COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 07.12.1995 
COM(95) 625 final 
REPORT FROM THE COMMISSION TO THE COUNCIL 
ON GUARANTEES 
COVERED BY THE GENERAL BUDGET -
SITUATION AT 30 JUNE 1995 

2-
REPORT ON GUARANTEES COVERED BY THE GENERAL BUDGET 
SITUATION AT 30 JUNE 1995 
This report describes the situation as regards budget guarantees at 30 June 1995. 
It is in response to the statement made by the Commission, when the vote was taken on 
supplementary and amending budget No 1/91, that it would report to the budgetary 
authority twice a year on budget guarantees and the corresponding risks. 
The Commission has already presented eight reports to the budgetary authority. 
The report is in three parts: 
1. Events since the last report, the risk situation and the activation of budget guarantees. 
2. Description of operations entered in the budget. 
3. Assessment of the economic and financial situation of non-Community countries 
benefiting from the most important operations. 
PART ONE: EVENTS SINCE THE REPORT AT 31 DECEMBER 
1994, THE RISK SITUATION AND ACTIVATION OF BUDGET 
GUARANTEES 
L EVENTS SINCE THE REP03RT AT 31 DECEMBER 1994 
A. MACROFINANCIAL ASSISTANCE TO BELARUS 
As part of an overall aid programme for Belarus, the Council Decision of 
10 April 1995 empowered the Commission, on behalf of the Community, to 
borrow ECU 75 million for a maximum period of ten years. The proceeds of 
this operation are to be on-lent to Belarus in two tranches of ECU 40 million 
and ECU 35 million respectively. At 30 June 1995 the first tranche had not yet 
been paid to Belarus. 
B. LOANS GRANTED BY THE EUROPEAN INVESTMENT BANK TO 
SOUTH AFRICA 
On 1 June 1995 the Council adopted the guidelines proposed by the 
Commission for the extension of the EIB's activities to South Africa and asked 
it to grant loans, in accordance with its Statute and its usual criteria, for 
projects of mutual interest in that country. 
An overall ceiling of ECU 300 million has been set for a two-year period, 
which may be extended to two and a half years. 
These loans are covered by a 100% Community budget guarantee. The 
Commission presented a proposal for a decision to this effect on 5 December 
1994 and the formal Council Decision followed on 1 June 1995. The contract 
of guarantee between the Community and the EIB will be signed during the 
second half of 1995. 
C. COMMUNITY CREDIT GUARANTEE FOR EXPORTS OF 
AGRICULTURAL PRODUCTS AND FOODSTUFFS FROM THE 
COMMUNITY TO THE FORMER SOVIET UNION 
At 30 June 1995 this loan had been repaid in full. 
H. RISK SITUATION 
There are two possible methods for evaluating the risks borne by the Community 
budget: 
- the method, often used by bankers, of the total amount of capital outstanding for 
the operations concerned on a given date; 
-4 
- the more budgetary approach of calculating the maximum amount which the 
Community could have to pay out in each financial year. 
The second approach itself has been applied in two different ways: 
- by reference only to actual disbursements at 30 June 1995, giving the minimum 
level of risk to the Community assuming that there are no early repayments 
(see Table 2); 
- on a more forward-looking basis, by reference to all the operations decided by the 
Council or proposed by the Commission in order to estimate the impact on future 
budgets, giving the maximum risk borne by the Community assuming that the 
Commission's proposals are accepted (see Table 3). 
For the latter exercise a number of assumptions have to be made about dates of 
disbursement, terms of repayment, interest and exchange rates; details are given in 
the annex. However, this method does give some idea about the future level of risks 
connected with the proposals made. 
The results are shown in the attached tables, which assess the risk relating to 
countries inside the Community and countries outside the Community. 
The overall figures quoted cover risks of different types; loans to one country in the 
case of macrofinancial assistance and loans for projects guaranteed by the borrowers 
in the case of NCI and EIB operations, for example. 
The following analysis distinguishes between total risk, the risk in respect of 
Member States and the risk in respect of non-member countries. 
A. TOTAL RISK 
/. AMOUNT OUTSTANDING AT 30 JUNE 1995 (see Table 1) 
y 
The total risk at 30 June 1995 came to ECU 13 111 million, 4,78% 
less than at 31 December 1994. 
2. MAXIMUM ANNUAL RISK BORNE BY THE COMMUNITY 
BUDGET: OPERATIONS DISBURSED AT 30 JUNE 1995 (see 
Table 2) 
The total risk, which came to ECU 2 916 million in 1995, will develop 
as follows: 
Year 
Annual risk 
(ECU million) 
% change 1996 
3119 
+ 7% 1997 
3006 
- 4% 1998 
3180 
+ 6% 1999* 
918 
-71% 2000 
3418 
+272% 2001 
661 
-81% 2002 
324 
-51% 
-5-
* No capital repayments for the balance-of-payments loans to the 
Member States; capital repayments on loans to Hungary, the Czech 
and Slovak Republics and Bulgaria end in 1998. 
MAXIMUM THEORETICAL ANNUAL RISK BORNE BY THE 
COMMUNITY BUDGET (see Table 3) 
This risk comes to ECU 3 203 million in 1995 and will increase 
regularly until 2000 (except in 1999 when it will total 
ECU 2 645 million) as follows: 
Years 
Annual risk 
(ECU million) 
% change 1996 
3870 
+21% 1997 
4119 
+ 6% 1998 
4635 
+13% 1999 
2645 
-43% 2000 
5416 
+104% 2001 
4764 
-12% 2002 
5128 
+ 8% 
B. RISK IN RESPECT OF THE MEMBER STATES 
J. AMOUNT OUTSTANDING AT 30 JUNE 1995 (see Table 1) 
The capital outstanding in respect of operations in the Member States 
was ECU 7 540 million at 30 June 1995, a fall of 3.8% compared with 
31 December 1994. 
This fall is mainly due to the reduction in outstanding loans to Greece, 
Euratom loans and NCI loans. 
The amount outstanding from the other operations has remained 
stable. 
2. MAXIMUM ANNUAL RISK BORNE BY THE COMMUNITY 
BUDGET: OPERATIONS DISBURSED AT 30 JUNE 1995 (see 
Table 2) 
The risk for 1995 comes to ECU 1 173 million. 
The total maximum annual risk to the Community budget in relation 
to disbursements (Table 2) changes in line with the capital repayments 
(every two years) on balance-of-payment loans to Greece and Italy. 
The maximum risk is highest in the even years up to 2000 when it will 
reach ECU 2 843 million. 
-6 
3. MAXIMUM THEORETICAL ANNUAL RISK BORNE BY THE 
COMMUNITY BUDGET (see Table 3) 
The trend is much the same as in Table 2 up to 2000 when the risk 
will amount to ECU 3 235 million. It will fall to ECU 2 446 million in 
2001 and ECU 2 200 million in 2002. 
C. RISK IN RESPECT OF NON-MEMBER COUNTRIES 
/. AMOUNT OUTSTANDING AT 30 JUNE 1995 (see Table 1) 
The capital outstanding at 30 June 1995 was ECU 5 572 million, a fall 
of 6% compared with 31 December 1994. 
2. MAXIMUM ANNUAL RISK BORNE BY THE COMMUNITY 
BUDGET: OPERATIONS DISBURSED AT 30 JUNE 1995 (see 
Table 2) 
The risk for 1995 comes to ECU 1 744 million and will fall to 
ECU 1 045 million in 1996, mainly because two repayments of 
principal then fall due: 
- ECU 260 million from Hungary; 
- ECU 205 million from the Republics of the former Soviet Union. 
The risk will increase in 1997 to ECU 1 543 million as the following 
payments fall due: 
- ECU 80 million from Hungary; 
- ECU 127 million from the Czech Republic; 
- ECU 63 million from the Slovak Republic; 
- ECU 140 million from Bulgaria; 
- ECU 250 million from Algeria; 
- ECU 160 million from Israel. 
- ECU 161 million from the Republics of the former Soviet Union. 
At ECU 1 110 million, the risk will be smaller but still at a high level 
in 1998, but should fall to ECU 616 million in 1999, ECU 575 million 
in 2000, ECU 555 million in 2001 and ECU 294 million in 2002. 
3. MAXIMUM THEORETICAL ANNUAL RISK BORNE BY THE 
COMMUNITY BUDGET (see Table 3) 
The risk will fall from ECU 1 901 million in 1995 to 
ECU 1 459 million in 1996; in particular, the Republics of the former 
Soviet Union are to repay principal of ECU 205 million that year. 
The risk will rise again to ECU 2 235 million in 1997, 
ECU 2 143 million in 1998, ECU 1 951 million in 1999, 
ECU 2 181 million in 2000, ECU 2 318 million in 2001 and 
ECU 2 928 million in 2002. 
IH. ACTIVATION OF BUDGET GUARANTEES 
A. EIB LOANS TO NON-MEMBER COUNTRIES 
On 22 February 1995, the EIB again called on the budget guarantee in respect 
of loans of around ECU 6.08 million to the Republics of former Yugoslavia 
(Macedonia and Serbia). The payment was made to the EIB on 24 May 1995. 
On 5 July 1995, the EIB again called on the budget guarantee in respect of 
loans of ECU 8.6 million to the Republics of former Yugoslavia (Macedonia 
and Serbia). The payment should be made to the EIB on 11 October 1995. 
At 30 June 1995 the total amount of debts settled by the Community and not 
yet repaid by the defaulting debtors came to ECU 54.4 million. These debts 
were owed by all the Republics of former Yugoslavia with the exception of 
Slovenia and Croatia, which have no payments overdue. 
Of the ECU 54.4 million due but not paid, ECU 28.6 million was entered in 
the budget in respect of the amount owed from before 1994 and a total of 
ECU 25.8 million was called in from the Guarantee Fund on 11 January 1995 
(ECU 5.3 million), on 30 January 1995 (ECU 14.3 million) and on 24 May 
1995 (ECU 6.08 million). 
B. BORROWING/LENDING OPERATIONS OR LOAN GUARANTEES 
FOR NON-MEMBER COUNTRIES 
1. PA YMENTS FROM CASH RESOURCES 
The Commission draws on its cash resources under Article 12 of 
Council Regulation No 1552/89 of 29 May 1989 implementing 
Decision 88/376/EEC, Euratom on the system of the Communities' 
own resources to avoid delays in servicing its borrowing operations 
when a debtor is late in paying. 
2. ACTIVA TION OF THE GUARANTEE FUND 
In the event of late payment by a recipient of a loan granted or 
guaranteed by the Community, the Guarantee Fund is called on to 
cover the default within three months of the date on which is payment 
is due. 
Penalty interest for the time between the date on which cash resources 
are made available and the date of activation of the Fund is drawn 
from the Fund and repaid to the cash resources. 
In the last six months the Fund has been called on to honour 
guarantees for the following debtors: 
Country Date Amount 
Tajikistan 20.01.95 1 688 215.50 
Georgia 20.01.95 2 150 162.28 
Kyrgyzstan 20.01.95 704 696.46 
Tajikistan 30.01.95 4 087 082.35 
Georgia 30.01.95 3 204927.24 
Ukraine 30.01.95 31925 800.00 
Georgia 12.04.95 1366 392.43 
Kazakhstan 12.04.95 776 033.13 
LATE REPAYMENTS 
During the period covered by this report the following countries 
repaid debts on which they had defaulted and for which the Guarantee 
Fund had already been activated. The amounts recovered are repaid to 
the Fund under Article 2 of Council Regulation (EC) No 2728/94 of 
31 October 1994 establishing a Guarantee Fund for external action. 
Country Repayment date Amount 
Kyrgyzstan 23.02.95 704 696.46 
Ukraine 16.03.95 31 925 800.00 
Kazakhstan 28.04.95 776 033.13 
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4. SITUATION AS REGARDS UNPAID DEBTS AT 30 JUNE 1995 
The following amounts had not been paid at 30 June 1995: 
Country Amount 
Tajikistan 5 775 297.85 
Georgia 6 721481.95 
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PART TWO: OPERATIONS ALREADY ENTERED IN THE 
BUDGET 
The budgetary authority authorized 29 headings with token entries in the 1995 budget to 
cover any payment of guarantees. These headings can be divided into three categories: 
borrowing and lending within the Community, borrowing and lending outside the 
Community and guarantees given to financial institutions. 
I. BORROWINGS TO BE ON-LENT WITHIN THE COMMUNITY 
A. COMMUNITY BORROWING OPERATIONS TO PROVIDE 
BALANCE-OF-PAYMENTS SUPPORT 
The Community is authorized to borrow on the capital markets or from 
financial institutions and make the sums raised available to Member States 
experiencing temporary balance-of-payments difficulties. 
The outstanding amount of loans granted to Member States for this purpose 
may not exceed ECU 14 billion in principal. 
At 30 June 1995 there was one operation in respect of Greece under the 
decision of 4 March 1991 and one operation in respect of Italy under the 
decision of 18 January 1993. 
At 30 June 1995 the amount outstanding was ECU 1 000 million in loans to 
Greece and ECU 4 071 million in loans to Italy (Table 1). 
B. EURATOM BORROWING OPERATIONS 
In 1977 the Commission was empowered to borrow funds to be used to help 
finance nuclear power stations. 
Loans are made to electricity producers and carry the usual guarantee 
demanded by banks. Recipients are often State-owned companies or 
companies, enjoying a State guarantee. 
The maximum amount of borrowings authorized is ECU 4 billion, of which 
ECU 500 million was authorized by the 1977 decision, ECU 500 million in 
1980, ECU 1 billion in 1982, ECU 1 billion in 1985 and ECU 1 billion in 1990. 
The amount borrowed comes to around ECU 2 900 million, leaving 
ECU 1 100 million which may still be raised. 
At 30 June 1995 the total outstanding was ECU 740.5 million. 
On 9 December 1992 the Commission proposed that the balance of 
borrowings not used in the Member States could be used to finance the 
11 -
improvement of the degree of efficiency and safety of nuclear power stations in 
the countries of Central and Eastern Europe and in the CIS. 
The Council adopted a decision to this effect on 21 March 1994 (see Part II -
Loans raised for non-Community countries). 
C. BORROWING OPERATIONS FOR THE PROMOTION OF 
INVESTMENT IN THE COMMUNITY 
The Commission was empowered by a Council Decision of 16 October 1978 
to borrow funds to be used to promote investment in the Community (New 
Community Instrument). 
The authorized borrowing ceiling was fixed at ECU 1 billion by the Decision 
of 16 October 1978 and was then raised by ECU 1 billion by the Decision of 
15 March 1982. The ceiling was further raised by ECU 3 billion by the 
Decision of 19 April 1983 and by ECU 750 million by the Decision of 
9 March 1987. 
The proceeds of the operations are paid out in the form of loans granted by the 
EIB, acting for the Commission, to finance investment projects which 
contribute to greater convergence and growing integration and are consistent 
with the priority Community objectives in the energy, industry and 
infrastructure sectors, taking account of such factors as the regional impact of 
the projects and the need to combat unemployment. Support for small 
businesses was also made a priority objective by the Decision of 26 April 1982. 
A Decision of 20 January 1981 also empowered the Community to contract 
loans in order to provide exceptional aid of ECU 1 billion to the regions of 
Italy affected by the earthquake of November 1980. A similar decision 
involving ECU 80 million was adopted on 14 December 1981 for the regions 
affected by the earthquakes in Greece in February/March 1981. 
The maximum amount of borrowings authorized thus comes to 
ECU 6 830 million. 
At 30 June 1995 the total outstanding was ECU 1 289.2 million, 31.43% less 
than on 30 June 1994. 
The risk is spread over a large number of borrowers. In addition, most of the 
loans are global loans to financial institutions which guarantee repayment of 
the funds. 
Every year the EIB provides the Commission with a list of debtors who, 
according to its information, risk defaulting in the coming year. So far, no 
names have appeared on this list. 
- 12-
IL LOANS RAISED FOR ON-LENDING TO NON-COMMUNITY 
COUNTRIES 
A. EURATOM BORROWINGS FOR CERTAIN NON-COMMUNITY 
COUNTRIES 
On 21 March 1994 the Council decided to amend Decision 77/270/Euratom to 
authorize the Commission to contract Euratom borrowings in order to 
contribute to the financing required for improving the degree of safety and 
efficiency of nuclear power stations in certain non-member countries. 
This Decision will allow a considerable proportion of Euratom's available 
borrowing capacity (some ECU 1 100 million) to be used to finance projects. 
For these projects to be eligible they must relate to: 
- nuclear power stations or installations in the nuclear fuel cycle which are in 
service, or under construction; 
- or to the dismantling of installations which cannot be brought up to standard 
for technical or economic reasons. 
The following non-member countries qualify: 
Republic of Bulgaria 
Republic of Hungary 
Republic of Lithuania 
Romania 
Republic of Slovenia 
Czech Republic 
Slovak Republic 
Russian Federation 
Republic of Armenia 
Ukraine 
The idea of international financial aid for the closure of the Chernobyl nuclear 
power plant was entered in the conclusions of both the Corfu European 
Council of 24 and 25 June 1994 and the G7 summit at Naples on 7 and 
8 July 1994. 
- 13 
B. PROGRAMME OF BORROWINGS CONTRACTED BY THE 
COMMUNITY TO PROVIDE MACROFINANCIAL ASSISTANCE TO 
THE COUNTRIES OF CENTRAL AND EASTERN EUROPE 
1. HUNGARY 
(a) Hungary I 
In 1990 the Community granted Hungary a medium-term loan of 
up to ECU 870 million in principal for a maximum of five years. 
The loan is intended to facilitate the adjustment of the Hungarian 
economy in a way which will enable it to derive all the benefits of 
a market-based economy. It is being made available in tranches. 
The first tranche of ECU 350 million was paid on 20 April 1990. 
A second tranche of ECU 260 million was paid on 
14 February 1991. The third tranche, which is not to exceed 
ECU 260 million, was planned for 1992 but has not yet been paid 
out as Hungary's balance of payments has been more favourable 
than expected. The tranches will be repaid in one instalment after 
five years and interest, which is at variable rates, is payable half-
yearly. 
Hungary repaid the first tranche of ECU 350 million in full on 20 
April 1995. 
(b) Hungary II 
As the break-up of the Council for Mutual Economic Assistance 
(Comecon) and the Gulf crisis threatened to compromise the 
initial encouraging results of the reforms undertaken, the Council 
decided to grant additional macrofinancial assistance to Hungary 
in the form of a loan of ECU 180 million under a general G-24 
programme of financial assistance. 
The first tranche of ECU 100 million was paid on 
14 August 1991. It will be repaid in one instalment after seven 
years, and interest, which is at variable rates, is payable half-
yearly. The second tranche of ECU 80 million was paid on 
15 January 1993. It will be repaid in January 1997 and interest, 
which is at a fixed rate, is payable annually. 
At 30 June 1995 the amount outstanding on borrowings for 
Hungary came to ECU 440 million. 
- 14 
2. CZECH REPUBLIC AND SLOVAK REPUBLIC 
- As part of G-24's overall financial assistance, the Commission, on 
behalf of the Community, was empowered to borrow, in two 
tranches, ECU 375 million for a period of seven years. The 
proceeds of this operation were to be on-lent on the same terms 
to the Czech and Slovak Federal Republic. 
The first tranche of ECU 185 million was paid on 
14 August 1991. It will be repaid in one instalment after seven 
years, and interest, which is at variable rates, is payable half-
yearly. 
The second tranche of ECU 190 million was paid on 
2 March 1992 and will be repaid in one instalment after six years. 
- Following the division of Czechoslovakia into the Czech Republic 
and the Slovak Republic on 1 January 1993, the Commission 
proposed that the loan be divided between the two Republics. 
Under the Council decision of 24 January 1994, two thirds of the 
loan - ECU 250 million - will be for the Czech Republic and one 
third - ECU 125 million - for the Slovak Republic. 
At 30 June 1995 the amount outstanding on borrowings for the 
two republics came to ECU 375 million. 
- Slovak republic 
As part of the new financial assistance to the Slovak Republic, the 
Commission, on behalf of the Community, was empowered by a 
Council decision of 22 December 1994 to borrow, in two 
tranches, ECU 130 million for a period of seven years. The 
proceeds of this operation were to be on-lent on the same terms 
to Slovakia. 
No tranche had been paid at 30 June 1995. 
3. BULGARIA 
(a) Bulgaria I 
As part of G-24's overall financial assistance, the Commission, on 
behalf of the Community, was empowered to borrow, in two 
tranches, ECU 290 million for a period of seven years. The 
proceeds of this operation were to be on-lent on the same terms 
to Bulgaria. 
- 15 
The first tranche of ECU 150 million was paid to Bulgaria on 
14 August 1991. It will be repaid in one instalment after seven 
years, and interest, which is at variable rates, is payable half-
yearly. 
The second tranche of ECU 140 million was paid on 
2 March 1992 and will be repaid in one instalment after five years. 
Interest, which is at variable rates, is payable half-yearly. 
(b) Bulgarian 
As part of G-24's new aid for 1992 and 1993, the Commission, on 
behalf of the Community, was empowered to borrow 
ECU 110 million in two tranches for a maximum period of seven 
years. The proceeds of this operation were to be on-lent to 
Bulgaria. Because of delays in the process of economic reform in 
Bulgaria, this operation was deferred. 
The first tranche of ECU 70 million was finally paid to Bulgaria 
on 7 December 1994. It will be repaid in one instalment on 
7 December 2001 and the interest, which is at variable rates, is 
payable half-yearly. 
At 30 June 1995 the amount outstanding on borrowings for 
Bulgaria came to ECU 360 million. 
4. ROMANIA 
(a) Romania I 
As part of G-24's overall financial assistance, the Commission, on 
behalf of the Community, was empowered to borrow 
ECU 375 million in two tranches for a maximum period of seven 
years. The proceeds of this operation were to be on-lent on the 
same terms to Romania. 
The first tranche of ECU 190 million for a term of seven years 
was paid on 22 January 1992. It will be repaid in one instalment 
on 1 February 1999, and interest, which is at variable rates, is 
payable half-yearly. 
The second tranche of ECU 185 million for a term of six years 
was paid in April 1992 and will be repaid in one instalment on 
18 March 1998. Interest, which is at variable rates, is payable 
half-yearly. 
16-
(b) Romanian 
As part of G-24's new aid, the Commission, on behalf of the 
Community, was empowered to borrow ECU 80 million for a 
maximum period of seven years. The proceeds of this operation 
were to be on-lent on the same terms to Romania. 
The loan was paid out in a single tranche on 26 February 1993. It 
will be repaid in one instalment on 26 February 2000, and interest 
is payable half-yearly. 
(c) Romania III 
As part of G-24's new overall macrofinancial aid, the Commission, 
on behalf of the Community, was empowered by the Council 
Decision of 20 June 1994 to borrow ECU 125 million in two 
tranches of ECU 90 million and ECU 35 million for a maximum 
period of seven years. The proceeds of this operation are to be on 
-lent on the same terms to Romania. 
No tranche had been paid at 30 June 1995. 
At 30 June 1995 the amount outstanding on borrowings for 
Romania came to ECU 455 million. 
C. BORROWINGS CONTRACTED BY THE COMMUNITY TO GRANT 
MACROFINANCIAL ASSISTANCE TO THE NEW INDEPENDENT 
STATES OF THE FORMER SOVIET UNION 
- Medium-term loan of ECU 1 250 million 
In December 1991 the Council decided to grant a credit facility of up to 
ECU 1 250 million for the Soviet Union and its Republics in order to finance 
imports of agricultural products, foodstuffs and medicines from the 
Community and Eastern Europe for a maximum period of three years. 
After the Soviet Union broke up, the loan was divided between the various 
new independent States at the beginning of 1992. 
1. Loan contracts signed on the basis of the original breakdown 
Most of the loan contracts were signed in the course of 1992: 
- with Armenia (ECU 38 million), Kyrgyzstan (ECU 32 million), 
Turkmenistan (ECU 45 million) and Moldova (ECU 27 million) on 
10 July 1992; the amount for Kyrgyzstan has since been reduced to 
ECU 23.7 million at the request of the Kyrgyzstan authorities; 
17 
- with Ukraine (ECU 130 million) on 13 July 1992; 
- with Belarus (ECU 102 million), Tajikistan (ECU 55 million) and 
Georgia (ECU 70 million) on 24 July 1992; 
- with Russia (ECU 150 million) on 9 September 1992; 
- with Russia (ECU 349 million) on 9 December 1992; 
- with Kazakhstan (ECU 25 million) on 15 December 1992; 
Loan contracts signed on the basis of the amended breakdown 
Some loan contracts were also signed in 1993 after the initial 
breakdown of the total amount of the loan had been changed: 
- On 5 May 1993 two further contracts were signed with Armenia 
(ECU 20 million) and Georgia (ECU 10 million). The amount 
represented by these two loans had originally been allocated to 
Kazakhstan. 
- On 6 December 1993 a further loan contract of ECU 40 million 
was signed with Georgia. This loan was financed by reducing 
Uzbekistan's allocation. 
- On 14 September 1994 a contract for ECU 59 million was signed 
with Uzbekistan. 
- On 12 October 1994 a contract for ECU 68 million was signed 
with Azerbaijan. 
Loan contracts not yet signed 
At 30 June 1995 one new loan contract for Kazakhstan 
(ECU 30 million) had still not been signed. 
18-
4. Utilization of the ECU 1 250 million loan 
Republic 
Armenia a 
Armenia b 
Azerbaijan 
Belarus 
Georgia a 
Georgia b 
Georgia c 
Kazakhstan a 
Kazakhstan b 
Kyrgyzstan 
Moldova 
Russia a 
Russia b 
Tajikistan 
Turkmenistan 
Ukraine 
Uzbekistan 
Total Initial 
breakdown 
(1992) 
38 
68 
102 
70 
55 
32 
27 
150 
349 
55 
45 
130 
129 
1250 Breakdown at 
30.06.1995 
38 
20 
68 
100.5 
70 
10 
40 
25 
30 
23.7 
27 
72.9 
349 
55 
45 
129.8 
59 
1162.9 Actual 
utilization at 
30.06.1995 
37.9 
19.6 
28.2 
100.5 
69.4 
9.8 
34.1 
24.9 
22.7 
27.0 
70.0 
299.7 
54.5 
44.9 
129.8 
43.5 
1016.8 
At 30 June 1995 the amount of loans actually being used came to 
ECU 1016.8 million. 
Capital repayment and interest payment dates 
The capital repayment and interest payment dates for this operation 
vary depending on the date on which the loan contract was signed and 
the amount of the loan: 
- Armenia (ECU 38 million), Belarus, Georgia (ECU 70 million), 
Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine, Russia 
(ECU 150 million): 
- interest on 20 April and 20 October 
- capital on 20 August 1995 (half on 20 August 1994 and half 
on 20 August 1995 for Belarus, Ukraine and Russia) 
- Armenia (ECU 20 million), Kazakhstan, Russia (ECU 349 million), 
Georgia (ECU 10 million and ECU 40 million): 
- interest on 15 January and 15 July 
- 19-
- capital on 15 January 1996 (half on 15 January 1995 and 
half on 15 January 1996 for Russia and 15 January 1997 for 
Georgia (ECU 40 million)). 
- Azerbaijan and Uzbekistan: 
- interest on 28 March and 28 September 
- capital on 28 September 1997. 
At 30 June 1995 Georgia and Tajikistan had defaulted on interest 
totalling ECU 16.39 million (see Part Two, Section IV - Activation of 
budget guarantees). 
- Macrofinancial assistance for Moldova 
As part of the Community's contribution to the international aid 
scheme for Moldova, the Commission, on behalf of the Community, 
was empowered by a decision of 13 June 1994 to borrow 
ECU 45 million in two tranches for a maximum period of ten years. 
The proceeds of this operation were to be on-lent on the same terms 
to Moldova. 
The first tranche of ECU 25 million was paid to Moldova in 
December 1994. The loan is to be repaid in five equal annual 
instalments from the sixth year onwards. The full loan will have been 
paid by 7 December 2004. The interest, which is at variable rates, is 
payable half-yearly. 
At 30 June 1995 the amount outstanding on borrowings for Moldova 
came to ECU 25 million. 
- Macrofinancial assistance for Ukraine 
As part of the overall aid programme for Ukraine, the Commission, 
on behalf of the Community, was empowered by the Council Decision 
of 22 December 1994 to borrow ECU 85 million for a maximum 
period often years. The proceeds of this operation are to be on-lent 
to Ukraine in one tranche. 
The loan had not been paid at 30 June 1995. 
D. BORROWINGS CONTRACTED BY THE COMMUNITY TO GRANT 
MACROFINANCIAL ASSISTANCE TO THE BALTIC STATES 
As part of the G-24's overall programme of financial assistance for these three 
countries, the Commission, on behalf of the Community, was empowered to 
borrow ECU 220 million for a period of seven years. The proceeds of this 
operation were to be on-lent on similar terms in two tranches: 
20-
- ECU 40 million for Estonia; 
- ECU 80 million for Latvia; 
- ECU 100 million for Lithuania. 
The first tranches of the loan for Estonia (ECU 20 million) and for Latvia 
(ECU 40 million) were paid on 31 March 1993. The loans are to be repaid in 
one instalment on 31 March 2000 and interest, which is at variable rates, is 
payable half-yearly every 31 March and 30 September. 
The first tranche for Lithuania was paid on 27 July 1993; it is to be repaid in 
one instalment on 27 July 2000 and interest, which is at a fixed rate, is payable 
annually every 27 July. 
At 30 June 1995 the amount outstanding on the borrowings for the Baltic 
States came to ECU 110 million. 
E. BORROWINGS CONTRACTED BY THE COMMUNITY TO GRANT 
MACROFINANCIAL ASSISTANCE TO THE MEDITERRANEAN 
COUNTRIES 
1. ISRAEL 
As part of the financial assistance agreed for Israel and the population 
of the occupied territories, the Commission was empowered in June 
1991 to borrow, on behalf of the Community, ECU 160 million in one 
tranche for a period of seven years. The proceeds were to be paid out 
to Israel on the same terms and are accompanied by an interest 
subsidy of ECU 27.5 million paid from the Community budget. 
This operation started on 2 March 1992. The borrowing is to be 
repaid in full on 15 December 1997. 
At 30 June 1995 the amount outstanding on the borrowings for Israel 
came to ECU 160 million. 
2. ALGERIA 
In September 1991 the Commission, on behalf of the Community, was 
empowered to borrow ECU 400 million in two tranches for a 
maximum period of seven years. The proceeds of this operation were 
to be on-lent on the same terms to Algeria. 
A bridging loan was granted on 23 December 1991 to cover the first 
tranche of ECU 250 million and was repaid from the net proceeds of 
the borrowing contracted on 14 January 1992 for a period of six 
years. 
21 
The loan is to be repaid in one instalment on 15 December 1997 and 
interest is payable annually every 15 December. 
Payment of the second tranche of ECU 150 million was deferred 
because of delays in Algeria's economic reform programme and was 
not made until August 1994 when the process of structural adjustment 
resumed. The loan is to be repaid in full on 17 August 2001 and 
interest is payable annually every 17 August. 
In December 1994 the Council decided to grant Algeria further 
macrofinancial assistance. The Commission, on behalf of the 
Community, was empowered to borrow ECU 200 million for a 
maximum period of seven years. The proceeds of this operation are 
to be on-lent to Algeria in two tranches. 
No tranche had yet been paid at 30 June 1995. 
At 30 June 1995 the amount outstanding on the loans raised for 
Algeria came to ECU 400 million. 
m. COMMUNITY GUARANTEE TO NON-COMMUNITY COUNTRIES 
A. EUROPEAN INVESTMENT BANK LOANS TO MEDITERRANEAN 
COUNTRIES GUARANTEED BY THE GENERAL BUDGET 
Under the terms of the Council Decision of 8 March 1977, the Community 
guarantees loans to be granted by the European Investment Bank as part of the 
Community's financial commitments towards the Mediterranean countries. 
This decision was the basis for the contract of guarantee signed by the 
European Economic Community and the European Investment Bank on 
30 October 1978 in Brussels and 10 November 1978 in Luxembourg 
introducing a global guarantee of 75% on all credit lines made available for 
loans in the following countries: Portugal (Financial Protocol, pre-accession 
aid), Greece, Spain (financial cooperation), Malta, Tunisia, Algeria, Morocco, 
Turkey, Cyprus, Egypt, Jordan, Syria, Israel, Yugoslavia and Lebanon. 
In addition, by way of exception, a 100% guarantee covers loans allocated for 
emergency aid to Portugal in accordance with the Council Decision of 
7 October 1975. 
A new extension of the contract of guarantee is established for each new 
Financial Protocol. 
The loans authorized at 30 June 1995 total ECU 7 782 million, of which 
ECU 1 500 million is for Spain, Greece and Portugal and ECU 6 282 million 
for the non-member Mediterranean countries. At 30 June 1995 the total of 
22-
outstanding loans came to ECU 2 195 million (taking account of the 75% 
limit), of which ECU 439 million was accounted for by Spain, Greece and 
Portugal and ECU 1 756 million by the non-member Mediterranean countries. 
There is also provision for EEB loans outside these protocols under Council 
Regulation (EEC) No 1763/92 of 29 June 1992 concerning financial 
cooperation in respect of all Mediterranean non-member countries. 
EIB loans under this operation must not exceed ECU 1 800 million. A 75% 
overall guarantee is provided. 
At 30 June 1995 ECU 695 million had been made available; of this total, 
ECU 62 million had been paid; this figure corresponds to the amount currently 
outstanding. 
At 30 June 1995, the breakdown of authorizations by country (non-member 
countries only) was as follows: 
Loans authorized 
Algeria 640 
Cyprus 92 
Egypt 802 
Israel 215 
Jordan 198 
Lebanon 222 
Malta 55 
Morocco 517 
Slovenia 150 
Syria 323 
Tunisia 418 
Turkey 90 
Yugoslavia 760 
Protocols - Total 4 482 
Horizontal financial 1 800 
cooperation 
Mediterranean - 6 282 
Total 
The second protocol with Yugoslavia was suspended when ECU 100 million of credits could still be 
granted. 
23 
The loans are generally for 15 years with 3 to 4-year periods of grace on 
capital repayments. 
B. LOANS GRANTED BY THE EUROPEAN INVESTMENT BANK IN 
COUNTRIES OF CENTRAL AND EASTERN EUROPE 
In response to a call made by the Council on 9 October 1989, the Board of 
Governors of the European Investment Bank decided on 29 November 1989 
to authorize the Bank to provide loans from its own resources to finance 
investment projects in Hungary and Poland for a total amount not exceeding 
ECU 1 billion. These loans are granted to finance investment projects which 
satisfy the Bank's usual requirements for loans from its own resources. The 
contract of guarantee covering 100% of the lending operations was signed on 
24 April 1990 in Bmssels and 14 May 1990 in Luxembourg. 
On 14 May 1991 the budgetary authority extended this 100% guarantee to 
loans made in Czechoslovakia, Bulgaria and Romania up to a maximum of 
ECU 700 million. 
The extension of the contract of guarantee was signed on 31 July 1991. 
On 23 October 1992 the Commission presented a proposal for a Council 
Decision extending this 100% Community guarantee to losses incurred by the 
EIB as a result of loans granted to Estonia, Latvia and Lithuania; this was 
approved by the budgetary authority in its decision of 15 March 1993. 
The overall ceiling on loans which the EIB may grant in these countries was 
set at ECU 200 million for a period of three years. 
On 18 December 1992 the Commission also proposed the extension of this 
100% guarantee to losses incurred by the EIB as a result of loans granted in 
Albania. 
On 13 December 1993 the budgetary authority renewed the 100% Community 
guarantee for a period of three years for loans granted by the EIB in the 
countries of Central and Eastern Europe (including the Baltic States and 
Albania) up to a maximum of ECU 3 billion. 
The contract of guarantee was signed on 22 July 1994 in Brussels and on 
12 August 1994 in Luxembourg. 
The loans are generally long-term: 15 years on average with 3 to 4-year 
periods of grace on capital repayments. 
At 30 June 1995, ECU 2 698 million had been made available in the Central 
and Eastern European countries but only ECU 689 million had been disbursed. 
24 
C. LOANS GRANTED BY THE EUROPEAN INVESTMENT BANK IN 
NON-MEMBER COUNTRIES 
At its meeting of 19 May 1992 the Council (Economic and Financial Affairs) 
adopted the guidelines proposed by the Commission for the extension of EIB 
activities outside the Community and asked it to grant loans in accordance 
with its Statute and its usual criteria to projects of mutual interest in certain 
non-member countries (the developing countries of Asia and Latin America) 
with which the Community has concluded cooperation agreements. 
An overall limit of ECU 250 million per year has been set for a 3-year period; 
this ceiling will be reviewed at the end of the period. 
These loans benefit from 100% Community budget guarantees. The 
Commission presented a proposal for a decision to this effect on 3 June 1992. 
The formal Council Decision followed on 15 February 1993. The contract of 
guarantee between the Community and the EIB was signed on 
4 November 1993 in Brussels and on 17 November 1993 in Luxembourg. 
At 30 June 1995 credit lines of ECU 344 million had been signed but only 
ECU 107 million had been disbursed. 
D. COMMUNITY CREDIT GUARANTEE FOR EXPORTS OF 
AGRICULTURAL PRODUCTS AND FOODSTUFFS FROM THE 
COMMUNITY TO THE FORMER SOVIET UNION 
The Community has decided to guarantee loans granted to the former Soviet 
Union by a pool of banks to finance imports of agricultural products and 
foodstuffs originating in the Community and the countries of Central and 
Eastern Europe. 
The Community guarantee covers 98%, up to a maximum of ECU 500 million, 
of any losses in principal (around ECU 408 million) and interest (around 
ECU 92 million). 
As the credit line has not been used in full and as the time limit for use has not 
been extended, the amount guaranteed comes to only ECU 375.5 million in 
principal and ECU 80.3 million in interest. 
The Community will receive a surety commission of 0.67% of the amount 
guaranteed in consideration for this guarantee. Half of this commission was 
paid on 26 December 1991 under the terms of the contract. The balance 
corresponding to the Community guarantee was paid on 28 January 1993. 
On 26 November 1991 the terms of the loan and the arrangements for the 
utilization of the funds were laid down in an exchange of letters between the 
Commission and the Soviet authorities. On the same day the Community and 
the banks signed a contract of guarantee. 
25 
Following the disappearance of the Soviet Union, it has been decided that the 
funds will be used by the Russian Republic. 
The loan is for three and a half years from the date of signature. 
Interest is payable half-yearly and the principal will be repaid in three 
instalments, 20, 31 and 42 months after the agreement has been signed. 
Interest payments up to 30 June 1995: 
1st 
2nd 
3rd 
4th 
5th 
6th Payment due 
9.9.1992 
9.3.1993 
9.9.1993 
9.3.1994 
9.9.1994 
9.3.1995 Actual date of payment 
25.9.1992 
2.4.1993 
18.11.1993 
24.3.1994 
9.9.1994 
9.3.1995 
Capital repayments up to 30 June 1995: 
1st 
2nd 
3rd Payment due 
26.7.1993 
26.6.1994 
30.5.1995 Actual date of payment 
18.11.1993 
14.7.1994 
30.5.1995 
All the default interest has been paid on late payments up to 26 June 1994. 
26-
PART THREE: CHANGES IN POTENTIAL RISKS 
The figures given in the previous parts provide information on the quantitative aspects of 
the risks borne by the general budget. 
However, these data should be weighted in accordance with aspects relating to the quality 
of the risk, which depend on the type of operation and the standing of the borrower. 
I. TYPES OF OPERATION 
The risks to which the above figures relate derive from a variety of operations which 
can be divided into two categories: operations with macroeconomic objectives and 
those with microeconomic objectives. 
A. OPERATIONS WITH MACROECONOMIC OBJECTIVES 
The first of these are the balance of payments loans for Member States, 
normally carrying strict economic conditions and undertakings. 
Macrofinancial assistance operations are similar in nature but are intended for 
non-member countries. 
Finally, this category includes the credit guarantee of ECU 500 million and the 
loan of ECU 1 250 million to finance imports of agricultural products and 
foodstuffs into the former Soviet Union, since the risk involved in these two 
operations depends to a large extent on macroeconomic and political 
developments in the recipient countries. 
B. OPERATIONS WITH MICROECONOMIC OBJECTIVES 
These are loans to finance specific projects which are usually repaid over the 
long term from funds which these projects are expected to generate; as a rule, 
they are granted to State companies or financial institutions and, in addition to 
the Community guarantee, are covered by the usual guarantees demanded by 
banks. 
They are the Euratom and NCI loans in Member States and the Euratom and 
EIB loans outside the Community (Mediterranean and Central and Eastern 
Europe, certain non-member countries - developing countries of Asia and 
Latin America and South Africa). 
27 
A. ALGERIA 
1. GENERAL ECONOMIC SITUATION 
Since 1994, progress with respect to macro-economic stabilisation under the stand­
by programme with the IMF has been impressive. The fiscal deficit was halved from 
8.7% of GDP in 1993 to 4.4% in 1994. Monetary policy was tightened and nominal 
interest rates increased, though not to a positive level in real terms. Inflation initially 
accelerated before slowing down again to 34% by April 1995 (last 12 months), 
which is not excessive, considering the depreciation of the dinar and price increases 
triggered by price liberalisation and reductions in consumer subsidies. 
Price are liberalised, except for a few (subsidised) staple foods, medical drugs, 
energy products and rental rates for public housing. Imports were completely 
liberalised and government import monopolies are being phased out. The Bank of 
Algeria switched from a fixed to a managed floating exchange rate with the aim of 
stabilising the real effective exchange rate. Foreign exchange is now available for all 
bona fide and visible current account transactions. The gap between the official and 
parallel market exchange rate was reduced from over 250% at the end of 1993 to 
less than 50% in the second quarter of 1995. 
Financial restructuring of non-autonomous public enterprises has accelerated, a draft 
privatisation law has been adopted by the government and a pilot privatisation 
programme was launched in early 1995. The Bank of Algeria started auctioning off 
refinancing credits and the Treasury introduced an auction mechanism and a 
secondary market for Treasury bills. 
In May 1995, the stand-by arrangement with the IMF was followed up by a 3-year 
(1995-98) Extended Fund Facility for an amount of approximately US$ 1.75 billion. 
Continued political and security problems weaken consumer and investor confidence 
and may even affect hydrocarbon export capacity. GDP growth in 1994 is estimated 
at zero and prospects for 1995 are not significantly better in the present 
circumstances. Social safety net reforms are in progress but still insufficient to 
effectively improve the situation of the poor. 
2. THE BALANCE OF PAYMENTS 
Substantial liberalisation of the imports and foreign exchange regimes resulted in a 
worsening of the current account position, from a 1.6% of GDP surplus in 1993 to a 
4.3% deficit in 1994. Imports increased substantially in the second half of 1994, 
thereby eliminating shortages of consumer goods and much needed spare parts and 
inputs in industries and the construction sector. Export revenue decreased in 1994, 
reflecting both a decline in hydrocarbon export prices and reductions in the quantities 
exported. A further worsening of the current account is expected in 1995. 
-28 
The overall balance of payments position improved because of external debt 
reschedulings which provided some US$ 4.4 billion in exceptional financing in 1994. 
Further exceptional financing was provided by the IMF and other multilateral balance 
of payments support programmes, including from the EU, for an amount of US$ 
1.25 billion in 1994, and more is expected in 1995. 
3. EXTERNAL DEBT 
Algeria's external debt situation has been stabilised, largely due to the bilateral debt 
rescheduling arrangements with the Paris Club, which are likely to be continued 
under the new programme with the IMF. The Algerian authorities also reached an 
agreement ad referendum with the commercial banks in the London Club to 
reschedule US$ 3.2 billion commercial debt service due between 1 March 1994 and 
31 December 1997, including US$ 1.1 billion due under the 1992 "re profiling 
operation" (the Credit Lyonnais agreement). Rescheduling is done in three tranches, 
over a period ranging from 11.5 to 16 years and 4.5 to 6.5 years grace, at existing 
interest rates until expire of the initial contracts and Libor+13/16 thereafter. 
The debt stock-to-GDP ratio stood at 71% end 1994 and is not expected to undergo 
substantial changes in the next few years. The debt service-to-exports ratio, on the 
other hand, declined from 82% of export revenue in 1993 to below 50% in 1994 and 
is expected to decline further over the next three years as a result of the extensive 
debt reschedulings in the Paris and London Clubs. 
29-
B. BELARUS 
l. GENERAL ECONOMIC SITUATION 
Until 1994 reforms in Belarus were slow. A large part of the command system 
remained in place (trade administered, subsidies high). GDP fell by about 10% per 
year in 1992 and 1993, less than in Russia. However the recession in 1994, with a 
20% drop of GDP, was one of the most severe of the countries in transition. 
One of the main reasons of delays in stabilising the economy was the absence of a 
clear autonomous monetary policy in Belarus. Until early 1994, despite the 
introduction of a temporary local rouble in 1992, the prospect of monetary union 
with Russia remained strong. In May 1994 the Belarussian rubel was declared the 
only legal tender in the country. After the presidential election held in July, the newly 
formed government has adopted a reformist stance and an ambitious programme of 
reforms, under the assumption that the monetary policy remains under national 
control. In January 1995, Belarus signed with Russia a customs union agreement. 
Economic stabilisation is the immediate priority. In 1994 monetary expansion 
remained high and average inflation was over 30% per month. After July 1994 
monetary expansion limits were set. Inflation in early 1995 was down to 20% per 
month over the first quarter and an estimated 5% per month over the second quarter. 
The authorities' goal is to bring it down to a monthly 1% level by the end of the year. 
The budget performance improved in 1994 with a deficit of about 2% of GDP, 
against 8% in 1993. The 1995 budget envisages a deficit of 3.2 % of GDP. 
Core structural reforms have been slow and remain the weak point which delayed the 
approval of a stand-by arrangement with the IMF. Prices were liberalised in June 
1993, but subsidies on basic foodstuffs were maintained until late 1994, and rents 
and utility prices remained controlled at very low levels. Until 1994, no proper 
two-tier banking system existed, with the established practice of direct central bank 
lending, and even subsidising, to enterprises. Enterprise restructuring has made little 
progress. Privatisation was until this year delayed by the resistance of enterprises and 
sectoral ministries. Although a privatisation law was approved in July 1993, by the 
end of 1994 the private sector accounted for only a minor part of economic activity. 
Bankruptcy legislation, which had been enacted already in 1992 is still far from being 
effective. Neither is a law on commercial paper and stock exchanges passed in 1992. 
2. THE BALANCE OF PAYMENTS 
While the country suffered from disruptions of trade and payments in the FSU, it has 
been so far unable to redirect its trade to the west. It has furthermore been adversely 
affected by the deterioration of its terms of trade, with an increasing cost of energy 
imports which are now close to world market prices. As a result, the trade balance, 
which was positive in 1991 (mainly inter-FSU republics trade) is now negative and 
-30-
registered a deficit of about US$ 600 million in 1994, most of which is due to energy 
imports from Russia which account for more than 50% of total imports. As Belarus 
lacks the currency reserves to pay for this, net interstate arrears increased and 
reached almost US$ 0.5 billion by the end of 1994, mainly on Russian gas deliveries. 
The current account deficit reached about US$ 545 million in 1994 (about 11% of 
GDP). Taking a moderation of imports and slow growth of exports into account, the 
current account deficit in 1995 could amount to about US$ 360 million. Hard 
currency reserves, which were almost non existent by end 1994, are reported to have 
significantly increased over the first half of 1995. 
The IMF disbursed in January the second tranche, worth US$ 100 million, of the 
Systemic Transformation Facility (STF) approved in 1993, and intends to further 
support the country with a 12 month stand-by arrangement from mid-1995 to 
mid-1996, provided prior structural reforms are implemented. The World Bank is 
likely to approve a policy loan of about US$ 100-120 million, out of which some 
60 million US dollars could already be disbursed in the second semester of 1995. 
3. FOREIGN DEBT 
Under the "zero option" agreement between Russia and the other new independent 
states, Russia took over the external assets and liabilities of the ex-USSR. Thus, 
Belarus' external debt stock is recent (post 1992). 
The estimated external debt of the country was standing at about 1.5 billion 
US dollars by the end of 1994. This'estimate takes into account a rescheduling of gas 
arrears towards Russia, for an equivalent of about US$ 0.5 billion, which have been 
converted into medium and long term debts. The external debt service on exports 
ratio averaged only 6% in 1994 but this actually represents a heavy burden owing to 
the very limited hard currency resources of the country. In 1995, assuming the 
approval of the IMF stand-by arrangement and complementary financing from 
international donors, the external debt could increase up to almost two billion US 
dollars, i.e. about 40% of GDP. 
-31 
C. BULGARIA 
1. GENERAL ECONOMIC SITUATION 
In 1994 the Bulgarian economy stopped shrinking. Real GDP increased by 1.4%, 
reflecting a more favourable business climate, new export opportunities and 
increased domestic demand. Unemployment declined from 16% in 1993 to around 
13% in 1994, partly reflecting the economic turnaround. By end of first quarter of 
1995, it further contracted to 12%. 
Significant price fluctuations occurred in 1994 as a result of the introduction of 
VAT, a sharp lev devaluation and policy slippages. In 1994, year-on-year CPI 
inflation reached 121.9%, which negatively compares with the rate recorded in 1993 
(63.8%). The government projects an inflation rate of around 50% in 1995 but this 
target seems to be over-ambitious. In April 1995, year-on-year CPI inflation stood at 
106.6%. 
In 1994, the government aimed at implementing tight monetary and credit policies 
with a view to curbing inflationary pressures. Essential conditions of it were also 
exchange rate stability, the hardening of enterprises' budget constraints and a sharp 
reduction of the state's budgetary requirements. The implementation of fiscal policy 
was rather successful (in 1994 budget deficit/GDP ratio edged down to 6.6% from 
13.6% in 1993) and the government's incomes policy has been moderately restrictive. 
During the second half of the year it became, however, more difficult to implement a 
tight monetary policy. 
In May 1995, the government approved a new policy programme which envisages 
for 1995 a decline in the budget deficit to 5.5% of GDP and moderate real money 
supply growth (5%). Direct financing of the budget by the Bulgarian National Bank 
is expected to increase and this is a source for concern. 
As for structural reforms, in 1994 main loss-making enterprises worked out 
rationalisation plans. The government intends to issue long-term bonds worth 
US$ 1.8 billion, aimed at replacing banks' bad loans and interest arrears. Banking 
supervision has been strengthened. A bank consolidation programme has been 
completed; mass privatization of 500 companies has been postponed; standard 
(market-based) privatization proceeded only slowly. 
2. THE BALANCE OF PAYMENTS 
As regards Bulgaria's external developments in 1994, the structural shift in foreign 
trade towards OECD and other third markets was further consolidated, reflecting the 
positive impact of association and trade agreements with EU and EFT A, the lev 
devaluation and low labour costs. In 1993, the trade balance and the current account 
witnessed deficits of respectively US$ 0.9 billion and US$ 1.4 billion. In 1994, the 
-32-
trade balance turned into a surplus of US$ 200 million while the current account was 
balanced. 
In 1994, the capital account benefited from new external financial support made 
available by the IMF (stand-by and Systemic Transformation Facility), the World 
Bank, EU and other bilateral donors, in the framework of the G-24 initiative in 
favour of Bulgaria. Foreign direct investment remained extremely low despite a 
liberal legislation passed in 1992. Short-term capital inflows were equally modest. 
In 1994 gross official reserves (including gold) were replenished to US$ 1.3 billion 
or about 2.7 months of imports. By end-May 1995, they had increased to US$ 1.6 bn 
(3.3 months of imports). 
FOREIGN DEBT 
The agreement in principle reached in November 1993 with the London Club 
commercial creditors on a debt and debt service reduction programme (DDSR) was 
finalized in July 1994. Overall, it is estimated that the agreement reduced Bulgaria's 
US$ 8.2 billion eligible debt to western commercial banks by around 46%. The 
up-front cost of the operation (US$ 715 million) was partly covered by the country's 
hard currency international reserves and partly by exceptional external financing 
made available by the Fund and the World Bank in September 1994. In April 1994, 
a third Paris Club debt rescheduling arrangement was reached between Bulgaria and 
its official creditors, covering all obligations falling due from the previous 
rescheduling until April 30, 1995. 
By restoring Bulgaria's external viability, these debt agreements should help the 
country attract further FDI and regain access to the international financial markets. 
At end 1994 the external debt/GDP ratio was 117% (144%. in 1992) and the debt 
service ratio was reduced to 19% (39% in 1992). 
-33-
D. THE CZECH REPUBLIC 
1. GENERAL ECONOMIC SITUATION 
After a sharp decline in 1990-92 and stagnation in 1993, the Czech economy grew by 
2.6% in 1994, reflecting a strong recovery of private consumption and investment. 
Industrial production rose by 2.3% and the unemployment rate continued to edge 
down, reaching 2.8% in May 1995. The tightness of the labour market remains an 
extraordinary feature of the Czech transformation process. Indicators for the first 
quarter of 1995 suggest an acceleration of growth. 
Inflationary pressures were subdued in the first half of 1994, with annual inflation 
falling to 9.2% in May 1994. Since then, however, inflation has been on an upward 
trend as a result of the rapid expansion of the money supply and domestic demand. 
Annual inflation stood at 10.2% in May 1995. 
Money supply (M2) grew by 22% in 1994, well above the 12% original target. This 
rapid growth of liquidity reflects the impact of the strong foreign capital inflows, 
which the Czech National Bank (CNB) has only been able to sterilize partially 
through open market operations and the increase in the banks' minimum reserve 
requirements. Regarding fiscal policy, the state budget ended 1994 with a surplus of 
Ck 11.2 billion (about US$ 336 million) and the Parliament has approved a balanced 
budget for 1995. 
As far as structural reform is concerned, the second wave of large-scale voucher 
privatization, involving assets in 861 enterprises with a book value of Ck 155 billion 
(US$ 4.7 billion), has been concluded in November 1994. About 80% of the 
productive capacity of the economy is estimated to be now in private hands. 
2. THE BALANCE OF PAYMENTS 
Reflecting the acceleration of domestic demand, the real appreciation of the Czech 
crown and trade restrictions introduced by Slovakia, the current account moved from 
a US$ 115 million (0.5% of GDP) surplus in 1993 to small deficit (US$ 16 million) 
in 1994. The deficit has continued to increase in the first quarter of 1995 and is 
expected to reach about 1.5-2% of GDP for the whole year. 
The balanced current account result achieved in 1994 hides a very large trade deficit 
(US$ 865 million) offset by a US$ 766 million surplus in the services balance (largely 
due to revenues from tourism and transportation) and a US$ surplus in net 
unrequited transfers. The deterioration of the bilateral current account with Slovakia 
has led the Czech Republic to consistently exceed the ECU 130 million credit ceiling 
agreed under the Czech-Slovak clearing system. Following the official request by the 
Czech government, this clearing system is expected to be terminated in October 
1995. 
-34 
The net inflow of FDI slowed down considerably in 1993 (declining to 
US$ 552 million from US$ 983 million in 1992) but recovered partly in 1994 (to 
US$ 749 million). Furthermore, the Czech Republic has been experiencing a surge in 
other capital inflows since the third quarter of 1993. Thus, in 1994, gross portfolio 
investment (mostly equity investment in the Prague Stock Exchange and foreign 
acquisition of Czech issues of international bonds) reached US$ 901 million, Czech 
enterprises took financial credits abroad in the amount of US$ 1378 million. Also, 
Czech banks have been borrowing significant amounts in the international market for 
syndicated loans. The Czech Republic's access to the international capital markets 
has been reinforced by successive upgradings of the country's rating. In June 1994, 
Moody's upgraded again the Czech Republic's rating (from Baa3 to Baa2), and in 
July 1994 S & P's upgraded its rating from BBB to BBB+. 
The combination of a healthy current account and a strong capital inflow has put 
upward pressure on the nominal exchange rate and has resulted in a rapid growth of 
official foreign exchange reserves, which stood at US$ 8.6 billion (or about 7 months 
of imports) at end-April 1995, compared to only US$ 0.7 billion at end-1992. In 
order to offset or restrict part of the capital inflows, the authorities have repaid ahead 
of schedule all the remaining IMF loans (worth US$ 1.1 billion), have approved a 
draft Foreign Exchange Act which provides for the gradual introduction of the full 
convertibility of the crown, and have imposed in late June 1995 limits on the total 
amount of short-term foreign credits Czech banks may take. Also, the CNB is 
considering possible options to increase the flexibility of their exchange rate policy, 
including the widening of the fluctuation band around the D-mark/US$ peg, the 
revaluation of the central rate and the move to a floating exchange rate regime. 
3. FOREIGN DEBT 
Despite a significant growth of convertible debt in 1993 and 1994, mostly associated 
with strong foreign borrowing by Czech companies and banks, the Czech Republic 
continues to enjoy a low foreign debt burden. Total convertible debt increased from 
US$ 6.9 billion at end-1992 to US$ 10.3 billion at end-1994, but this still implied a 
relatively .low debt/GDP ratio of 29%. The debt service ratio has increased between 
1992 and 1994 but, at 13% in 1994, it remains moderate. While projections for 1995 
and 1996 point towards an increase in the debt and debt service indicators, they are 
expected to remain at reasonable levels. 
-35-
E. ESTONIA 
1. GENERAL ECONOMIC SITUATION 
The Estonian economy emerged from recession by the end of 1993 and GDP grew 
by 4% in 1994, despite a severe drought which hampered the agricultural production.. 
Since 1993 services account for more than half of GDP. Growth mainly relies on the 
development of the private sector. 
The currency board arrangement introduced in 1992 (under which the kroon is 
pegged to the DM at a fixed 8 to 1 rate, and the monetary base limited by the amount 
of hard currencies and gold detained by the central bank) proved successful in 
stabilising the economy. However, inflationary pressures, fuelled by sharp increases 
of energy imports prices, resumed at the end of 1993 and early 1994. Prices 
increased by more than 40% in 1994, well over target, but the latest recorded 
monthly price increases in late 1994 and early 1995 were more moderate (2.4% in 
March, 1% in April) although, still, irregular. Under the currency board arrangement 
central bank lending to the state is prohibited, which contributed to budgetary 
discipline. The general government budget was in balance in 1994, against a 1.8% 
deficit in 1993, reflecting improvements of revenue performance, and despite 
increases of public investment. The 1995 budget envisages a GDP 1% deficit. 
Estonia has made continuing progress on structural reform. In 1994, Estonia 
advanced further in the area of privatisation (80% of small enterprises and more than 
258 large state owned firms have now been sold to private owners)and in some cases 
bankruptcy law was applied. Banking supervision was improved and following the 
banking crisis of 1993, the banking system was restructured. The number of 
commercial banks was reduced to 21, mostly through mergers. Estonia maintains 
liberal foreign trade and investment laws. The Estonian kroon is fully convertible. 
2. THE BALANCE OF PAYMENTS 
Estonia's current account situation became tight in 1994. The excess of domestic 
inflation over international price increases has reduced the country's international 
competitiveness, and, in combination with the resumption of domestic demand, has 
resulted in higher imports. As a result, the current account deficit which stood at 
5.7% of <3DP in 1993 reached an estimated 9% level of GDP (excluding official 
transfers) in 1994. 
The IMF programme under the stand-by arrangement for the period October 1993 to 
March 1995 remained on-track and in March 1995 the IMF approved a new fifteen-
month stand-by arrangement for an amount of SDR 14 million (US$ 20 million). The 
inflow of foreign direct investment remained high for the third consecutive year, 
(worth some US$ 253 million). Official foreign exchange reserves continued to grow 
-36 
and, at US dollars 450 million at end-1994, covered approximately 3 months of 
imports. 
3. FOREIGN DEBT 
Estonia has no legacy of foreign debts from the ex-USSR. In 1994 the stock of 
external debts increased from US dollar 135 million to an estimated US dollar 
170 million level (or 6.5% of GDP). External debt service remained low in 1994 with 
a ratio to exports of goods and non-factor services below 1%. A substantial part of 
Estonia's foreign debt is owed to international financial institutions. 
-37 
F. HUNGARY 
1. GENERAL ECONOMIC SITUATION 
The Hungarian economy recovered in 1994, with real GDP growing by an estimated 
2% and industrial production by 9%. Following a peak of 11.8% of the labour force 
in early 1993, the unemployment rate has declined to 10.1% in the first quarter of 
1995. Growth, however, is expected to slow down in 1995, reflecting the effect of 
the "austerity package" adopted by the government in March 1995 to reduce the 
country's high budget and current account deficits. 
The "austerity package" includes: 1) the introduction of an 8% temporary surcharge 
on imports, excluding primary energy products, investment goods and 
outward-processing trade; 2) an 8.3% devaluation of the forint combined with the 
switch to a pre-announced crawling-peg system implying a monthly devaluation of 
1.9% during the second quarter of 1995 and of 1.3% in the second half of the year; 
3) a range of expenditure cuts and measures to increase revenues including the 
reform of the social welfare system, cuts in public sector employment and real wages, 
the increase in the consumption tax on automobiles and improvements in tax 
administration. 
The fiscal measures included in the package are estimated to yield about 3% of GDP 
in 1995, in spite of which the consolidated state budget deficit (excluding 
privatization revenues) is expected to fall only from 6.9%» of GDP in 1994 to 6% in 
1995. 
In 1994, consumer prices rose by a little over 19%, continuing the gradual 
moderation in inflation which has taken place since 1992, when the end-of-year 
increase in the CPI reached 24.7%. However, the combined effects of a faster forint 
devaluation, the import surcharge, an increase in the VAT and higher charges for 
utilities are likely to push inflation to 28-30% in 1995. Year-on-year inflation stood 
at 30.8% in May 1995. After four years of decline, real wages grew by 8% in 1994 
but have been declining in the first months of 1995. 
Disagreements within the government coalition that took office in July 1994 initially 
resulted in a deadlock of the privatization process. Although a new impulse to this 
process was announced, few sales of enterprises have taken place until now. The 
government is, therefore, unlikely to meet its ambitious target of raising 
Ft 150 billion (3% of GDP) in privatization revenues in 1995. The bulk of these 
revenues were expected to come from the sale of several large enterprises in the 
energy sector, telecommunications and, to a lesser extent, the banking sector. 
-38 
2. THE BALANCE OF PAYMENTS 
After reaching a deficit of US$ 3.9 billion (9.5% of GDP) in 1994, no correction in 
the current account was recorded in the first quarter of 1995. The authorities, 
however, expect that the stabilization package will result in a reduction of the current 
account deficit to about US$ 2.5 billion (6% of GDP) in 1995. 
Foreign Direct Investment (FDI) declined from US$ 2.3 billion in 1993 to 
US 1.1 billion in 1994. The authorities hope that the planned acceleration of 
privatization, which is expected to rely to a significant extent in the sale of 
enterprises to foreign investors, will increase FDI inflows to about US$ 2.5 billion. 
But, given the delay in the implementation of the privatization programme, FDI is 
likely to fall substantially short of this figure. This would mean that non-debt creating 
inflows will again fail to match the size of the current account deficit, thus resulting 
in a new increase in both gross and net foreign debt. 
In spite of the high current account deficit, the slowdown in FDI inflows and 
substantial debt repayments, official foreign exchange reserves remained at relatively 
high levels throughout 1994, and stood at US$ 6.8 billion at end-February 1995 
(7 months of imports). This is basically explained by the substantial foreign 
borrowing undertaken by Hungarian banks and enterprises and by the continued 
recourse by the National Bank of Hungary (NBH) to the international capital 
markets. In the first five months of 1995, and despite increasing concerns in the 
markets about Hungary's economic prospects, the NBH managed to place 
international bonds in the amount of US$ 1 billion. 
The 18-month stand-by facility granted by the IMF to Hungary in September 1993 
was interrupted owing to slippages with respect to some of the programme targets. 
However, the government's austerity package and the likely approval of a restrictive 
budget for 1996 should pave the way for the resumption of IMF lending by the end 
of 1995. 
3. FOREIGN DEBT 
With the current account deficit considerably exceeding the net inflow of FDI since 
1993, both gross and net foreign debt have been rising rapidly, and from already high 
levels. Gross convertible foreign debt has increased from US$ 21.5 at end-1992 to 
US$ 31.7 billion (77% of GDP) billion at end-March 1995. Net foreign debt, for its 
part, has increased from US$ 13.1 billion to US$ 21.4 billion over the same period. 
After increasing in previous years, the proportion of medium- and long-term debt has 
remained practically unchanged at around 91%. 
Total debt service has been consistently increasing since 1992, reaching an estimated 
61% of exports of goods and non-factor services in 1994 (against 35% in 1991). The 
early repayments made by the NBH in 1994 have significantly reduced the expected 
concentration of repayments in 1995 and 1996. Repayments are now projected to 
amount to about US$ 3.4 billion in both 1995 and 1996. 
39 
G. ISRAEL 
1. GENERAL ECONOMIC SITUATION 
Annual GDP growth slowed down to 5.5% in the last quarter of 1994 and 2.6% in 
the first quarter of 1995. The official forecast for 1995 has been lowered to 4%. 
Unemployment continued to fall, from 9% end 1993 to 7.8% end 1994, as the wave 
of immigration from Eastern Europe and the ex-Soviet Union of the early 1990s 
came to an end and the repeated closure of the Occupied Territories accelerated the 
replacement of Palestinian workers with immigrants. 
Inflation accelerated significantly in the last quarter of 1994 to 14.5% (last 
12 months) but has slowed down again recently to 10.8% in May 1995. Still, 
underlying inflation remains high, fuelled by buoyant consumer demand and 
considerable increases in public sector real wages. The authorities are sticking to the 
announced inflation target zone of 8 to 11% for end-1995. 
The inflation differential was not entirely matched by the nominal depreciation of the 
shekel, thereby pushing the real exchange rate up and widening the current account 
deficit to over US$ 3 billion at the end of 1994. This has put downward pressure on 
the shekel. As a result, the Bank of Israel has slowed down the trend towards lower 
interest rates. The key refinancing rate stood at 13.5% end May 1995. 
The government budget deficit was further reduced from 2.5% of GDP in 1993 to 
2% in 1994 reflecting curbs in the housing programme and other subsidies for 
immigrants, including unemployment benefits, and tax increases, especially on capital 
gains. Revenue from privatisation reached US$ 700 million in 1994 and is expected 
to increase to US$ 1.5 billion in 1995, in spite of a slow-down in the privatisation 
process. 
2. THE BALANCE OF PAYMENTS 
Recent developments in the trade balance are a cause for concern. Export growth 
remained strong at close to 11% over the first five months of 1995, compared to 
10.4% in 1994. But imports are even more buoyant with growth estimated at 15.6%o 
(in US$ terms) over the same period. The cumulative trade deficit over that period 
reached US$ 4.3 billion, up from US$ 3.5 billion over the corresponding period last 
year. 
Capital inflows have soared in the first quarter of 1995 to US$ 2.6 billion, compared 
to US$ 2.3 billion in all of 1994, driven by the increasing gap between interest rates 
on the domestic and international capital markets. Capital inflows have also increased 
inflationary pressure. 
-40 
The Bank of Israel maintains a "crawling peg" exchange rate regime with an 
announced annual target depreciation rate of 6%. The variation band allowed around 
the targeted exchange rate was recently increased to 7%. Official foreign exchange 
reserves reached a satisfying level of US$ 6.7 billion at the end of 1994 and 
continued to grow to over US$ 8 billion in the first quarter of 1995, equivalent to 3.5 
months of imports, and still rising in the wake of strong capital inflows. 
3. FOREIGN DEBT 
The US$ 10 billion credit guarantees obtained from the US government in 1992 have 
enabled the authorities to draw on medium and long-term credit lines for investment 
projects. By end 1994, some US$ 4.4 billion had effectively been drawn, mostly by 
the government and a few public sector enterprises, allowing them to establish a 
presence and building an image in international markets. Most of the funds have 
resulted in a strengthening of the reserve position of the Bank of Israel. Private 
sector borrowers find these loans too costly, at 30-year interest rates around 7.3%», 
while short-term US$ interest rates have stood at 5%. 
Israel has a BBB+ rating on international capital markets, which may be sufficient to 
get unguaranteed access. The authorities are likely to announce their intention to 
launch a bonds issue in the second half of 1995, to finance the Treasury deficit and to 
test their access to the international capital markets. 
-41-
H. LATVIA 
l. GENERAL ECONOMIC SITUATION 
Latvia is emerging out of the recession which saw GDP fall by 45% between 1991 
and 1993. Growth in 1994 was a moderate 2%, partly because of the adverse impact 
of the drought which affects the whole region. Unemployment is already substantial, 
with an estimated 7% level at the end of 1994, one of the highest levels of the former 
Soviet countries. 
The Latvian national currency, the lat, was introduced in 1993 under a floating, 
exchange rate regime but the authorities have actually pursued a policy of stable 
exchange rate with an informal peg to the SDR. They further tightened monetary 
policy in 1994, limiting the growth of broad money to 48%. As a result, inflation, 
which had reached hyper-inflationary levels in 1992, continued to slow down, falling 
from 35%o at end-1993 to 26% at end-1994. 
The government financial deficit remained in 1994 within the initial 2% of GDP 
target. The total deficit (including net government lending), about 4% of GDP, was 
mainly financed through external borrowing. In 1995, both government expenditures 
(in particular social benefits) and revenues would increase significantly, and a 
comparable financial deficit (1.7% of GDP) is expected, without taking into account 
public investment financed by external borrowings. Most of the deficit should be 
financed by issuing treasury bills. 
Structural reforms continued in 1994. The State Property Fund in charge of public 
assets started its activities in September. Privatisation, which had been initiated at a 
slow pace in 1992-1993, accelerated since November 1994 after the government 
announced an international tender of 45 medium and large size firms. The 
Privatisation Agency is now fully operational and intends to privatise 50 firms by 
tender each year in 1995 and 1996. The financial sector was shaken in early 1995 by 
the crisis of the main commercial bank of Latvia, Baltija Bank, which triggered a 
government action to guarantee deposits. Two other important Banks, Universal 
Bank of Latvia (UBL) and Latvian Savings Bank are engaged in the restructuring 
process, their portfolios have been strengthened and UBL might be ready for 
privatisation by the end of 1995. A new tariff law on external trade enacted in 
September introduced flat ad valorem import tariffs except for a limited number of 
goods (mainly agricultural products and cars). The free trade agreement signed with 
the European Union came into force on 1 January 1995. 
2. THE BALANCE OF PAYMENTS 
The current account, which had recorded a substantial surplus in 1993, became 
negative in 1994 (-160 million US dollars without the official transfers, i.e. 4.6%» of 
GDP) mainly because imports grew significantly while exports decreased. This is the 
-42-
result of the upsurge of economic activity which lead to a substantial increase of 
investment-related imports. 
Important official transfers, foreign direct investment (US$ 155 million) and 
disbursements from the international financial institutions contributed to finance this 
deficit. Latvia's hard currency reserves continued to grow in 1994 and, with a 
US dollar 620 million level at year-end, covered about 5 months of imports. Foreign 
direct investment is reported to have further increased in early 1995. However, 
private capital inflows could drop substantially in the coming months as a result of 
the present banking crisis in Latvia. 
The IMF confirmed in April 1995 its support to the authorities' policies by renewing 
the stand-by arrangement for a 13-month period. It is however expected that the 
authorities will not draw on this facility (about 44 million US$) unless the country's 
level of foreign exchange reserves significantly drops. 
3. FOREIGN DEBT 
Latvia has no legacy of foreign debts of the ex-USSR, and the country's external debt 
is thus recent. In 1994 the external debt stock increased from $ 240 million to $ 370 
million, or 11% of GDP. The external debt service ratio presently remains moderate 
at 5%. More than 50% of Latvia's foreign debt is owed to the international financial 
institutions. 
-43-
I. LITHUANIA 
1. GENERAL ECONOMIC SITUATION 
After a sharp decline of about 55% between 1989 and 1993, Lithuania's GDP 
stabilised in 1994 with an estimated 2% growth. Unemployment, which reached 2% 
of the active population by the end of the 1994, is reported to have significantly risen 
in early 1995. 
Inflation, which had peaked in 1992 at hyper-inflationary levels, slowed down in 
1993 and early 1994. An important step in the stabilisation process of the economy 
was the introduction, on April 1, 1994, of a currency board arrangement under which 
central bank lending to the government is not allowed, and the monetary base limited 
to the market value of gold and hard currencies detained in the Bank of Lithuania. 
The litas became pegged to the US dollar at a rate of LTL 4 to US$ 1. Monetary 
expansion dropped in 1994. In the months following the introduction of the currency 
board arrangement, inflation dropped down to a level of less than 3% per month, and 
the state budget deficit was substantially reduced. For the whole year 1994, 
consumer prices increased by 45% (Dec. to Dec). 
In early 1994 the authorities adopted austerity budgetary measures, including the 
phasing out of public subsidies, which fell below 1% of GDP in 1994 (against 5.5% 
in 1991). Revenue performance increased over the second semester, allowing for a 
moderate deficit of 3% of GDP. The deficit target is 1.5% of GDP for 1995 and 2% 
for 1996. A three-year macro-economic programme, covering the period 
October 1994 - September 1997, has now been adopted by the Government. It 
envisages tight budgetary policies under the existing currency board arrangement and 
a sustained effort to maintain the momentum of structural reforms. 
Progress has also been registered with respect to structural reforms. Prices 
liberalization is almost completed and the only items with administered prices relate 
to cases of monopolistic situations. The government continued also to progress with 
privatisation and restitution. By September 1994, 76% of all companies eligible for 
privatisation, or 30% of all state assets, had been privatised through vouchers, public 
share subscription and auctions. In December the central bank law was enacted, and 
was followed by the adoption of the commercial banking law in early 1995. 
Enterprise restructuring was however slow and the implementation of the bankruptcy 
law was delayed until appropriate courts were designated to deal with cases. 
THE BALANCE OF PAYMENTS 
The share of the west in the country's external trade is continuing to increase. About 
50% of Lithuania's exports were directed to western markets in 1994. On 
1 January 1995, the Free Trade Agreement with the European Union entered into 
force. The trade balance, which recorded a surplus until 1992, became negative in 
44 
1993 and 1994 (US$ 200 million deficit last year) owing to the sharp increase of 
energy imports from Russia, which are now close to world market prices, and 
account for about 50% of the country's imports. According to national data, the 
current account of the country registered a US$ 90 million deficit in 1994 (1.6% of 
GDP), which was however compensated by significant private capital inflows. 
Following the approval of the government autumn three-year programme, the IMF 
approved an SDR 134.55 million (about US$ 200 million) extended facility in 
October. This would allow Lithuania to build up the necessary reserves and would 
help financing key energy and investment related imports. 
The growth trend is expected to remain robust, and investment related imports 
would grow substantially. The country would remain therefore in current account 
deficit over the next few years, and is expected to heavily rely on private capital 
inflows and the support of international financial institutions. 
3. FOREIGN DEBT 
Lithuania has no legacy of sovereign debts of the ex-USSR. In 1994, the outstanding 
external debts increased by almost 200 million US$, reaching a level of 
530 million US$. As a percentage of GDP this level is however moderate (10%) as is 
the country's external debt service over exports ratio (at about 1%). 
45-
J. MOLDOVA 
1. GENERAL ECONOMIC SITUATION 
Moldova's real GDP declined by some 22% in 1994, owing to the continuing 
disruptions to output and trade associated with the collapse of central planning, but 
also to severe weather conditions. Industrial production remains depressed in 1995. 
However, agricultural production is expected to rebound from its 1994 level, which 
should lead to a modest recovery of GDP in the remainder of 1995. Official 
unemployment remains low (at some 2% in early 1995) but some 17% of labour 
force are on long-term unpaid leave. 
Inflation decelerated sharply in 1994: the average annual CPI inflation went down 
from 788.5% in 1993 to 329.6% in 1994 and, in the course of the year, the quarter-
on-quarter average inflation rate decreased from 83% in the first quarter to about 9% 
in the fourth quarter. In early 1995, new inflationary pressures emerged and had to 
be contained through a tightening of credit policy by the central bank. The monthly 
inflation rate was 0.7% in March, down from 2.9% in January and 2.3% in February. 
Fiscal deficit for 1994 was contained to 8% of GDP, despite the 
greater-than-envisaged decline in real output and inflation. However, expenditure 
arrears rose by some 1.5% of GDP, including arrears on wages, as a result of the 
application of a strict cash management system. In the first quarter of 1995, 
important efforts, were made to collect 1994 tax arrears, which were allocated to 
liquidate 1994 expenditure arrears. Although government current expenditure 
remained subject to.severe control, arrears continued to accumulate in the first 
months of 1995: wage arrears of both central and local governments stood, at the 
end of March, at about 1.3% of quarterly GDP. 
Although important measures were initiated in the first quarter of 1995, structural 
reforms have not matched the gains made with respect to financial stabilisation. More 
particularly, the pace of privatisation process slowed again, partly owing to a "wait-
and-see" attitude of enterprise managers with respect to the new 1995/96 
Privatisation Programme, finally approved by Parliament on 15 March 1995. 
Important progress were however registered in enterprise restructuring, with the 
liquidation of three state enterprises and the revision of the bankruptcy legislation. 
2. THE BALANCE OF PAYMENTS 
The balance of payments remained under severe pressure throughout 1994, primarily 
as a result of higher prices for imported energy and the effects of natural disasters. 
Based on preliminary data, the current account deficit was equivalent to 9.6 % of 
GDP (US$ 183 million). Both exports and imports have been weak in 1994. Exports 
have been negatively affected by the continuing economic contraction in Moldova's 
main trading partners and by increased transport costs. Imports, for their part, have 
46-
been severely compressed by the slow pace of disbursements of foreign assistance 
and the collapse of domestic demand. The first quarter of 1995 shows a current 
account deficit of US$ 53 million. This relatively good result is partly explained by 
the strong growth registered in exports to non-FSU countries (US 75 million, 
compared to US$ 27 million in the same period of 1993). 
Preliminary indications about the capital account show a surplus of some 
US$ 300 million for the whole year 1994, compared to 117 million in 1993. At an 
estimated US$ 23 million in 1994, direct investment remained low, while 
medium-and long-term loans represented the main part of capital inflows, with an 
estimated amount of US$ 163 million for 1994. With the pace of disbursements in 
foreign assistance increasing in the last months of the year, gross reserves of the 
central bank reached the equivalent of 3 months of imports at end-1994 (up from 1.4 
months at end-93) and were still at this level by end-March 1995. 
3. FOREIGN DEBT 
Moldova agreed to the zero option with the Russian Federation and so has no 
responsibility for the external debt of the ex-USSR. The total external debt of the 
country is estimated at US$ 343 million by end 1994 (or around 26% of GDP), and 
is owed mainly to Russia, the IMF and the World Bank. This compares to US$ 168 
million in 1993 (about 23% of GDP). The external debt service as a percentage of 
exports is estimated to have increased from around 1% in 1993 to some 2% in 1994 
and is expected to increase substantially (to between 12 and 15%) in 1995. 
-47-
K. ROMANIA 
l. GENERAL ECONOMIC SITUATION 
Economic growth in Romania continued to pick up slowly, driven mainly by exports 
that benefited from a strong depreciation of the exchange rate in early 1994. Real 
GDP growth is estimated at 3% in 1994 and is expected to accelerate in 1995. 
However, consumer confidence remained weak as households attached priority to 
restoring their savings, which continue to grow strongly. Annual inflation slowed 
down from nearly 300% in early 1994 to under 50% by mid-1995. 
The fiscal deficit was kept under control at 4.4% of GDP in 1994 and is expected to 
decrease further in 1995. Tighter monetary policy and the increase in interest rates to 
strongly positive levels in real terms renewed confidence in the leu in the course of 
1994 and fuelled household savings. 
A floating exchange rate regime and an interbank foreign exchange market were 
introduced in 1994. However, at the end of 1994 and early 1995, a significant 
differential between official and private bureaux exchange rates re-emerged, 
indicating that the foreign exchange market was not functioning in a fully transparent 
way. 
Structural reforms are making slow progress. The authorities have tried to impose 
financial discipline on loss-making state-owned enterprises with large payments 
arrears, but inter-enterprise arrears continued to increase to some 14% of GDP by 
end 1994. Parliamentary approval of the long-overdue bankruptcy law, an essential 
piece in the transition towards a market economy, took place only in March 1995. 
Privatisation of state-owned enterprises also remains slow. By mid 1995, 3 years 
after the approval of the privatisation law, only around 1,000 out of nearly 6,300 
state-owned companies had been fully transferred to private ownership. A new Mass 
Privatisation Programme took nearly one year to gain Parliamentary approval. 
2. THE BALANCE OF PAYMENTS 
The current account deficit was considerably reduced, from US$ 1.2 billion in 1993 
to US$ 0.3 billion in 1994. This was due to a strong export performance (+23% in 
dollar terms), driven mainly by the depreciation of the leu in early 1994. 
Furthermore, substantial payment arrears and delays in the domestic market 
encouraged enterprises to sell on export markets were more immediate payments 
could be expected. Imports increased by about 5% only. Towards the end of 1994 
and in early 1995, current account pressures re-emerged, partly as a result of 
seasonal fluctuations (winter energy imports). The association agreement with the 
EU, facilitating Romania's access to the EU market, came into force on 
1 February 1995. 
48-
The capital account showed an increase in private direct and portfolio investments, 
reaching US$ 414 million in 1994, compared to only US$ 14 million in 1993. Despite 
this increase, the inflow of foreign direct investments remains very low as a 
percentage of GDP. A slow-down has been registered in official loan disbursements, 
but these remain the principal source of external finance. 
Official foreign exchange reserves, that were almost depleted in early 1994, increased 
to more than US$ 620 million (1.2 months of imports) by mid-October 1994. 
Howeyer, in the wake of the re-emergence of exchange rate differentials and the 
authorities' apparent willingness to keep the official exchange rate below the market-
clearing level, the National Bank sold part of its reserves. They fell to less than US$ 
407 million at the end of February 1995, when the National Bank resumed the 
purchase of foreign exchange. Foreign exchange holdings in the overall banking 
system increased from US$ 0.9 billion in January to US$ 2 billion in December 1994. 
3. EXTERNAL DEBT 
Total external debt increased rapidly from virtually zero in 1989 to US$ 4.7 billion or 
16% of GDP at end-1994 and external debt service accounted for some 6% of 
current receipts. The external debt service ratio is expected to increase to close to 
20% in 1999. Despite this rapid increase, debt and debt service ratios remain 
relatively low. 
Recently, Romania has been able to raise US$ 150 million in the international 
financial markets, at interest rates around Libor+275 base points, to strengthen the 
reserves of the National Bank. More operations of this type are planned in the course 
of 1995. 
-49-
L. RUSSIA 
1. GENERAL ECONOMIC SITUATION 
After failure of stabilisation policies over the last few years, the evolution of Russia's 
economic policies remained uncertain until early 1995. Recent developments, in 
particular the tightening of macro-economic policies, the vote of an austerity 1995 
budget in March and the agreement with the IMF on a stand-by arrangement in 
April, suggest that the authorities now have a strong commitment and the needed 
support to implement long-needed stabilisation policies. 
GDP continued to decline in 1994, by 15%, after an already sharp decrease in the 
previous years. In 1994 industrial production was reported at less than 45% of its 
1991 level. However, during the second semester 1994 output stabilised. Early 1995 
figures suggest that a resumption of growth, which had been anticipated by the end 
of 1994, is still very uncertain. In May, industrial output increased for the first time 
on a year-on-year basis (by 1%). The unemployment rate grew up to 7.1% compared 
with 5.5% by end-1993. 
The deficit.of the enlarged government was initially targeted at 6.5% of GDP for 
1994. However, after a relatively satisfactory performance over the first semester, 
the budget implementation went off-track in the summer after the government 
increased expenditure in favour of the Northern Territories and agriculture. For the 
whole year the budget deficit, at 10% of GDP, was higher than expected. The 
acceleration of monetary growth over the third quarter led to a resumption of 
inflation at the end of the year, to over 15% per month. For the whole year, 
consumer prices grew by about 10% per month (300% Dec. to Dec). 
In early 1995 negotiations with the IMF on a stand-by programme resumed. The 
authorities tightened their budgetary and monetary policies. The monetary base rose 
by only 1% over the first quarter and the budget fiscal deficit was about 3.5% of 
quarterly GDP. The 1995 budget adopted in March targets a deficit of 5.5% of GDP. 
However the decline of inflation remained slower than expected, with a 7.9% level in 
May down from about 18% in January. In April the IMF board approved a 12 month 
stand-by arrangement, which aims at bringing monthly inflation down to 1% over the 
second semester, mainly through a further tightening of monetary policy. Monetary 
financing of the deficit is to be reduced below 3% of GDP, compared with about 8% 
in 1994. The IMF and the authorities agreed on a tight monthly monitoring of the 
programme, which was broadly on-track after the first April review. 
Structural reforms are in many respects well advanced in Russia. Price liberalisation 
is almost completed, and remaining controls should be eliminated in 1995, except for 
clearly-identified monopolies. Trade restrictions, which had adversely affected the oil 
exports, have been eliminated in April as a prior action to the stand-by arrangement. 
Privatisation is well advanced with already about 85% of workers employed in 
-50-
privatised enterprises by the end of 1994. Its pace is to be invigorated by the sale of 
large enterprises for cash. A lot remains however to be done in other areas such as 
land reform, strengthening the financial sector, or building up an efficient social 
security system. 
2. THE BALANCE OF PAYMENTS 
The assessment of the balance of payments of Russia is made difficult by the poor 
quality of the data. For instance, there is wide evidence that unrecorded capital flight 
has been significant since the early 1990s. 
In 1994, Russia recorded a significant trade surplus, estimated at about US$ 12 bn, 
compared with a surplus of US$ 14 bn in 1993. This amount, however, may be 
greatly over-estimated, as a part of imports .go unrecorded in order to escape tax 
payments. By regions, the shift of the trade to the West is significant. Industrialised 
countries accounted for 69% of the total volume of imports in 1994, compared to 
60%) in 1993, while imports from former-CMEA countries continued to decline. 
After a surplus of US$ 2.5 bn in 1993, the current account was again reported in 
slight surplus, of about US$ 3.6 bn in 1994 (1.4% of GDP). However, the balance of 
payments situation of Russia remained extremely weak, owing to the high level of 
debt service obligations of the country which would require large current account 
surpluses in the range of US$ 15 bn every year. This situation is expected to further 
deteriorate in the late 1990s. The country will therefore heavily rely on debt 
restructuring, foreign direct investments to finance the private sector's external needs 
and loans from the international financial institutions. 
Net official reserves increased by US$ 4 bn, of which US$ 1.5 bn resulted from IMF 
disbursements under the Systemic Transformation Facility. The bulk of IMF 
disbursements under the new US$ 6.5 bn stand-by programme adopted in April will 
be disbursed in 1995 (US$ 5.2 bn), provided the programme remains on-track. 
3. FOREIGN DEBT 
According to the agreements reached with the New Independent States, Russia is the 
successor state for the assets and liabilities of the former Soviet Union. The level of 
the Russian debt represents an increasing burden for the country, in a context of 
recession and with the capitalisation of accumulated arrears. In 1994, foreign debt, at 
an estimated US $ 119 billion, represented 40% of GDP. The service of the debt 
represented 42% of the country's exports. Most of this debt is owed to official 
bilaterals (about US$ 75 billion), a substantial part to commercial banks (about US$ 
30 billion ) and a growing part to the international financial institutions (about US$ 6 
billion). The bulk of the Russian debt represents the outstanding amounts of 
ex-USSR debts (US dollars 108 billion). 
51-
Russia's inability to service its debts already triggered several Paris Club rounds since 
1992. On 3 June 1995, Russia reached an agreement with its Paris Club creditors on 
a new rescheduling for debt maturities falling due in 1995. Accordingly, it is now 
expected that the debt service in 1995 will amount to US$ 7.9 billion, about 11% of 
projected exports, and some US$ 1.1 billion more than initially set aside in the 1995 
general government budget. Paris Club creditors also agreed to start discussions in 
Autumn 1995 on a wider rescheduling of the Russian debt, in order to bring debt 
service down to sustainable levels for the coming years. A similar wide agreement 
with London Club creditors is expected by the end of 1995. 
52-
M. THE SLOVAK REPUBLIC 
1. GENERAL ECONOMIC SITUATION 
Following four consecutive years of recession, the Slovak economy recovered 
strongly in 1994, with real GDP growing by 4.8% and industrial production by 6.4%. 
Unemployment seems to have stabilized at around 14.5%. After accelerating to 
25.1% in 1993, CPI inflation has been on a downward trend since the beginning of 
1994, falling to about 11.2% in May 1995. 
The reduction in inflation has been supported by tight macroeconomic policies. The 
general government deficit was reduced from 7.6% of GDP in 1993 to 2.7% in 1994, 
and the state budget for 1995 is consistent with a general government deficit of 
around 3% of GDP. Regarding monetary policy, the net domestic assets of the 
banking system expanded by only 2% in 1994, down from 11.1% in 1993. The 
National Bank of Slovakia (NBS) is expected to continue conducting a prudent 
monetary policy in 1995. It has decided to maintain until ehd-1995 the individual 
credit ceilings on banks introduced in February 1994, and will aim at a 4.5% growth 
of net domestic assets and a 12.3% growth of M2 in 1995. 
The new government formed in December 1994 decided in June 1995 to cancel the 
voucher privatization scheme launched by the previous government. Instead of 
shares in state enterprises, the 3.5 million Slovak citizens that bought vouchers last 
year will initially be given 5-year interest-bearing bonds issued by the National 
Property Fund. In the area of banking sector reform, stricter regulations on the 
classification and provisioning of bad loans came into force in March 1995, and the 
Parliament is expected to pass by mid-1995 amendments granting full tax 
deductibility for bad-loan provisions made during 1995-97 by banks presenting 
appropriate restructuring plans. 
2. THE BALANCE OF PAYMENTS 
The balance of payments has experienced a clear improvement since the second 
quarter of 1994. The current account swung from a deficit of US$ 0.6 billion (5.4% 
of GDP) in 1993 to a surplus of US$ 0.7 billion (6% of GDP) in 1994. The 
improvement in the current account has been particularly marked vis-à-vis the 
Czech Republic, with the bilateral balance reaching a US$ 0.8 billion surplus in 1994. 
The capital account has also improved. About US$ 295 million of official 
macro-financial assistance (IMF, World Bank's Economic Recovery Loan and Japan 
Exim Bank) have been disbursed since mid-1994. In addition, the NBS issued in July 
1994 a US$ 250 million bond in the Samurai market. FDI increased from US$ 134 
million in 1993 to US$ 184 million in 1994, although it remains low (1.5% of GDP). 
Finally, the tight management of inter-bank liquidity by the NBS, in combination with 
the perceived stability of the Slovak crown (and, in the first half of 1995, the 
-53 
expectation of a revaluation against thé Czech crown), has led to some short-term 
capital inflows. 
These favourable trends in" both the current and the capital account have been 
translated into a substantial increase in reserves. Official foreign exchange reserves 
have risen from US$ 415 million at end-1993 to US$ 2.2 billion in April 1995, or 3 
months of imports. Following a 10% devaluation in July 1993, the exchange rate of 
the crown has been kept stable against a basket of Western currencies. In July 1994, 
the number of currencies in the basket was reduced from five to two (the 
Deutschmark and the US dollar). 
Despite the clear improvement of the current account and balance of payments, the 
Slovak authorities intend to maintain until end-1996 the import surcharge introduced 
in March 1994. The surcharge, however, is expected to be reduced from 10% to 
7.5% by end-1995. Foreign exchange travel allowances were increased as of 
1 January 1995. The authorities intend to make the crown fully convertible for 
current account purposes by 1 January 1996, and also plan to liberalize some capital 
flows. Following the official request by the Czech government, the Czech-Slovak 
clearing system is expected to be eliminated by October 1995. 
In April 1995, the US rating agency Standard & Poor's upgraded Slovakia's rating 
from BB" to BB , and in May 1995 Moody's assigned to Slovakia an investment 
grade rating (Baa3). All this should have a positive impact on the country's access to 
the international capital markets. 
3. FOREIGN DEBT 
Slovakia inherited from the Czechoslovak federation a very low external debt. 
Although debt and debt service ratios have deteriorated since the country's 
independence, they remain at relatively low levels. The foreign debt/GDP ratio has 
increased from 25.7% at end-1992 to 31.1% at end-1994. Debt service as a 
percentage of exports, for its part, has risen from 3.3% in 1992 to 8.8% in 1994. 
54-
N. CENTRAL ASIAN AND TRANSCAUCASIAN REPUBLICS 
l. GENERAL ECONOMIC SITUATION 
The situation among the Transcaucasian and Asian Newly Independent States (NIS) 
varies considerably. All the former soviet republics suffered in 1992-1993 from the 
weakening of socialist structures and the collapse of inter-republican trade links. The 
drop in trade among the NIS (probably 20-30% a year since 1992) has had serious 
knock-on effects on output. The dismantling of the rouble area led to a payments 
crisis in 1993 which aggravated the situation and led to considerable inter-enterprises 
arrears. Loose financial policies in many NIS compounded the adverse effects of the 
external shocks. Price increases reached hyperinflationary levels in 1993. Political 
and military conflicts in Tajikistan and the Transcaucasian republics dramatically 
aggravated the situation in these countries. 
Far-reaching economic reform however already begun in several NIS in 1993. Some 
republics like Kyrgyzstan have already made considerable progress in the transition 
to a market-based system while implementing more strict financial policies. 1994 has 
been a year of acceleration of reforms in Georgia and Armenia. While a 
hyper-inflationary situation had prevailed in most republics in 1993, inflation 
generally decreased in 1994. In early 1995 Azerbaijan and Tajikistan also engaged in 
the way of economic stabilisation. Most countries however continue to suffer from 
high government budget deficits. 
Kyrgyzstan and Kazakhstan are the most advanced countries in the way of 
stabilisation and reforms and already benefited from the IMF support (presently in 
the form of a stand-by arrangement for Kazakhstan and an enhanced structural 
adjustment facility in the case of Kyrgyzstan). Turkmenistan delayed the 
implementation of core structural reforms but has a stronger external position owing 
to its oil and gas exports. Tajikistan, where reforms had been delayed in the context 
of civil war and political instability, initiated in early 1995 stabilisation measures and 
is presently preparing a new package of reforms. In 1995, Uzbekistan launched a 
programme of reforms which benefited from IMF support under the Systemic 
Transformation Facility (STF). 
In the Transcaucasian republics, civil and regional conflicts led to severe drops of 
output (about 70% from 1991 to 1994) and delayed reforms. Armenia initiated 
reforms in early 1994 which already had a positive effect over the year, with GDP 
growing in 1994 for the first time since 1991. Georgia engaged in reforms in late 
1994. Reforms in both countries were supported in late 1994 by the IMF through 
STF and discussions are presently underway with a view to concluding stand-by 
arrangements. Azerbaijan started implementing stabilisation and reform measures 
only in early 1995, with IMF support under the STF. The country also recently 
signed an agreement with major international oil companies which is expected to 
trigger inflows of foreign investments. 
55-
2. THE BALANCE OF PAYMENTS 
The balance of payments situation of the area is extremely weak, with the exception 
of Turkmenistan and Uzbekistan. Large trade deficits with Russia and Turkmenistan, 
linked primarily to higher prices for energy and raw materials make the current 
account position of the other countries particularly precarious. The financial 
credibility of most countries is further aggravated by lack of international reserves, so 
that current account deficits tend to degenerate into crisis of payments and the piling 
up of arrears. 
From a longer-term perspective, the new states present variable profiles. Some have 
an important hard currency earning potential (Kazakhstan, Uzbekistan, Azerbaijan) 
and a significant industrial productive capacity. Others are much less developed and 
strongly rely on external assistance. Armenia, Georgia, Azerbaijan, Kyrgyzstan and 
Tajikistan have already been made eligible to highly concessional lending from the 
Bretton Woods institutions. 
3. FOREIGN DEBT 
The NIS made in 1993 substantial progress in clarifying their position regarding the 
former Soviet Union's debt legacy. The April 1993 Paris Club agreement with Russia 
was accompanied by a change in legal arrangements on debt servicing within the ex-
USSR in effect making Russia the sole actual manager of the debt. The creditors 
acknowledged that the so-called "zero-option" agreements concluded by Russia with 
other former republics (by virtue of which Russia takes over the full amount of the 
ex-Soviet debt, in exchange for the full amount of the ex-Soviet external assets) 
discharge them of any servicing of such debt. 
Only Kazakhstan and a few other NIS have attracted new credits from the West 
since their independence. The bulk of the NIS external debt is owed to Russia and 
Turkmenistan. This debt mainly results from balances of the republics' central banks 
with the central bank of Russia and from arrears on energy shipments. Russia has 
awarded bilateral loans to several countries (Armenia, Georgia, Uzbekistan, 
Kyrgyzstan) and already concluded several agreements rescheduling its claims. Trade 
arrears have however continued to build up with the two energy-exporting NIS in 
1994. Turkmenistan agreed in early 1995 with Ukraine and Georgia on substantial 
deferrals of arrears. 
The Community has provided significant amounts of three-year commercial credits to 
all the NIS under the ECU 1250 million loan facility made available in 1992 for food 
and medical supplies. As already noted, some of these countries are presently facing 
difficulties in ensuring a timely servicing of their debts towards the Community. 
Georgia and Tajikistan are already in arrears on interest payments. Armenia, Georgia 
and Tajikistan, which in a context of civil or regional war have suffered the sharpest 
economic decline, have made clear that a lack of hard currency reserves could lead to 
problems in securing forthcoming payments. 
56-
O. UKRAINE 
1. GENERAL ECONOMIC SITUATION 
Following an accumulated output contraction of 38%» from 1990 to 1993, and of 
another 23% in 1994, GDP decline slowed down markedly in the first quarter of 
1995 to some 10% over the first quarter of 1994. Industrial production is estimated 
to have increased moderately in the second quarter. The official unemployment figure 
of 0.3% does not at all reflect the protracted fall in output. The International Labour 
Organization estimated in autumn 1994 that 12% of Ukraine's workers were already 
on long-term unpaid leave, and estimates of hidden unemployment reach as much as 
20%. 
Following a stop and go pattern, the National Bank of Ukraine (NBU) tightened 
monetary policy considerably in autumn 1994 as part of Ukraine's comprehensive 
stabilization and reform programme supported by an IMF Systemic Transformation 
Facility (STF) since October 1994 and by an IMF stand-by arrangement since 
April 1994. At first, the relaxation of credit policy in summer 1994 and the price 
liberalization in autumn contributed to a surge of inflation. But since 
November 1994, inflation has declined steadily from a monthly rate of 72%» to 4.6% 
in May 1995. If the NBU were to give in to the mounting pressures to extend credits 
to the agricultural sector for the harvest, inflation would be likely to increase again. 
Following a sharp decline of the budget deficit in 1993 (10% of GDP, after 29% in 
1992) the authorities managed to bring the deficit further down to 8.6% of GDP in 
1994 and to limit monetary financing of the government to 5% of GDP in the fourth 
quarter. The bulk of fiscal adjustment relied on cuts in expenditures, in particular in 
subsidies to coal mines, agriculture and communal services. In April 1995, the 
Parliament adopted the budget proposal for 1995 limiting the expected deficit to 
3.3% of GDP. 
Since September 1994, a number of important reforms have been undertaken. The 
authorities advanced rapidly towards full price liberalization, including with the 
elimination of controls on profit margins, and raised administered prices set by the 
state. The government also took a number of steps towards reducing the role of the 
government. In early 1995, it started to implement the mass privatization programme 
formulated in late 1994. On 1 January 1995, it eliminated the old system of state 
orders and state contracts, other than to meet the government's needs which are 
narrowly defined and now have to be provided for through competitive bidding. The 
change is particularly important in the area of agricultural procurement. The 
government also undertook important steps to liberalize the foreign trade regime and 
the foreign exchange market including the unification of the exchange rate. To 
shelter vulnerable groups from the impact of the adjustment measures, minimum 
pensions and social benefits were raised. 
57-
2. THE BALANCE OF PAYMENTS 
Given the heavy dependence of the Ukrainian economy on energy, the price of which 
has been adjusted towards world market levels since 1992, the balance of payments 
remains very constrained. The current account deficit is estimated to have widened 
further in 1994 to US$ 1.6 billion (some 6% of GDP). Against the background of 
capital flight, low foreign direct investment and the need to amortize medium- and 
long-term credits not matched by new credits, Ukraine accumulated important 
external arrears in the first three quarters of 1994 (more than US$ 2 billion). 
To strengthen its balance of payments and support its stabilization and reform 
programme, Ukraine received in autumn 1994 the first tranche (US$ 271 million) of 
the-STF from the IMF and the first tranche (US$ 100 million) of a rehabilitation loan 
from the World Bank (totalling US$ 500 million). In the course of 1994, official 
foreign exchange reserves increased from 0.2 to 0.6 months of imports. 
At the beginning of 1995, the Ukrainian balance of payments seemed to be improving 
somewhat with more than expected foreign exchange being accumulated by the 
NBU. However, this appears to be largely linked to the payment delays with respect 
to gas supplies from Russia. Altogether, the balance of payments situation in 1995 
remains tight, leaving residual financing needs of some US$ 3.5 billion after 
contributions of over US$ 2 billion by the international financial institutions. After 
rescheduling of arrears towards Russia and Turkmenistan a gap of US$ 900 million 
remains to be filled by complementary financing from the European Union (some 
ECU 285 million) and Other bilateral donors. 
3. EXTERNAL DEBT 
In 1994, Ukraine's external debt stock increased from US$ 4.1 billion in 1993 to 
US$ 7.1 billion. In percent of GDP, this represents an increase from 12% to 29%. 
The ratio of external debt service to exports of goods and services rose from 1% to 
12%). In November 1994, Ukraine reached an agreement with Turkmenistan to clear 
arrears of US$ 300 million on gas and to reschedule the remaining arrears. In 
April 1995, Russia agreed to reschedule some US$ 2.5 billion on Ukrainian debt, 
including those accumulated in 1994 on account of gas. 
-5e-
U_F-3 Country risk indicators 
Last update 
22.06.95 Country: Algeria 
Real GDP growth rate (in %) 
Hydrocarbon production ( % change) 
Inflation rate (Dec/Dec) 
Exchange rate (dinars per USD) (end of period) 
Nominal effective exchange rate (change Q4/Q4) (- - depreciation) 
Real effective exchange rate (change Q4/Q4) (- = depreciation) 
General government balance (as % of GDP) 
Balance of payments 
Exports of GAS (in bn USD) 
Current account balance (in % of GDP) 
Net inflow of foreign direct investment (in mio USD) 
Official FX reserves (end of period) 
in bn USD 
in months of imports of G&S 
External debt 
External debt 
(in convertible currencies, in bn USD, end of period) 
medium and long-term (> 1 year) 
short-term (=< 1 year) 
Convertible debt service (in bn USD) 
principal 
interest 
External debt/GDP (%) 
External debt/exports of G&S (%) 
Debt service/exports of G&S (%) 
Arrears (on both interest and principal, in mio USD) 
Debt relief agreements and rescheduling (bin US$) 
IMF arrangements 
Type/no 
(Date/-) 
On track/off track 
Indicators of market's perceived creditworthiness 
Moody's long-term foreign currency rating (end of per.) 
S&P long-term foreign currency rating (end of period) 
Euromoney 
Position in the ranking (2) 
(number of countries) 
The Institutional Investor 
Position in the ranking (2) 
(number of countries) 
Credit rating (3) 1992 
2.2 
2.6 
28.0 
22.8 
-1.0 
20.7 
-1.3 
12.1 
2.9 
30.0 
1.5 
2.0 
26.3 
25.2 
1.2 
9.1 
6.8 
2.3 
58.6 
215.6 
75.0 
No 
No 
No 
Not rated 
Not rated 
66 
(169) 
Mar Sep 
53 57 
(119) (126) 
33.1 28.9 1993 
-2.0 
-0.6 
16.1 
24.0 
-7.9 
12.8 
-8.7 
10.9 
1-6 
0.0 
1.5 
1.9 
25.4 
24.6 
0.8 
9.1 
7.0 
2.1 
53.4 
2402 
82.2 
No 
No 
No 
Not rated 
Not rated 
Mar Sep 
68 79 
(169) (170) 
Mar Sep 
62 69 
(127) (133) 
28.2 27.1 1994 
•02 
-2.5 
38.6 
42.9 
-78.6 
-40^4 
-4.4 
8.9 
-4.3 
0.0 
2.6 
2.9 
26.3 
25.6 
0.7 
8.9 
7.1 
1.8 
71.0 
312.4 
49.7 
No 
5.2 
--"SBA 
(6794-6795) 
On-Track 
. 3-year EFF 
(since May 1995) 
Not rated 
Not rated 
Mar Sep 
92 96 
(167)(167) 
Mar Sep 
75 78 
(13S)(135) 
26.3 24.6 
(1) Countries are given a rating between A - E and a score between 1 -100. wilh E and 100 representing the highest risk. 
(2) The higher the score in the ranking, the lower the creditworthiness of the country. 
(3) Countries are rated on a scale of zero to 100. with 100 representing the least chance of default. A given country 
may improve 'tis rating and still fall in the ranking if also the average global rating for all rated countries improves. 
-59 
' u-F-3 Country risk indicators 
' Last update: 
27/06/95 Country: Belarus 
-
Real GDP growth*rate On %) 
Industrial production ( % change) 
Unemployment rate (end of period) 
Inflation rate (Dec/Dec) 
Exchange rate ( Rbs per USD) (average). 
Nominal effective exchange rate (change, Q4/Q4) (- = depreciation) 
Real effective exchange rate (change, Q4/Q4) (- = depreciation) 
General government balance (as % of GDP) 
Balance of payments. 
Exports (in mio USD) 
Current account balance (in % of GDP) 
Net inflow of foreign direct investment (in mio USD) 
Official FX reserves (end of period) 
in mio USD 
in months of imports 
External debt 
External debt 
(in convertible currencies, in mio USD, end of period) 
medium and long-term (> 1 year) 
short-term (=< 1 year) 
Convertible debt service (in mio USD) 
principal 
interest 
External debt/GDP (%) 
External debt/exports of G&S (%) 
Debt service/exports of G&S (%) 
Arrears (on both interest and principal, in bn USD) 
Debt rescheduling agreement 
IMF arrangements 
Type/no 
(Date/-) 
On track/off track 
(-/Date) 
Indicators of market's perceived creditworthiness 
Moody's long-term foreign currency rating (end of period) 
S&P long-term foreign currency rating (end of period) 
EIU country risk service (1) 
Score (end of period) 
Rating (end of period) 
Euromoney 
Position in the ranking (2) 
(number of countries) 
The Institutional Investor 
Position in the ranking (2) 
(number of countries) 
Credit rating (3) 1992 
-9.6 
-10.0 
0.6 
1560 
226 
n.a. 
n.a. 
-4.5 
3580 
0.7 
na. 
8.0 
na 
338.0 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
7.3 
11.1 
n.a. 
n.a. 
-
Not rated 
Not rated 
Not rated 
Not rated 
132 
(169) 
Mar Sep 
- (126) 1993 
-11.6 
-10.0 
1.5 
1990 
269 
n.a. 
n.a. 
-8.3 
2941 
-8.7 
18 
75.0 
0.3 
964.0 
n.a. 
n.a. 
2.9 
n.a. 
n.a. 
25.0 
33.0 
0.1 
n.a. 
STF 
(08.93 - 8.94) 
Off track 
See footnote 
(4) 
Not rated 
Not rated 
Not rated 
Not rated 
Mar Sep 
148 139 
(169) (170) 
Mar Sep 
100 
(127) (133) 1994 
-20.0 
-35.0 
2.0 
2220 
3650 
n.a. 
n.a. 
-1.9 
3073 
-11.4 
10 
99.0 
0.3 
1500.0 
n.a. 
n.a. 
197.0 
n.a. 
n.a. 
20.0 
32.0 
6.5 
493 
with Russia 
on gas arrears 
STF 
(01.95) 
See footnote 
--" (4) 
Not rated 
Not rated 
Not rated 
Not rated 
Mar Sep 
145 138 
(167) (167) 
Mar Sep 
109 109 
(135) (135) 
15.5 15.7 
(1) Countries are given a rating between A - E and a score between 1 -100, with E and 100 representing 
the highest risk. 
(2) The higher the score in the ranking, the lower the creditworthiness of the country. 
(3) Countries are rated on a scale of zero to 100, with 100 representing the least chance of default. A given country 
may improve its rating and still fall in the ranking if also the average global rating for all rated countries improves. 
(4) 'MP 1993 STF programme went off track in early 1994. However. IMF staff considered favourably the government 
programme adopted in Autumn 1994. which it supported with the second STF tranche by end-January 1995 and 
intends to fuither support with a stand-by arrangement later in 1995. 
_ & o-
H-F-3 Country-risk indicators 
Last update: 
30-Jun-95 Country: Bulgaria 
Real GDP growth rate (in %) 
Industrial production ( % change) 
Unemployment rate (end of period) 
Inflation rate (end of period) 
Exchange rate (Leva per USD) (end of period) 
Nominal effective exchange rate (change, Q4/Q4) (- = depreciation) 
Real effective exchange rate (change, Q4/Q4) (- = depredation) 
General government balance (as % of GDP) 
Balance of payments 
Exports of G&S (in bn USD) 
Current account balance (in % of GDP) 
Net inflow of foreign direct investment (in mio USD) 
Official reserves, including gold (end of period) 
in bn USD 
in months of imports of G& S 
External debt 
External debt 
(in convertible currencies, in bn USD, end of period) 
medium and long-term (> 1 year) 
short-term (=< 1 year) 
Convertible debt service (in bn USD) 
principal 
interest 
External debt/GDP (%) 
External debt/exports of G&S (%) 
Debt service/exports of G&S (%) 
Arrears (on both interest and principal, in bn USD) 
Debt relief agreements and rescheduling 
IMF arrangements 
Type/no 
(Date/-) 
On track/off track 
(-/Date) 
Indicators of market's perceived creditworthiness 
Moody's long-term foreign currency rating (end of period) 
S&P long-term foreign currency rating (end of period) 
EIU country risk service (1 ) 
Score (end of period) 
Rating (end of period) 
Euromoney 
Position in the ranking (2) 
(number of countries) 
The Institutional Investor 
Position in the ranking (2) 
(number of countries) 
Credit rating (3) 1992 
-7.3 
-11.0 
15.3 
79.4 
24.5 
-15.7 
43.6 
-15.0 
4.0 
-9.2 
42 
1.2 
2.8 
12.5 
n.a. 
n.a. 
2.0 
1.4 
0.6 
144.0 
248.0 
39.0 
6.1 
Paris Club 
(resched.) 
London CI. 
(roll-overs) 
SBA 
(4/92-4/93) 
Off-track 
Not rated 
Not rated 
80 
E 
Sep 
91 
(169) 
Mar Sep 
81 86 
(119) (126) 
21.1 19.8 1993 
-2.4 
-8.5 
16.3 
63.8 
33.3 
-3.1 
59.2 
-15.7 
3.7 
-7.9 
55 
1.0 
2.1 
12.8 
n.a. 
n.a. 
1.7 
1.1 
0.6 
124.0 
249.0 
32.0 
n.a. 
London Club 
(roll-overs, and 
DDSR agreed 
in principle) 
No 
Not rated 
Not rated 
80 
E 
Mar Sep 
122 125 
(169)(170) 
Mar Sep 
91 89 
(127) (133) 
18.9 19.5 1994 
Latest data or 
estimates (E) 
•1.4 
4.0 
12.9 
121.9 
66.5 
n.a. 
n.a. 
-6.7 
4.2 
2.0(E) 
n.a. . 
1.3 
2.7 
. 10.8 
n.a. 
n.a. 
1.0 
0.5 
0.4(E) 
117.0(E) 
204.6 (E) 
19.0(E) 
n.a. 
London Club 
DDSR (July) 
Paris Club 
resched. (Apr) 
SBA+STF 
(3/94-3/95) 
Not rated 
Not rated 
80 (Aug) 
E(Aug) 
Mar Sep 
88 98 
(167) (167) 
Mar Sep 
91 95 
(135) (135) 
19.8 20.8 
(1) Countries are given a rating between A - E and a score between 1-100. with E and 100 representing 
the highest risk. 
(2) The higher the score in the ranking, the lower the creditworthiness of the country. 
(3) Countries are rated on a scale of zero to 100, with 100 representing the least chance of default. A given countiy 
may improve ils rating and still tall in the ranking d also the average ylotxil rating for all rated countiies improves. 
G A 
ll-F-3 Country-risk indicators 
Last update: 
30-Jun-95 Country: Czech Republic 
Real GDP growth rate (in %) 
Industrial production ( % change) 
Unemployment (% of labour force) (end of period) 
Inflation rate (Dec/Dec) 
Exchange rate (CK's per USD) (end of period) 
Nominal effective exchange rate (change, Q4/Q4) (- = depreciation) 
Real effective exchange rate (change, Q4/Q4) (- = depreciation) 
General government balance (as % of GDP) 
Balance of payments 
Exports of G&S (in mio USD) 
Current account balance (in % of GDP) 
Net inflow of foreign direct investment (in mio USD) 
Official FX reserves (end of period) 
in bn USD 
in months of imports of G&S 
External debt (end of period) 
External debt 
(in convertible currencies, in bn USD, end of period) 
medium and long-term (> 1 year) 
short-term (=< 1 year) 
Convertible debt service (in bn USD) 
principal 
interest 
External debt/GDP (%) 
External debt/exports of G&S (%) 
Debt service/exports of G&S (%) 
Arrears (on both interest and principal, in mio USD) 
Debt relief agreements and rescheduling 
IMF arrangements 
Type/no 
(Date/-) 
On track/off track 
(-/Date) ' . .. 
Indicators of market's perceived creditworthiness 
Moody's long-term foreign currency rating (end of period) (1) 
S&P long-term foreign currency rating (end of period) 
EIU country risk service (2) 
Score (end of period) 
Rating (end of period) 
Euromoney 
Position in the ranking (3) 
(number of countries) 
The Institutional Investor ( 1 ) 
Position in the ranking (3) 
(number of countries) 
Credit rating (4) 1992 
-7.1 
-10.6 
3.1 
12.7 
28.9 
-0.1 
14.7 
0.7 
14800 
0.4 
983 
0.7 
1.1 
6.9 
5.1 
1.8 
1.4 
0.8 
0.5 
25.4 
46.8 
9.1 
No 
No 
SBA 
(4/92-4/93) 
on-trackbut 
expired with 
dissolution 
ofCSFR 
Ba1 
Not rated 
30 
B 
49 
(169) 
Mar Sep 
37 39 
(119) (125) 
47.1 46.1 1993 
-0.9 
-5.4 
3.5 
18.2 
29.9 
4.2 
19.3 
0.5 
16728 
0.5 
552. 
39 
2.8 
8.7 
6.6 
2.1 
1.4 
0.9 
0.5 
27.4 
52.0 
8.4 
No 
No 
SBA 
(3/93-3/94):-
On-track 
Baa3 
BBS 
25 
B 
Mar Sep 
48 43 
(169) (170) 
Mar Sep 
42 40 
(127) (133) 
44.6 46.6 1994 
Z6 
2.3 
2.8 
10.2 
28.2 
0.0 
n.a. 
0.1 
18837 
0.0 
748 
62 
4.2 
10.3 
7.6 
2.7 
2.5 
n.a. 
n.a. 
28.5 
54.7 
13.0 
No 
No 
SBA 
On-track 
Ail debts to IMF 
paid ahead of 
schedule. 
Baa2 (Jun) 
BBB+(Jul) 
25 (Aug) 
B(Aug) 
Mar Sep 
40 39 
(167) (167) 
Mar Sep 
40 39 
(135) (135) 
49.7 52.8 
(1) For 1992, rating or position in the ranking assigned to the former CSFR. 
(2) Countries are given a rating between A - E and a score between 1-100. with E and 100 representing 
the highest risk. 
(3) The higher the score in the ranking, the lower the creditworthiness of the country. 
(<) Countries are rated on a scale of zero to 100. with 100 representing the least chance of default A given country 
may improve ils rating and still fall in the ranking if also the average global rating for all rated countries improves. 
-6o*-
H-p_3 Country-risk indicators 
Last update: 
30-Jun-SS Country: Estonia 
Real GDP growth rate (in %) 
Industrial production ( % change) 
Unemployment rate (end of period) 
Inflation rate (end of period) 
Exchange rate (Krons per USD) (end of period) 
Nominal effective exchange rate (change, Q4/Q4) (- = depreciation) 
Real effective exchange rate (change, Q4/Q4) (- - depreciation) 
General government balance (as % of GDP) 
Financial balance (1 ) 
Fiscal balance (1 ) 
Balance of payments 
Exports of goods (in mio USD) 
Current account balance (in % of GDP) (excl. official transfers) 
Net inflow of foreign direct investment (in mio USD) 
Official FX reserves (end of period) 
in mio USD 
in months of goods imports 
External debt * 
External debt 
(in convertible currencies, in mio USD, end of period) 
medium and long-term (> 1 year) 
short-term (=< 1 year) 
Convertible debt service (in mio USD) 
principal 
interest 
External debt/GDP (%) 
External debt/exports of G&S (%) 
Debt service/exports of G&S (%) 
Arrears (on both interest and principal, in mio USD) 
Debt relief agreements and rescheduling 
IMF arrangements 
Type/no 
(Date/-) 
On track/off track 
(-/Date) 
Indicators of market's perceived creditworthiness 
Moody's long-term foreign currency rating (end of period) 
S&P long-term foreign currency rating (end of period) 
EIU country risk service (2) 
Score (end of period) 
Rating (end of period) 
Euromoney 
Position in the ranking (3) 
(number of countries) 
The Institutional Investor 
Position in the ranking (3) 
(number of countries) 
Credit rating (4) 1992 
-19.0 
-38.7 
2.0 
953.5 
11.7 
n.a. 
n.a. 
0.8 
-0.3 
446.0 
-0.7 
57.9 
195.2 
4.5 
27 
n.a. 
n.a. 
0.3 
n.a. 
n.a. 
4.2 
3.2 
0.0 
No 
No 
SBA 
(9/92-9/93) 
On track 
Not rated 
Not rated 
80 
E 
Sep 
1.17 
(169) 
Mar Sep 
68 74 
(119) (126) 
25.7 22.1 1993 
-3.5 
-27.0 
1.7 
35.7 
13.2 
n.a. 
n.a. 
1.4 
-0.7 
801.0 
-5.7 
160.0 
388 
4.0 
135.5 
n.a. 
n.a. 
13.5 
n.a. 
n.a. 
8.6 
1.7 
1.2 
No 
No 
SBA/STF 
(10/93^3/95) 
On track 
. Not rated 
Not rated 
75 
D 
Mar Sep 
126 122 
(169) (170) 
Mar Sep 
81 84 
(127) (133) 
21.4 20.9 1994 
6.0 
10.0 
4.0 
41.6 
13.0 
n.a. 
n.a. 
0.9 
0.0 
881.0 
-9.0 
253.0 
447 
2.8 
228.1 
n.a. 
n.a. 
10.2 
n.a. 
n.a. 
6.5 
0.5 
0.7 
No 
No 
-SBA/STF 
(10/93-3/95 
On track 
Not rated 
Not rated 
70 (Aug) 
O(Aug) 
Mar Sep 
105 102 
(167) (167) 
Mar Sep 
88 86 
(135) (135) 
20.7 23.6 
(1 ) Financial balance does not take into account government net lending, whereas fiscal balance does. 
(2) Countries are given a rating between A - E and a score between 1-100, with E and 100 representing 
the highest risk. 
(3) The higher the score in the ranking, the lower the creditworthiness of the country. 
(4) Countries are rated on a scale of zero to 100. with 100 representing the least chance of default. A given countiy 
may impiove its rating and still tall in the ranking il also the average glolwl rating for all rated countries improves 
-63-
ll_|:_3 Country-risk indicators 
Last update: 
30-Jun-S5 Country: Hungary 
Real GDP growth rate On %) 
Industrial production ( % change) 
Unemployment (% of labour force) (end of period) 
Inflation rate (Dec/Dec) 
Exchange rate (forints per USD) (end of period) 
Nominal effective exchange rate (change, Q4/Q4) (- = depreciation) 
Real effective exchange rate (change, Q4/Q4) (- - depreciation) 
Consolidated state budget balance (as % of GDP) (GFS definition) 
Balance of payments 
Exports of G+S (in mio USD) 
Current account balance (in % of GDP) 
Net inflow of foreign direct investment (in mio USD) 
Official reserves (end of period) 
in bn USD 
in months of imports of merchandises 
External debt 
External debt 
.(in convertible currencies, in bn USD, end of period) 
medium and long-term (> i year) 
short-term (=< 1 year) 
Convertible debt service (in bn USD) 
principal (1) 
interest 
External debt/GDP (%) 
External debt/Exports of G+S (%) 
Debt service/Exports of G+S (%) 
Arrears (on both interest and principal, in mio USD) 
Debt relief agreements and rescheduling 
IMF arrangements 
Type/no 
(Date/-) 
On track/off track 
(-/Date) 
Indicators of market's perceived creditworthiness 
Moody's long-term foreign currency rating (end of period) 
S&P long-term foreign currency rating (end of period) 
EIU country risk service (2) 
Score (end of period) 
Rating (end of period) 
Euromoney 
Position in the ranking (3) 
(number of countries) 
The Institutional Investor 
Position in the ranking (3) 
(number of countries) 
Credit rating (4) 1992 
-4.4 
-9.8 
1Z3 
24.7 
84.0 
-5.4 
7.9 
-6.6 
12300 
0.9 
1471 
4.5 
5.2 
21.5 
19.2 
2.3 
4.7 
3.1 
1.6 
58.7 
174.8 
35.0 
No 
No 
EFF 
(2/91-2/94) 
Off track 
Summer 
Bal 
BB+a 
40 
B 
46 
(169) 
Mar Sep 
42 43 
(119) (126) 
41.7 42.3 1993 
-2.3 
4.0 
12.1 
21.1 
100.7 
-3.1 
10.2 
-7.5 
10371 
-9.6 
2328 
6.7 
7.1 
24.6 
22.6 
2.0 
4.9 
3.3 
1.6 
68.0 
237.2 
47.4 
No 
No 
SBA 
(9/93-12/94) 
On track-" 
Ba1 
BB+ 
50 
C 
Mar Sep 
47 46 
(169) (170) 
Mar Sep 
43 43 
(127) (133) 
44.3 44.8 1994 
2.0 
9 
10.9 
21.2 
111.0 
-14.3 
0.0 
-6.1 
10219 
-9.5 
1100 
7.0 
7.4 
28.5 
26.1 
2.4 
6.2 
4.3 
1.9 
69.5 
278.9 
60.8 
No 
No 
SBA 
First review 
uncompleted 
Ba1 
BB+ 
50 (Aug) 
C (Aug) 
Mar Sep 
44 46 
(167) (167) 
Mar Sep 
43 44 
(135) (135) 
46.1 46.2 
(1) Including early repayments. 
(2) Countries are given a rating between A - E and a score between 1-100, with E and 100 representing 
Ihe highest risk 
(3) The higher the score in the ranking, the lower the creditworthiness of the country. 
(4) Countries are rated on a scale of zero to 100, with 100 representing the least chance of default. A given country 
msy impiove its rating and still tall in the ranking il also the average global rating for all rated countries improves 
-ÇQ-
. II-F-3 Cot,ntfy "sk indicators 
Last update: 
21.06.95 Country: |srafij 
Real GDP growth rate (in tt) 
Industrial production ( % change) (at constant 1990 prices) 
Unemployment rate (average) 
Consumer Price Index (Dec/Dec) 
Exchange rate (sheqalim per USD) (end of period) 
Nominal effective exchange rate (change. Q4/Q4) (- = deprec.) 
Real effective exchange rate (change. Q4/Q4J (- = deprec.) 
Central government overall deficit (as % of GOP) 
Balance of payments 
Exports (in bn USD) 
Current account balance (in % of GDP) 
Net inflow of foreign direct investment (in mio USD) 
Gross official FX reserves (end of period) (in months of total imports) 
in billions USS 
in months of imports of G&S 
External debt 
External debt (gross external liabilities) 
(in bn USD. end of period) 
medium and long-term (> 1 year) 
short-term (=< 1 year) 
Debt service (in bn USD) 
principal 
interest (gross) 
External debt/GDP (%) 
External debt/exports (%) 
Debt service/exports of goods and services (%) 
Arrears (on both interest and principal, in mio USD) 
Debt relief agreements and rescheduling 
IMF arrangements 
Type/no 
(Date/-) 
On track/off track s '• 
(-/Date) 
Indicators of markets perceived creditworthiness 
Moody's long-term foreign currency rating (end of period) 
S&P long-term foreign currency rating (end of period) 
Euromoney 
Position in the ranking (2) 
(number of countries) 
The Institutional Investor 
Position in the ranking (2) 
(number of countries) 
Credit rating (3) 1992 
6.6 
8.2 
11.2 
9.4 
2.764 
-9.7 
-4.9 
-2.4 
13.3 
0.1 
-340 
5.127 
2.2 
33.6 
23.2 
10.4 
6.5 
42 
2.3 
52.3 
252.6 
31.0 
No 
No 
CCFF 
(3/92-3/93) 
On-track 
Not rated 
BBB-
32 
(169) 
Mar Sep 
50 52 
(119) (126) 
37.1 35.1 1993 
3.5 
6.5 
10.0 
11.3 
2.986 
-6.1 
1.8 
-2.5 
14.9 
-1.8 
0 
6.382 
2.4 
36.1 
n.a. 
n.a. 
6.4 
4.1 
2.3 
55.8 
242.3 
29.0 
No 
No 
No 
Not rated 
BBB+ 
Mar Sep 
29 29 
(169) (170) 
Mar Sep 
46 46 
(127) (133) 
39.6 40.5 1994 
6.5 
4.7 
7.8 
14.5 
3.018 
-1.1 
n.a. 
-2.0 
148 
. 3.0 
156 
6.689 
2.5 
37.4 
n.a 
n.a. 
n.a. 
n.a 
n.a. 
n.a 
226.7 
n.a. 
No 
No 
No 
Not rated 
BBB+ 
Mar Sep 
30 00 
(167) (000) 
Mar Sep 
46 43 
(135) (135) 
43.4 46.5 
(1) Countries are given a rating between A - E and a score between 1 -100. with E and 100 representing the highest risk 
(2) The higher the score in the ranking, the lower the creditworthiness of the country. 
(3) Countries are rated on a scale of zero to 100, with 100 representing the least chance of default. A given country 
may improve its rating and still fall in the ranking if also the average global rating for all rated countries improves. 
- G5 
H_F-3 Country-*isk indicators 
* Last update: 
30-Jun-95 Country: Latvia 
Real GOP growth rate (in %) 
Industrial production ( % change) 
Unemployment (end of period) 
Inflation rate 
Exchange rate (Lats per USD) (end of period) 
Nominal effective exchange rate (change, Q4/Q4) (- = depreciation) 
Real effective exchange rate (change, Q4/Q4) (- = depreciation) 
General government balance (as % of GDP) 
Financial balance (1) 
Fiscal balance (1 ) 
Balance of payments 
Exports (in mio USD) 
Current account balance, excl. official transfers (in % of GDP) 
Net inflow of foreign direct investment (in mio USD) 
Official FX reserves (end of period) 
in mio USD 
in months of imports of G&S 
External debt 
External debt 
fin convertible currencies, in mio USD, end of period) 
medium and long-term (> 1 year) 
short-term (=< 1 year) . 
Convertible debt service (in mio USD) 
principal 
interest 
External debt/GDP (%) 
External debt/merchandise exports (%) 
Debt service/merchandise exports (%) 
Arrears (on both interest and principal, in mio USD) 
Debt relief agreements and rescheduling 
IMF arrangements 
Type/no 
(Date/-) 
On track/off track 
(-/Date) 
Indicators of market's perceived creditworthiness 
Moody's long-term foreign currency rating (end of period) 
S&P long-term foreign currency rating (end of period) 
EIU country risk service (2) 
Score (end of period) 
Rating (end of period) 
Euromoney 
Positron in the ranking (3) 
(number of countries) 
The Institutional Investor 
Position in the ranking (3) 
(number of countries) 
Credit rating (4) 1992 
-33.8 
-351 
2.3 
958.1 
0.843 
n.a. 
n.a. 
0.0 
-0.8 
825 
2.3 
14 
156 
2.0 
58 
58 
0.0 
0 
0 
0 
. 4.7 
7.0 
0.0 
No 
No 
SBA 
(9/92-9/93) 
On track 
Not rated 
Not rated 
80 
E 
Sep 
123 
(169) 
Mar Sep 
72 77 
(119) (126) 
23.9 21.4 1993 
-12.0 
-32.6 
5.8 
34.8 
0.595 
n.a. 
n.a. 
1.0 
0.6 
998 
4.6 
51 
510 
5.6 
240 
240 
0.0 
20 
n.a. 
n.a. 
11.0 
24.0 
2.0 
No 
No 
SBA/STF 
(12/93-3/95) 
On track 
Not rated 
Not rated 
75 
D 
Mar Sep 
133 132 
(169) (170) 
Mar Sep 
89 87 
(127) (133) 
19.5 20.0 1994 
2.0 
-2.2 
7.0 
26.0 
0.548 
n.a. 
n.a. 
-1.7 
-4.1 
951 
-4.6 
155 
620 
5.5 
370 
370 
0.0 
48.0 
n.a. 
n.a. 
11.0 
38.0 
5.0 
No 
No 
-SBA/STF 
(12/93-3/95) 
On track 
Not rated 
Not rated 
75 (Aug) 
D (Aug) 
Mar. Sep 
104 125 
(167) (167) 
Mar Sep 
94 92 
(135) (135) 
19.6 21.3 
(1) Financial balance does not take into account government net lending, whereas fiscal balance does 
(2) Countries are given a rating between A - £ and a score between 1-100. with E and 100 representing 
the highest risk. 
(3) The higher the score in the ranking, the lower the creditworthiness of the country. 
(4) Countiies are rated on a scale ol :e<o lo 100, with 100 lepresenting ttvo least chance of default A given countiy 
may improve rts rating and still fall in the ranking if also the average global rating for all raled countries improves 
- 66-
- U-F-3 Country-risk indicators 
Last update: 
30-Jun-£5 Country: Lithuania 
Real GDP growth rate (in %) 
Industrial production ( % change) 
Unemployment rate (end of period) 
Inflation rate (end of period) 
Exchange rate (Litas per USD) (end of period; for 1994. fixed as of 1.4.94) 
Nominal effective exchange rate (change, Q4/Q4) (- = depreciation) 
Real effective exchange rate (change, Q4/Q4) (- = depreciation) 
General government balance (as % of GDP) 
Financial balance (1 ) 
Fiscal balance (1 ) 
Balance of payments 
Exports (in mio USD) 
Current account balance (in % of GDP) 
Net inflow of foreign direct investment (in mio USD) 
Official FX reserves (end of period) 
in mio USD 
in months of imports of G&S 
External debt 
External debt 
fin convertible currencies, in mio USD. end of period) 
medium and long-term (> 1 year) 
short-term (=< 1 year) 
Convertible debt service (in mio USD) 
principal 
interest 
External debt/GDP (%) 
External debt/exports of G&S (%) 
Debt service/exports of G&S (%) 
Arrears (on both interest and principal, in mio USD) 
Debt relief agreements and rescheduling 
IMF arrangements 
Type/no 
(Date/-) 
On track/off track 
(-/Date) 
Indicators of market's perceived creditworthiness 
Moody's long-term foreign currency rating (end of period) 
S&P long-term foreign currency rating (end of period) 
EIU country risk service (2) 
Score (end of period) 
Rating (end of period) 
Euromoney 
Position in the ranking (3) 
(number of countries) 
The Institutional Investor 
Position in the ranking (3) 
(number of countries) 
Credit rating (4) 1992 
-37.7 
-51.6 
1.3 
1161.1 
1.8 
n.a. 
n.a. 
0.6 
0.7 
1145 
3.4 
10 
106 
2.6 
98.8 
n.a. 
n.a. 
2.0 
n.a. 
n.a. 
5.4 
7.8 
0.2 
No 
No 
SBA 
(10/92-9/93) 
On track 
Not rated 
Not rated 
80 
E 
Sep 
118 
(169) 
Mar Sep 
73 80 
(119) (126) 
23.7 20.7 1993 
-16.2 
-47.0 
1.6 
188.6 
3.9 
n.a. 
n.a. • 
0.9 
-4.6. 
1877 
-6.2 
23 
410 
2.4 
345.3 
n.a. 
n.a. 
15.0 
n.a. 
n.a. 
11.2 
16.3 
0.7 
No 
No 
SBA/STF 
(10/93^3/94) 
On track 
Not rated 
Not rated 
75 
D 
Mar Sep 
134 130 
(169) (170) 
Mar Sep 
91 93 
(127) (133) 
18.9 19.0 1994 
1.5 
1.0 
2.0 
45.0 
4.0 
n.a: 
n.a. 
-3.0 
-3.0 
2220 
-1.6 
60 
650 
3.5 
530 
n.a. 
n.a. 
25.4 
n.a. 
n.a. 
9.7 
25.0 
1.0 
No 
No 
STF (10/93-3/94) 
EFF (10/94-11/95) 
On track 
Not rated 
Not rated 
75 (Aug) 
D(Aug) 
Mar Sep 
110 121 
(167)(167) 
Mar Sep 
97 96 
(135) (135) 
18.4 20.0 
(1) Financial balance does not take into account government net lending, whereas fiscal balance does. 
(2) Countries are given a rating between A - E and a score l>etweon 1-100. with E and 100 representing 
I he highest risk 
(3) 1 he higher the score m the ranking, tlie lower the creditworthiness of tlie counliy. 
(•') Countries are rated on a scale of :vro to 100, with 100 representing the least chance of default. A given country 
m.ty impiove- i!s i.itmg and ;,tj|| fall in the lankuvi if also the avi.i-je glohal I.;1UKJ foi al! (.tied eountn. ••:, impiov.-s 
-6?-
II-F-3 Country-risk indicators 
Last update: 
29^Jun-95 Country: Moldova 
Real GDP growth rate (in %) 
Industrial production ( % change) 
Unemployment (% of labour force) (end of period) 
Inflation rate (end of period) 
Exchange rate (leu per USD) (end of period) 
Nominal effective exchange rate (change, Q4/Q4) (- = depreciation) 
Real effective exchange rate (change, Q4/Q4) (- = depreciation) 
General government balance (as % of GDP) 
Balance of payments 
Merchandise exports (in mio USD) 
Current account balance (in % of GDP) 
Net inflow of foreign direct investment (in mio USD) 
Official FX reserves (end of period) 
in mio USD 
in months of imports of merchandises 
External debt 
External debt 
(in convertible currencies, in mio USD, end of period) 
medium and long-term (> 1 year) 
short-term (=< 1 year) 
Convertible debt service (in mio USD) 
principal 
interest 
External debt/GDP (%) 
External debt/ merchandise exports (%) 
Debt service/ merchandise exports (%) 
Arrears (on both interest and principal, in mio USD) 
Debt relief agreements and rescheduling 
IMF arrangements 
Type/no 
(Date / - ) 
On track/off track 
(-/Date) 
Indicators of market's perceived creditworthiness 
Moody's long-term foreign currency rating (end of period) 
S&P long-term foreign currency rating (end of period) 
EIU country risk service (1 ) 
Score (end of period) 
Rating (end of period) 
Euromoney 
Position in the ranking (2) 
(number of countries) 
The Institutional Investor 
Position in the ranking (2) 
(number of countries) 
Credit rating (3) 1992 
-29.1 
-27.10 
n.a. 
2198.0 
0.19 
n.a. 
n.a. 
-23.4 
n.a. 
-3.4 
n.a. 
2.5 
0.0 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
n.a. 
Not rated 
Not rated 
Not rated 
Sep 
156 
(169) 
Not rated 1993 
-8.7 
-7.20 
n.a. 
837 
3.64 
n.a. 
n.a. 
-6.8 
451 
-9.3 
14.0 
76.6 
1.4 
168.0 
n.a. 
n.a. 
5.0 
n.a. 
n.a. 
23.0 
37.3 
1.1 
No 
No 
SBA 
(3/93-3/94) 
On-track 
Not rated 
Not rated 
Not rated 
Mar Sep 
159 160 
(169) (170) 
Not rated 1994 
-22.2 
-30.0 
1.0 
116.0 
4.27 
n.a. 
n.a. 
-8.1 
617 
-9.6 
23.0 
1788 
3.0 
343.0 
n.a 
n.a. 
12.3 
n.a. 
n.a. 
26.0 
55.6 
2.0 
No 
No 
""SBA 
(12/93-3/95) 
On-track 
Not rated 
Not rated 
Not rated 
Mar Sep 
148 155 
(167) (167) 
Not rated 
(1 ) Countries are given a rating between A - E and a score between 1-100. with E and 100 representing 
the highest risk 
(<?) The higher the score in the ranking, the lower the creditworthiness of the country. 
(3) Countiies 3re rated on a scale of zero to 100, with 100 representing the least chance of default A given country 
may improve us rating and stili fall m ft*? ranking ,f r<|..0 the average global rating for all rnted countries improves 
-G ft-
jj.p_3 Country-risk indicators 
Last update: 
26-Jun-95 Country: Romania 
Real GDP growth rate (in %) 
Industrial production (% change) 
Unemployment rate (end of period) 
Inflation rate (Dec/Dec) 
Exchange rate ( lei per USD) (end of period) 
Nominal effective exchange rate (change. Q4/Q4) (- = depreciation) 
Real effective exchange rate (change, Q4/Q4) (- = depreciation) 
General government balance (as % of GDP) 
Balance of payments 
Exports of G&S (in mio USD) 
Currentaccount balance (in % of GDP) 
Net inflow of foreign direct investment (in mio USD) 
Official FX reserves (end of period) 
in mio USD 
in months of imports of G&S 
External debt 
External debt 
(in convertible currencies, in bn USD. end of period) 
medium and long-term (> 1 year) 
short-term (=< 1 year) 
Convertible debt service (in mio USD) 
principal 
interest 
External debt/GDP (%) 
External debt/exports of G&S (%) 
Debt service/exports of G&S (%) 
Arrears (on both interest and principal, in mio USD) 
Debt relief agreements and rescheduling 
IMF arrangements 
Type/no 
(Date/-) 
On track/off track 
(-/Date) 
Indicators of market's perceived creditworthiness 
Moody's long-term foreign currency rating (end of period) 
S&P long-term foreign currency rating (end of period) 
EIU country risk service (1 ) 
Score (end of period) 
Rating (end of period) 
Euromoney 
Position in the ranking (2) 
(number of countries) 
The Institutional Investor 
Position in the ranking (2) 
(number of countries) 
Credit rating (3) 1992 
-13.6 
-22.1 
8.4 
198.5 
460 
-74.6 
-24.0 
-4.8 
4299 
-6.8 
73 
93 
0.2 
3.5 
2.4 
1.1 
176 
85 
91 
18.1 
95.1 
4.1 
No 
No 
SBA 
(S/92-3/93) 
Off track 
Dec 92 
Not rated 
Not rated 
60 
D 
72 
(169) 
Mar Sep 
69 68 
(119) (126) 
25.6 24.8 1993 
1.3 
7.7 
9.9 
295.5 
1276 
-56.9 
39.7 
-0.1 
4882 
-5.5 
48' 
52 
0.1 
4.7 
3.3 
1.4 
312 
147 
165 
21.4 
129.6 
6.4 
No 
No 
No ' 
Not rated 
Not rated 
65 
D 
Mar Sep 
66 75 
(169) (170) 
Mar Sep 
73 75 
(127) (133) 
24.2 24.4 1994 
3.4 . 
9.9 
10.9 
61.7 
1767 
-29.4 
n.a. 
-4.4 
5998 
-3.5 
340 
591 
1.5 
4.9 
4.5 
0.4 
449.0 " 
224.0 
225.0 
23.5 
81.7 
10.0 
No 
No 
SBA/STF 
(5/94-12/95) 
On track 
Not rated 
Not rated 
65 (Aug) 
0 (Aug) 
Mar Sep 
74 77 
(167)(167) 
Mar Sep 
76 74 
(135) (135) 
25.4 .26.2 
(1 ) Countries are given a rating between A - E and a score between 1-100. with E and 100 representing 
the highest risk 
(2) The higher the score in Hie ranking, the lower the creditworthiness of the country 
(3) Countries are rated on a scale of .zero to 100. with 100 representing the least chance of default A given country 
may improve it-, latino :.:vi --.till tall in the ranking if al-.o the average glohal'ratmg 1or all ral-d countries impiove-. 
-G S-
„. • ll-lr-3 ' CounUy lisfc indicators 
Last updale: 
30.0695 Country: Russia 
Real GOP growth rate (in %) 
Industrial production ( % change) 
Unemptoyment rate (end of period) 
Inflation rate (Dec/Dec) 
Exchange rate ( Rbs per USD) (end of period) . 
Nominal exchange rate (change. Q4/Q4) (- = depreciation) 
Real exchange rate (5) (change. Dec/Dec.) (- = depreciation) 
General government balance (as % of GOP) 
Balance of payments (6) 
Exports of G&S (in bn USD) 
Current account balance (in % of GDP) 
Net inflow of foreign direct investment (in bn USD) 
Official FX reserves (end of period) (excluding gold) (net figures) 
in mio USD 
in months of imports of G&S 
External debt (7) 
External debt (in convertible currencies, in bn USD. end of period) 
medium and long-term (> 1 year) 
short-term (=< 1 year) 
Convertible debt service (in bn USD) (before rescheduling) 
principal 
interest 
. External debt/GDP (%) 
External debt/exports of G&S (%) 
Debt service/exports of G&S (%) (before rescheduling) 
Arrears (on both interest and principal, in bn USD) 
Debt relief agreements and rescheduling 
IMF arrangements 
Type/no 
(Date/-) 
On track/off track 
(-/Date) 
Indicators of market's perceived creditworthiness 
Moody's long-term foreign currency rating (end of period) 
S&P long-term foreign currency rating (end of period) 
EIU country risk service (1) 
Score (end of period) 
Rating (end of period) 
Euromoney 
Position in the ranking (2) 
(number of countries) 
The Institutional Investor 
Position in the ranking (2) 
(number of countries) 
Credit rating (3) 1992 
-19.0 
-18.4 
n.a. 
2300 
414.5 
(Q4/Q1) -55.6 
-68.7 
-188 
57 
-1.2 
0.7 
2.0 
0 5 
787 
65.7 
13.0 
156 
10.4 
5.2 
24.0 
137.0 
25.0 
11.8 
Paris Club 
(deferrals) 
London Club 
(roll-overs) 
1st credit 
tranche 
Not rated 
Not rated 
95 
E 
129 
(169) 
Mar Sep 
- 73 
- (126) 
- 23.6 1993 
-12.0 
-16.4 
5.1 
840 
1247 
-62.5 
-669 
-7.7 
58 
16 
07 
64 
1.3 
1040 
n.a. 
n.a. 
19.4 
14.7 
4.7 
31.0 
178.0 
34.0 
11.0 
Paris Oub 
(resched.) 
(roll-overs) 
STF 
(07.93 - 07.94) 
Off track 
Not rated 
Not rated 
95 
E 
Mar Sep 
141 137 
(169) (170) 
Mar Sep 
87 92 
(127) (133) 
20.2 19.0 1994 
-1S.3 
-21.0 
7.1 
203 
3571 
n.a. 
-2.2 
-11.5 
66 
-04 
-02 
23 
04 
1190 
n.a. 
n.a 
19.9 
142 
5.7 
40.0 
180.0 
31.0 
n.a. 
Paris Club 
(reserved.) 
(roll-overs) 
STF (4) 
(07.93 - 07.94) 
Qff track 
Not rated 
Not rated 
90 (Aug) 
E(Aug) 
Mar Sep 
138 136 
(167) (167) 
Mar Sep 
98 100 
(135) (135) 
18.1 184 
(1) Countries are given a rating between A - E and a score between 1 - 100. with E and 100 representing the highest risk 
(2) The higher the score in the ranking, tlie lower the creditworthiness of the country. 
(3) Countries are rated on a scale of zero to 100. with 100 representing the least chance of default A given country 
may improve its rating and still fall in the ranking if also the average global rating for all rated countries improves 
(4) Second tranche (1.5 bn USS) disbursed in April 94 
(5) Real exchange rate (USD/rouble rate x US price level) / (Russian pnee level) 
(6) '992 excluding FSU transactions 1993-1?9<: including f-SU transactions 
(') v.«93 and V.rt4 Oat.) ;n.> not compataiilo w.;:\ 19^2 cijta 19'.'2 data do nil! include délits to (miner ;,oci.ili:.l countrii.'s 
-?o-
114: j Country-risk indicators 
Last update: 
30-Jun-95 Country: Slovak Republic 
Real GDP growth rate (in %) 
Industrial production ( % change) 
Unemployment (% of labour force) (end of period) 
Inflation rate (Dec/Dec) 
Exchange rate (SKs per USD) (end of period) 
Nominal effective exchange rate (change. Q4/Q4) (- = depreciation) 
Real effective exchange rate (change. Q4/Q4) (- = depreciation) 
General government balance (as % of GDP) 
Balance of payments 
Exports of G&S (in mio USD) 
Current account balance (in % of GDP) 
Net inflow of foreign direct investment (in mio USD) 
Official FX reserves (end of period) 
in mio USD 
in months of imports of G&S 
External debt 
External debt 
(in convertible currencies, in bn USD, end of period) 
medium and long-term (> 1 year) 
short-term (=< 1 year) 
Convertible debt service (in mio USD) 
principal 
interest 
External debt/GDP (%) 
External debt/exports of G&S (%) 
Debt service/exports of G&S (%) 
Arrears (on both interest and principal, in mio USD) 
Debt relief agreements and rescheduling 
IMF arrangements 
Type/no 
(Date/-) 
On track/off track 
• (-/Date) 
Indicators of market's perceived.creditworthiness 
Moody's long-term foreign currency rating (end of period) (1 ) 
S&P long-term foreign currency rating (end of period) 
E1U country risk service (2) 
Score (end of period) 
Rating (end of period) 
Euromoney 
Position in the ranking (3) 
(number of countries) 
The Institutional Investor (1) 
Position in the ranking (3) 
(number of countries) 
Credit rating (4) 1992 
-7.0 
-12.8 
10.4 
9.1 
28.9 
n.a. 
0.5 
-13.1 
8219 
-0.4 (5) 
100 
356 
0.5 
2.8 
2.1 
0.4 
271 
167 
104 
25.7 
31.2 
3.3 
No 
No 
SBA 
(4/92-4/93) 
on-track but 
expired with 
dissolution 
ofCSFR 
Ba1 
Not rated 
Not rated 
Not rated 
58 
(169) 
Mar - Sep 
37 39 
(119) (125) 
47.1 46.1 1993 
-4.1 
-6.6 
14.4 
25.1 
33.2 
n.a. 
-1.8 
-7.6 
7568 
-5.4 
134 
395 • 
0.6 
3.4 
n.a. 
n.a. 
674 
490 
184 
30.8 
44.5 
8.9 
No 
No 
STF 
(7/93- ) 
On-track 
Not rated 
Not rated 
Not rated 
Not rated 
Mar Sep 
56 63 
(169) (170) 
Mar - Sep 
57 57 
(127) (133) 
31 30.6 1994 
4.8 
7.0 
14.6 
11.7 
31.3 
n.a. 
2.4 
-2.7 
8983 
6.0 
184 
1725 
0.4 
3.9 
n.a. 
n.a. 
791 
n.a. 
n.a. 
31.1 
43.4 
8.8 
No 
No 
STF 
(-7/94) 
_.-- SBA 
(7/94-3/96) 
On-track (6) 
Baa3 (May) 
BB+ (Apr) 
50 (Aug) 
C (Aug) 
Mar Sep 
64 66 
(167)(167) 
Mar Sep 
59 59 
(135) (135) 
31.6 33.1 
(1 ) For 1992, rating or position in the ranking assigned to the former CSFR. 
(2) Countries are given a rating between A - E and a score between 1-100. with E and 100 representing 
the highest risk. 
(3) The higher the score in the ranking, the lower the creditworthiness of the country. 
(4) Countries are rated on a scale of zero to 100. with 100 representing the least chance of default. A given country 
niay improve its rating and still fall in the ranking if also the average glottal (ating for all rated countries improves. 
<r>) Alter fiscal transfers from the Ooch lands, estimated at about 7% of Slovak GDP-, 
C>) 1 he mid term review of the programme, which l.vgan in Feljruaiy 1995. has not Iv.-en completed yet 
-?J 
ll-F-3 Country risk indicators 
Last update: 
23.06.95 Country: Ukraine 
Rial GOP growth (% change) 
industrial production ( % change) 
Unemployment rate (end of period) 
Inflation rate (Dec/Dec) 
Exchange rate (Krb per USD) (end of period) 
- suction / interbank 
-cash 
Nominal effective exchange rate (change, Q4SQ4) (- = depreciation) 
Real effective exchange rate (change. Q4/Q4) (- = depreciation) 
General government balance (as V. of GDP) 
Balance of payments 
Exports of G&S (in bn USD) 
Current account balance (excl. transfers) (in % of GDP) 
Net inflow of foreign direct investment (in bn USD) 
Gross official FX reserves (end of period) in mio USD 
in months of imports of G&S 
External debt 
External debt 
(in convertible cuaencies, in bn USD, end of period) 
medium and long-term (> 1 year) 
short-term (=< 1 year) 
Convertible debt service paid (in mio USD) 
principal 
interest 
External debt/GDP (%) 
External debt/exports of G&S (%) 
Oebt service/exports of G&S (%) 
Arrears (on both interest and principal, in mio USD) 
Debt relief agreements and rescheduling 
IMF arrangements 
Type/no 
(Date/-) 
On track/off track 
(-/Date) 
Indicators of market's perceived creditworthiness 
Mood/s long-term foreign ctjrrency rating (end of period) 
S&P long-term foreign currency rating (end of period) 
EIU country risk service (2) 
Score (end of period) 
Rating (end of period) 
Euromoney 
Position in the ranking (3) 
(number of countries) 
The Institutional Investor 
Position in the ranking (3) 
(number of countries) 
Credit rating (4) 1992 
-17.0 
-6.5 
0 
2000 
638 
749 
n.a. 
n.a. 
-30.4 
15.9 
-3.5 
n.a. 
3.5 
n.a. 
n.a. 
14 
n.a. 
n.a. 
17.2 
22.0 
0.1 
264 
-
Not rated 
Not rated 
100 
E 
122 
(169) 
Mar Sep 
- 79 
- 026) 
- 21.1 1993 
-17.1 
-8.5 
0.3 
10155 
12610 
25000 
n.a. 
n.a. 
-10.1 
14.4 
-S.9 
0.2 
193 
0.2 
4.1 
n.a. 
n.a. 
202 
n.a. 
n.a. 
12.1 
28.5 
1.3 
548 
- • 
Not rated 
Not rated 
100 
E 
Mar Sep 
142 146 
(169) (170) 
Mar Sep 
95 96 
(127) (133) 
18.2 18.2 1994 
23.0 
-35.6 
0.3 
401 
108196 
128000 
n.a. 
n.a. 
-«.6 
' 14.8 
-6.0 
0.09 
646 
0.6 
7.1 
n.a. 
n.a. 
1794 
n.a. 
n.a. 
29.2 
48.0 
12.4 
2722 
rescheduling of 
debt owed to 
Turkmenistan 
STF(1) 
26 Oct 94 
On track 
Not rated 
Not rated 
100 (Aug) 
E (Aug) 
Mar Sep 
149 147 
(167) (167) 
Mar Sep 
111 113 . 
(135) (135) 
15.1 14.5 
In April 1995 complemented by a stand-by anangement. 
(2) Countiies are given a rating between A - E and a score between 1 - 100. wit'li C and 100 representing the highest risk 
(3) The higher the score in the ranking, the lov.oi the creditworthiness of the countiy 
<•*) Countiies are latcd on a scale of zero lo 100. with 100 representing the least chance ot default. A given countiy 
may improve its t.V.mg and still fall in the (.inking it also the aveiage <jloh.il i.Hing for all iaU-d countiies improve-. 
-v 
TABLE 1 
CAPITAL OUTSTANDING IN RESPECT OF OPERATIONS DISBURSED 
(ECU million) 
Operation 
MEMBERSIATES 
A. Balance of payments 
I.Greece I 
2. Greece II 
3. Italy 
B. Others 
4. Euratom 
5. NCI and NCI earthquakes 
6. EIB Mediterranean, 
Spain, Greece, Port. 
MEMBER STATES - TOTAL 
THIRD COUNTRIES 
A. Financial assistance 
I.Hungary 
2. Czech Republic 
3. Slovak Republic 
4. Bulgaria 
5. Romania 
6. Algeria 
7. Israel 
8. Baltic States 
9. Moldova 
10. Ukraine 
11 .Belarus 
12. Former Soviet Union 
B. Other 
13. EIB Mediterranean 
14. EIB Central & E. Europe I 
15. EIB Central & E. Europe II 
16. EIB Asia, Latin America 
17.South Africa 
18. Guarantee, CIS 
THIRD COUNTRIES - TOTAL 
GRAND TOTAL Authorized 
ceiling 
14000 
1750 
2200 
8000 
4000 
6830 
1500 
26330 
1050 
250 
255 
400 
580 
600 
160 
220 
45 
85 
75 
1250 
6282 
1700 
3000 
750 
300 
500 
17502 
43832 Capital 
outstanding 
31.1Z94 
1000 
4022 
779 
1570 
473 
7843 
790 
250 
125 
360 
455 
400 
160 
110 
25 
810 
1688 
572 
2 
46 
133 
5925 
13769 Capital 
outstanding 
30.06.95 
1000 
4071 
741 
1289 
439 
7540 
440 
250 
125 
360 
455 
400 
160 
110 
25 
702 
1756 
658 
24 
107 
0 
5572 
13111 Remainder to 
be disbursed 
30.06.95 
0 
1200 
4000 
0 
0 
0 
5200 
260 
0 
130 
40 
125 
200 
0 
110 
20 
85 
75 
233 
3645 
1035 
2976 
643 
300 
9877 
15077 
1) No disbursement is planned. 
2) The third and fourth tranches had still not been paid at 30.06.95. So far, the Italian 
Government has not requested payment. 
ANNEX TO TABLE 1 
SITUATION IN RESPECT OF EIB OPERATIONS (30.06.95) 
Operations 
EIB Mediterranean, 
Spain, Greece, Port. 
Third countries EIB Med. 
Central & Eastern Europe I 
Central & Eastern Europe II 
Asia, Latin America Credit line 
authorized 
1500 
6282 
1700 
3000 
750 Loans made 
available, minus 
cancellations 
1465 
4287 
1647 
1051 
344 Initial 
disbursement 
1612 
2637 
665 
24 
107 Amount 
outstanding 
at 30.06.1995 
439 
1756 
658 
24 
107 
NB: The fact that the initial disbursement sometimes exceeds the authorized ceilThgls due to differences 
in the ecu rate between the date on which the contracts were signed and 30.06.95. 
-}3 
TABLE 2 
MAXIMUM ANNUAL RISK BORNE BY THE COMMUNITY BUDGET 
MEMBER STATES 
CAPITAL 
A. Balance of payments 
1. Greece 
2. Italy 
B. Structural loans 
3. Euratom 
4. NCI and NCI EQ 
5. EIB Med. Old. Prot. 
Sp. Gr. Port 
Capital - subtotal 
INTEREST 
A. Balance of payments 
1. Greece 
2. Italy 
B. Structural loans 
3. Euratom 
4. NCI and NCI EQ 
5. EIB Med. Old. Prot. 
Sp. Gr. Port 
Interest - subtotal 
MEMBER STATES - TOTAL 
NON-MEMBER COUNTRIES 
CAPITAL 
A. Financial assistance 
6. Hungary 
7. Czech Republic 
8. Slovak Republic 
9. Bulgaria 
10. Romania 
11. Israel 
12. Algeria 
13. Ex USSR 
14. Baltic States 
15. Moldova 
B. Guarantees 
16. EIB Mediterranean 
17. EIB C+E Eur. I + II 
18. EIB Asia Latin America 
19. Aid. Russia 500m 
Capital - subtotal 
INTEREST 
A. Financial assistance 
6. Hungary 
7. Czech Republic 
8. Slovak Republic 
9. Bulgaria 
10. Romania 
11. Israel 
12. Algeria 
13. Ex USSR 
14. Baltic States 
15. Moldova 
B. Guarantees 
16. EIB Mediterranean 
17. EIB C+E Eur. I + II 
18. EIB Asia Latin America 
19. Aid. Russia 500m 
Interest - subtotal 
NON-MEMBER COUNTRIES -
TOTAL 
GRAND TOTAL 
(Eastern Europe ) 
(Other non-member countries) 1995 
47 
458 
81 
587 
95 
254 
62 
133 
41 
586 
1173 
350 
556 
139 
14 
133 
1192 
79 
25 
13 
36 
46 
16 
40 
112 
11 
3 
120 
39 
3 
9 
552 
1744 
2916 
1426 
318 1996 
500 
500 
154 
305 
76 
1535 
95 
257 
57 
96 
34 
539 
2073 
260 
205 
137 
27 
628 
44 
25 
13 
36 
46 
16 
40 
15 
11 
3 
118 
47 
3 
417 
1045 
3119 
731 
314 1997 
440 
545 
75 
1060 
48 
216 
41 
70 
27 
403 
1463 
80 
127 
63 
140 
160 
250 
161 
143 
36 
11 
1171 
18 
25 
•13 
36 
46 
16 
40 
9 
11 
3 
108 
45 
3 
373 
1543 
3006 
812 
732 1998 
500 
1012 
93 
90 
59 
1754 
48 
216 
10 
21 
21 
316 
2070 
100 
123 
62 
150 
185 
157 
50 
14 
841 
10 
13 
6 
22 
46 
15 
11 
3 
97 
42 
3 
268 
1110 
3180 
823 
287 1999 
16 
42 
52 
110 
161 
3 
13 
15 
192 
303 
190 
158 
63 
14 
426 
7 
27 
15 
11 
3 
86 
38 
3 
190 
616 
918 
339 
277 2000 
2559 
13 
42 
46 
2659 
161 
1 
10 
11 
184 
2843 
80 
110 
5 
148 
63 
15 
420 
7 
8 
15 
11 
3 
75 
34 
3 
155 
575 
3418 
320 
256 2001 
71 
21 
92 
7 
7 
14 
106 
70 
150 
5 
136 
63 
15 
439 
7 
10 
2 
65 
29 
2 
116 
555 
661 
177 
378 2002 
23 
23 
2 
6 
7 
30 
5 
128 
63 
15 
211 
2 
55 
25 
2 
83 
294 
324 
94 
200 TOTAL 
1000 
4071 
763 
1554 
432 
7820 
285 
1266 
175 
352 
163 
2240 
10060 
790 
250 
125 
360 
455 
160 
400 
922 
110 
15 
1146 
379 
84 
133 
5329 
151 
88 
45 
151 
219 
48 
175 
136 
66 
25 
724 
300 
23 
9 
2159 
7468 
17549 
4727 
2761 
-?v-
TABLE 3 
MAXIMUM THEORETICAL ANNUAL RISK BORNE BY THE COMMUNITY BUDGET 
(Estimate in ECU million based on all operations disbursed, adopted and proposed by the Commission) 
MEMBER STATES 
CAPITAL 
A. Balance of payments 
I.Greece 
2. Italy 
B. Structural loans 
3. Euratom + NCI 
4. EIB Sp.Gr.Port 
Capital - subtotal 
INTEREST 
A Balance of payments 
1. Greece 
2. Kay 
B. Structural loans 
3. Euratom + NCI 
4. EIB Sp.Gr.Port 
Interest - subtotal 
MEMBER STATES - TOTAL 
NON-MEMBER COUNTRIES 
CAPITAL 
A. Financial assistance 
5. Hungary 
6. Czech Republic 
7. Slovak Republic 
8. Bulgaria 
9. Romania 
10. Israel 
11. Algeria 
12. Ex USSR 
13. Baltic States 
14. Moldova 
15. Ukraine 
16. Belarus 
17. Euratom, C+E Eur. 
B. Guarantees 
18. EIB Mediterranean 
19. EIB C+E Eur. I + II 
20. EIB Asia Latin America 
21.South Africa 
22. Aid. Russia 500m 
Capital • subtotal 
INTEREST 
A. Financial assistance 
5. Hungary 
6. Czech Republic 
7. Slovak Republic 
8. Bulgaria 
9. Romania 
10. Israel 
11. Algeria 
12. Ex USSR 
13. Baltic States 
14. Moldova 
15. Ukraine 
16.Belarus 
17. Euratom, C+E Eur. 
B. Guarantees 
18. EIB Mediterranean 
19. EIB C+E Eur. I + II 
20. EIB Asia Latin America 
21. South Africa 
22. Aid. Russia 500m 
Interest - subtotal 
NON-MEMBER COUNTRIES - TOTAL 
GRAND TOTAL 
(Eastern Europe ) 
(Other non-member countries) 1995 
505 
81 
587 
95 
383 
196 
41 
715 
1302 
350 
556 
139 
14 
133 
1192 
92 
25 
16 
40 
52 
16 
50 
127 
17 
4 
7 
2 
10 
153 
85 
5 
1 
9 
709 
1901 
3203 
1537 
364 1996 
500 
500 
459 
76 
1535 
95 
595 
153 
34 
877 
2411 
260 
205 
137 
27 
629 
70 
25 
22 
44 
58 
16 
60 
24 
22 
5 
24 
8 
30 
230 
172 
17 
4 
830 
1459 
3870 
995 
464 1997 
985 
75 
1060 
48 
638 
112 
27 
824 
1884 
80 
127 
63 
140 
160 
250 
161 
143 
36 
11 
1171 
44 
25 
26 
44 
58 
16 
60 
18 
22 
5 
29 
8 
50 
331 
284 
35 
11 
1064 
2235 
4119 
• 1218 
1017 1998 
500 
1012 
183 
59 
1754 
48 
638 
31 
21 
737 
2492 
100 
123 
62 
150 
185 
210 
112 
22 
1 
965 
36 
12 
20 
30 
58 
35' 
22 
5 
29 
8 
70 
416 
369 
50 
20 
1178 
2143 
4635 
1389 
754 ".999 
59 
52 
110 
553 
16 
15 
584 
69.4 
190 
292 
210 
35 
6 
733 
26 
14 
15 
40 
35 
22 
5 
29 
8 
88 
458 
399 
58 
23 
1218 
1951 
2645 
1044 
907 2000 
2559 
55 
46 
2659 
553 
11 
11 
575 
3235 
80 
110 
5 
10 
386 
315 
52 
13 
971 
26 
13 
15 
21 
35 
22 
5 
29 
8 
101 
461 
389 
58 
29 
1210 
2181 
5416 
1147 
1034 2001 
2000 
71 
21 
2092 
340 
7 
7 
354 
2446 
70 
150 
9 
37 
8 
23 
439 
366 
62 
21 
1185 
26 
13 
15 
13 
35 
11 
4 
29 
8 
106 
440 
354 
53 
28 
1134 
2318 
4764 
1090 
1228 2002 
2000 
23 
2023 
170 
2 
6 
177 
2200 
260 
65 
80 
125 
200 
110 
9 
57 
15 
40 
477 
397 
69 
25 
1929 
13 
8 
13 
20 
11 
3 
25 
7 
102 
408 
316 
48 
26 
999 
2928 
5128 
1655 
1273 TOTAL 
1000 
8071 
2317 
432 
11820 
285 
3869 
527 
163 
4843 
16663 
1050 
250 
190 
440 
580 
160 
600 
922 
220 
23 
94 
23 
73 
2223 
1477 
251 
66 
133 
8775 
320 
87 
136 
211 
311 
48 
330 
169 
149 
33 
198 
54 
557 
2897 
2368 
324 
142 
9 
8342 
17116 
33779 
10075 
7041 
75 
EXPLANATORY NOTES 
The purpose of these tables is to show the annual repayments of capital and interest in 
respect of borrowing and lending operations for which the risk is covered by the 
Community budget. The figures show the maximum possible risk for the Community in 
respect of these operations and must not be read as meaning that these amounts will 
actually be drawn from the budget. In the case of Table 3, it is not certain that all the 
operations described will actually be disbursed. No account has been taken of interest on 
late payment or any additional costs such as lawyers' fees. 
I. TYPES OF OPERATION AND PAYMENT OF THE BUDGET 
GUARANTEE 
A. TYPES OF OPERATION 
The risk covered by the Community budget results from two types of 
operation: 
- borrowing/lending operations; 
- guarantees given to third parties. 
(a) Borrowing/lending operations 
In this type of operation, the Community borrows on the financial 
market and on-lends the proceeds (at the same rate and for the same 
term) to Member States (balance of payments), non-member 
countries (medium-term financial assistance) or firms (NCI, Euratom). 
The loan repayments are scheduled to match the repayments of the 
borrowings due from the Community. If the recipient of the loan is 
late in making a repayment, the Commission must draw on its 
resources to repay the borrowing on the due date. 
(b) Guarantees given to third parties 
The loan guarantee is in respect of loans granted by a financial 
institution (EIB or commercial banks in the case of the former Soviet 
Union). When the recipient of a guaranteed loan fails to make a 
payment on the due date, the EIB asks the Commission to pay the 
amounts owed by the defaulter in accordance with the contract of 
guarantee. The guarantee must be paid within three months of 
receiving the EIB's request. The EIB administers the loan with all the 
care required by banking practice and is obliged to demand the 
payments due after the guarantee has been activated. 
76 
B. MOBILIZATION OF FUNDS FOR GUARANTEE PAYMENTS 
The funds needed to pay the budget guarantee in the event of late payment by 
the recipient of a loan granted or guaranteed by the Community are raised as 
follows: 
(a) Borrowing/lending operations 
1. The amount required may be taken provisionally from cash 
resources in accordance with Article 12 of the Financial 
Regulation. This method is used so that the Community can 
immediately repay the borrowing on the date scheduled in the 
event of late payment by the recipient of the loan. 
2. If the delay extends to .three months after the due date, the 
Commission draws on the Guarantee Fund to cover the default. 
The funds obtained are used to replenish the Commission's cash 
resources. 
3. The transfer procedure can be used to provide the budget heading 
with the appropriations needed to cover the default. This method 
is used when there are insufficient appropriations in the Guarantee 
Fund and must be authorized in advance by the budgetary 
authority. 
4. The re-use of amounts repaid by debtors who have defaulted, 
leading to activation of the Community guarantee, allows 
payments to be made within a short period of time always 
providing, of course, that there are recovered funds available. 
(b) Community guarantees for loans from the EIB's own resources 
Since the entry in force of the Regulation establishing a Guarantee 
Fund for external action, the provisions of the Agreement between the 
Community and the EIB on management of the Fund state that, after 
the EIB calls in the guarantee in the event of a default, the 
Commission must authorize the Bank to withdraw the corresponding 
amounts from the Guarantee Fund within three months. 
If there are insufficient resources in the Fund, the procedure used for 
activating the guarantee is the same as for borrowing/lending 
operations. 
n. CALCULATION 
Some of the amounts indicated are the result of estimates made on the basis of the 
following assumptions. 
-77 
Generally speaking, the exchange rates for loans in currencies other than the ecu are 
assumed to have been stable since 30 June 1995. However, borrowing and lending 
operations should not involve exchange risks for the Community. Unless otherwise 
stated, the average rate of interest is estimated at 10%. This rate is probably a little 
high for EIB loans, which often attract interest subsidies under the protocols. 
A. MEMBER STATES 
1. Greece: A balance-of-payments loan of ECU 2 200 million has been 
authorized. ECU 1 000 million of this amount has been disbursed in two 
tranches of ECU 500 million to be repaid in 1996 and 1998 respectively. It 
is assumed that the remaining ECU 1 200 million will not be disbursed. 
2. Italy: The Council decision of 18 January 1993 granted a ECU 8 000 
million balance-of-payments loan to Italy. The loan is to be made available 
in four instalments amounting to ECU 2 000 million each and - with the 
exception of the first instalment - is conditional on the attainment of agreed 
targets on Italy's public debt and deficit. 
The first two instalments were released in 1993. Concerning the coming 
period, the Council Decision states that the third instalment could be 
released as of 1 February 1995 (but the Italian Government has not yet 
applied for it). The fourth instalment may be released not earlier than 
1 February 1996. 
If the Italian Government decides to apply for the release of the third and 
fourth instalments and the conditions are deemed to be fulfilled ECU 2 000 
million in 1995 and ECU 2 000 million in 1996 will be disbursed to the 
Italian Republic. 
3. EIB. Mediterranean, old protocols: Spain, Greece. Portugal: These are 
Community guarantees for EIB operations in these countries prior to 
accession. The amounts are now final, since all the loans authorized have 
been disbursed. 
B. NON-MEMBER COUNTRIES 
A. FINANCIAL ASSISTANCE 
1 • Hungary I: The amounts of the first two tranches are final and 
certain. The third tranche of the macrofinancial assistance decided 
in 1990 could be disbursed in the second half of 1995. The first 
tranche was repaid by Hungary in full on 20 April 1995. 
2. Hungary II: ECU 180 million has been granted and paid out in 
full. 
-78-
3. Czech and Slovak Republics: ECU 375 million has been granted, 
in two tranches for a maximum term of seven years (bullet), with a 
first tranche of ECU 185 million and a second tranche of 
ECU 190 million for a term of six years. 
ECU 130 million has been granted to Slovakia in two tranches for 
a maximum term of seven years (bullet). It is assumed that the 
full ECU 130 million will be disbursed in 1995. 
No tranche had been paid at 30 June 1995. 
4. Bulgaria I: ECU 290 million has been granted in two tranches for 
a maximum term of seven years (bullet), with a first tranche of 
ECU 150 million for a term of seven years and a second tranche 
of ECU 140 million for a term of five years. 
5. Bulgaria II: The financial assistance of ECU 110 million over a 
maximum period of seven years decided in 1992 is being granted 
in two tranches. The first tranche of ECU 70 million was paid on 
7 December 1994. The second tranche could be paid in the 
course of 1995. 
6. Romania I: An estimated ECU 375 million in two tranches for a 
maximum term of seven years (bullet). The first tranche of 
ECU 190 million was disbursed in 1992 with a term of seven 
years and the second was disbursed in 1992 with a term of six 
years. 
7. Romania II: The new operation involving ECU 80 million for a 
maximum term of seven years was disbursed in 1993. 
8. Romania HI: This is a seven-year loan of ECU 125 million to be 
disbursed in two tranches. No tranche had been disbursed at 30 
June 1995. It is assumed that ECU 55 million " and 
ECU 70 million will be paid out. 
9. Moldova: This is a ten-year loan of ECU 45 million to be 
disbursed in two tranches. The first tranche of ECU 25 million 
was disbursed on 7 December 1994. The second tranche of 
ECU 20 million could be paid to Moldova in the second half of 
1995. 
10. Ukraine: ECU 85 million is to be lent in one tranche for a 
maximum term of ten years. At 30 June 1995 the loan had still 
not been paid out. 
11. Baltic States: The first tranche (ECU 110 million) of a loan of 
ECU 220 million was paid in 1993. The second should be paid in 
79-
1995. The two tranches would then be due for repayment in 2000 
and 2002 respectively. 
12. Algeria: ECU 400 million has been granted in two tranches of 
ECU 250 million and ECU 150 million. The first was paid in 
December 1991 for a term of six years. 
The second tranche of ECU 400 million was paid on 17 August 
1994. 
13. Algeria II: ECU 200 million has been granted in two tranches for 
a maximum term of seven years (bullet). It is assumed that the 
full ECU 200 million will be disbursed in 1995. No tranche had 
been paid at 30 June 1995. 
14. Israel: A loan of ECU 160 million has been paid in full and is 
repayable in 1997. 
B. GUARANTEES 
1. EIB 
The EIB has supplied the figures used for calculation of the 
assumptions made for drawing up Table 3 (EIB loans to 
non-member countries from its own resources). 
In the case of loans not disbursed, we have assumed that an 
average of 10% of the loan will be disbursed in the year of 
signature and 30% in each of the three following years. 
It is estimated that the average term will be fifteen years with a 
three-^year period of grace. 
2. Food aid for the former Soviet Union 
(a) Guarantee 
This is a guarantee for a bank loan of ECU 500 million, with 
principal and interest fully covered by the budget, for a term of 
three and a half years with three repayments at intervals of 
eleven months starting from the twentieth month. ECU 375 
million has been used. 
(b) Borrowing/lending 
An operation involving ECU 1 250 million for a maximum term 
of three years. 
-80-
This borrowing will be divided between the various Republics 
of the former Soviet Union. Loans amounting to less than 
ECU 100 million will be repaid in one instalment three years 
after the start of the period in which the funds may be drawn. 
Borrowings exceeding ECU 100 million will be repaid in two 
instalments two years and three years after the start of the 
period in which the funds may be drawn. 
Depending on the type of contract, there are two periods in 
which funds may be drawn; one starts on 20 August, the other 
on 15 January. 
The balance still to be used at 30 June 1995 came to 
ECU 233 million. 
3. Euratom, countries of Central and Eastern Europe 
Of the ECU 1 100 million involved, it is assumed that 
ECU 200 million will be disbursed in 1995, ECU 200 million in 
each of the three following years and ECU 150 million in 1999 
and 2000. 
It is assumed that the loans will be for an average term of twenty 
years with a five-year period of grace. 
-81-
ANNEX 
DEFINITION OF FIGURES USED IN THE REPORT 
A. AUTHORIZED CEILING 
This is the aggregate of the maximum amounts of capital authorized (ceilings) for 
each operation decided by the Council (see Table 1). 
In order to relate it to the risk which the budget might have to cover, account should 
be taken of the following factors which could affect it: 
- factor increasing the risk: the interest on the loans must be added to the 
authorized ceiling; 
- factors reducing, the risk; 
- limitation of the guarantee given to the ELB to 75% of the loans signed in 
the Mediterranean countries; 
- operations already repaid, since the amounts concerned, except in the case 
of balance of payments support, are the maximum amount of loans granted 
and not outstanding amounts authorized; 
- the amounts authorized are not necessarily taken up in full. 
The breakdown of authorizations is as follows: 
Member States 
Balance of payments 14 000 
NCI 6 830 
Euratom 4 000 
EIB; Spain, Greece, Portugal 1 500 
Member States - total 26 330 
Authorized amount outstanding: once this figure is reached, further loans may be granted as 
previous operations are repaid. 
Including ECU 1 100 million which inav be granted lo tlie countries of Eastern Europe and the 
CIS. 
-82 
Non-member countries 
Hungary I 870 
Hungary n 180 
Czech Republic 250 
Slovak Republic I 125 
Slovak Republic II , 130 
Bulgaria I 290 
Bulgarian 110 
Romania I 375 
Romania II 80 
Romania III -, 125 
Israel 160 
Algeria I 400 
Algerian 200 
former Soviet Union I 408 
former Soviet Union II 1 250 
Baltic States 220 
Moldova 45 
Ukraine 85 
Belarus 75 
EIB, old protocols 3 032 
EIB, Eastern and Central Europe I 1 700 
EIB, Eastern and Central Europe II 3 000 
ELB, new protocols 1 450 
EIB, horizontal financial cooperation 1 800 
South Africa 300 
Other non-member countries 750 
Non-member countries - total 17 410 
Grand total 43 740 
B. CAPITAL OUTSTANDING 
This is the amount of capital still to be repaid on a given date in respect of operations 
disbursed (see Table 1). 
Compared with the previous aggregate, the amount outstanding does not include 
loans which have not yet been disbursed nor the proportion of disbursed loans which 
have already been repaid. It may be described as the amount of loans which exist on 
a given date. 
83 
C. ANNUAL RISK 
Estimated amount of principal and interest due each financial year. 
This amount is calculated for: 
- disbursements alone (Table 2), in which case the capital to be repaid corresponds 
to the amount outstanding; 
- disbursements, decisions still awaiting disbursement and Commission proposals 
still awaiting decisions (Table 3), in which case the capital to be repaid 
corresponds to the ceiling on loans authorized plus, where applicable, the amounts 
in respect of operations proposed by the Commission and not yet decided. 



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DOCUMENTS 
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ISBN 92-77-97138-X 
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