guarantees issued | - | - | - | - | -628 | -628 | | | | | |
| Provisions for loan commitments | - | - | - | - | -37,269 | -37,269 | | | | | |
| Amounts owed to third parties | - | - | - | - | -147,438 | -147,438 | | | | | |
| Other liabilities | - | - | - | - | -2,353 | -2,353 | | | | | |
| Total financial liabilities measured at AC | - | - | - | - | -187,688 | -187,688 | | | | | |
| Total financial liabilities | -191 | - | - | - | -187,688 | -187,879 | | | | | |

As at 31 December 2019

Carrying amount

Fair value

in EUR’000

Derivative financial instruments

Shares and other variable yield securities

Cash, loans and advances

Treasury financial assets

Other financial liabilities

Total

Level 1

Level 2

Level 3

Total

Financial assets mandatorily measured at FVTPL

Derivative financial instruments

14,184

-

-

-

-

14,184

-

14,184

-

14,184

Venture Capital Fund

-

504,694

-

-

-

504,694

362

-

504,332

504,694

Direct Equity Investment

-

115,234

-

-

-

115,234

15,255

-

99,979

115,234

Loans and advances

-

-

21,702

-

-

21 702

-

-

21,702

21,702

Total financial assets mandatorily measured at FVTPL

14,184

619,928

21,702

-

-

655,814

15,617

14,184

626,013

655,814

Financial assets at AC

Cash and cash equivalents

-

-

837,777

-

-

837,777

-

-

-

-

Loans and advances

-

-

1,496,973

-

-

1,496,973

-

1,699,057

-

1,699,057

Amounts receivable from contributors

-

-

86,330

-

-

86,330

-

-

-

-

Treasury financial assets

-

-

-

330,587

-

330,587

144,097

186,083

-

330,180

Other assets

-

-

-

-

-

-

-

-

-

-

Total financial assets measured at AC

-

-

2,421,080

330,587

-

2,751,667

144,097

1,885,140

-

2,029,237

Total financial assets

14,184

619,928

2,442,782

330,587

-

3,407,481

Financial liabilities mandatorily measured at FVTPL

Derivative financial instruments

-191

-

-

-

-

-191

-

-191

-

-191

Total financial liabilities measured at FVTPL

-191

-

-

-

-

-191

-

-191

-

-191

Financial liabilities at AC

Provisions for guarantees issued

-

-

-

-

-628

-628

Provisions for loan commitments

-

-

-

-

-37,269

-37,269

Amounts owed to third parties

-

-

-

-

-147,438

-147,438

Other liabilities

-

-

-

-

-2,353

-2,353

Total financial liabilities measured at AC

-

-

-

-

-187,688

-187,688

Total financial liabilities

-191

-

-

-

-187,688

-187,879

4.2
     Measurement of fair values

0.0.0Valuation techniques and significant unobservable inputs

The table below sets out information about the valuation techniques and significant unobservable inputs used in measuring financial instruments, categorised as Level 2 and 3 in the fair value hierarchy:

| | Valuation technique | Significant unobservable inputs | Relationship of unobservable inputs to fair value measurement |
| --- | --- | --- | --- |
| Financial instruments carried at fair value | | |
| | | | |
| Derivative financial instruments | Discounted cash flow: Future cash flows are estimated based on forward exchange/interest rates (from observable forward exchange rates and yield curves at the end of the reporting period) and contract forward/interest rates, discounted at a rate that reflects the credit risk of various counterparties. | Not applicable. | Not applicable. |
| | | | |
| Venture Capital Fund (VCF) | Adjusted net assets method: The fair value is determined by applying either the Facility’s percentage ownership in the underlying vehicle to the net asset value reflected in the most recent report adjusted for cash flows or, where available, the precise share value at the same date, submitted by the respective Fund Manager. In order to bridge the interval between the last available Net assets value (NAV) and the year-end reporting, a subsequent event review procedure is performed and if necessary the reported NAV is adjusted. | Adjustment for time elapsed between the last reporting date of the VCF and the measurement date, taking into account: operating expenses and management fees, subsequent changes in the fair value of the VCF’s underlying assets, additional liabilities incurred, market changes or other economic condition changes. | The longer the period between the fair value measurement date and the last reporting date of the VCF, the higher the adjustment for time elapsed. |
| | | | |
| Direct Equity Investment | Adjusted net assets. | Adjustment for time elapsed between the last reporting date of the investee and the measurement date, taking into account: operating expenses, subsequent changes in the fair value of the investee’s underlying assets, additional liabilities incurred, market changes or other economic condition changes, capital increase, sale/change of control. | The higher the


  marketability discount, the


  lower the fair value. |
| | | | |
| | | Discount for lack of marketability (liquidity) determined by reference to previous transaction prices for similar equities in the country/region, ranging from 5 to 30%. | |
| Loans at fair


  value (IFE) | For going concern borrowers: Discounted cash flow using contractual/expected future cash flows discounted with appropriate risk-adjusted discount rate that captures the risk inherent to the loan (including credit risk of the borrower). The discount rate is compared/assessed with any relevant market benchmark.



  For borrowers not going concern: Net assets approach (liquidation value approach). | Components of the discount rate to reflect the credit risk of borrower compared to the risk-free market rates. | The higher the discount rate the lower the fair value |

Valuation technique

Significant unobservable inputs

Relationship of unobservable inputs to fair value measurement

Financial instruments carried at fair value

Derivative financial instruments

Discounted cash flow: Future cash flows are estimated based on forward exchange/interest rates (from observable forward exchange rates and yield curves at the end of the reporting period) and contract forward/interest rates, discounted at a rate that reflects the credit risk of various counterparties.

Not applicable.

Not applicable.

Venture Capital Fund (VCF)

Adjusted net assets method: The fair value is determined by applying either the Facility’s percentage ownership in the underlying vehicle to the net asset value reflected in the most recent report adjusted for cash flows or, where available, the precise share value at the same date, submitted by the respective Fund Manager. In order to bridge the interval between the last available Net assets value (NAV) and the year-end reporting, a subsequent event review procedure is performed and if necessary the reported NAV is adjusted.

Adjustment for time elapsed between the last reporting date of the VCF and the measurement date, taking into account: operating expenses and management fees, subsequent changes in the fair value of the VCF’s underlying assets, additional liabilities incurred, market changes or other economic condition changes.

The longer the period between the fair value measurement date and the last reporting date of the VCF, the higher the adjustment for time elapsed.

Direct Equity Investment

Adjusted net assets.

Adjustment for time elapsed between the last reporting date of the investee and the measurement date, taking into account: operating expenses, subsequent changes in the fair value of the investee’s underlying assets, additional liabilities incurred, market changes or other economic condition changes, capital increase, sale/change of control.

The higher the

marketability discount, the

lower the fair value.

Discount for lack of marketability (liquidity) determined by reference to previous transaction prices for similar equities in the country/region, ranging from 5 to 30%.

Loans at fair

value (IFE)

For going concern borrowers: Discounted cash flow using contractual/expected future cash flows discounted with appropriate risk-adjusted discount rate that captures the risk inherent to the loan (including credit risk of the borrower). The discount rate is compared/assessed with any relevant market benchmark.

For borrowers not going concern: Net assets approach (liquidation value approach).

Components of the discount rate to reflect the credit risk of borrower compared to the risk-free market rates.

The higher the discount rate the lower the fair value

0.0.0Valuation techniques and significant unobservable inputs (continued)

| | Valuation technique | Significant unobservable inputs | Relationship of unobservable inputs to fair value measurement |
| --- | --- | --- | --- |
| Financial instruments not carried at fair value | | |
| | | | |
| Loans and advances | Discounted cash flows: The valuation model uses contractual cash flows that are conditional upon the non-occurrence of default by the debtor and do not take into account any collateral values or early repayments’ scenarios. To obtain the Net Present Value (NPV) of the loans, the model retained discounts the contractual cash flows of each loan using an adjusted market discount curve. The individual loan NPV is then adjusted to take into consideration the relevant associated Expected Loss. The results are then summed to obtain the fair value of loans and advances. | Not applicable. | Not applicable. |
| | | | |
| Treasury financial assets | Discounted cash flows. | Not applicable. | Not applicable. |

Valuation technique

Significant unobservable inputs

Relationship of unobservable inputs to fair value measurement

Financial instruments not carried at fair value

Loans and advances

Discounted cash flows: The valuation model uses contractual cash flows that are conditional upon the non-occurrence of default by the debtor and do not take into account any collateral values or early repayments’ scenarios. To obtain the Net Present Value (NPV) of the loans, the model retained discounts the contractual cash flows of each loan using an adjusted market discount curve. The individual loan NPV is then adjusted to take into consideration the relevant associated Expected Loss. The results are then summed to obtain the fair value of loans and advances.

Not applicable.

Not applicable.

Treasury financial assets

Discounted cash flows.

Not applicable.

Not applicable.

With the application of IFRS 13, valuation adjustments are included in the fair value of derivatives as at 31 December 2020 and 2019, namely:

-Credit valuation adjustments (CVA), reflecting counterparty credit risk on derivative transactions, amounting to EUR -34.3k as at 31 December 2020 and to EUR -32.8k as at 31 December 2019.

-Debit valuation adjustments (DVA), reflecting own credit risk on derivative transactions, amounting to EUR +21.8k as at
  31 December 2020 and EUR +28.7k as at 31 December 2019.

0.0.0 Transfers between Level 1 and 2

The Facility’s policy is to recognise the transfers between Levels as of the date of the event or change in circumstances that caused the transfer.

In 2020 and 2019 the Facility did not make transfers from Level 1 to 2 or Level 2 to 1 of the fair value hierarchy.

0.0.1Level 3 fair values

Reconciliation of Level 3 fair values

The following tables present the changes in Level 3 instruments for the year ended 31 December 2020 and 31 December 2019:

| in EUR'000 | Shares and other variable yield securities |
| --- | --- |
| Balance as at 1 January 2020 | 604,311 |
| Gains or losses included in profit or loss: | |
| Realised fair value adjustment on sales | -15,632 |
| Net fair value change on shares and other variable yield securities | -47,909 |
| Total | -63,541 |
| Disbursements | 85,305 |
| Repayments | -65,649 |
| Foreign exchange rates differences | -33,616 |
| Balance as at 31 December 2020 | 526,810 |
| | |
| | |
| | |
| Reconciliation of Level 3 fair values (continued) | |
| in EUR'000 | Shares and other variable yield securities |
| Balance as at 1 January 2019 | 550,617 |
| Gains or losses included in profit or loss: | |
| Foreign exchange rates differences | 1,708 |
| Net fair value change on shares and other variable yield securities | 17,666 |
| Total | 19,374 |
| Disbursements | 106,943 |
| Repayments | -79,435 |
| Foreign exchange rates differences | 6,812 |
| Balance as at 31 December 2019 | 604,311 |
| | |
| In 2020 and 2019 the Facility did not make transfers out or to Level 3 of the fair value hierarchy. | |

in EUR'000

Shares and other variable yield securities

Balance as at 1 January 2020

604,311

Gains or losses included in profit or loss:

Realised fair value adjustment on sales

-15,632

Net fair value change on shares and other variable yield securities

-47,909

Total

-63,541

Disbursements

85,305

Repayments

-65,649

Foreign exchange rates differences

-33,616

Balance as at 31 December 2020

526,810

Reconciliation of Level 3 fair values (continued)

in EUR'000

Shares and other variable yield securities

Balance as at 1 January 2019

550,617

Gains or losses included in profit or loss:

Foreign exchange rates differences

1,708

Net fair value change on shares and other variable yield securities

17,666

Total

19,374

Disbursements

106,943

Repayments

-79,435

Foreign exchange rates differences

6,812

Balance as at 31 December 2019

604,311

In 2020 and 2019 the Facility did not make transfers out or to Level 3 of the fair value hierarchy.

The cash and cash equivalents are composed of:

| in EUR'000 | 31.12.2020 | 31.12.2019 |
| --- | --- | --- |
| Cash in hand | 398,991 | 72,166 |
| Term deposits | 380,000 | 622,991 |
| Commercial papers | 145,086 | 142,823 |
| Cash and cash equivalents in the cash flow statement | 924,077 | 837,980 |
| Accrued interest | -137 | -203 |
| Cash and cash equivalents in the statement of financial position | 923,940 | 837,777 |

in EUR'000

in EUR'000

31.12.2020

31.12.2020

31.12.2019

31.12.2019

Cash in hand

Cash in hand

398,991

398,991

72,166

72,166

Term deposits

Term deposits

380,000

380,000

622,991

622,991

Commercial papers

Commercial papers

145,086

145,086

142,823

142,823

Cash and cash equivalents in the cash flow statement

Cash and cash equivalents in the cash flow statement

924,077

924,077

837,980

837,980

Accrued interest

Accrued interest

-137

-137

-203

-203

Cash and cash equivalents in the statement of financial position

Cash and cash equivalents in the statement of financial position

923,940

923,940

837,777

837,777

As at 31 December 2020

| As at 31 December 2020 | Fair Value | Notional amount |
| --- | --- | --- |
| in EUR'000 | Assets | Liabilities | |
| Interest rate swaps | - | -642 | 17,710 |
| FX swaps | 33,584 | - | 1,480,000 |
| Total derivative financial instruments | 33,584 | -642 | 1,497,710 |
| | | | |
| As at 31 December 2019 | Fair Value | Notional amount |
| In EUR'000 | Assets | Liabilities | |
| Interest rate swaps | 99 | -191 | 24,181 |
| FX swaps | 14,085 | - | 1,545,000 |
| Total derivative financial instruments | 14,184 | -191 | 1,569,181 |

As at 31 December 2020

Fair Value

Fair Value

Notional amount

Notional amount

in EUR'000

in EUR'000

Assets

Assets

Liabilities

Liabilities

Interest rate swaps

Interest rate swaps

-

-

-642

-642

17,710

17,710

FX swaps

FX swaps

33,584

33,584

-

-

1,480,000

1,480,000

Total derivative financial instruments

Total derivative financial instruments

33,584

33,584

-642

-642

1,497,710

1,497,710

As at 31 December 2019

As at 31 December 2019

Fair Value

Fair Value

Notional amount

Notional amount

In EUR'000

In EUR'000

Assets

Assets

Liabilities

Liabilities

Interest rate swaps

Interest rate swaps

99

99

-191

-191

24,181

24,181

FX swaps

FX swaps

14,085

14,085

-

-

1,545,000

1,545,000

Total derivative financial instruments

Total derivative financial instruments

14,184

14,184

-191

-191

1,569,181

1,569,181

7
     Loans and advances

7

7.1Loans and advances

7.1

Loans and advances

The following table shows the reconciliation from the opening to the closing balance of loans and advances:

The following table shows the reconciliation from the opening to the closing balance of loans and advances:

| in EUR'000 | Global loans* | Senior loans | Subordinated loans | POCI | Total |
| --- | --- | --- | --- | --- | --- |
| Nominal of loans at AC as at 1 January 2020 | 1,021,556 | 597,364 | 27,714 | - | 1,646,634 |
| Disbursements | 433,466 | 67,762 | - | - | 501,228 |
| Write offs | -15,170 | -2,268 | -27,905 | - | -45,343 |
| Repayments | -214,018 | -60,571 | - | - | -274,589 |
| Foreign exchange rates differences | -74,436 | -29,423 | 191 | - | -103,668 |
| Nominal of loans at AC as at 31 December 2020 | 1,151,398 | 572,864 | - | - | 1,724,262 |
| | | | | | |
| Impairment - loss allowance as at 1 January 2020 | -96,166 | -36,650 | -27,714 | - | -160,530 |
| Net changes of the 12 month ECL | -1,344 | -2,531 | - | - | -3,875 |
| Net changes of lifetime ECL not credit-impaired | -5,888 | -3,628 | - | - | -9,516 |
| Lifetime ECL credit-impaired | -12,373 | - | - | - | -12,373 |
| Reversal of lifetime ECL credit-impaired | 19,565 | 1,887 | - | - | 21,452 |
| Write offs | 15,170 | 2,268 | 27,905 | - | 45,343 |
| Foreign exchange rates differences | 12,793 | 3,104 | -191 | - | 15,706 |
| Impairment - loss allowance as at 31 December 2020 | -68,243 | -35,550 | - | - | -103,793 |
| | | | | | |
| Loans and advances at AC as at 31 December 2020 | 1,083,155 | 537,314 | - | - | 1,620,469 |
| | | | | | |
| Nominal of loans at FVTPL as at 1 January 2020 | 1,080 | 36,858 | - | - | 37,938 |
| Disbursements | - | 29,063 | 30,000 | - | 59,063 |
| Repayments | - | -1,512 | - | - | -1,512 |
| Foreign exchange rates differences | - | -2,916 | - | - | -2,916 |
| Nominal of loans at FVTPL as at 31 December 2020 | 1,080 | 61,493 | 30,000 | - | 92,573 |
| | | | | | |
| Fair value adjustment as at 1 January 2020 | -1,080 | -15,156 | - | - | -16,236 |
| Net FV change | - | -11,330 | -18,291 | - | -29,621 |
| Foreign exchange rates differences | - | 593 | - | - | 593 |
| Fair value adjustment as at 31 December 2020 | -1,080 | -25,893 | -18,291 | - | -45,264 |
| | | | | | |
| Loans and advances at FVTPL as at 31 December 2020 | - | 35,600 | 11,709 | - | 47,309 |
| Amortised Cost | -3,578 | -5,100 | - | - | -8,678 |
| Interest | 7,325 | 7,020 | - | - | 14,345 |
| Loans and advances as at 31 December 2020 | 1,086,902 | 574,834 | 11,709 | - | 1,673,445 |
| * Including agency agreements | | | | | |

in EUR'000

in EUR'000

Global loans*

Global loans*

Senior loans

Senior loans

Subordinated loans

Subordinated loans

POCI

POCI

Total

Total

Nominal of loans at AC as at 1 January 2020

Nominal of loans at AC as at 1 January 2020

1,021,556

1,021,556

597,364

597,364

27,714

27,714

-

-

1,646,634

1,646,634

Disbursements

Disbursements

433,466

433,466

67,762

67,762

-

-

-

-

501,228

501,228

Write offs

Write offs

-15,170

-15,170

-2,268

-2,268

-27,905

-27,905

-

-

-45,343

-45,343

Repayments

Repayments

-214,018

-214,018

-60,571

-60,571

-

-

-

-

-274,589

-274,589

Foreign exchange rates differences

Foreign exchange rates differences

-74,436

-74,436

-29,423

-29,423

191

191

-

-

-103,668

-103,668

Nominal of loans at AC as at 31 December 2020

Nominal of loans at AC as at 31 December 2020

1,151,398

1,151,398

572,864

572,864

-

-

-

-

1,724,262

1,724,262

Impairment - loss allowance as at 1 January 2020

Impairment - loss allowance as at 1 January 2020

-96,166

-96,166

-36,650

-36,650

-27,714

-27,714

-

-

-160,530

-160,530

Net changes of the 12 month ECL

Net changes of the 12 month ECL

-1,344

-1,344

-2,531

-2,531

-

-

-

-

-3,875

-3,875

Net changes of lifetime ECL not credit-impaired

Net changes of lifetime ECL not credit-impaired

-5,888

-5,888

-3,628

-3,628

-

-

-

-

-9,516

-9,516

Lifetime ECL credit-impaired

Lifetime ECL credit-impaired

-12,373

-12,373

-

-

-

-

-

-

-12,373

-12,373

Reversal of lifetime ECL credit-impaired

Reversal of lifetime ECL credit-impaired

19,565

19,565

1,887

1,887

-

-

-

-

21,452

21,452

Write offs

Write offs

15,170

15,170

2,268

2,268

27,905

27,905

-

-

45,343

45,343

Foreign exchange rates differences

Foreign exchange rates differences

12,793

12,793

3,104

3,104

-191

-191

-

-

15,706

15,706

Impairment - loss allowance as at 31 December 2020

Impairment - loss allowance as at 31 December 2020

-68,243

-68,243

-35,550

-35,550

-

-

-

-

-103,793

-103,793

Loans and advances at AC as at 31 December 2020

Loans and advances at AC as at 31 December 2020

1,083,155

1,083,155

537,314

537,314

-

-

-

-

1,620,469

1,620,469

Nominal of loans at FVTPL as at 1 January 2020

Nominal of loans at FVTPL as at 1 January 2020

1,080

1,080

36,858

36,858

-

-

-

-

37,938

37,938

Disbursements

Disbursements

-

-

29,063

29,063

30,000

30,000

-

-

59,063

59,063

Repayments

Repayments

-

-

-1,512

-1,512

-

-

-

-

-1,512

-1,512

Foreign exchange rates differences

Foreign exchange rates differences

-

-

-2,916

-2,916

-

-

-

-

-2,916

-2,916

Nominal of loans at FVTPL as at 31 December 2020

Nominal of loans at FVTPL as at 31 December 2020

1,080

1,080

61,493

61,493

30,000

30,000

-

-

92,573

92,573

Fair value adjustment as at 1 January 2020

Fair value adjustment as at 1 January 2020

-1,080

-1,080

-15,156

-15,156

-

-

-

-

-16,236

-16,236

Net FV change

Net FV change

-

-

-11,330

-11,330

-18,291

-18,291

-

-

-29,621

-29,621

Foreign exchange rates differences

Foreign exchange rates differences

-

-

593

593

-

-

-

-

593

593

Fair value adjustment as at 31 December 2020

Fair value adjustment as at 31 December 2020

-1,080

-1,080

-25,893

-25,893

-18,291

-18,291

-

-

-45,264

-45,264

Loans and advances at FVTPL as at 31 December 2020

Loans and advances at FVTPL as at 31 December 2020

-

-

35,600

35,600

11,709

11,709

-

-

47,309

47,309

Amortised Cost

Amortised Cost

-3,578

-3,578

-5,100

-5,100

-

-

-

-

-8,678

-8,678

Interest

Interest

7,325

7,325

7,020

7,020

-

-

-

-

14,345

14,345

Loans and advances as at 31 December 2020

Loans and advances as at 31 December 2020

1,086,902

1,086,902

574,834

574,834

11,709

11,709

-

-

1,673,445

1,673,445

- Including agency agreements

- Including agency agreements

7
     Loans and advances (continued)

| in EUR'000 | Global loans* | Senior loans | Subordinated loans | POCI | Total |
| --- | --- | --- | --- | --- | --- |
| Nominal of loans at AC as at 1 January 2019 | 1,051,317 | 593,324 | 60,717 | 3,588 | 1,708,946 |
| Disbursements | 164,308 | 123,416 | - | - | 287,724 |
| Write offs | -2 | -278 | - | - | -280 |
| Repayments | -206,517 | -113,100 | -34,496 | - | -354,113 |
| Sale of loans | -2,591 | - | - | - | -2,591 |
| Business model change (IFE**) | - | -10,062 | - | -3,588 | -13,650 |
| Foreign exchange rates differences | 15,041 | 4,064 | 1,493 | - | 20,598 |
| Nominal of loans at AC as at 31 December 2019 | 1,021,556 | 597,364 | 27,714 | - | 1,646,634 |
| | | | | | |
| Impairment - loss allowance as at 1 January 2019 | -103,868 | -49,609 | -29,360 | -1,794 | -184,631 |
| Net changes of the 12 month ECL | 5,164 | -86 | - | - | 5,078 |
| Net changes of lifetime ECL not credit-impaired | -15,558 | 2,559 | 2,205 | - | -10,794 |
| Lifetime ECL credit-impaired | -4,397 | -47 | - | - | -4,444 |
| Reversal of lifetime ECL credit-impaired | 21,811 | 5,592 | - | - | 27,403 |
| Sale of loans | 2,591 | - | - | - | 2,591 |
| Business model change (IFE**) | - | 5,031 | - | 1,794 | 6,825 |
| Write offs | 2 | 278 | - | - | 280 |
| Foreign exchange rates differences | -1,911 | -368 | -559 | - | -2,838 |
| Impairment - loss allowance as at 31 December 2019 | -96,166 | -36,650 | -27,714 | - | -160,530 |
| | | | | | |
| Loans and advances at AC as at 31 December 2019 | 925,390 | 560,714 | - | - | 1,486,104 |
| | | | | | |
| Nominal of loans at FVTPL as at 1 January 2019 | 1,800 | - | - | - | 1,800 |
| Disbursements | - | 23,461 | - | - | 23,461 |
| Business model change (IFE**) | - | 13,650 | - | - | 13,650 |
| Repayments | -720 | -245 | - | - | -965 |
| Foreign exchange rates differences | - | -8 | - | - | -8 |
| Nominal of loans at FVTPL as at 31 December 2019 | 1,080 | 36,858 | - | - | 37,938 |
| | | | | | |
| Fair value adjustment as at 1 January 2019 | -1,080 | - | - | - | -1,080 |
| Net FV change | - | -8,331 | - | - | -8,331 |
| Business model change (IFE**) | - | -6,825 | - | - | -6,825 |
| Fair value adjustment as at 31 December 2019 | -1,080 | -15,156 | - | - | -16,236 |
| | | | | | |
| Loans and advances at FVTPL as at 31 December 2019 | - | 21,702 | - | - | 21,702 |
| Amortised Cost | -3,545 | -4,950 | 10 | - | -8,485 |
| Interest | 10,451 | 8,903 | - | - | 19,354 |
| Loans and advances as at 31 December 2019 | 932,296 | -586,369 | 10 | - | 1,518,675 |
| * Including agency agreements | | | | | |
| ** For details, please refer to Note 24. | | | | | |

in EUR'000

in EUR'000

Global loans*

Global loans*

Senior loans

Senior loans

Subordinated loans

Subordinated loans

POCI

POCI

Total

Total

Nominal of loans at AC as at 1 January 2019

Nominal of loans at AC as at 1 January 2019

1,051,317

1,051,317

593,324

593,324

60,717

60,717

3,588

3,588

1,708,946

1,708,946

Disbursements

Disbursements

164,308

164,308

123,416

123,416

-

-

-

-

287,724

287,724

Write offs

Write offs

-2

-2

-278

-278

-

-

-

-

-280

-280

Repayments

Repayments

-206,517

-206,517

-113,100

-113,100

-34,496

-34,496

-

-

-354,113

-354,113

Sale of loans

Sale of loans

-2,591

-2,591

-

-

-

-

-

-

-2,591

-2,591

Business model change (IFE**)

Business model change (IFE**)

-

-

-10,062

-10,062

-

-

-3,588

-3,588

-13,650

-13,650

Foreign exchange rates differences

Foreign exchange rates differences

15,041

15,041

4,064

4,064

1,493

1,493

-

-

20,598

20,598

Nominal of loans at AC as at 31 December 2019

Nominal of loans at AC as at 31 December 2019

1,021,556

1,021,556

597,364

597,364

27,714

27,714

-

-

1,646,634

1,646,634

Impairment - loss allowance as at 1 January 2019

Impairment - loss allowance as at 1 January 2019

-103,868

-103,868

-49,609

-49,609

-29,360

-29,360

-1,794

-1,794

-184,631

-184,631

Net changes of the 12 month ECL

Net changes of the 12 month ECL

5,164

5,164

-86

-86

-

-

-

-

5,078

5,078

Net changes of lifetime ECL not credit-impaired

Net changes of lifetime ECL not credit-impaired

-15,558

-15,558

2,559

2,559

2,205

2,205

-

-

-10,794

-10,794

Lifetime ECL credit-impaired

Lifetime ECL credit-impaired

-4,397

-4,397

-47

-47

-

-

-

-

-4,444

-4,444

Reversal of lifetime ECL credit-impaired

Reversal of lifetime ECL credit-impaired

21,811

21,811

5,592

5,592

-

-

-

-

27,403

27,403

Sale of loans

Sale of loans

2,591

2,591

-

-

-

-

-

-

2,591

2,591

Business model change (IFE**)

Business model change (IFE**)

-

-

5,031

5,031

-

-

1,794

1,794

6,825

6,825

Write offs

Write offs

2

2

278

278

-

-

-

-

280

280

Foreign exchange rates differences

Foreign exchange rates differences

-1,911

-1,911

-368

-368

-559

-559

-

-

-2,838

-2,838

Impairment - loss allowance as at 31 December 2019

Impairment - loss allowance as at 31 December 2019

-96,166

-96,166

-36,650

-36,650

-27,714

-27,714

-

-

-160,530

-160,530

Loans and advances at AC as at 31 December 2019

Loans and advances at AC as at 31 December 2019

925,390

925,390

560,714

560,714

-

-

-

-

1,486,104

1,486,104

Nominal of loans at FVTPL as at 1 January 2019

Nominal of loans at FVTPL as at 1 January 2019

1,800

1,800

-

-

-

-

-

-

1,800

1,800

Disbursements

Disbursements

-

-

23,461

23,461

-

-

-

-

23,461

23,461

Business model change (IFE**)

Business model change (IFE**)

-

-

13,650

13,650

-

-

-

-

13,650

13,650

Repayments

Repayments

-720

-720

-245

-245

-

-

-

-

-965

-965

Foreign exchange rates differences

Foreign exchange rates differences

-

-

-8

-8

-

-

-

-

-8

-8

Nominal of loans at FVTPL as at 31 December 2019

Nominal of loans at FVTPL as at 31 December 2019

1,080

1,080

36,858

36,858

-

-

-

-

37,938

37,938

Fair value adjustment as at 1 January 2019

Fair value adjustment as at 1 January 2019

-1,080

-1,080

-

-

-

-

-

-

-1,080

-1,080

Net FV change

Net FV change

-

-

-8,331

-8,331

-

-

-

-

-8,331

-8,331

Business model change (IFE**)

Business model change (IFE**)

-

-

-6,825

-6,825

-

-

-

-

-6,825

-6,825

Fair value adjustment as at 31 December 2019

Fair value adjustment as at 31 December 2019

-1,080

-1,080

-15,156

-15,156

-

-

-

-

-16,236

-16,236

Loans and advances at FVTPL as at 31 December 2019

Loans and advances at FVTPL as at 31 December 2019

-

-

21,702

21,702

-

-

-

-

21,702

21,702

Amortised Cost

Amortised Cost

-3,545

-3,545

-4,950

-4,950

10

10

-

-

-8,485

-8,485

Interest

Interest

10,451

10,451

8,903

8,903

-

-

-

-

19,354

19,354

Loans and advances as at 31 December 2019

Loans and advances as at 31 December 2019

932,296

932,296

-586,369

-586,369

10

10

-

-

1,518,675

1,518,675

- Including agency agreements

- Including agency agreements

** For details, please refer to Note 24.

** For details, please refer to Note 24.

7.2
     Impairment on loans and advances – Loss allowances

| | 2020 |
| --- | --- |
| | | Lifetime ECL | | |
| in EUR'000 | 12-month ECL | Lifetime ECL not credit-impaired | Lifetime ECL credit-impaired | POCI | Total |
| Loans and advances at AC | | | | | |
| Balance as at 1 January 2020* | 17,191 | 38,509 | 104,830 | - | 160,530 |
| Transfer to 12-month ECL | 96 | -167 | - | - | -71 |
| Transfer to lifetime ECL not credit-impaired | -732 | 6,380 | -6,080 | - | -432 |
| Transfer to lifetime ECL credit-impaired | -127 | -54 | 8,522 | - | 8,341 |
| Net measurement of loss allowance | 5,440 | 3,010 | -6,554 | - | 1,896 |
| Financial assets that have been derecognised | -802 | 347 | -4,967 | - | -5,422 |
| Write-offs | - | - | -45,343 | - | -45,343 |
| Foreign exchange rates differences | -4,677 | -4,049 | -6,980 | - | -15,706 |
| Balance as at 31 December 2020 | 16,389 | 43,976 | 43,428 | - | 103,793 |
| * Following the updated model versions referred in Note 2.4.2 opening balances for 12-month and Lifetime non-credit impaired ECL would be higher for EUR 0.3m and EUR 1.5m, respectively. |
| | 2019 |
| | | Lifetime ECL | | |
| in EUR'000 | 12-month ECL | Lifetime ECL not credit-impaired | Lifetime ECL credit-impaired | POCI | Total |
| Loans and advances at AC | | | | | |
| Balance as at 1 January 2019 | 22,023 | 27,342 | 133,472 | 1,794 | 184,631 |
| Transfer to 12-month ECL | 3,952 | - | - | - | 3,952 |
| Transfer to lifetime ECL not credit-impaired | -4,005 | 25,150 | - | - | 21,145 |
| Transfer to lifetime ECL credit-impaired | - | -46 | - | - | -46 |
| Net measurement of loss allowance | -4,897 | -4,249 | -22,961 | - | -32,107 |
| Sale of loans | - | - | -2,591 | - | -2,591 |
| Business model change (IFE*) | - | -10 | -5,031 | -1,794 | -6,835 |
| Financial assets that have been derecognised | -129 | -10,049 | - | - | -10,178 |
| Write-offs | - | - | -280 | - | -280 |
| Foreign exchange rates differences | 247 | 371 | 2,221 | - | 2,839 |
| Balance as at 31 December 2019 | 17,191 | 38,509 | 104,830 | - | 160,530 |
| * For details, please refer to Note 24. | | | | |

2020

2020

Lifetime ECL

Lifetime ECL

in EUR'000

in EUR'000

12-month ECL

12-month ECL

Lifetime ECL not credit-impaired

Lifetime ECL not credit-impaired

Lifetime ECL credit-impaired

Lifetime ECL credit-impaired

POCI

POCI

Total

Total

Loans and advances at AC

Loans and advances at AC

Balance as at 1 January 2020*

Balance as at 1 January 2020*

17,191

17,191

38,509

38,509

104,830

104,830

-

-

160,530

160,530

Transfer to 12-month ECL

Transfer to 12-month ECL

96

96

-167

-167

-

-

-

-

-71

-71

Transfer to lifetime ECL not credit-impaired

Transfer to lifetime ECL not credit-impaired

-732

-732

6,380

6,380

-6,080

-6,080

-

-

-432

-432

Transfer to lifetime ECL credit-impaired

Transfer to lifetime ECL credit-impaired

-127

-127

-54

-54

8,522

8,522

-

-

8,341

8,341

Net measurement of loss allowance

Net measurement of loss allowance

5,440

5,440

3,010

3,010

-6,554

-6,554

-

-

1,896

1,896

Financial assets that have been derecognised

Financial assets that have been derecognised

-802

-802

347

347

-4,967

-4,967

-

-

-5,422

-5,422

Write-offs

Write-offs

-

-

-

-

-45,343

-45,343

-

-

-45,343

-45,343

Foreign exchange rates differences

Foreign exchange rates differences

-4,677

-4,677

-4,049

-4,049

-6,980

-6,980

-

-

-15,706

-15,706

Balance as at 31 December 2020

Balance as at 31 December 2020

16,389

16,389

43,976

43,976

43,428

43,428

-

-

103,793

103,793

- Following the updated model versions referred in Note 2.4.2 opening balances for 12-month and Lifetime non-credit impaired ECL would be higher for EUR 0.3m and EUR 1.5m, respectively.

- Following the updated model versions referred in Note 2.4.2 opening balances for 12-month and Lifetime non-credit impaired ECL would be higher for EUR 0.3m and EUR 1.5m, respectively.

2019

2019

Lifetime ECL

Lifetime ECL

in EUR'000

in EUR'000

12-month ECL

12-month ECL

Lifetime ECL not credit-impaired

Lifetime ECL not credit-impaired

Lifetime ECL credit-impaired

Lifetime ECL credit-impaired

POCI

POCI

Total

Total

Loans and advances at AC

Loans and advances at AC

Balance as at 1 January 2019

Balance as at 1 January 2019

22,023

22,023

27,342

27,342

133,472

133,472

1,794

1,794

184,631

184,631

Transfer to 12-month ECL

Transfer to 12-month ECL

3,952

3,952

-

-

-

-

-

-

3,952

3,952

Transfer to lifetime ECL not credit-impaired

Transfer to lifetime ECL not credit-impaired

-4,005

-4,005

25,150

25,150

-

-

-

-

21,145

21,145

Transfer to lifetime ECL credit-impaired

Transfer to lifetime ECL credit-impaired

-

-

-46

-46

-

-

-

-

-46

-46

Net measurement of loss allowance

Net measurement of loss allowance

-4,897

-4,897

-4,249

-4,249

-22,961

-22,961

-

-

-32,107

-32,107

Sale of loans

Sale of loans

-

-

-

-

-2,591

-2,591

-

-

-2,591

-2,591

Business model change (IFE*)

Business model change (IFE*)

-

-

-10

-10

-5,031

-5,031

-1,794

-1,794

-6,835

-6,835

Financial assets that have been derecognised

Financial assets that have been derecognised

-129

-129

-10,049

-10,049

-

-

-

-

-10,178

-10,178

Write-offs

Write-offs

-

-

-

-

-280

-280

-

-

-280

-280

Foreign exchange rates differences

Foreign exchange rates differences

247

247

371

371

2,221

2,221

-

-

2,839

2,839

Balance as at 31 December 2019

Balance as at 31 December 2019

17,191

17,191

38,509

38,509

104,830

104,830

-

-

160,530

160,530

- For details, please refer to Note 24.

- For details, please refer to Note 24.

8
     Shares and other variable yield securities

| in EUR'000 | Venture Capital Funds | Direct Equity Investments | Total |
| --- | --- | --- | --- |
| Cost as at 1 January 2020 | 462,304 | 101,424 | 563,728 |
| Disbursements | 85,305 | - | 85,305 |
| Repayments / sales | -66,011 | -18,274 | -84,285 |
| Foreign exchange rates differences | -29,437 | -6,892 | -36,329 |
| Cost as at 31 December 2020 | 452,161 | 76,258 | 528,419 |
| | | | |
| Unrealised gains and losses as at 1 January 2020 | 42,390 | 13,810 | 56,200 |
| Net change in unrealised gains and losses | -45,079 | -2,830 | -47,909 |
| Realised fair value adjustment on sales | -15,632 | 3,019 | -12,613 |
| Foreign exchange rates differences | 3,302 | -589 | 2,713 |
| Unrealised gains and losses as at 31 December 2020 | -15,019 | 13,410 | -1,609 |
| | | | |
| Shares and other variable yield securities as at 31 December 2020 | 437,142 | 89,668 | 526,810 |
| | | | |
| in EUR'000 | Venture Capital Funds | Direct Equity Investments | Total |
| Cost as at 1 January 2019 | 421,593 | 93,214 | 514,807 |
| Disbursements | 90,972 | 15,971 | 106,943 |
| Repayments / sales | -56,387 | -8,042 | -64,429 |
| Foreign exchange rates differences | 6,126 | 281 | 6,407 |
| Cost as at 31 December 2019 | 462,304 | 101,424 | 563,728 |
| | | | |
| Unrealised gains and losses as at 1 January 2019 | 45,559 | 6,926 | 52,485 |
| Net change in unrealised gains and losses | -3,488 | 12,117 | 8,629 |
| Realised fair value adjustment on sales | - | -5,319 | -5,319 |
| Foreign exchange rates differences | 319 | 86 | 405 |
| Unrealised gains and losses as at 31 December 2019 | 42,390 | 13,810 | 56,200 |
| | | | |
| Shares and other variable yield securities as at 31 December 2019 | 504,694 | 115,234 | 619,928 |
| | | | |

in EUR'000

in EUR'000

Venture Capital Funds

Venture Capital Funds

Direct Equity Investments

Direct Equity Investments

Total

Total

Cost as at 1 January 2020

Cost as at 1 January 2020

462,304

462,304

101,424

101,424

563,728

563,728

Disbursements

Disbursements

85,305

85,305

-

-

85,305

85,305

Repayments / sales

Repayments / sales

-66,011

-66,011

-18,274

-18,274

-84,285

-84,285

Foreign exchange rates differences

Foreign exchange rates differences

-29,437

-29,437

-6,892

-6,892

-36,329

-36,329

Cost as at 31 December 2020

Cost as at 31 December 2020

452,161

452,161

76,258

76,258

528,419

528,419

Unrealised gains and losses as at 1 January 2020

Unrealised gains and losses as at 1 January 2020

42,390

42,390

13,810

13,810

56,200

56,200

Net change in unrealised gains and losses

Net change in unrealised gains and losses

-45,079

-45,079

-2,830

-2,830

-47,909

-47,909

Realised fair value adjustment on sales

Realised fair value adjustment on sales

-15,632

-15,632

3,019

3,019

-12,613

-12,613

Foreign exchange rates differences

Foreign exchange rates differences

3,302

3,302

-589

-589

2,713

2,713

Unrealised gains and losses as at 31 December 2020

Unrealised gains and losses as at 31 December 2020

-15,019

-15,019

13,410

13,410

-1,609

-1,609

Shares and other variable yield securities as at 31 December 2020

Shares and other variable yield securities as at 31 December 2020

437,142

437,142

89,668

89,668

526,810

526,810

in EUR'000

in EUR'000

Venture Capital Funds

Venture Capital Funds

Direct Equity Investments

Direct Equity Investments

Total

Total

Cost as at 1 January 2019

Cost as at 1 January 2019

421,593

421,593

93,214

93,214

514,807

514,807

Disbursements

Disbursements

90,972

90,972

15,971

15,971

106,943

106,943

Repayments / sales

Repayments / sales

-56,387

-56,387

-8,042

-8,042

-64,429

-64,429

Foreign exchange rates differences

Foreign exchange rates differences

6,126

6,126

281

281

6,407

6,407

Cost as at 31 December 2019

Cost as at 31 December 2019

462,304

462,304

101,424

101,424

563,728

563,728

Unrealised gains and losses as at 1 January 2019

Unrealised gains and losses as at 1 January 2019

45,559

45,559

6,926

6,926

52,485

52,485

Net change in unrealised gains and losses

Net change in unrealised gains and losses

-3,488

-3,488

12,117

12,117

8,629

8,629

Realised fair value adjustment on sales

Realised fair value adjustment on sales

-

-

-5,319

-5,319

-5,319

-5,319

Foreign exchange rates differences

Foreign exchange rates differences

319

319

86

86

405

405

Unrealised gains and losses as at 31 December 2019

Unrealised gains and losses as at 31 December 2019

42,390

42,390

13,810

13,810

56,200

56,200

Shares and other variable yield securities as at 31 December 2019

Shares and other variable yield securities as at 31 December 2019

504,694

504,694

115,234

115,234

619,928

619,928

9
     Amounts receivable from contributors

The amounts of EUR 68.9m (2019: EUR 86.3m) receivable from contributors are entirely composed of Member States contribution called but not paid.

10
     Treasury financial assets

The treasury portfolio is composed of quoted bonds which have a remaining maturity of less than three months at reporting date. The following table shows the movements of the treasury portfolio:

| in EUR'000 | |
| --- | --- |
| Balance as at 1 January 2020 | 330,587 |
| Acquisitions | 2,710,009 |
| Maturities | -2,689,790 |
| Change in amortisation of premium/discount | -208 |
| Change in accrued interest | 1,275 |
| Balance as at 31 December 2020 | 351,873 |
| | |
| in EUR'000 | |
| Balance as at 1 January 2019 | 335,140 |
| Acquisitions | 2,948,021 |
| Maturities | -2,952,905 |
| Change in amortisation of premium/discount | -93 |
| Change in accrued interest | 424 |
| Balance as at 31 December 2019 | 330,587 |

in EUR'000

in EUR'000

Balance as at 1 January 2020

Balance as at 1 January 2020

330,587

330,587

Acquisitions

Acquisitions

2,710,009

2,710,009

Maturities

Maturities

-2,689,790

-2,689,790

Change in amortisation of premium/discount

Change in amortisation of premium/discount

-208

-208

Change in accrued interest

Change in accrued interest

1,275

1,275

Balance as at 31 December 2020

Balance as at 31 December 2020

351,873

351,873

in EUR'000

in EUR'000

Balance as at 1 January 2019

Balance as at 1 January 2019

335,140

335,140

Acquisitions

Acquisitions

2,948,021

2,948,021

Maturities

Maturities

-2,952,905

-2,952,905

Change in amortisation of premium/discount

Change in amortisation of premium/discount

-93

-93

Change in accrued interest

Change in accrued interest

424

424

Balance as at 31 December 2019

Balance as at 31 December 2019

330,587

330,587

in EUR'000

| in EUR'000 | 31.12.2020 | 31.12.2019 |
| --- | --- | --- |
| Financial guarantees | 109 | - |
| Total other assets | 109 | - |

in EUR'000

31.12.2020

31.12.2020

31.12.2019

31.12.2019

Financial guarantees

Financial guarantees

109

109

-

-

Total other assets

Total other assets

109

109

-

-

in EUR'000

| in EUR'000 | 31.12.2020 | 31.12.2019 |
| --- | --- | --- |
| Deferred interest subsidies | 28,788 | 32,085 |
| Deferred commissions on loans and advances | 944 | 481 |
| Total deferred income | 29,732 | 32,566 |

in EUR'000

31.12.2020

31.12.2020

31.12.2019

31.12.2019

Deferred interest subsidies

Deferred interest subsidies

28,788

28,788

32,085

32,085

Deferred commissions on loans and advances

Deferred commissions on loans and advances

944

944

481

481

Total deferred income

Total deferred income

29,732

29,732

32,566

32,566

13
     Provisions for guarantees issued, net of reversals

The following tables show the reconciliation from the opening to the closing balance of the provision for financial guarantees.

| | 2020 |
| --- | --- |
| in EUR'000 | 12-month ECL | Lifetime ECL not credit-impaired | Lifetime ECL credit-impaired | Total |
| Guarantees issued | | | | |
| Balance as at 1 January | 628 | - | - | 628 |
| Transfer to 12-month ECL | - | - | - | - |
| Guarantees that have been derecognised | - | - | - | - |
| Net measurement of loss allowance | 228 | - | - | 228 |
| Guarantee calls | - | - | - | - |
| Amortisation of upfront fees | - | - | - | - |
| Foreign exchange rates differences | -5 | - | - | -5 |
| Balance as at 31 December | 851 | - | - | 851 |
| | | | | |
| | | | | |
| | 2019 |
| in EUR'000 | 12-month ECL | Lifetime ECL not credit-impaired | Lifetime ECL credit-impaired | Total |
| Guarantees issued | | | | |
| Balance as at 1 January | 94 | 699 | - | 793 |
| Transfer to 12-month ECL | 534 | - | - | 534 |
| Guarantees that have been derecognised | - | -588 | - | -588 |
| Guarantee calls | - | -53 | - | -53 |
| Amortisation of upfront fees | - | -71 | - | -71 |
| Foreign exchange rates differences | - | 13 | - | 13 |
| Balance as at 31 December | 628 | - | - | 628 |
| | | | | |

2020

2020

in EUR'000

in EUR'000

12-month ECL

12-month ECL

Lifetime ECL not credit-impaired

Lifetime ECL not credit-impaired

Lifetime ECL credit-impaired

Lifetime ECL credit-impaired

Total

Total

Guarantees issued

Guarantees issued

Balance as at 1 January

Balance as at 1 January

628

628

-

-

-

-

628

628

Transfer to 12-month ECL

Transfer to 12-month ECL

-

-

-

-

-

-

-

-

Guarantees that have been derecognised

Guarantees that have been derecognised

-

-

-

-

-

-

-

-

Net measurement of loss allowance

Net measurement of loss allowance

228

228

-

-

-

-

228

228

Guarantee calls

Guarantee calls

-

-

-

-

-

-

-

-

Amortisation of upfront fees

Amortisation of upfront fees

-

-

-

-

-

-

-

-

Foreign exchange rates differences

Foreign exchange rates differences

-5

-5

-

-

-

-

-5

-5

Balance as at 31 December

Balance as at 31 December

851

851

-

-

-

-

851

851

2019

2019

in EUR'000

in EUR'000

12-month ECL

12-month ECL

Lifetime ECL not credit-impaired

Lifetime ECL not credit-impaired

Lifetime ECL credit-impaired

Lifetime ECL credit-impaired

Total

Total

Guarantees issued

Guarantees issued

Balance as at 1 January

Balance as at 1 January

94

94

699

699

-

-

793

793

Transfer to 12-month ECL

Transfer to 12-month ECL

534

534

-

-

-

-

534

534

Guarantees that have been derecognised

Guarantees that have been derecognised

-

-

-588

-588

-

-

-588

-588

Guarantee calls

Guarantee calls

-

-

-53

-53

-

-

-53

-53

Amortisation of upfront fees

Amortisation of upfront fees

-

-

-71

-71

-

-

-71

-71

Foreign exchange rates differences

Foreign exchange rates differences

-

-

13

13

-

-

13

13

Balance as at 31 December

Balance as at 31 December

628

628

-

-

-

-

628

628

2020

| | 2020 |
| --- | --- |
| in EUR'000 | 12-month ECL | Lifetime ECL not credit-impaired | Lifetime ECL credit-impaired | Total |
| Loans commitments | | | | |
| Balance as at 1 January* | 3,943 | 33,326 | - | 37,269 |
| Transfer to 12-month ECL | 4,067 | - | - | 4,067 |
| Transfer to lifetime ECL not credit-impaired | - | 2,773 | - | 2,773 |
| Net measurement of loss allowance | 388 | -5,932 | - | -5,544 |
| Financial assets that have been derecognised | -1,158 | -3,853 | - | -5,011 |
| Foreign exchange rates differences | -423 | 21 | - | -402 |
| Balance as at 31 December | 6,817 | 26,335 | - | 33,152 |
| * Following the updated model versions referred in Note 2.4.2 opening balances for 12-month and Lifetime non-credit impaired ECL would be lower for EUR -0.2m and higher for EUR 1.1m, respectively. |
| | | | | |
| | 2019 |
| in EUR'000 | 12-month ECL | Lifetime ECL not credit-impaired | Lifetime ECL credit-impaired | Total |
| Loans commitments | | | | |
| Balance as at 1 January | 7,225 | 16,597 | - | 23,822 |
| Transfer to 12-month ECL | 1,669 | 9,983 | - | 11,652 |
| Transfer to lifetime ECL not credit-impaired | -836 | 15,138 | - | 14,302 |
| Net measurement of loss allowance | 696 | 773 | - | 1,469 |
| Business model change (IFE)* | -2,974 | -1,387 | - | -4,361 |
| Financial assets that have been derecognised | -1,960 | -7,858 | - | -9,818 |
| Foreign exchange rates differences | 123 | 80 | - | 203 |
| Balance as at 31 December | 3,943 | 33,326 | - | 37,269 |
| * For details, please refer to Note 24. | | | | |

2020

in EUR'000

in EUR'000

12-month ECL

12-month ECL

Lifetime ECL not credit-impaired

Lifetime ECL not credit-impaired

Lifetime ECL credit-impaired

Lifetime ECL credit-impaired

Total

Total

Loans commitments

Loans commitments

Balance as at 1 January*

Balance as at 1 January*

3,943

3,943

33,326

33,326

-

-

37,269

37,269

Transfer to 12-month ECL

Transfer to 12-month ECL

4,067

4,067

-

-

-

-

4,067

4,067

Transfer to lifetime ECL not credit-impaired

Transfer to lifetime ECL not credit-impaired

-

-

2,773

2,773

-

-

2,773

2,773

Net measurement of loss allowance

Net measurement of loss allowance

388

388

-5,932

-5,932

-

-

-5,544

-5,544

Financial assets that have been derecognised

Financial assets that have been derecognised

-1,158

-1,158

-3,853

-3,853

-

-

-5,011

-5,011

Foreign exchange rates differences

Foreign exchange rates differences

-423

-423

21

21

-

-

-402

-402

Balance as at 31 December

Balance as at 31 December

6,817

6,817

26,335

26,335

-

-

33,152

33,152

- Following the updated model versions referred in Note 2.4.2 opening balances for 12-month and Lifetime non-credit impaired ECL would be lower for EUR -0.2m and higher for EUR 1.1m, respectively.

- Following the updated model versions referred in Note 2.4.2 opening balances for 12-month and Lifetime non-credit impaired ECL would be lower for EUR -0.2m and higher for EUR 1.1m, respectively.

2019

2019

in EUR'000

in EUR'000

12-month ECL

12-month ECL

Lifetime ECL not credit-impaired

Lifetime ECL not credit-impaired

Lifetime ECL credit-impaired

Lifetime ECL credit-impaired

Total

Total

Loans commitments

Loans commitments

Balance as at 1 January

Balance as at 1 January

7,225

7,225

16,597

16,597

-

-

23,822

23,822

Transfer to 12-month ECL

Transfer to 12-month ECL

1,669

1,669

9,983

9,983

-

-

11,652

11,652

Transfer to lifetime ECL not credit-impaired

Transfer to lifetime ECL not credit-impaired

-836

-836

15,138

15,138

-

-

14,302

14,302

Net measurement of loss allowance

Net measurement of loss allowance

696

696

773

773

-

-

1,469

1,469

Business model change (IFE)*

Business model change (IFE)*

-2,974

-2,974

-1,387

-1,387

-

-

-4,361

-4,361

Financial assets that have been derecognised

Financial assets that have been derecognised

-1,960

-1,960

-7,858

-7,858

-

-

-9,818

-9,818

Foreign exchange rates differences

Foreign exchange rates differences

123

123

80

80

-

-

203

203

Balance as at 31 December

Balance as at 31 December

3,943

3,943

33,326

33,326

-

-

37,269

37,269

- For details, please refer to Note 24.

- For details, please refer to Note 24.

in EUR'000

| in EUR'000 | 31.12.2020 | 31.12.2019 |
| --- | --- | --- |
| Net general administrative expenses payable to the EIB | 58,527 | 50,009 |
| Other amounts payable to the EIB | 56 | 31 |
| Interest subsidies and TA not yet disbursed owed to Member States | 93,795 | 97,398 |
| Total amounts owed to third parties | 152,378 | 147,438 |

in EUR'000

31.12.2020

31.12.2020

31.12.2019

31.12.2019

Net general administrative expenses payable to the EIB

Net general administrative expenses payable to the EIB

58,527

58,527

50,009

50,009

Other amounts payable to the EIB

Other amounts payable to the EIB

56

56

31

31

Interest subsidies and TA not yet disbursed owed to Member States

Interest subsidies and TA not yet disbursed owed to Member States

93,795

93,795

97,398

97,398

Total amounts owed to third parties

Total amounts owed to third parties

152,378

152,378

147,438

147,438

16
     Other liabilities

| in EUR'000 | 31.12.2020 | 31.12.2019 |
| --- | --- | --- |
| Loan repayments received in advance | 3,166 | 1,961 |
| Deferred income from interest subsidies | 280 | 339 |
| Financial guarantee calls | - | 53 |
| Total other liabilities | 3,446 | 2,353 |

in EUR'000

in EUR'000

31.12.2020

31.12.2020

31.12.2019

31.12.2019

Loan repayments received in advance

Loan repayments received in advance

3,166

3,166

1,961

1,961

Deferred income from interest subsidies

Deferred income from interest subsidies

280

280

339

339

Financial guarantee calls

Financial guarantee calls

-

-

53

53

Total other liabilities

Total other liabilities

3,446

3,446

2,353

2,353

Member States

| Member States | Contribution to the Facility** | Contribution to interest subsidies and technical assistance** | Total Contributed | Called and not paid* |
| --- | --- | --- | --- | --- |
| Austria | 82,689 | 9,852 | 92,541 | 1,687 |
| Belgium | 121,923 | 14,470 | 136,393 | 2,471 |
| Bulgaria | 1,567 | 421 | 1,988 | 98 |
| Cyprus | 1,008 | 270 | 1,278 | - |
| Czech Republic | 5,710 | 1,532 | 7,242 | 357 |
| Denmark | 67,377 | 8,118 | 75,495 | 1,400 |
| Estonia | 560 | 150 | 710 | 35 |
| Finland | 47,569 | 5,876 | 53,445 | - |
| France | 729,689 | 82,689 | 812,379 | 13,685 |
| Germany | 720,567 | 84,614 | 805,181 | 14,350 |
| Greece | 42,735 | 5,648 | 48,383 | 1,029 |
| Hungary | 6,158 | 1,652 | 7,810 | 385 |
| Ireland | 23,221 | 3,345 | 26,566 | 637 |
| Italy | 407,583 | 50,996 | 458,579 | 9,002 |
| Latvia | 784 | 210 | 994 | 49 |
| Lithuania | 1,344 | 360 | 1,704 | 84 |
| Luxembourg | 9,119 | 1,097 | 10,216 | 189 |
| Malta | 336 | 90 | 426 | 21 |
| Netherlands | 164,029 | 19,716 | 183,745 | 3,395 |
| Poland | 14,555 | 3,905 | 18,460 | 910 |
| Portugal | 33,266 | 4,411 | 37,677 | 805 |
| Romania | 4,143 | 1,111 | 5,254 | 259 |
| Slovakia | 2,351 | 631 | 2,982 | 147 |
| Slovenia | 2,015 | 541 | 2,556 | 126 |
| Spain | 210,652 | 29,338 | 239,990 | 5,495 |
| Sweden | 88,064 | 10,923 | 98,987 | 1,918 |
| United Kingdom | 432,681 | 57,030 | 489,711 | 10,374 |
| Total as at 31 December 2020 | 3,221,695 | 398,996 | 3,620,692 | 68,908 |
| Total as at 31 December 2019 | 2,967,000 | 383,691 | 3,350,691 | 86,330 |

Member States

Contribution to the Facility**

Contribution to the Facility**

Contribution to interest subsidies and technical assistance**

Contribution to interest subsidies and technical assistance**

Total Contributed

Total Contributed

Called and not paid*

Called and not paid*

Austria

Austria

82,689

82,689

9,852

9,852

92,541

92,541

1,687

1,687

Belgium

Belgium

121,923

121,923

14,470

14,470

136,393

136,393

2,471

2,471

Bulgaria

Bulgaria

1,567

1,567

421

421

1,988

1,988

98

98

Cyprus

Cyprus

1,008

1,008

270

270

1,278

1,278

-

-

Czech Republic

Czech Republic

5,710

5,710

1,532

1,532

7,242

7,242

357

357

Denmark

Denmark

67,377

67,377

8,118

8,118

75,495

75,495

1,400

1,400

Estonia

Estonia

560

560

150

150

710

710

35

35

Finland

Finland

47,569

47,569

5,876

5,876

53,445

53,445

-

-

France

France

729,689

729,689

82,689

82,689

812,379

812,379

13,685

13,685

Germany

Germany

720,567

720,567

84,614

84,614

805,181

805,181

14,350

14,350

Greece

Greece

42,735

42,735

5,648

5,648

48,383

48,383

1,029

1,029

Hungary

Hungary

6,158

6,158

1,652

1,652

7,810

7,810

385

385

Ireland

Ireland

23,221

23,221

3,345

3,345

26,566

26,566

637

637

Italy

Italy

407,583

407,583

50,996

50,996

458,579

458,579

9,002

9,002

Latvia

Latvia

784

784

210

210

994

994

49

49

Lithuania

Lithuania

1,344

1,344

360

360

1,704

1,704

84

84

Luxembourg

Luxembourg

9,119

9,119

1,097

1,097

10,216

10,216

189

189

Malta

Malta

336

336

90

90

426

426

21

21

Netherlands

Netherlands

164,029

164,029

19,716

19,716

183,745

183,745

3,395

3,395

Poland

Poland

14,555

14,555

3,905

3,905

18,460

18,460

910

910

Portugal

Portugal

33,266

33,266

4,411

4,411

37,677

37,677

805

805

Romania

Romania

4,143

4,143

1,111

1,111

5,254

5,254

259

259

Slovakia

Slovakia

2,351

2,351

631

631

2,982

2,982

147

147

Slovenia

Slovenia

2,015

2,015

541

541

2,556

2,556

126

126

Spain

Spain

210,652

210,652

29,338

29,338

239,990

239,990

5,495

5,495

Sweden

Sweden

88,064

88,064

10,923

10,923

98,987

98,987

1,918

1,918

United Kingdom

United Kingdom

432,681

432,681

57,030

57,030

489,711

489,711

10,374

10,374

Total as at 31 December 2020

Total as at 31 December 2020

3,221,695

3,221,695

398,996

398,996

3,620,692

3,620,692

68,908

68,908

Total as at 31 December 2019

Total as at 31 December 2019

2,967,000

2,967,000

383,691

383,691

3,350,691

3,350,691

86,330

86,330

- On 10 November 2020, the Council fixed the amount of financial contributions to be paid by each Member State by 21 January 2021. As at 31 December 2020 EUR 68.9m were not paid in.

** On 14 July 2020, 9th EDF EUR 45.1m unused commitments for interest rate subsidies and technical assistance were reallocated to the Contributors' Resources as per allocation key for 9th EDF contributions.

18
     Commitments and contingent liabilities

| in EUR'000 | 31.12.2020 | 31.12.2019 |
| --- | --- | --- |
| Commitments | | |
| Undisbursed loans | 1,722,618 | 1,357,320 |
| Undisbursed commitment in respect of shares and other variable yield securities | 378,347 | 405,920 |
| Issued guarantees | 998,560 | 200,013 |
| Interest subsidies and technical assistance | 483,897 | 455,671 |
| | | |
| Contingent liabilities | | |
| Signed non-issued guarantees | 554,686 | 1,359,818 |
| | | |
| Total commitments and contingent liabilities | 4,138,108 | 3,778,742 |

in EUR'000

in EUR'000

31.12.2020

31.12.2020

31.12.2019

31.12.2019

Commitments

Commitments

Undisbursed loans

Undisbursed loans

1,722,618

1,722,618

1,357,320

1,357,320

Undisbursed commitment in respect of shares and other variable yield securities

Undisbursed commitment in respect of shares and other variable yield securities

378,347

378,347

405,920

405,920

Issued guarantees

Issued guarantees

998,560

998,560

200,013

200,013

Interest subsidies and technical assistance

Interest subsidies and technical assistance

483,897

483,897

455,671

455,671

Contingent liabilities

Contingent liabilities

Signed non-issued guarantees

Signed non-issued guarantees

554,686

554,686

1,359,818

1,359,818

Total commitments and contingent liabilities

Total commitments and contingent liabilities

4,138,108

4,138,108

3,778,742

3,778,742

in EUR'000

| in EUR'000 | From 01.01.2020 | From 01.01.2019 |
| --- | --- | --- |
| | to 31.12.2020 | to 31.12.2019 |
| Loans and advances | 80,252 | 89,244 |
| Interest subsidies | 4,531 | 4,679 |
| Total interest and similar income | 84,783 | 93,923 |
| | | |
| The main components of interest and similar expenses are as follows: |
| | | |
| in EUR'000 | From 01.01.2020 | From 01.01.2019 |
| | to 31.12.2020 | to 31.12.2019 |
| Derivative financial instruments | -541 | -261 |
| Cash and cash equivalents | -2,961 | -722 |
| Treasury financial assets | -1,748 | -1,965 |
| Total interest and similar expense | -5,250 | -2,948 |

in EUR'000

From 01.01.2020

From 01.01.2020

From 01.01.2019

From 01.01.2019

to 31.12.2020

to 31.12.2020

to 31.12.2019

to 31.12.2019

Loans and advances

Loans and advances

80,252

80,252

89,244

89,244

Interest subsidies

Interest subsidies

4,531

4,531

4,679

4,679

Total interest and similar income

Total interest and similar income

84,783

84,783

93,923

93,923

The main components of interest and similar expenses are as follows:

The main components of interest and similar expenses are as follows:

in EUR'000

in EUR'000

From 01.01.2020

From 01.01.2020

From 01.01.2019

From 01.01.2019

to 31.12.2020

to 31.12.2020

to 31.12.2019

to 31.12.2019

Derivative financial instruments

Derivative financial instruments

-541

-541

-261

-261

Cash and cash equivalents

Cash and cash equivalents

-2,961

-2,961

-722

-722

Treasury financial assets

Treasury financial assets

-1,748

-1,748

-1,965

-1,965

Total interest and similar expense

Total interest and similar expense

-5,250

-5,250

-2,948

-2,948

20
     Fee and commission income and expenses

| in EUR'000 | From 01.01.2020 | From 01.01.2019 |
| --- | --- | --- |
| | to 31.12.2020 | to 31.12.2019 |
| Fee and commission on loans and advances | 141 | 4,399 |
| Fee and commission on financial guarantees | 211 | 39 |
| Other | 1 | - |
| Total fee and commission income | 353 | 4,438 |
| | | |
| The main component of fee and commission expenses is as follows: |
| | | |
| in EUR'000 | From 01.01.2020 | From 01.01.2019 |
| | to 31.12.2020 | to 31.12.2019 |
| Commission paid to third parties with regard to shares and other variable yield securities | -225 | -721 |
| Total fee and commission expenses | -225 | -721 |

in EUR'000

in EUR'000

From 01.01.2020

From 01.01.2020

From 01.01.2019

From 01.01.2019

to 31.12.2020

to 31.12.2020

to 31.12.2019

to 31.12.2019

Fee and commission on loans and advances

Fee and commission on loans and advances

141

141

4,399

4,399

Fee and commission on financial guarantees

Fee and commission on financial guarantees

211

211

39

39

Other

Other

1

1

-

-

Total fee and commission income

Total fee and commission income

353

353

4,438

4,438

The main component of fee and commission expenses is as follows:

The main component of fee and commission expenses is as follows:

in EUR'000

in EUR'000

From 01.01.2020

From 01.01.2020

From 01.01.2019

From 01.01.2019

to 31.12.2020

to 31.12.2020

to 31.12.2019

to 31.12.2019

Commission paid to third parties with regard to shares and other variable yield securities

Commission paid to third parties with regard to shares and other variable yield securities

-225

-225

-721

-721

Total fee and commission expenses

Total fee and commission expenses

-225

-225

-721

-721

in EUR'000

| in EUR'000 | From 01.01.2020 | From 01.01.2019 |
| --- | --- | --- |
| | to 31.12.2020 | to 31.12.2019 |
| Net realised result due to sales and exits | -3,069 | -133 |
| Dividend income | 4,261 | 1,408 |
| Net fair value change | -47,909 | 8,629 |
| Net result on shares and other variable yield securities | -46,717 | 9,904 |

in EUR'000

From 01.01.2020

From 01.01.2020

From 01.01.2019

From 01.01.2019

to 31.12.2020

to 31.12.2020

to 31.12.2019

to 31.12.2019

Net realised result due to sales and exits

Net realised result due to sales and exits

-3,069

-3,069

-133

-133

Dividend income

Dividend income

4,261

4,261

1,408

1,408

Net fair value change

Net fair value change

-47,909

-47,909

8,629

8,629

Net result on shares and other variable yield securities

Net result on shares and other variable yield securities

-46,717

-46,717

9,904

9,904

22
     General administrative expenses

General administrative expenses represent the actual costs incurred by the EIB for managing the Facility less income generated from standard appraisal fees directly charged by the EIB to clients of the Facility.

The main components of general administrative expenses are as follows:

| in EUR'000 | From 01.01.2020 | From 01.01.2019 |
| --- | --- | --- |
| | to 31.12.2020 | to 31.12.2019 |
| Actual cost incurred by the EIB | -61,470 | -52,982 |
| Income from appraisal fees directly charged to clients of the Facility | 2,943 | 2,973 |
| Total general administrative expenses | -58,527 | -50,009 |

in EUR'000

in EUR'000

From 01.01.2020

From 01.01.2020

From 01.01.2019

From 01.01.2019

to 31.12.2020

to 31.12.2020

to 31.12.2019

to 31.12.2019

Actual cost incurred by the EIB

Actual cost incurred by the EIB

-61,470

-61,470

-52,982

-52,982

Income from appraisal fees directly charged to clients of the Facility

Income from appraisal fees directly charged to clients of the Facility

2,943

2,943

2,973

2,973

Total general administrative expenses

Total general administrative expenses

-58,527

-58,527

-50,009

-50,009

23
     Involvement with unconsolidated structured entities (in EUR’000)

23

Definition of a structured entity

Definition of a structured entity

A structured entity is one that has been designed so that voting or similar rights are not the dominant factor in deciding, who controls the-entity. IFRS 12 observes that a structured entity often has some or all of the following features:

A structured entity is one that has been designed so that voting or similar rights are not the dominant factor in deciding, who controls the-entity. IFRS 12 observes that a structured entity often has some or all of the following features:

-Restricted activities;

-

Restricted activities;

-A narrow and well-defined objective, such as to effect a tax-efficient lease, carry out research and development activities, provide a source of capital or funding to an entity or provide investment opportunities for investors by passing on risks and rewards associated with the assets of the structured entity to investors;

-

A narrow and well-defined objective, such as to effect a tax-efficient lease, carry out research and development activities, provide a source of capital or funding to an entity or provide investment opportunities for investors by passing on risks and rewards associated with the assets of the structured entity to investors;

-Insufficient equity to permit the structured entity to finance its activities without subordinated financial support;

-

Insufficient equity to permit the structured entity to finance its activities without subordinated financial support;

-Financing in the form of multiple contractually linked instruments to investors that create concentrations of credit or other risks (tranches).

-

Financing in the form of multiple contractually linked instruments to investors that create concentrations of credit or other risks (tranches).

Unconsolidated structured entities

Unconsolidated structured entities

The term 'unconsolidated structured entities' refers to all structured entities that are not controlled by the Facility and includes interests in structured entities that are not consolidated.

The term 'unconsolidated structured entities' refers to all structured entities that are not controlled by the Facility and includes interests in structured entities that are not consolidated.

Definition of Interests in structured entities:

IFRS 12 defines "interests" broadly to include any contractual or non-contractual involvement that exposes the reporting entity to variability in returns from the performance of the entity. Examples of such interests include the holding of equity interests and other forms of involvement such as the provision of funding, liquidity support, credit enhancements, commitments and guarantees to the other entity. IFRS 12 states that a reporting entity does not necessarily have an interest in another entity solely because of a typical customer supplier relationship.

The table below describes the types of structured entities that the Facility does not consolidate but in which it holds an interest.

| Type of structured entity | Nature and purpose | Interest held by the Facility |
| --- | --- | --- |
| Project Finance - lending to Special Purposes Vehicles (“SPV”) | Project Finance Transactions (PF Operations) are transactions where the Facility relies for the servicing of its debt on a borrower whose sole or main source of revenue is generated by a single or limited number of assets being financed by such debt or other pre-existing assets contractually linked to the project. PF operations are often financed through SPV. | Net disbursed amounts;


  Interest income. |
| Venture capital operations | The Facility finances venture capital and investment funds. Venture capital and investment funds pool and manage money from investors seeking private equity stakes in small and medium-size enterprises with strong growth potential as well as financing infrastructure projects. | Investments in units/shares issued by the venture capital entity;


  Dividends received as dividend income. |

Type of structured entity

Nature and purpose

Interest held by the Facility

Project Finance - lending to Special Purposes Vehicles (“SPV”)

Project Finance Transactions (PF Operations) are transactions where the Facility relies for the servicing of its debt on a borrower whose sole or main source of revenue is generated by a single or limited number of assets being financed by such debt or other pre-existing assets contractually linked to the project. PF operations are often financed through SPV.

Net disbursed amounts;

Interest income.

Venture capital operations

The Facility finances venture capital and investment funds. Venture capital and investment funds pool and manage money from investors seeking private equity stakes in small and medium-size enterprises with strong growth potential as well as financing infrastructure projects.

Investments in units/shares issued by the venture capital entity;

Dividends received as dividend income.

The table below shows the carrying amounts of unconsolidated structured entities in which the Facility has an interest at the reporting date, as well as the Facility's maximum exposure to loss in relation to those entities. The maximum exposure to loss includes the carrying amounts and the related undisbursed commitments.

| Type of structured entity | Caption | Carrying amount at 31.12.2020 | Carrying amount at 31.12.2019 | Maximum exposure to loss at 31.12.2020 | Maximum exposure to loss at 31.12.2019 |
| --- | --- | --- | --- | --- | --- |
| Venture capital funds | Shares and other variable yield securities | 437,142 | 504,332 | 437,142 | 834,955 |
| Total | | 437,142 | 504,332 | 437,142 | 834,955 |

Type of structured entity

Caption

Carrying amount at 31.12.2020

Carrying amount at 31.12.2019

Maximum exposure to loss at 31.12.2020

Maximum exposure to loss at 31.12.2019

Venture capital funds

Shares and other variable yield securities

437,142

504,332

437,142

834,955

Total

437,142

504,332

437,142

834,955

No support is provided to structured entities by the Facility beyond the respective financing.

24
     Impact financing envelope (in EUR’000)

In June 2013 the ACP-EU Joint Ministerial Council approved the new financial protocol for the 11th European Development Fund (EDF), covering the period 2014-2020.

A new EUR 500m endowment was agreed for the Investment Facility, the so called ‘impact financing envelope’ or “IFE”, enabling the Facility to support projects that promise a particularly high development impact whilst bearing the greater risks inherent in such investments. This envelope presents new possibilities for enhancing the Facility’s private sector lending through investments in the following instruments:

Social impact equity funds - promoted by an emerging population of private equity fund managers who put the alleviation of social or environmental issues at the core of their funds' investment strategy but still target sustainability at the levels of both the fund and its investee companies.

Loans to financial intermediaries - (e.g. microfinance institutions, local banks and credit unions) operating in ACP countries in which the EIB cannot consider financing - in particular in local currency - under the existing credit risk guidelines, e.g. due to either high country risks, currency volatility or lack of pricing benchmarks. The main objective of such loans is to fund projects with a high developmental impact, especially in the field of support to micro and small enterprises (MSEs) and agriculture, which generally do not qualify for IF financing.

Risk sharing facilitating instruments - which take the form of first loss guarantees ("first loss pieces") that facilitate risk sharing operations of the EIB with local financial intermediaries (mainly commercial banks) for the benefit of underserved SMEs and small projects that meet the Impact Financing Criteria in situations where a market gap has been identified in relation to the access of SMEs/small projects to finance. The first loss pieces would be structured as a counter-guarantee in favour of senior guarantee tranches funded by the EIB - under the Investment Facility - and by other International Financial Institutions/Development Financial Institutions, thus generating a substantial leverage effect.

Direct financing - through debt (i.e. loans) or equity instruments in projects with sound and experienced promoters and high developmental impacts, but that will, however, also entail higher expectations of losses and difficulties to recover the investment (equity type risk with higher than usual expectation of losses). The EIB applies strict selection and eligibility criteria for this instrument, as these projects, notwithstanding their high developmental impact, would not be able to meet acceptable financing criteria (i.e. low expectation of recovering the investment or offsetting the losses through interest rates /equity returns).

The IFE also allows diversification into new sectors, such as health and education, agriculture and food security, and the development of new and innovative risk-sharing instruments. In 2016, the IFE financing capacity was increased to EUR 800m by making the IFE partially revolving.

From a financial and accounting perspective the IFE forms part of the IF portfolio and is accounted for in the overall IF annual financial statements.

24
     Impact financing envelope (in EUR’000) (continued)

The following table represents the carrying amounts and the committed, but undisbursed amounts, per type of asset:

| Type of IFE investment | Caption | Measurement | Gross carrying amount as at 31.12.2020 | Loss allowance / FV adj. amount as at 31.12.2020 | Carrying amount as at 31.12.2020 | Undisbursed amount as at 31.12.2020 | OFF BS ECL adj. amount as at 31.12.2020 |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Loans to financial intermediaries | Loans and advances | AC | 49,522 | -1,839 | 47,683 | 26,954 | -199 |
| Direct loan operations | Loans and advances | FVTPL | 91,186 | -44,681 | 46,505 | 98,314 | - |
| Social impact equity funds | Shares and other variable yield securities | FVTPL | 41,885 | -4,778 | 37,107 | 73,362 | - |
| Direct equity participations | Shares and other variable yield securities | FVTPL | 57,395 | 9,195 | 66,590 | 14 | - |
| Risk sharing facilitating instruments | Issued guarantees | higher of approach* | - | - | - | 40,746 | - |
| Total | | | 239,988 | -42,103 | 197,885 | 239,390 | -199 |
| *For details, please refer to section subsequent measurement of Note 2.4.3. | | | | |
| | | | | | | | |
| Type of IFE investment | Caption | Measurement | Gross carrying amount as at 31.12.2019 | Loss allowance / FV adj. amount as at 31.12.2019 | Carrying amount as at 31.12.2019 | Undisbursed amount as at 31.12.2019 | OFF BS ECL adj. amount as at 31.12.2019 |
| Loans to financial intermediaries | Loans and advances | AC | 22,347 | -354 | 21,993 | 42,400 | -1,251 |
| Direct loan operations | Loans and advances | FVTPL | 37,136 | -15,156 | 21,980 | 75,700 | - |
| Social impact equity funds | Shares and other variable yield securities | FVTPL | 33,417 | -3,175 | 30,242 | 66,840 | - |
| Direct equity participations | Shares and other variable yield securities | FVTPL | 58,643 | 19,626 | 78,269 | 14 | - |
| Risk sharing facilitating instruments | Issued guarantees | higher of approach* | - | - | - | 47,331 | -50 |
| Total | | | 151,543 | 941 | 152,484 | 232,285 | -1,301 |
| *For details, please refer to section subsequent measurement of Note 2.4.3. | | | | |
| | | | | | | | |
| The EIB is applying the General Mandate Risk Principles to IFE direct loan operations (excluding Loans to financial intermediaries), as envisaged in the EIB’s Credit and Equity Risk Guidelines, and to monitor and report the risk associated with the IFE direct loan operations on the basis of their fair value. According to the methodology, the Bank performs a Qualitative Risk Assessment (QRA) aiming to assess the soundness of the investment rationale and plausible business viability of such operations. |
| |

Type of IFE investment

Type of IFE investment

Caption

Caption

Measurement

Measurement

Gross carrying amount as at 31.12.2020

Gross carrying amount as at 31.12.2020

Loss allowance / FV adj. amount as at 31.12.2020

Loss allowance / FV adj. amount as at 31.12.2020

Carrying amount as at 31.12.2020

Carrying amount as at 31.12.2020

Undisbursed amount as at 31.12.2020

Undisbursed amount as at 31.12.2020

OFF BS ECL adj. amount as at 31.12.2020

OFF BS ECL adj. amount as at 31.12.2020

Loans to financial intermediaries

Loans to financial intermediaries

Loans and advances

Loans and advances

AC

AC

49,522

49,522

-1,839

-1,839

47,683

47,683

26,954

26,954

-199

-199

Direct loan operations

Direct loan operations

Loans and advances

Loans and advances

FVTPL

FVTPL

91,186

91,186

-44,681

-44,681

46,505

46,505

98,314

98,314

-

-

Social impact equity funds

Social impact equity funds

Shares and other variable yield securities

Shares and other variable yield securities

FVTPL

FVTPL

41,885

41,885

-4,778

-4,778

37,107

37,107

73,362

73,362

-

-

Direct equity participations

Direct equity participations

Shares and other variable yield securities

Shares and other variable yield securities

FVTPL

FVTPL

57,395

57,395

9,195

9,195

66,590

66,590

14

14

-

-

Risk sharing facilitating instruments

Risk sharing facilitating instruments

Issued guarantees

Issued guarantees

higher of approach*

higher of approach*

-

-

-

-

-

-

40,746

40,746

-

-

Total

Total

239,988

239,988

-42,103

-42,103

197,885

197,885

239,390

239,390

-199

-199

*For details, please refer to section subsequent measurement of Note 2.4.3.

*For details, please refer to section subsequent measurement of Note 2.4.3.

Type of IFE investment

Type of IFE investment

Caption

Caption

Measurement

Measurement

Gross carrying amount as at 31.12.2019

Gross carrying amount as at 31.12.2019

Loss allowance / FV adj. amount as at 31.12.2019

Loss allowance / FV adj. amount as at 31.12.2019

Carrying amount as at 31.12.2019

Carrying amount as at 31.12.2019

Undisbursed amount as at 31.12.2019

Undisbursed amount as at 31.12.2019

OFF BS ECL adj. amount as at 31.12.2019

OFF BS ECL adj. amount as at 31.12.2019

Loans to financial intermediaries

Loans to financial intermediaries

Loans and advances

Loans and advances

AC

AC

22,347

22,347

-354

-354

21,993

21,993

42,400

42,400

-1,251

-1,251

Direct loan operations

Direct loan operations

Loans and advances

Loans and advances

FVTPL

FVTPL

37,136

37,136

-15,156

-15,156

21,980

21,980

75,700

75,700

-

-

Social impact equity funds

Social impact equity funds

Shares and other variable yield securities

Shares and other variable yield securities

FVTPL

FVTPL

33,417

33,417

-3,175

-3,175

30,242

30,242

66,840

66,840

-

-

Direct equity participations

Direct equity participations

Shares and other variable yield securities

Shares and other variable yield securities

FVTPL

FVTPL

58,643

58,643

19,626

19,626

78,269

78,269

14

14

-

-

Risk sharing facilitating instruments

Risk sharing facilitating instruments

Issued guarantees

Issued guarantees

higher of approach*

higher of approach*

-

-

-

-

-

-

47,331

47,331

-50

-50

Total

Total

151,543

151,543

941

941

152,484

152,484

232,285

232,285

-1,301

-1,301

*For details, please refer to section subsequent measurement of Note 2.4.3.

*For details, please refer to section subsequent measurement of Note 2.4.3.

The EIB is applying the General Mandate Risk Principles to IFE direct loan operations (excluding Loans to financial intermediaries), as envisaged in the EIB’s Credit and Equity Risk Guidelines, and to monitor and report the risk associated with the IFE direct loan operations on the basis of their fair value. According to the methodology, the Bank performs a Qualitative Risk Assessment (QRA) aiming to assess the soundness of the investment rationale and plausible business viability of such operations.

The EIB is applying the General Mandate Risk Principles to IFE direct loan operations (excluding Loans to financial intermediaries), as envisaged in the EIB’s Credit and Equity Risk Guidelines, and to monitor and report the risk associated with the IFE direct loan operations on the basis of their fair value. According to the methodology, the Bank performs a Qualitative Risk Assessment (QRA) aiming to assess the soundness of the investment rationale and plausible business viability of such operations.

25
     Subsequent events

OJ L 210, 6.8.2013, p. 1.

Council Regulation (EU) 2018/1877 of 26 November 2018 on the financial regulation applicable to the 11th European Development Fund, and repealing Regulation (EU) 2015/323.

In accordance with Article 53 of the Financial Regulation applicable to the 11th European Development Fund, the treasury is presented in the balance sheet of the 11th EDF. The nature of the various bank accounts is outlined in chapter 5, Financial Risk Management.

Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union.

Council regulation (EU) 2018/1877 of 26 November 2018 on the financial regulation applicable to the 11th European Development Fund, and repealing Regulation (EU) 2015/323

Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union.

Council regulation (EU) 2018/1877 of 26 November 2018 on the financial regulation applicable to the 11th European Development Fund, and repealing Regulation (EU) 2015/323.

COUNCIL REGULATION (EU) 2018/1877

Except for operations in South-Sudan

Gross amounts (i.e. excluding decommitments and recovery orders)

Amounts in columns Committed, Contracted, Paid are color weighted