BOARD OF GOVERNORS Enlargement of the European Union: EIB preaccession facility (98/C 116/09)

1. At its January ECOFIN meeting the Council decided on the amounts to be proposed for EIB external lending mandates. With regard to the Bank's activity in Central and Eastern Europe, the Council proposed a three-year envelope of ECU 3 520 million and, in addition, it invited the Bank to propose a substantial preaccession support facility, to be presented to the Bank's Governors later this year. In the conclusions of the Council, taken up in the preamble of the Council Decision of 14 April 1997 on the Community guarantee arrangements (1) (as being at the basis of the regional ceilings agreed for the lending mandates), it is stipulated that 'Member States and the Commission unanimously declare that they agree to the creation of a substantial preaccession 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 accession. The facility will be approved under Article 18 of the EIB statute and will carry no guarantee from the Community budget or from the Member States`.

2. The above proposal was communicated to the Bank by a letter dated 15 April 1997 from the Council to the President of the Bank forming the basis of the Board of Governors subsequent unanimous decision, acting on a proposal by the Board of Directors and in conformity with the second paragraph of Article 18(1) of the Statute, to authorise lending by the Bank to the Central and East European countries, Mediterranean countries, Latin American and Asian countries and South Africa.

3. Following the conclusion of the IGC and in line with the above Council decision as well as the conclusions of the European Council in Amsterdam, the Board of Directors proposes to the Board of Governors that it authorise the Bank, in conformity with the second paragraph of Article 18(1) of the Statute, to establish a preaccession facility, as requested by the Council, so that the Bank contributes appropriately to the economic integration of the countries of Central and Eastern Europe which have applied for EU membership and of Cyprus.

4. An amount of up to ECU 3,5 billion has been set to cover the period until 31 January 2000. This amount will double the existing mandate running over the same period and should be sufficient to cover the Bank's reinforced preaccession action in favour of all applicant countries during the said period. It should be noted that this overall amount reflects the needs and absorptive capacity of the countries concerned as well as the capacity of the Bank.

5. The facility shall be used only for financing projects which meet the Bank's normal banking requirements, notably those concerning security arrangements. The Bank will ensure that, by managing the facility together with the existing CEEC mandate, there will be no discrimination between the applicant countries. Non-government lending will be based on the quality of the underlying operation and the related security arrangements.

6. The facility, as well as the lending mandate, shall be used in order to facilitate and accelerate progress in all sectors normally eligible for EIB financing, notably in areas of key European Union policy objectives. Emphasis shall be given to integration projects and those facilitating the adoption of the acquis communautaire, (with particular priority to be given to environmental protection), in areas like the development of transport, telecommunication and energy links (particularly TENs), the development of industrial competitiveness and the regional development. The Bank shall continue to apply its normal project-based approach and will take fully into account the priorities adopted by the European Council in the Accession Partnership Agreements being finalised with each applicant country. The Bank shall ensure close cooperation with the Commission to develop the maximum possible synergies between the Communities' main financial instruments for the region, namely the PHARE programme and EIB loans. Whenever appropriate, the Bank shall also continue to cooperate closely with other IFIs, bilateral as well as domestic and international banking institutions, taking appropriate account also of the availability of private capital and other sources of funding.

In accordance with its general policy, projects to be financed by the Bank shall satisfy its normal criteria of intervention notably those concerning economic, technical and financial aspects and shall provide for appropriate terms and conditions (e.g. in relation to tariff structures, financial and general management, monitoring, etc.) in order to enhance performance and ensure viability of investments.

7. Lending under the facility shall be at the Bank's own risk and off the 10 % guideline for lending to third countries. The decision to this effect is annexed.

(1) Council Decision 97/256/EC of 14 April 1997 granting a Community guarantee to the European Investment Bank against losses under loans for projects outside the Community (Central and East European countries, Mediterranean countries, Latin American and Asian countries and South Africa) (OJ L 102, 19.4.1997, p. 33).

ANNEX

DECISION OF THE BOARD OF GOVERNORS Enlargement of the European Union: EIB preaccession facility (Decision of 28 January 1998)

THE BOARD OF GOVERNORS:

WHEREAS the Council of the European Union, by the letter of its President dated 15 April 1997 invited the Bank to propose a substantial preaccession support facility;

WHEREAS, by Council Decision 97/256/CE of 14 April 1997, the Member States and the Commission unanimously declared that they agree to the creation of a substantial preaccession support facility, which would enter into force as soon as possible in the light of future accession;

WHEREAS, such facility shall aim at enabling the Bank to continue and strengthen its support for the efforts of the applicant countries towards achieving EU membership;

WHEREAS, such a task is in line with EIB's mission as a house bank of the European Union and has been successfully performed during previous enlargements;

HEREBY UNANIMOUSLY DECIDES, on a proposal from the Board of Directors in accordance with the second paragraph of Article 18(1) of the Statute:

1. The Bank shall be authorised to grant loans from its own resources to Cyprus and to the countries of Central and Eastern Europe which have applied to the European Union with a view to adhering to it.

Such loans shall be used in order to facilitate and accelerate progress in all sectors normally eligible for EIB financing, notably in areas of key European Union policy objectives. Emphasis shall be given to integration projects and those facilitating the adoption of the acquis communautaire (with particular priority to be given to environmental protection), in areas like the development of transport, telecommunication and energy links (particularly TENs), the development of industrial competitiveness and regional development.

The Bank shall continue to apply its normal project-based approach and will take fully into account the priorities adopted by the European Council in the Accession Partnership Agreements being finalised with each applicant country. The Bank shall ensure close cooperation with the Commission to develop the maximum possible synergies between the Communities' main financial instruments for the region, namely the PHARE programme and EIB loans. Whenever appropriate, the Bank shall also continue to cooperate closely with other IFIs, bilateral as well as domestic and international banking institutions, taking appropriate account also of the availability of private capital and other sources of funding.

In accordance with its general policy, projects to be financed by the Bank shall satisfy its normal criteria of intervention notably those concerning economic, technical and financial aspects and shall provide for appropriate terms and conditions (e.g. in relation to tariff structures, financial and general management, monitoring, etc.) in order to enhance performance and ensure viability of investments.

An amount of up to ECU 3,5 billion is set for a period concurrent with the present mandate, i.e. until 31 January 2000; together with the existing EU mandate, the facility will enable the Bank to support priority investments in all applicant countries of Central and Eastern Europe and in Cyprus as long as the Bank's requirements, as foreseen under Article 18 of the Bank's statutes, notably security arrangements, are met.

2. Lending under the facility shall be at the Bank's own risk and off the 10 % guideline for lending to third countries.

3. Individual projects under present authorisation will be decided by the Board of Directors.

4. The text of the decision shall be communicated by the President of the Bank to the Council of the European Union, in reply to the letter of 15 April 1997, and to the President of the European Commission.