97/256/EC - - - I
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COUNCIL DECISION
of 14 April 1997
granting a Community guarantee to the European Investment Bank against losses under loans
for projects outside the Community (Central and Eastern Europe countries, Mediterranean
countries, Latin American and Asian countries, South Africa and the former Yugoslav R epublic
of Macedonia and Bosnia and Herzegovina)
(97/256/EC)
(OJ No L 102, 19. 4. 1997, p. 33)
Amended by:
Official Journal
No page date
Council Decision of 19 May 1998 (98/348/EC) L 155 53 29. 5. 1998
Council Decision of 14 December 1998 (98/729/EC) L 346 54 22. 12. 199898/729/EC
97/256/EC - - - I
ICOUNCIL DECISION
of 14 April 1997
granting a Community guarantee to the European Investment Bank against losses under loans
for projects outside the Community (Central and Eastern Europe countries, Mediterranean
countries, Latin American and Asian countries, South Africa and the former Yugoslav R epublic
of Macedonia and Bosnia and Herzegovina)
(97/256/EC)
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the T reaty establishing the European
Community, and in particular Article 235 thereof,
Having regard to the proposal of the Commission (1),
Having regard to the opinion of the European Parlia-
ment (2),
(1) Whereas the European Council meeting in Essen on
9 and 10 December 1994 defined the pre-accessionstrategy for the associated Central and Eastern
Europe countries;
(2) Whereas the European Council in Cannes on 26 and
27 June 1995 agreed to supplement the budgetary as-
sistance granted to the Mediterranean countries by an
increase in European Investment Bank (EIB) loans to
contribute to the creation of a free-trade area and to
the Euro-Mediterranean partnership;
(3) Whereas the European Council meeting in Madrid on
15 and 16 December 1995 called on the Council and
the Commission to implement the Declaration on the
Euro-Mediterranean partnership and the work pro-
gramme drawn up at the Barcelona Conference with
the Mediterranean countries (Algeria, Cyprus, Egypt,
Israel, Jordan, Lebanon, Malta, Morocco, Syria and
T unisia, T urkey, Gaza-West Bank); whereas, at the
same meeting, the European Council confirmed the
importance of the EIB’s role as an instrument of
cooperation between the Community and Latin
America and called on the EIB to intensify its acti-
vities in the region; whereas the European Council
also noted with respect to enlargement that the con-
tinued activities of the EIB will allow an overall in-
crease in the input for accession preparations;
(4) Whereas the European Council meeting in Florence
on 21 and 22 June 1996 welcomed the results of the
Asia-Europe summit, which marked a turning-point in
the relations between the two continents;
(1) OJ No C 13, 14. 1. 1996, p. 9.
(2) OJ No C 115, 14. 4. 1997.98/729/EC
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II(5) Whereas the Central and Eastern Europe countries
(Albania, Bulgaria, Czech Republic, Estonia, Hungary,
Latvia, Lithuania, Poland, Romania, Slovak Republic
and Slovenia) are undertaking major political and so-
cial reforms and have embarked on a fundamental re-
structuring of their economies;
(6) Whereas the EIB is completing the current loan pro-
grammes for Central and Eastern Europe countries
pursuant to Decision 93/696/EC (1) and the lending
that is governed by the IV Protocols and horizontal
financial cooperation in the Mediterranean non-
member countries as set out in Regulation (EEC)
No 1763/92 (2);
(7) Whereas the EIB has already completed the three-
year lending programme in Latin American and Asian
countries pursuant to Decision 93/115/EEC (3);
whereas a new interim programme pursuant to Deci-sion 96/723/EC (
4)w i l lp e r m i tt h eE I Bt oc o n t i n u ei t s
lending activities in those countries;
(1) Council Decision 93/696/EC of 13 December 1993 granting
a Community guarantee to the European Investment Bankagainst losses under loans for projects in Central and East-ern European countries (Poland, Hungary, the Czech Re-public, the Slovak Republic, Romania, Bulgaria, Estonia,Latvia, Lithuania and Albania) (OJ No L 321, 23. 12. 1993,p. 27).
(2) Council Regulation (EEC) No 1763/92 of 29 June 1992
concerning financial cooperation in respect of all Mediter-ranean non-member countries (OJ No L 181, 1. 7. 1992,p. 5) as amended by Regulation (EC) No 1735/94 (OJ NoL 182, 16. 7. 1994, p. 6).
(
3) Council Decision 93/115/EEC of 15 February 1993 grant-
ing a Community guarantee to the European InvestmentBank against losses under loans for projects of mutual in-terest in certain third countries (OJ No L 45, 23. 2. 1993,p. 27).
(
4) Council Decision 96/723/EC of 12 December 1996 granting
a Community guarantee to the European Investment Bankagainst losses under loans for projects of mutual interest inL a t i nA m e r i c a na n dA s i a nc o u n t r i e sw i t hw h i c ht h eC o m -munity has concluded cooperation agreements (Argentina,Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador,Guatemala, Honduras, Mexico, Nicaragua, Panama, Para-guay, Peru, El Salvador, Uruguay and Venezuela;Bangladesh, Brunei, China, India, Indonesia, Macao, Ma-laysia, Pakistan, Philippines, Singapore, Sri Lanka, Thai-land and Vietnam) (OJ No L 329, 19. 12. 1996, p. 45).
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III(8) Whereas the Council approved on 4 October 1994 a
Cooperation Agreement between the Community and
the Republic of South Africa that aims to promote
harmonious, balanced and sustainable social and
economic development; whereas the EIB will be com-
pleting in June 1997 the two-year lending programme
in South Africa pursuant to Decision 95/207/EC (1);
(9) Whereas the Council calls on the EIB to continue its
operations in support of investment projects carried
out in the Central and Eastern Europe countries,
Mediterranean countries, Latin American and Asian
countries and South Africa;
(9a) Whereas the Community guarantee to the EIB
against losses under loans for projects in Bosnia and
Herzegovina is an exceptional and special action and
does not constitute a precedent for any future guaran-
tees;
(10) Whereas it is appropriate to effect certain improve-
ments in the programmes of operations in respect of
duration, instruments used and country coverage;
(11) Whereas the guarantee provided for in this Decision
should be granted to the EIB;
(12) Whereas this guarantee is subject to the conditions
set out in the Regulation (EC, Euratom)
No 2728/94 (2);
(13) Whereas, in June 1996, the Commission, in agreement
with the EIB, presented to the Council a proposal for
a new guarantee system for EIB lending to third
countries;
(1) Council Decision 95/207/EC of 1 June 1995 granting a
Community guarantee to the European Investment Bankagainst losses under loans for projects in South Africa (OJNo L 131, 15. 6. 1995, p. 31).
(2) Council Regulation (EC, Euratom) No 2728/94 of 31 Oc-
tober 1994 establishing a Guarantee Fund for external ac-tions (OJ No L 293, 12. 11. 1994, p. 1).98/729/CE
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IV(14) Whereas the Council on 2 December 1996 has ap-
proved conclusions on new guarantee arrangements
for EIB lending to third countries, according to
which: ‘The volume of external lending shall respect
the Financial Perspective and Community Budget
discipline as well as the EIB internal guidelines on
lending to third countries and take into account the
conclusions of European Councils at Essen, Cannes
and Madrid. The approach of a blanket guarantee,
without distinguishing regions and projects, is ap-
proved. A risk sharing element as proposed by the
Commission and the EIB is accepted. Accordingly, the
EIB is invited where possible to secure, on a signifi-
cant proportion of its lending, adequate third-party
guarantees for commercial risks, with the Budgetary
guarantee in that case being responsible only for pol-
itical risks arising from currency non-transfer, expro-priation, war and civil disturbance. The EIB is invited
to aim at 25 % of its total lending under the man-
dates as a target for the use of non-sovereign guaran-
tees to be expanded on wherever possible insofar as
the market permits on an individual mandate basis.
The application of the target to individual mandates is
to be specified at the time of negotiation of those
mandates.’;
(15) Whereas this Decision should conform to the above
conclusions;
(16) Whereas a guarantee level of 70 % is sufficient to
meet the total lending volume of the new lending
mandates and other lending needs for the duration of
this Decision;
(17) Whereas the new guarantee arrangements will not af-
fect the excellent credit standing of the EIB;
(18) Whereas the Council concluded on 2 December 1996
that ‘the provisioning rates of the Guarantee Fund
will remain at the current levels up to 1999’; whereas
the Council concluded on 27 January 1997 that ‘each
payment to the loan guarantee fund will be based on
the percentage required at the time of payment, that
is 15 % currently and 14 % as soon as feasible’;
(19) Whereas the Commission and the EIB recognizing
their respective areas of responsibility should ensure
appropriate coordination between EIB operations in
the eligible third countries and the implementation of
the Community’s other financial instruments;
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V(20) Whereas the Commission and the EIB should consult
together in order to ensure that, in determining the
rate at which the mandates are used, account will be
taken of the annual fluctuations in the rate at which
the Community is being asked to provide balance of
payments support to third countries;
(21) Whereas the Council has approved this Decision and
in particular the amounts of the mandates taking into
account its conclusions of 27 January 1997 according
to which: ‘Member States and the Commission unani-
mously declare that they agree to the creation of a
substantial pre-accession support facility. They invite
the EIB to propose such a facility to the Board of
Governors later this year. The facility will enter into
force as soon as possible in the light of future acces-
sion. The facility will be approved under Article 18 of
the EIB statute and carry no guarantee from theCommunity budget or from the Member States. The
EIB lending envelopes covered by a Community guar-
antee can be considered to be consistent with a provi-
sion of ECU 1 050 million for macro-financial assist-
ance (MFA) assuming that ECU 750 million is
needed for Euratom lending; whereas the maximum
for MFA should be increased to ECU 1 200 million, if
Euratom lending in the period of application of the
present decision does not exceed ECU 600 million.’;
(22) Whereas, for the purpose of adopting this Decision,
the only powers provided for by the T reaty are those
set out in Article 235,
HAS DECIDED AS FOLLOWS:
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1Article 1
1. The Community shall grant the European Investment
Bank a global guarantee in respect of all payments not
received by it but due in respect of credits opened, in ac-
cordance with its usual criteria for investment projects car-
ried out in the Central and Eastern Europe countries, in
the Mediterranean countries, in the Latin American and
Asian countries, in the Republic of South Africa, in the
Former Yugoslav Republic of Macedonia and in Bosnia
and Herzegovina.
This guarantee shall be restricted to 70 % of the aggregate
amount of the credits opened, plus all related sums. The
overall ceiling of the credits opened shall be equivalent to
ECU 7 355 million, broken down as follows:
— Central and Eastern Europe countries:
ECU 3 520 million
— Mediterranean countries:
ECU 2 310 million
— Latin American and Asian countries:
ECU 900 million
— Republic of South Africa:
ECU 375 million
— Former Yugoslav Republic of Macedonia:
ECU 150 million
— Bosnia and Herzegovina:
ECU 100 million.
That ceiling shall cover a period of three years beginning
on 31 January 1997 for Central and Eastern Europe, Medi-
terranean and Latin American and Asian countries, on
1 July 1997 for the Republic of South Africa, and on 1 Jan-
uary 1998 for the Former Yugoslav Republic of Macedo-
nia. For Bosnia and Herzegovina it shall cover a period of
two years beginning on the date of publication of this
Decision. If, on the expiry of each of these periods, the
loans granted by the EIB have not attained the overall
amounts referred to above, the relevant period shall be
automatically extended by six months.
2. The countries included above are:
— Central and Eastern Europe: Albania, Bulgaria, Czech
Republic, Estonia, Hungary, Latvia, Lithuania,
Poland, Romania, Slovak Republic and Slovenia,
— Mediterranean countries: Algeria, Cyprus, Egypt,
Israel, Jordan, Lebanon, Malta, Morocco, Syria,
T unisia, T urkey, Gaza-West Bank,97/256/EC
98/729/EC
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2— Latin America: Argentina, Bolivia, Brazil, Chile,
Colombia, Costa Rica, Ecuador, Guatemala,
Honduras, Mexico, Nicaragua, Panama, Paraguay,
Peru, Salvador, Uruguay and Venezuela,
— Asia: Bangladesh, Brunei, China, India, Indonesia,
Macao, Malaysia, Mongolia, Pakistan, Philippines,
Singapore, Sri Lanka, Thailand and Vietnam,
— Republic of South Africa,
— former Yugoslav Republic of Macedonia,
— Bosnia and Herzegovina.
3. The European Investment Bank is invited to aim to
cover the commercial risk on 25 % of its lending under
this decision from non-sovereign guarantees to be ex-
panded upon whenever possible insofar as the market per-
mits on an individual mandate basis.
Article 1a
1. This Article shall apply to EIB lending in Bosnia and
Herzegovina.
2. The Community guarantee shall be conditional upon
clearance in full by Bosnia and Herzegovina of its out-
standing financial obligations towards the EIB and the
Community and upon the acceptance by Bosnia and
Herzegovina of responsibility by way of guarantee for such
of those obligations as are not yet due.
3. EIB lending in Bosnia and Herzegovina shall be con-
sistent with the policy of the Community in this country.
The EIB shall operate within the framework of the recon-
struction programme agreed at the various donors’ confer-
ences and shall finance projects of mutual interest in gen-
eral infrastructure, including transport, energy and the
environment, with the focus on the water, waste-water and
sanitation projects designed to speed up the reconstruction
process.
4. The Commission shall ensure appropriate coordina-
tion and consistency between operations undertaken pursu-
ant to this Decision and those undertaken pursuant to Re-
gulation (EC) No 1628/96 (3).
(1) OJ L 204, 14.8.1996, p. 1. Regulation as last amended by
Regulation (EC) No 851/98 (OJ L 122, 24.4.1998, p. 1).97/256/EC
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35. Grants from the Community budget for projects in
Bosnia and Herzegovina under this Decision shall take the
form of interest-rate subsidies for loans granted by the
EIB. The subsidy rate shall be 2 %.
Financial decisions relating to this Decision shall be
adopted in accordance with the procedures laid down in
the Regulation (EC) No 1628/96.
6. Article 1(3) shall not apply to EIB lending in Bosnia
and Herzegovina.
7. The Commission and the EIB shall cooperate when-
ever appropriate with all international financial institutions
active in fields similar to its own in Bosnia and Herzegovi-
na.
Article 2
The Commission shall inform the European Parliament
and the Council every six months of the situation regarding
loans signed and progress made on risk sharing according
to Article 1 (3). T o that end, the EIB shall regularly trans-
mit to the Commission the appropriate information.
The Commission shall submit to the European Parliamentand the Council, at the latest by the end of 1999, a report
on the implementation of this Decision, including an asses-
sment of its impact. This report shall in particular take
into account the evolution of the economic and financial
situation in Bosnia and Herzegovina and the commitment
level of EIB loans and shall make appropriate recommen-
dations. T o this end, the EIB shall transmit to the Com-
mission the appropriate information.
Article 3
The Commission shall inform the European Parliament
and the Council each year of the loan operations and shall,
at the same time, submit an assessment of the operation of
the scheme and of coordination between the financial in-
stitutions operating in that area.
Article 4
The Council shall evaluate the application of this Decision
on the basis of a report presented in June 1998 by the
Commission and the EIB.
Article 5
Detailed rules for the application of this Decision shall be
laid down in an agreement to be concluded between the
Commission and the EIB.98/729/EC
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4Article 6
This Decision shall take effect on the day of its publication
in the Official Journal of the European Communities.97/256/EC