COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 18.05.1995 
COM(95) 182 final 
REPORT FROM THE COMMISSION 
ON GUARANTEES 
COVERED BY THE GENERAL BUDGET -
SITUATION AT 31 DECEMBER 1994 

REPORT ON GUARANTEES COVERED BY THE GENERAL BUDGET 
SITUATION AT 31 DECEMBER 1994 
This report describes the situation as regards budget guarantees at 31 December 1994. 
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 seven reports to the budgetary authority. 
The report is in three parts: 
1. Description of operations entered in the budget and events since the last report. 
2. Situation at 31 December 1994 as regards guarantees already activated and risks 
for the budget in future years. 
3. Assessment of the economic and financial situation of non-Community countries 
benefiting from the most important operations. 
3-
PARTONE: OPERATIONS ALREADY ENTERED IN THE BUDGET 
The budgetary authority authorized 26 headings with token entries in the 1994 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 31 December 1994 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 31 December 1994 the amount outstanding was ECU 1 000 million in loans to 
Greece and ECU 4 021.9 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 31 December 1994 the total outstanding was ECU 779.1 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 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 in the first half of 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 
EBB, 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 31 December 1994 the total outstanding was ECU 1 569.8 million, 28.72% less 
than on 31 December 1993. 
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 been 
recorded on this list. 
H. 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. 
-6-
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. 
(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 in June 
1991 to grant additional macro financial 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 31 December 1994 the amount oustanding on borrowings for Hungary 
came to ECU 790 million. 
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 
-7-
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 31 December 1994 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 31 December 1994. 
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. 
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. 
8-
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 31 December 1994 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. 
(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. 
9-
(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 31 December 1994. 
At 31 December 1994 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; 
- 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; 
10-
2. 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. 
3. Loan contracts not vet signed 
At 31 December 1994 one new loan contract was in preparation but had still 
not been signed. The loan is for Kazakhstan (ECU 30 million) and will be 
financed by reducing Uzbekistan's allocation. 
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 
31.12.1994 
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 31.12.1994 
37.9 
19.6 
14.9 
100.5 
69.4 
9.8 
34.1 
24.9 
22.7 
27.0 
70.0 
299.7 
54.5 
44.9 
129.8 
959.8 
-11-
At 31 December 1994 the amount of loans actually being used came to 
ECU 959.8 million. 
5. 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 
- 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 31 December 1994 Ukraine had defaulted on capital repayments and* 
Georgia, Kyrgyzstan and Tajikistan had defaulted on interest. The total came 
to ECU 43.76 million (see Part IV - Activation of 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 often 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 31 December 1994 the amount outstanding on borrowings for Moldova came 
to ECU 25 million. 
-12-
- 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 onlent on the same terms to Ukraine in one tranche. 
The loan had not been paid at 31 December 1994. 
P. 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: 
- 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 31 December 1994 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. 
13 
This operation started on 2 March 1992. The borrowing is to be repaid in full 
on 15 December 1997. 
At 31 December 1994 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 fçom the net proceeds of the borrowing 
contracted on 14 January 1992 for a period of six years. 
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 onlent to Algeria in two tranches on the same terms. 
No tranche had yet been paid at 31 December 1994. 
At 31 December 1994 the amount outstanding on the loans raised for Algeria 
came to ECU 400 million. 
PL 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. 
-14-
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 31 December 1994 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 31 December 1994 the total of 
outstanding loans came to ECU 2 161 million (taking account of the 75% limit), of 
which ECU 473 million was accounted for by Spain, Greece and Portugal and 
ECU 1 688 million by the non-member Mediterranean countries. 
There is also provision for EIB 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 31 December 1994 ECU 527 million had been made available; of this total, 
ECU 22 million had been paid; this figure corresponds to the amount currently 
outstanding. 
15-
At 31 December 1994, the breakdown of authorizations by country (non-member 
countries only) was as follows: 
Algeria 
Cyprus 
Egypt 
Israel 
Jordan 
Lebanon 
Malta 
Morocco 
Slovenia 
Syria 
Tunisia 
Turkey 
Yugoslavia 
Protocols - Total 
Horizontal financial 
cooperation 
Mediterranean - Total Loans authorized 
640 
92 
802 
215 
198 
222 
55 
517 
150 
323 
418 
90 
760 
4,482 
1.800 
6,282 
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 Brussels 
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. 
The second protocol with Yugoslavia was suspended when ECU 100 million of credits could still be 
granted. 
-16-
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 31 December 1994, ECU 2 571 million had been made available in the Central 
and Eastern European countries but only ECU 574 million had been disbursed. 
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 
statutes 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 31 December 1994 credit lines of ECU 319 million had been signed but only 
ECU 45.5 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). 
-17-
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. 
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 31 December 1994: 
Payment due Actual date of payment 
1st 9.9.1992 25.9.1992 
2nd 9.3.1993 2.4.1993 
3rd 9.9.1993 18.11.1993 
4th 9.3.1994 24.3.1994 
5th 9.9.1994 9.9.1994 
Capital repayments up to 31 December 1994: 
Payment due Actual date of payment 
1st 26.7.1993 18.11.1993 
2nd 26.6.1994 14.7.1994 
All the default interest has been paid on late payments up to 26 June 1994. 
18 
PART TWO: 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; 
- 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 31 December 1994, giving the minimum 
level of risk to the Community assuming that there are no early repayments (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 nature 
budgets, giving the maximum risk borne by the Community assuming that the 
Commission's proposals are accepted (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. 
I. TOTAL RISK 
A. AMOUNT OUTSTANDING AT 31 DECEMBER 1994 (Table U 
The total risk at 31 December 1994 came to ECU 13 769 million, 0.2% less than 
at 30 June 1994. 
B. MAXUMUM ANNUAL RISK BORNE BY THE COMMUNITY BUDGET: 
OPERATIONS DISBURSED AT 31 DECEMBER 1994 (Table 2) 
The total risk, which-came to ECU 2 785 million in 1994, will develop as follows: 
- 1995:2 855 million (+2.5%) 
-1996:3 112 million (+9%) 
- 1997:2 934 million (-6%) 
- 1998: 3 130 million (+7%) 
- 1999:* 872 million (-72%) 
- 2000: 3 335 million (+282%) 
-2001: 620 million (-81%) 
19 
* No capital repayments for the balance-of-payments loans to the Meniber States; 
capital repayments on loans'to Hungary, the Czech-and Slovak Republics and 
Bulgaria end in 1998. 
C. MAXIMUM THEORETICAL ANNUAL RISK BORNE BY THE 
COMMUNITY BUDGET (Table 3) 
This risk comes to ECU 2 857 million in 1994 and will increase regularly until 
2000 (except in 1999 when it will total ECU 2 529 million) as follows: 
- 1995:3 148 million (+10%) 
-1996:3 882 million (+23%) 
- 1997:4 098 million (+5.5%) 
-1998:4 536 million (+10.5%) 
- 1999:2 529 million (-44%) 
- 2000: 5 233 million (+107%) 
- 2001:4 492 million (-14%) 
H. RISK IN RESPECT OF THE MEMBER STATES 
A. AMOUNT OUTSTANDING AT 31 DECEMBER 1994 (Table 1) 
The amount of capital outstanding in respect of operations in the Member States 
came to ECU 7 844 million at 31 December 1994, a fall of 5.2% compared with 
30 June 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. 
B. MAXIMUM ANNUAL RISK BORNE BY THE COMMUNITY BUDGET: 
OPERATIONS DISBURSED AT 31 DECEMBER 1994 (Table 2) 
The risk for 1994 comes to ECU 1 900 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 leading up to 2000 when it will reach ECU 2 802 million. 
C. MAXIMUM THEORETICAL ANNUAL RISK BORNE BY THE 
COMMUNITY BUDGET (Table 3) 
The trend is much the same as in Table 2 up to 2000 when the risk will amount to 
ECU 3 196 million and 2001 when it will amount to ECU 2 446 million. 
m. RISK IN RESPECT OF NON-MEMBER COUNTRIES 
A. AMOUNT OUTSTANDING AT 31 DECEMBER 1994 (Table 1) 
The amount of capital outstanding at 31 December 1994 came to 
ECU 5 925 million, an increase of 7.2% compared with 30 June 1994. 
-20-
B. MAXIMUM ANNUAL RISK BORNE BY THE COMMUNITY BUDGET: 
OPERATIONS DISBURSED AT 31 DECEMBER 1994 (Table 2) 
The risk for 1994 comes to ECU 885 million and will increase to 
ECU 1 682 million in 1995, mainly because two repayments of principal then fall 
due: 
- ECU 350 million from Hungary; 
- ECU 494 million from the Republics of the former Soviet Union. 
The risk will drop in 1996 to ECU 1 032 million and increase again in 1997 to 
ECU 1 465 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 108 million from the Republics of the former Soviet Union. 
At ECU 1 076 million, the risk will be smaller but still at a high level in 1998, but 
should fall to ECU 575 million in 1999, ECU 533 million in 2000 and 
ECU 514 million in 2001. 
C. MAXIMUM THEORETICAL ANNUAL RISK BORNE BY THE 
COMMUNITY BUDGET (Table 3) 
The risk will rise from ECU 957 million in 1994 to ECU Î 890 million in 1995; in 
particular, the Republics of the former Soviet Union are to repay principal of 
ECU 566 million that year. 
The risk will drop to ECU 1 461 million in 1996, rise again to ECU 2 205 million 
in 1997, ECU 2 057 million in 1998, ECU 1 838 million in 1999, 
ECU 2 037 million in 2000 and ECU 2 046 million in 2001. 
IV. ACTIVATION OF BUDGET GUARANTEES 
1. EIB loans to non-member countries 
On 21 June 1994, the EIB again called on the budget guarantee in respect of loans 
of around ECU 8.6 million to the Republics of former Yugoslavia (Macedonia and 
Serbia). The payment was made to the EIB on 23 September 1994. 
On 6 October 1994, the EIB again called on the budget guarantee in respect of 
loans of ECU 5.3 million to the Republics of former Yugoslavia (Macedonia, 
-21-
Serbia and Bosnia-Hercegovina). The payment was made to the EIB on 
11 January 1995. 
At 31 December 1994 the total amount of debts settled by the Community and not 
yet repaid by the defaulting debtors came to ECU 43.0 million. These debts were 
owed by all the Republics of former Yugoslavia with the exception of Slovenia and 
Croatia, which have no payments overdue. 
2. Borrowing/lending operations or loan guarantees for non-member countries 
The Commission also made payments from 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: 
(a) loans granted by a consortium of banks guaranteed by the Community 
(ECU 500 million) 
- payment of principal and interest due from Russia on 26 June 1994 and 
interest due on 9 September >994 in respect of a loan granted by a 
consortium of banks and guaranteed by the Community; 
(b) loans granted by the Community to the new independent States of the former 
Soviet Union (ECU 1 250 million) 
- payment of interest: 
due from four newly independent States (Russia, Armenia, Georgia and 
Kazakhstan) on 15 July 1994 in respect of the borrowing and lending 
operation of ECU 1 250 million for these Republics, 
due from nine newly independent States on 20 October 1994 in respect of 
the same operation, 
- payment of principal and interest due from three newly independent States 
(Belarus, Russia and Ukraine) on 22 August 1994. 
These payments were eventually made by the debtors concerned, except in the 
case of four Republics: Tajikistan, Kyrgyzstan, Georgia and Ukraine, which 
had still not settled all their debts on 31 December 1994. 
3. Situation as regards unpaid debts at 31 December 1994 
Republics of former Yugoslavia: ECU 48.2 million (including ECU 28.6 million 
from before 1994)2 
Tajikistan: ECU 5.8 million (including ECU 2 million 
from before 1994)3 
Kyrgyzstan: ECU 0.70 million3 
Of the ECU 48.2 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 19.6 million was called in from the Guarantee 
Fund on 11 January 1995 (ECU 5.3 million) and on 30 January 1995 (ECU 14.3 million). 
The amount due but not paid was called in from the Guarantee Fund on 20 January 1995 
(ECU 4.6 million) and 30 January 1995 (ECU 30.2 million). 
-22-
Georgia: ECU 5.4 million3 
Ukraine: ECU 31.9 million 
23 
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 and 
* certain non-member countries - developing countries of Asia and Latin America). 
24-
A. ALGERIA 
1. GENERAL ECONOMIC SITUATION 
The authorities reached a new agreement with the IMF in April 1994 on an economic 
reform programme. The programme's main objective is to give a new impetus to 
economic growth while reducing inflation and the fiscal deficit. It comprises a 
substantial liberalisation of prices, imports and the foreign exchange regime, 
combined with stringent monetary and fiscal policies. 
Price increases and liberalisation measures were implemented in April. At the same 
time, the Algerian Dinar devalued from 25 to 36 Dinar per US$. The resulting 
increase in inflation slowed down towards the end of the year to less than 30%. The 
foreign exchange allocation system has been liberalised and administrative imports 
management has been abolished. Weekly fixing sessions of the exchange rate were 
introduced in October. By the end of 1994, the exchange rate reached 43 Dinar per 
US$. The various liberalisation measures are expected to result in an increase in 
imports which, in turn, will fuel industrial and construction activities. GDP growth 
remained somewhat below forecasts, however, and is now expected to reach 2% in 
1994, following a 1.8% decline in 1993. The overall deficit of the government should 
decline rapidly to no more than 5.7% of GDP in 1994. The increase in hydrocarbon 
export prices in 1994 is likely to facilitate the implementation of the economic and 
financial recovery programme. 
2. THE BALANCE OF PAYMENTS 
In spite of the increase in hydrocarbon prices, export revenues, generated almost 
exclusively by hydrocarbon products, are projected to remain relatively low in 1994. 
The elimination of the strict administrative imports regime led to an increase in 
imports by nearly 20% in 1994. The current account deficit is forecasted to reach 
some US$ 1.4 billion. In view of the political and economic situation, there were no 
foreign investments in 1993. 
The projected increase in the current account deficit will be financed by external debt 
rescheduling arrangements with the Paris Club and commercial creditors as well as 
new money from, amongst others, the IMF, the World Bank and the EU. In August, 
the remaining second tranche (ECU 150 million) of the 1992 Community balance of 
payments loan was disbursed. A proposal for a further balance of payments loan of 
up to ECU 200 million in support of the economic reform programme has been 
approved on 22 December 1994. 
Algeria's foreign reserves position worsened in 1993 but recovered strongly after the 
debt rescheduling agreement with the Paris Club and reached nearly US$ 2.2 billion 
at the end of 1994, equivalent to 11 weeks of imports. 
25 
3. FOREIGN DEBT 
End 1993, Algeria's foreign debt stock amounted to US$ 24.6 billion, requiring US$ 
2.1 billion in interest payments and US$ 7.1 billion in repayments of principal. Nearly 
three quarters of this debt stock consisted of publicly guaranteed private sector 
credits. About 13% are bilateral credits, mostly non-concessional. 
Following the agreement with the IMF on an economic reform programme, the 
Algerian authorities obtained, in June, an agreement from Paris Club creditors on a 
rescheduling of bilateral debt. Commercial debt rescheduling negotiations with 
commercial creditors have not been concluded yet. 
As a result of these reschedulings, external debt service due during the programme 
period with the IMF (May 1994-May 1995) has been reduced by some US$ 5.1 
billion or more than 55% compared to scheduled debt service. According to balance 
of payments projections, at present hydrocarbon price levels, Algeria will reach 
external viability only by the end of 1997. Further external financial support, notably 
from the IMF and through debt reschedulings, will be required over the next three 
years. 
The 1992 Community balance of payments loan (ECU 250 million) is excluded from 
the rescheduling agreements and debt service on this loan should continue as 
foreseen. 
-26-
B. BELARUS 
1. GENERAL ECONOMIC SITUATION 
Belarus used to be, under the former regime, one of the most developed republics of 
the Union, with a strong industrial base. GDP per capita was one of the highest of 
the FSU, and close to that of Hungary. However, until 1994 reforms were slow. A 
large part of the command system remained in place, trade administered and 
subsidies high. GDP fell by about 10% per year in 1992 and 1993, less than in 
Russia; however, a considerable drop was expected in 1994, one of the most severe 
of the countries in transition (already -26% Jan.-Sept, year-on- year). 
One of the main reasons for the delays in economic stabilization 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 rouble was declared the 
only legal tender in the country. Although a new President, Mr Lukashenko, 
favourable to closer links with Russia, was elected in July, the newly formed 
government under Prime Minister Chigir has adopted a reformist stance and an 
ambitious programme of reforms, requiring an autonomous monetary policy. 
Monetary union with Russia now does not seem to be on the agenda any more and 
would be a more long term prospect at best. The Belarus' new macro-economic 
programme is to be supported by the IMF and other multilateral and bilateral donors. 
The budget deficit was of about 8% of GDP for the first six months of 1994. Over 
the first nine months of the year, monetary expansion remained high and average 
inflation was over 25% per month. In July monetary expansion limits were set. The 
goal is now to reduce inflation down to a monthly 8% level in by mid-1995. 
Core structural reforms have also been delayed until the recent decisions of 1994. 
Subsidies on basic foodstuffs were maintained, and rents and utility prices remained 
controlled at very low levels. No proper two-tier banking system existed, with the 
established practice of direct central bank lending, and even subsidising, to 
enterprises. Enterprise restructuring had not been significant either. The 
implementation of privatisation and even the corporatisation of enterprises had been 
delayed by the resistance of entreprises and sectoral ministries: a privatisation law 
was approved only in July 1993 and, by the end of the year, the private sector 
accounted for only 5% of employment and 10% of non-agricultural output. Although 
a bankruptcy legislation had been enacted already in 1992, it has so far been 
inoperative. 
2. BALANCE OF PAYMENTS 
While the country suffered from disruptions of trade and payments in the FSU, it has 
so far been 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 
27-
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), 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 currency 
reserves, net interstate arrears increased and reached US$ 405 million by end-; 
September. 
The current account deficit reached about US$ 630 million in 1994. A current 
account deficit of about US$ 320 million is expected for 1995. The IMF supports the 
Autumn package of reforms of the government and has called for the support of the 
international donor community. The Fund is ready to disburse about US$ 300 million 
under a second tranche of the Systemic Transformation Facility (STF) and a stand-by 
arrangement to be finalised in early 1995. 
After IMF and World Bank support (and bilateral debt restructuring with Russia on 
1994's energy import arrears), the remaining balance of payments gap for 1995 is 
estimated at US$ 250 million and is expected to be filled by bilateral official 
assistance. 
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 FSU. Thus, Belarus' 
external debt has been incurred only recently (after 1992). 
A large part of the foreign debt of Belarus is commercial debt and consists of gas 
arrears vis-à-vis Russia (US$ 405 million). According to ongoing negotiations 
between Belarus and Russia (to be finalised in early 1995), this debt would be 
transformed into assets under a US$ 235 million debt/equity swap, or repaid under a 
barter arrangement between the two countries. 
The estimated external debt of the country was about US$ 1.5 billion by the end of 
1994. The debt service on exports ratio averaged only 10% of GDP but, owing to 
the very limited hard currency resources of the country, represented a heavy burden. 
In 1995, assuming the approval of the IMF stand-by arrangement and the fulfilment 
of the residual financing gap by new loans of international donors, the external debt 
could increase up to almost US$ 2 billion, i.e. about 35% of GDP. 
-28 
C. BULGARIA 
1. GENERAL ECONOMIC SITUATION 
Following sharp declines through 1993, production started recovering in 1994, 
entailing some improvement in the rate of unemployment. Inflation increased to 122 
percent in 1994, as a consequence of sharp unanticipated depreciations of the 
national currency (triggered by heightened political uncertainties) and the 
introduction of the VAT. The authorities responded to those developments by 
reaffirming their commitment to the programme of fiscal restraint agreed with the 
IMF: budgetary data for 1994 indicate a considerable improvement in the deficit 
performance, owing both to buoyant revenues and a scale-down of real expenditures 
- particularly on wages and operating and maintenance. 
Progress in structural reforms have been slow. Despite the parliamentary passage in 
June 1994 of an amendment to the Privatization Act and the establishment of a 
Centre for Mass Privatization, the pace of privatization has remained slow; and the 
completion of a clean-up of non-performing, pre-1991 policy-directed loans of State-
owned banks has not been sufficient to significantly improve the functioning of the 
banking sector. 
2. BALANCE OF PAYMENTS 
Bulgaria's external financial situation improved in 1994. Exports increased sharply as 
the lev strongly depreciated (reversing a substantial real appreciation trend in 1993), 
while imports were contained as à result of restrictive financial policies. External debt 
service declined sharply following the completion of the debt reduction deal with 
commercial creditors (see section 3). All this resulted in a shift in the external current 
account from a deficit equivalent to 8 percent of GDP to a surplus estimated at 2 
percent of GDP in 1994. 
With the conclusion of a new stand-by arrangement with the IMF in April 1994, 
official capital inflows, that had been interrupted since end-1992, resumed including 
significant balance-of-payments support. This permitted Bulgaria to service its 
external debt and to accumulate official reserves. At end-1994, official reserves 
amounted to some 2 1/2 months worth of imports of goods and non-factor services. 
3. FOREIGN DEBT 
Bulgaria's external debt position has significantly improved with the conclusion in 
July 1994 of a comprehensive debt and debt service reduction (DDSR) agreement 
with commercial creditors on the restructuring of about US$ 8.1 billion in public 
external debt, which resulted in a commercial debt reduction equivalent to 46 percent 
of eligible debt. The upfront costs of the DDSR agreement (which involved several 
instruments for restructuring, including debt buy-backs and long-term securities) 
29 
amounted to US$ 706 million. To replenish partially Bulgaria's international reserves 
used to finance these upfront costs, the IMF and the World Bank extended specific 
financing in September 1994 for a total amount of US$ 250 million, supplementing 
already existing balance-of-payments financial support from the IMF, the World 
Bank, the European Union and other G-24 bilateral donors. 
Completion of the DDSR deal is expected to help Bulgaria regain over time access to 
international credit markets, enhance the investment climate for investors and 
constitute a crucial step forward in Bulgaria's progress towards external viability. In 
the immediate, external debt has decreased to 117 percent of GDP at end-1994 (144 
percent in 1992) and the debt service ratio to 19 percent (39 percent in 1992). 
-30 
D. THE CZECH REPUBLIC 
1. GENERAL ECONOMIC SITUATION 
After a sharp decline in 1990-92 and stagnation in 1993, the Czech economy grew by 
2.1% in the first nine months of 1994 (year-on-year) reflecting a strong recovery of 
private consumption and investment. Real GDP is expected to expand by 3.5-4.5% in 
1995. The unemployment rate continued to edge down, reaching 3.1% in December-
1994, down from 3.5% in December 1993. 
Following a 8.5% price-jump in January 1993 associated with the introduction of the 
VAT, annual inflation came down rapidly, ending 1993 at 18.2%. Inflation remained 
subdued in the first half of 1994, with the annual rate falling below 10% for the first 
time since mid-1992. However, as a result of the rapid expansion of the money 
supply (M2) and domestic demand annual inflation accelerated to 10.7% in 
November 1994 and is unlikely to fall below that level in 1995. M2 is estimated to 
have grown by 20% in 1994, well above the 12% original target. 
The rapid growth of M2 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 (effective on 4 August) of the 
minimum reserve requirements on banks' demand deposits. Monetary policy was 
again tightened in October, through a 50 basic points increase in the discount and 
lombard rate, and in December, through a further 50 basic points increase in the 
lombard rate. Regarding fiscal policy, the state budget ended 1994 with a surplus of 
Ck 11.2 bn (about US$ 336 mio) 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 KC 155 bn 
(US$ 4.7 bn), was completed last November. 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 surplus 
shrunk considerably in 1994 and is likely to disapear or turn into a moderate deficit in 
1995. The surplus declined from US$ 643 mio (1.8% of GDP) in 1993 to US$ 197 
mio in the first nine months of 1994. The deterioration was particularly marked vis-a­
vis Slovakia, against which the Czech Republic posted a US$ 270 mio deficit in the 
first nine months of 1995. This has led the Czech Republic to exceed six times in 
1994 the ECU 130 mio credit ceiling agreed under the Czech-Slovak clearing 
system. 
-31 
The net inflow of FDI slowed down considerably in 1993 (declining to US$ 450 mio 
from US$ 983 mio in 1992) and has recovered only moderately in 1994 (US$ 420 
mio in January-September). The Czech Republic has been experiencing, however, a 
surge in other capital inflows since the third quarter of 1993. Thus, between January 
and September 1994, portfolio investment (mostly equity investment in the Prague*,. 
Stock Exchange and foreign acquisition of Czech issues of international bonds) 
reached US$ 750.5 mio, and net direct credits by Czech enterprises from foreign 
banks US$ 967 mio. Over the same period, Czech banks obtained internationally-
syndicated loans in the amount of US 175 mio. 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 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$ 5.8 bn at end November-1994 
compared to US$ 0.7 bn at end-1992. In order to stem the upward pressure on the 
exchange rate the CNB intends to make the crown fully convertible for current 
account transactions and liberalize capital controls in a phased manner. It has also 
decided to repay ahead of schedule all remaining loans owed to the IMF. 
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 bn at end-1992 to US$ 9.1 bn at end September-1994, but this still implied 
a relatively low debt/GDP ratio of 25.8%. The debt service ratio has increased 
between 1992 and 1994 but, at 10.2% 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. 
-32-
E. ESTONIA 
1. GENERAL ECONOMIC SITUATION 
The economy emerged from recession by the end of 1993 and GDP is expected to 
have grown by 4% in 1994, despite a severe drought which hampered agricultural 
production. Services now account since 1993 for more than half of GDP. Growth 
mainly relies on the development of the private sector. 
Inflationary pressures, fuelled by sharp increases of energy imports prices, resumed 
at the end of 1993 and early 1994. Prices increased by about 40% in 1994, well over 
target, but the latest recorded monthly price increases are moderate (1.4% Q4 
average). 
Under the currency board arrangement central bank lending to the state is prohibited: 
this has contributed to budgetary discipline. The general government budget should 
record a 2.5% deficit of GDP in 1994, against 1.8% in 1993: this is due mainly to 
increases of public investment. The deficit is fully financed by external borrowings. 
The 1995 budget envisages an overall balanced outcome. 
Estonia has made continuing progress on structural reform. In 1993 and 1994, 
Estonia advanced further in the area of privatisation, especially for small enterprises 
of which over 80% have now been sold to private owners. The Estonian 
Privatisation Office was created in 1993 to better co-ordinate policies towards the 
enterprise sector, and in 1994 a separate department was established in the Ministry 
of Economy with responsibility for restructuring state firms before privatisation. In 
some cases bankruptcy law was applied. Banking supervision has been improved. 
Following the banking crisis of early 1993, the banking system was restructured. The 
number of commercial banks was reduced to 21, mostly through mergers. The 
central bank policy of phased increases in minimum capital requirements keeps the 
pressure on banks to consolidate. 
2. THE BALANCE OF PAYMENTS 
Estonia's current account was broadly in balance in 1993. External capital grants 
fully compensated for the recorded deficit of 2.2% GDP on goods and services. This 
changed significantly in 1994. The excess of domestic inflation over international 
price increases reduced the competitive advantage and the resumption of domestic 
growth led to higher imports. As a result, the current account deficit reached a high 
level, close to an estimated 7% level of GDP. 
The inflow of foreign direct investment remained high for the third consecutive year. 
Official foreign exchange reserves continued to grow and, with a level worth US$ 
450 million at year end, covered approximately 5 months of imports. 
-33-
Assuming a steady recovery of the Estonian economy, the current account is 
expected to remain in deficit over the medium term. 
3. FOREIGN DEBT 
Estonia did not accept any legacy of foreign debts of the FSU. In 1994 the stock of-
external debts increased from US$ 135 million to an estimated US$ 228 million level 
(i.e. 9% of GDP). A substantial part of this debt is owed to international financial 
institutions. The IMF has granted to Estonia a US$ 17 million Systemic 
Transformation Facility and has disbursed US$ 44 million under the stand-by 
programmes since 1992. In 1993 the World Bank disbursed the bulk of a US$ 30 
million rehabilitation loan to finance critical imports, and has a substantial number of 
projects in the pipeline. Estonia also benefited from an energy emergency programme 
of the EBRD, some US$ 9 million of which were disbursed. 
Debt service remains very low with a ratio to exports of goods and non-factor 
services close to 1%. 
-34-
F. HUNGARY 
GENERAL ECONOMIC SITUATION 
The Hungarian economy recovered in 1994, with real GDP estimated to have grown 
by about 3%. Industrial production increased by 9% in the first nine months of 1994 
(year-on-year). Following a peak in February 1993, the unemployment rate has 
steadily declined to 10.4% in December 1994. Growth, however, is expected to slow 
down, or even stop altogether, in 1995, as the government applies an adjustment 
programme to reduce an unsustainable current account deficit. 
Increases in indirect taxes, a faster devaluation of the forint and the strengthening of 
domestic demand have again prevented a reduction of inflation in 1994. Annual CPI 
inflation reached 21% in November, the same level as at the end of 1993. After four 
years of decline, real wages started to grow again in 1994, with a year-on-year 
increase of 6% in real net average earnings in the first nine months of 1994. The new 
socialist-liberal government views such large gains as unjustified and is seeking a 
social pact to impose wage moderation. 
At HUF 320 bn (7.5% of GDP), the central government deficit finished 1994 HUF 
18 bn below the target contained in the supplementary budget adopted last autumn. 
As a central element of a three-year stabilization and modernization plan currently 
under elaboration, the government intends to reduce the 1995 deficit to HUF 282 bn 
(5.5% of GDP). However, this reduction of the deficit, which largely reflects a 
change in the accounting methodology and an uncertain increase in privatization 
revenues, may not be sufficient to produce a significant reduction in the current 
account deficit. 
The authorites have continued implementing the bank consolidation scheme launched 
in December 1993, involving the recapitalization of the major Hungarian banks in 
several steps through the transfer of state bonds. The privatization process slowed 
down in 1993 and 1994. The new govenment plans to revitalize the privatization 
process, but its recent decision to cancell the already agreed sale of a Hungarian 
hotel chain to a foreign investor and dismiss the reformist commissioner for 
privatization has raised some doubts about its strategy. 
2. THE BALANCE OF PAYMENTS 
Following the sharp deterioration suffered in 1993, the current account deficit 
continued to increase in 1994, reaching almost US$ 4 bn (or more than 10% of 
GDP) and significantly exceeding the official forecasts. The weakness of the current 
account and speculation against the forint led the authorities to devalue the currency 
by 8% against the ECU-dollar basket on 5 August, thus deviating from their policy 
of small, regular devaluations aimed at stabilizing the real exchange rate. 
35-
Despite the very high current account deficit, official foreign exchange reserves 
expanded rapidly in 1993, reaching US$ 7 bn at the end of the year, up from US$ 4.4 
bn at end-1992. This was made possible by a continuing strong net inflow of FDI 
(which reached a record of US$ 2.3 bn), high foreign borrowing by commercial 
banks and enterprises, and the placement by the National Bank of Hungary (NBH) o£~ 
US$ 4.5 bn in international bonds. 
Net borrowing by banks and enterprises accelerated in 1994 (to 1.7 bn in January-
August) and the NBH continued to raise a considerable amount of funds in the 
international capital markets. However, the higher current account deficit, lower •• 
inflows of FDI (about US$ 1.2 bn), and substantial early repayments of external debt 
aimed at reducing the "bunching"of repayments expected for 1995 and 1996, resulted 
in a decrease in official reserves from a peak of US$ 7.5 bn in January 1994 to US 
$6.8 bn at end-October 1994. 
The 18-month stand-by facility granted by the IMF to Hungary in September 1993 
was interrupted due to non-compliance with some of the programme targets. The 
IMF is currently discussing with the authorities on the main elements of an economic 
programme to be supported by the resumption of IMF lending. 
3. FOREIGN DEBT 
With the current account considerably exceeding the net inflow of FDI since 1993, 
both gross and net foreign debt have been rising rapidly, and from already high 
levels. Gross convertible foreign debt has increased from US$ 21.5 at end-1992 to 
US$ 28.2 (78% of GDP) bn at end-October 1994. Net foreign debt, for its part, has 
increased from US$ 13.1 bn at end-1992 to US$ 18.7 bn at end-October 1994. After . 
increasing in previous years, the proportion of medium- and long-term debt has 
remained practically unchanged at around 92%. 
Total debt service (excluding repayments on short-term debt but including early 
repayments) has been consistently increasing since 1992, reaching an estimated 65% 
of exports in 1994 (against 33% in 1991). The early repayments made by the NBS 
have significantly reduced the expected concentration of repayments in 1995 and 
1996. Repayments in 1995 and 1996, which would have otherwise reached US$ 3.4 
bn and US$ 3.9 bn respectively, are now projected to amount to US$ 3.bn and US$ ^ 
3.1 bn. 
-36 
G. ISRAEL 
1. GENERAL ECONOMIC SITUATION 
GDP growth accelerated again in 1994, reaching 6.8%. The forecast for 1995 is 
somewhat lower, at 5%. Inflation accelerated significantly in the last quarter of 1994, 
reaching nearly 15% on an annual basis. This was not matched by a proportional 
depreciation of the Shekel, thereby pushing the real exchange rate up and widening 
the current account deficit to over US$ 3 billion in 1994. This has put pressure on 
the shekel in foreign exchange markets and the Bank of Israel had to increase its key 
lending rate to 17% by mid-December without however succeeding in entirely 
stopping speculative pressure on the national currency. The government plans to 
present a major macro-economic programme in January 1995. The authorities 
announced an inflation target zone of 8 to 11% for 1995. 
The government budget deficit was further reduced from 2.5% of GDP in 1993 to 
2% in 1994 following reductions in the housing programme and other subsidies for 
immigrants, including unemployment benefits, and tax increases, especially on capital 
gains. Budget revenue from privatisation increased somewhat to US$ 700 million in 
1994, but remains very small compared to the substantial share of state-owned 
enterprises in the economy and was less than half of the announced target of US$ 15 
billion. 
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. 
2. THE BALANCE OF PAYMENTS 
At the end of 1993, Israel accepted the obligations concerning the full liberalization 
of current account transactions under article VIII of the IMF Articles of Agreement. 
The Central Bank of Israel maintains a "crawling peg" exchange rate system with a 
target depreciation rate announced by the Central Bank, in line with expected 
inflation, and a 2% variation allowed around the targeted exchange rate. 
Export expansion, estimated at 10.6%, was a strong driving force for growth in 
1994. Imports increased however equally fast at 10.4% and the current account 
deficit rose from US$ 1.2 billion in 1993 to more than US$ 3 billion in 1994. Net 
private capital inflows remained small at around US$ 100 million. 
Official foreign exchange reserves reached a satisfactory level of US$ 6.8 billion at 
the end of 1994, or the equivalent of nearly 2.5 months of imports. 
37-
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. However, Israel's rating on international capital markets would have tot, 
improve from the present BBB+ level in order to get unguaranteed access. Net 
foreign debt increased from US$ 16.7 billion end-1993 to US$ 17.7 billion at end-
1994, of which nearly three quarters was public sector debt. The debt service to 
exports ratio improved slightly as export growth was strong in 1994. 
-38 
H. LATVIA 
GENERAL ECONOMIC SITUATION 
For the first year since ,it became independent, Latvia is likely to emerge out of the 
recession which saw GDP fall by 45% between 1991 and 1993. Growth in 1994 is, 
however, likely to have been moderate (it is estimated at 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, the highest among 
the ^Baltic states. 
The authorities have successfully 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 39%. As a result, inflation continued to slow down 
from 35% in 1993 to an estimated 25% level last year. However, some inflationary 
pressures remain due to large inflows of foreign capital which might lead the 
authorities to accept some appreciation of the lats. 
The government financial deficit was expected to remain 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 (both VAT and social 
security contributions) should increase significantly, and a comparable 2% financial 
deficit is expected, without taking into account public investment financed by 
external borrowings. 
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 at the end of 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. In the Banking sector, the two main 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. The free trade agreement signed with the 
European Union entered 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) because 
imports grew significantly (+20%) while exports decreased. This is mainly due to the 
upsurge of the economic activity which lead to a substantial increase of investment-
related imports. 
39-
Substantial official transfers, inflows of private capital and disbursements of the 
international financial institutions contributed to finance the current account deficit. 
Latvia's hard currency reserves have continued to grow in 1994 and, with a US 
dollar 596 million level at year-end, almost cover 6 months of imports. 
3. FOREIGN DEBT 
Latvia did not accept any legacy of foreign debts of the FSU. In 1994 the external 
debt stock increased from US$ 311 million to US$ 445 million. More than 50% of 
this debt is owed to international financial institutions. Latvia owes the IMF 160 
million dollars (93.5 million under the 1992 stand-by and 1993 extended stand-by, 
66.5 million under the 1993-1994 STF). In 1993 and 1994, the World Bank 
disbursed the bulk of a US$ 45 million rehabilitation loan and part of a US$ 24 
million agricultural development loan. The EBRD has so far disbursed 20 million 
dollars on Latvia, half of which was for an energy sector emergency project. 
The debt service ratio, with a 3.8% level (debt service on exports) remains 
moderate. 
-40 
I. LITHUANIA 
l. GENERAL ECONOMIC SITUATION 
After a sharp decline of output of about 55% between 1989 and 1993, GDP 
stabilised in 1994 with an estimated 1.5% growth. The official unemployment rate 
rose moderately to an estimated 2% level by the end of the year: this figure, 
however, is considered to be far lower than the actual level of unemployment. 
After peaking in 1992 at hyper-inflationary levels, inflation 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 suppressed, and the money in circulation is 
constrained by 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. In 
the months following the introduction of the currency board arrangement, inflation 
dropped down to a level of less than 3% per month. 
Monetary expansion, under the currency board arrangement, declined in 1994. The 
state incurred a fiscal deficit of about 4% of GDf in 1994. Most of the deficit has 
been financed by issuing, since July, treasury bills. Also, to a lesser extent, public 
investments have been financed with normal commercial bank loans. The increase in 
the deficit led the authorities to adopt austerity budgetary measures, including the 
phasing out of public subsidies which fell to below 1% of GDP in 1994 (against 
5.5% in 1991). 
Structural reforms have been further implemented. The Government continued to 
progress with privatisation and restitution. By September 1994, 76% of all 
companies eligible for privatisation, or 30% of all state capital, had been privatised 
through vouchers, public share subscription and auctions. In December 1994 a new 
Central Bank bill was adopted in Parliament, and a commercial bank law is expected 
to be enacted in early 1995. 
A three-year programme was adopted by the Government, for the October 1994 -
September 1997 period, envisaging tight budgetary policies under the existing 
currency board arrangement and a sustained effort to maintain the momentum of 
structural reforms. 
2. THE BALANCE OF PAYMENTS 
The trade balance, which recorded a surplus until 1992, became negative in 1993 and 
1994 due to the sharp increase of energy imports fronvRussia, which are now close 
to world market prices, and account for about 50% of the country's imports. As a 
result, the current account of the country registered a 260 million US dollars deficit 
in 1994. 
-41-
A substantial part of the 1994 current account deficit was financed by private capital 
inflows. Also, following the adoption by the Government autumn three-year 
programme, the IMF approved on October 24 an SDR 134.55 million (about US$ 
200 million) extended facility. This should allow Lithuania to build up the necessary 
reserves and to finance key energy and investment-related imports. 
Over the medium-term, the growth trend should remain robust, and imports of 
capital goods are expected to grow substantially. The country is therefore expected 
to remain in current account deficit over the next five years, so that it will heavily 
rely on private capital inflows and the support of IFIs. 
3. FOREIGN DEBT 
Lithuania has not accepted any legacy of sovereign debts of the FSU. In 1994, the 
external stock of debts increased by about US$ 250 million, reaching a level of US$ 
580 million. This level of debt is moderate relative to GDP (10%). Most of the 1994 
increase is due to disbursements under the IMF stand-by and STF programmes, and 
of the World Bank US$ 60 million rehabilitation loan. 
-42-
J. MOLDOVA 
1. GENERAL ECONOMIC SITUATION 
Over the last twelve months, the authorities have been implementing their economic 
reform program, adopted in December 1993, with remarkable perseverance. 
However, owing to a severe drought which devastated crops in the south of the 
country, and given the importance of the agricultural sector which, together with the 
agricultural processing industry, accounts for roughly 60 percent of GDP, the decline 
in economic activity accelerated in the second half of 1994 (output is estimated to 
have declined by 31 percent in 1994, compared to a decline of 8,7 percent in 1993). 
Registered unemployment remains very low, at under 1 percent of the labour force, 
but an estimate figure including workers on unpaid leave puts unemployment at 14 
percent. 
Inflation has fallen dramatically since the beginning of 1994 (the monthly rate fell 
from 44 percent in January to 3.5 percent in November and to 2*6 percent in 
December). On a yearly basis, inflation fell to 105 percent at end-1994, compared to 
837 percent at end-1993. Since the introduction of the leu in November 1993, the 
exchange rate has remained relatively stable (about 4 leu per US$) and interest rates 
have declined (the National Bank of Moldova cut the discount rate to 42 percent in 
December, compared to the February peak of 377 percent). 
The government succeeded in reducing the budget deficit (to about 7.5 % in 1994 
from around 9 % in 1993) despite very considerable spending pressure, but this was 
in part achieved through one-time asset sales. For 1995, the Government intends to 
enforce fiscal discipline in a more sustainable way, recognising that too much reliance 
is currently being placed on payment arrears to achieve cash deficit targets. Particular 
attention will be paid to improve tax collection. 
Concerning structural reforms, some progress has been made (first auction for 
medium and large-sized enterprises held by end-June 1994, elimination of export 
quotas with the exception of grain, grain products and energy products) but it is 
lagging behind the efforts made in terms of financial stabilisation. Passed bankruptcy 
legislation was not used against state enterprises, and there have been no closures of 
large enterprises to date. Over 200 enterprises of all sizes - about 20 percent of the 
number of enterprises scheduled to be auctioned under the 1993/94 Privatisation 
Programme - had been transferred to private ownership by end- November 1994. 
2. THE BALANCE OF PAYMENTS 
The balance of payments remained under severe pressure in 1994, primarily as a 
result of higher prices for imported energy. Based on preliminary data, the current 
account deficit for the first three quarters of 1994 was US$ 90 million, and the deficit 
for the whole of 1994 is estimated at US$ 183 million (or 15.4 % of GDP), 
practically the same as in 1993. Both exports and imports have been weak. Exports 
-43-
have been negatively affected by the continuing economic contraction in Moldova's 
main trading partners and increased transport costs. Concerning the import side, even 
if adequate financing commitments Were obtained in December 1993 to close the 
projected financing gap for 1993 and 1994, the slow pace of disbursements and the 
collapse of output have led to a severe compression of imports. 
Preliminary figures for the capital account show a surplus of about US$ 170 million 
for the first three quarters of 1994 and an estimated surplus of US$ 241 million for 
the whole year, compared to 136 million in 1993. At an estimated US$ 25 million in 
1994, direct investment remained low, while medium- and long-term loans accounted 
for the bulk of capital inflows, with an estimated amount of US$ 181 million for 
1994. This capital inflow allowed the Central Bank to accumulate gross official 
reserves in excess of the programmed target. 
3. FOREIGN DEBT 
Moldova agreed to the zero option with the Russian Federation and so has no 
responsibility for the external debt of the FSU. The total external debt of the country 
is estimated at US$ 550 million by end 1994 (or around 26 % of GDP), mainly to 
Russia and to the IFIs (IMF and World Bank), compared to US$ 154 in 1993 (about 
11 % of GDP). Financing from other bilateral donors, principally the EU, Japan, the 
USA, China, Romania and the Netherlands are comparatively small. Debt service as 
a percentage of exports is estimated to have increased from around 1 % in 1993 to 
more than 8 % in 1994 and is expected to increase further to more than 11 % in 
1995. 
44-
K. ROMANIA 
1. GENERAL ECONOMIC SITUATION 
Although its decline was reversed in 1993, real GDP is expected to remain low at 
around 2% in 1994 owing to the slow implementation of reforms in public 
enterprises. Growth will come mainly from exports. The government deficit will 
increase compared to 1993 but is expected to remain low at around 2.5% of GDP. 
Inflation slowed down considerably from over 300% end 1993 to 70% at the end of 
1994. The increase in interest rates to positive levels in real terms early 1994 
contributed to the stabilisation of the Lei and facilitated the unification of official and 
market exchange rates. However, towards the end of the year, some discrepancies 
occurred again between the two rates. Nominal interest rates at National Bank credit 
auctions decreased in line with the slow-down in inflation to some 80% at the end of 
1994. 
' In the course of 1994, a new impulse has been given to public enterprise reform. 
Some 60 state-owned enterprises with large losses and/or arrears have been isolated 
from the financial system and financial recovery plans have been implemented. But 
there is little progress in the privatisation of large and medium sized state-owned 
enterprises. A new mass privatisation scheme has been announced but not 
implemented yet. Prudential regulations and stricter control of bank portfolio's have 
been introduced but little progress has been made with respect to the privatisation of 
banks. 
2. THE BALANCE OF PAYMENTS 
The depreciation of the Lei end-1993 and early 1994 improved the competitiveness 
of the Romanian economy. Imports stabilised close to the 1993 level as domestic 
demand remained weak. Exports grew because of increased competitiveness and 
easier access to markets with the approval of the (Interim) Europe Agreement with 
the European Union and the granting of Most-Favoured-Nation status in the United 
States import regime. 
As a result, the trade balance and current account improved markedly in the first half 
of 1994. The current account deficit for that period amounted to US$ 166 million 
only, compared to a US$ 1.6 billion deficit for the whole of 1993. The capital 
account surplus diminished however to some US$ 100 million (excluding IMF loans) 
during the first half of 1994, compared to a US$ 1.3 billion surplus for the whole of 
1993. But the new agreement with the IMF, approved by the Executive Board in 
May 1994, is likely to lead to a new stream of official financial inflows into Romania. 
Access to private financial markets is, however, still limited. Direct foreign 
investment inflows remain very low as large-scale privatisations have not really 
started yet. 
-45-
Foreign currency reserves at the National Bank increased rapidly from only US$ 40 
million at end-1993 to over US$ 600 million at end-1994. Most of this increase is 
due to a shift from foreign currency deposits to Lei deposits in the commercial 
banking system, triggered by the strong increase in domestic real interest rates. 
3. FOREIGN DEBT 
Total external debt increased rapidly from virtually zero in 1989 to US$ 4.7 billion or 
16% of GDP at end-1993 and debt service accounted for 6.2% of current receipts-, 
which is still relatively low compared to other Eastern-European countries. As 
foreign investment inflows are unlikely to increase rapidly, official medium and long 
term loans will remain the principal source of finance for the current account deficit 
and, consequently, the growth of the debt stock is projected to continue. According 
to the IMF, the external debt service ratio is projected to increase to around 18% in 
1999. 
46 
L. RUSSIA 
l. GENERAL ECONOMIC SITUATION 
Gross domestic product is estimated to have fallen by 15% in 1994, with industrial 
production reported at less than 45% of its 1991 level. However, since October 1994 
monthly real GDP is reported to be higher than the corresponding months a year 
earlier. Similarly the industrial production index grew strongly from the fall of 1994^ 
onwards. 
The progress made towards macroeconomic stabilisation in 1993 and during the first 
half of 1994 has been largely dissipated in the last part of 1994. After a substantial 
financial tightening in 1993 and part of 1994, there was a marked financial relaxation 
in the second and third quarter of 1994. During both this quarters central Bank credit 
grew at 13% per month. 
The rising costs of the military campaign in breakaway Chechnya, the fallout from 
the rouble crash in October and the issue of promissory notes in exchange for 
corporate debts had fuelled a revamp of inflation. Inflation, down to 4.6% per month 
in August 1994, has been accelerating in the last quarter of 1994 to around 15% per 
month, bringing the overall 1994 consumer price increase to over 200%. The rouble 
exchange rate was over 3.800 to the dollar at mid-January 1995, up from 3.550 at 
the end of 1994 and compared to 1.247 at the beginning of 1994. The acceleration in 
the fall of the rouble reflects the Chechen crisis and growing inflationary 
expectations. 
Conflicting signals emerged on structural reforms. On the one hand, some senior 
members of the government questioned the irreversibility of the privatisation process. 
On the other, quite unexpectedly, the government at the end of 1994 passed a 
resolution liberalising the country's energy export regime, clearing the way for higher 
energy prices, increased export revenue and tax receipts, and reducing the scope for 
corruption. 
The future course of inflation, the development of the relationship with the IMF and 
the World Bank, and more generally the credibility of the economic policy of the 
government will depend heavily on the budget for 1995 and the way*in which it is 
financed. By late January 1995, this was still very hard to predict. 
2. THE BALANCE OF PAYMENTS 
The assessment of the balance of payments of Russia is complicated by the poor 
quality of the data. For instance, there is wide evidence<that capital flight has been 
significant since the early 1990s, but this is not totally reflected in the official data. 
In 1994 Russia recorded a large trade surplus, preliminarily estimated at US$ 19.8 
bn, compared with a surplus of US$ 16 bn in 1993. This amount, however, may be 
-47-
greatly over-estimated, as a part of imports go unrecorded in order to escape tax 
payments. The main feature is the diversion of trade and financial transactions away 
from traditional partners - former CMEA partners and, even more, former soviet 
republics - and re-direction of flows towards developed countries. 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 and 
accounted for less than 8.5%. 
The current account swang from a deficit of US$ 4 bn in 1992 to a surplus of US$ 2 
bn in 1993. According to data of the Russian Central Bank, the current account had* 
a surplus of US$ 3.6 bn in the first half of 1994. 
The level of foreign direct investment in Russia remains very small in relation to the 
dimensions of the economy and the resource endowment of the country. The net 
inflow in the first half of 1994 amounted to 400 million dollar. Political infighting, 
and the lack of basic legislation on contracts, land ownership, oil, gas and securities 
are perpetuating legal uncertainties for business, therefore preventing large capital 
inflow. • 
During the first eight months of 1994, the level of net reserves fell by US$ 1.9 bn, 
reaching US$ 1.4 bn at end-August. 
3. FOREIGN DEBT 
The external debt of Russia was estimated at US$ 85 bn at the end of 1994. Slightly 
less than 90% of the total consists of debt contracted during the Soviet period, which 
was taken over by Russia in early 1993. The debt represents about 30% of GDP. 
Debt service in 1994 is estimated to have represented 32% of exports, of which 
about 10% is in interest payments. 
Re-estimations by the Ministry of Finance put the debt to US$ 113 bn at the 
beginning of 1995. At the moment it is unclear why there is such a big discrepancy. 
This discrepancy is too big to be explained only in terms of revaluation of the 
currencies in which the debt is denominated vis-à-vis the dollar. 
Maturities of the debt contracted or guaranteed by the government before the 31 . 
December 1991 have been re-scheduled in the framework of several agreements with 
the Paris Club in 1992, 1993 and 1994. Negotiations with the Paris Club on the 
rescheduling of maturities due in 1995 have been postponed until after the conclusion 
of a stand-by arrangement with the IMF. An agreement with the London Club on the 
restructuring of the commercial debt, worth 24 billion dollars, is still under discussion 
and could not be finalised in 1994 despite a legal understanding reached on the status 
of Russia's commercial debts. 
-48-
M. THE SLOVAK REPUBLIC 
1. GENERAL ECONOMIC SITUATION 
Following a 4.1% decline in 1993, real GDP recorded year-on-year growth-of 4.£%: 
in the first nine months of 1994. Industrial production has recovered strongly, 
growing by 9.3% in the third quarter of 1994 (year-on-year) and unemployment 
seems to have stabilized at about 14.3%. After accelerating to 25.1% in 1993 as 
result of increases in indirect taxes and the devaluation of the Slovak crown, CPI 
inflation has been on a downward trend since the beginning of 1994, falling to about 
12%atend-1994. 
The reduction of inflation has been supported by tight macroeconomic policies. Net 
domestic assets fell by 1.4% in 1994, while net credit to the government increased by 
only 3.3%. The general government deficit, for its part, is estimated to have finished 
the year close to the 4% of GDP target, well below a deficit of 7.5% of GDP in 
1993. The new government intends to reduce the 1995 deficit to around 3% of GDP. 
These fiscal targets are part of the economic programme for 1994/95 agreed with the 
IMF and supported by a SDR 115.8 mio stand-by arrangement, a second purchase 
(of SDR 64.34 mio) from the Systemic Transformation Facility (STF), and 
complementary macro-financial assistance from the EU/G-24 in the amount of about 
US$ 243 mio. 
Large-scale privatization was reactivated through the launching in the summer of 
1994 of a second wave of voucher privatization for which about 3.2 mio citizens 
(almost 90% of those eligible) registered. The voucher scheme, however, has been 
on hold since the September 30/October 1 general elections and the new Parliament 
has invalidated some direct-sale privatization contracts concluded after 6 September 
1994. The new government has yet to clarify its strategy towards privatization and 
financial and enterprise restructuring. 
2. THE BALANCE OF PAYMENTS 
Slovakia's balance of payments strengthened considerably in 1994. The current 
account, which had recorded a deficit of 4.2% of GDP in 1993, is estimated to have 
swung into a surplus of about 3% of GDP in 1994. This compares with a deficit of 
2.5% of GDP projected under the programme agreed with the IMF. The 
improvement in the current account has been particularly marked with respect to the 
Czech Republic. In the first nine months of 1994, Slovakia ran a surplus of US$ 
581.7 mio (or about 5% of GDP) against the Czech Republic, and the latter 
exceeded in 1994 six times the ECU 130 mio credit ceiling agreed under the bilateral 
clearing system. 
Also the capital account has strengthened, reflecting both substantial official support 
from the international financial community (IMF, World Bank, EU/G-24) and an 
improved access to the international capital markets. In July 1994, the National Bank 
-49-
of Slovakia placed successfully in the Samurai market a US$ 250 mio bond and 
further international issues are being envisaged. The Japan Bond Research Institute 
assigned to Slovakia an investment grade rating (BBB) in July 1994. 
Official foreign exchange reserves have increased from only US$ 395 mio (less than 
1 month of imports) at end-1993 to US$ 1.8 bn (2.5 months of imports) at end-1994, 
or the target for official reserves set within the IMF programme for end-1995. The-
total foreign exchange reserves of the banking system, for their part, have risen from 
US$ 1.4 bn at end-1993 to US$ 3.5 bn at end-1994. 
Despite the improvement in the balance of payments, the Slovak government has 
announced its intention of maintaining during 1995 the 10% surcharge on imports of 
consumer goods introduced in March 1994. Within the IMF programme, the 
government is committed to removing this surcharge and making progress towards 
achieving full current account convertibility so as to reach "Article VIII status" at the 
IMF by 1 January, 1996. Regarding exchange rate policy, the Slovak crown has been 
kept stable since July 1994 against a basket of Western currencies but has been 
devalued by 5% against the Czech crown within the clearing system. 
3. FOREIGN DEBT 
Slovakia inherited from the Czechoslovak federation a very low external debt. While 
external debt and debt service ration are expected to deteriorate in the coming years, 
they will remain at relatively low levels. The convertible currency debt/GDP ratio is 
projected to increase from 30.5% at end-1993 to around 40% at end-1995 and 
stabilize at around 45% after 1997. Convertible debt service as a percentage of 
exports of goods and services, for its part, is expected to increase from 8.9% in 1993 
to 11% in 1995 and remain approximately at that level thereafter. 
-50-
N. TRANSCAUCASIAN AND ASIAN REPUBLICS 
1. GENERAL ECONOMIC SITUATION 
The situation among the Tanscaucasian and Asian Newly Independent States (NISX* 
varies considerably. All the former soviet republics suffered in 1992-1993 from the 
weakening of old structures and the collapse of inter-republican trade links. The 
decline in trade among the NIS (probably 20-30% a year since 1992) has had serious. 
knock-on effects on output. Loose financial policies in many NIS compounded the 
adverse effects of the external shocks. Political and military conflicts in Tadjikistan 
and the Transcaucasian republics dramatically aggravated the situation in these 
countries. 
Far-reaching economic reform already begun in most NIS in 1993: several republics 
have already made considerable strides 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 
prevailed in most republics in 1993, inflation generally slowed down in 1994. Most 
countries suffer from high government budget deficits. 
Two republics, Kyrgyzstan and Kazakhstan, had already received in 1993 financial 
support from the IMF, mainly in the form of structural adjustment facility (STF) 
loans. Georgia and Armenia concluded similar arrangements with the IMF by the end 
of 1994. Also, progress towards comprehensive reforms has been made in Azerbaijan 
and Uzbekistan. The case of Tadjikistan remained very preoccupying: while reforms 
have been delayed in the context of civil war and political instability, there were no. 
short term prospects of significant improvement. The country's output is estimated to 
have dropped by more than 60% since 1989. 
2. THE BALANCE OF PAYMENTS 
The balance of payments situation of the area is extremely weak, with probably the 
exception of Turkmenistan. 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 rather variable profiles. Some 
have considerable hard currency earning potential (Kazakhstan, Uzbekistan, 
Azerbaijan) and industrial productive capacity. Others are clearly close to developing 
countries and will therefore strongly rely on external assistance. Armenia, Georgia 
and Kyrgyzstan have already been made eligible to highly concessional lending from 
the Bretton Woods institutions. 
-51-
3. FOREIGN DEBT 
The NIS already made in 1993 substantial progress in clarifying their position vis-à-
vis the question of the foreign debt legacy of the former Soviet Union. Initially (at 
the end of 1991), the former republics were made jointly and severally responsible, 
for such debt. A Memorandum of Understanding setting forth the principle of joint 
and several liability was signed on 28 October 1991. The April 1993 Paris Club* 
agreement with Russia, however, was accompanied by a change in legal 
arrangements on debt servicing within the FSU making in fact Russia the sole actual* 
manager of the debt. Accordingly, 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. 
Very few countries, like Kazakhstan, have attracted since their independence new 
credits from the West. The bulk of the NIS external debt is owed to Russia and 
Turkmenistan. This debt results from balances of the ex-republics' Central Banks 
with the Central Bank of Russia and arrears on energy shipments. In 1993, Russia 
concluded with all the NIS (with the only exception of Turkmenistan) agreements 
rescheduling its claims over a 1994-1997 period (Azerbaijan, Georgia). Russia 
awarded bilateral loans to several countries (Armenia, Uzbekistan, Kyrgyzstan) 
which had a negative correspondent account position with it. Trade arrears have 
however continued to build up with the two energy-exporting NIS in 1994. 
The Community has also provided significant amounts of three year commercial 
credits to all the NIS under the ECU 1250 million loan facility. Some of those 
countries are presently facing difficulties in ensuring a timely servicing to their debts 
towards the Community. 
-52-
O. UKRAINE 
l. GENERAL ECONOMIC SITUATION 
Following an accumulated output contraction of 40% from 1990 to 1993, GDP fell 
another 26% in 1994 reflecting not only the balance of payments constraint but also a 
massive shift into the informal, unregistered sector. However, the 1994 decline hides 
the fact that the Ukrainian economy seems to have stabilized in the second half of 
1994. The official unemployment figure does not reflect the protracted fall in output; 
at the end of 1994, it stood at 0.3%. However, estimates on hidden unemployment 
reach as much as 20%. 
Following a stop and go pattern, the National Bank of Ukraine made another attempt 
in autumn 1993 to tighten monetary policy considerably, which led to a sharp fall of 
~ inflation to a monthly rate of 3% in summer 199„4.„ The subsequent sharp increase of 
inflation in the last quarter of 1994 (monthly average 40%) partly reflects another 
relaxation of credit policy. But this also is a reaction to the liberalization of prices in 
the context of Ukraine's comprehensive stabilization and reform programme agreed 
with the IMF in September 1994 and supported by the Systemic Transformation 
Facility (STF) in October 1994. The tight monetary policy contained in this 
programme should contribute to a rapid deceleration of inflation in the first half of 
1995. 
Following a sharp decline of the budget deficit in 1993 (10% of GDP, after 29% in 
1992) the authorities managed to stabilize it in 1994, despite substantial demands to 
increase expenditures previously cut and to finance state procurement of agricultural 
products for which commercial banks refused to take the credit risk. The stabilization 
of the budget was achieved - despite an increase in outlays in the social safety net -
through cuts in subsidies and commodity reserves and through requiring the full 
repayment of all directed credits extended in the first half of 1994. It is the 
government's intention to achieve a further substantial reduction of the budget deficit 
in 1995. 
In the last quarter of 1994, a number of important reforms were initiated. Besides the 
liberalization of prices and the reduction of subsidies, it was decided to make 
adjustments to administered prices to fully pass implied price increases of imported 
energy onto industrial and agricultural users. The interbank auction market was also 
opened, and efforts were made to unify the exchange rate of the karbovanets. In 
addition, the Government approved an action plan to remove the legal obstacles to 
the ability of enterprises and individuals to own and transfer land and took steps to 
speed up privatization. These measures will be enhanced further in the context of an 
IMF stand-by arrangement which is expected to be in place in Spring 1995. 
-53-
2. THE BALANCE OF PAYMENTS 
As a consequence of the move of energy prices charged by former Soviet republics 
(mainly Russia) towards world market levels starting in 1992, Ukraine suffered a 
severe terms of trade shock. Given the heavy dependence of its economy on energy, 
Ukraine was forced to reduce import volumes both for energy and other goods 
adding further to the economic decline. The current account deficit is estimated to 
have widened further in 1994 to US$ 1.8 bn (some 8% of GDP). 
Given also the estimated capital flight, the need to amortize medium- and long-term 
credits not matched by new credits, and the negligible foreign direct investment, 
Ukraine accumulated important external arrears (more than US$ 2 bn). At the same 
time, the official foreign exchange reserves increased by some US$ 600 mio. 
In 1994, Ukraine received the first tranche (US$ 271 mio) from the IMF under the 
STF backing the country's comprehensive stabilization and reform programme. It 
also obtained a first tranche (US$ 100 mio) of a rehabilitation loan from the World 
Bank (totalling US$ 500 mio) which was approved in December 1994. The Union 
decided, in December 1994, to provide Ukraine with balance of payments assistance 
of up to ECU 85 million in support of the country's reform programme. 
3. FOREIGN DEBT 
In 1994, Ukraine's external debt stock increased from US$ 4.1 bn in 1993 to US$ 7.5 
bn. In percent of GDP this represents an increase from 27% to 35%. The ratio of 
debt service to exports of goods and services rose from 1% to 8.6%. In November 
1994, Ukraine reached an agreement with Turkmenistan that it would clear arrears of 
US$ 300 mio on gas, whereas the remaining arrears would be rescheduled. Russia 
declared its willingness to reschedule some US$ 500 mio on interstate debt, but 
negotiations are still ongoing; in addition, there are discussions about the 
regularization of a US$ 1.5 bn debt to Russia accumulated in 1994 on account of 
gas. 
54 
U-F-3 Country risk indicators 
Last update 
27-Jan-95 Cduntry: Algeria 
Real GDP grown» rate (in %) 
Hydrocarbon production ( % change) I 
Unemployment rate (end of period) 
Inflation rate (Dec/Dec) 
Exchange rate (dinars per USD) (end of period) 
Nommai effective exchange rate (change Q4/Q4) (- = dépréciation) 
Real effective exchange rate (change Q4/Q4) (• - depreciation) 
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 FX reserves (end of period) 
in bnUSD 
in mono» of imports of GAS 
External debt 
External debt 
(in convertible currencies, in bn USD, end cf 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 GAS (%) 
Debt service/exports of G&S (%) 
Arrears (on both interest and principal, in mio USD) 
Debt relief agreements and rescheduling (bn USD) 
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 per.) 
S&P long-term foreign currency rating (end of period) 
Euromoney 
Position in the ranking (1) 
(number of countries) 
The Institutional Investor 
Position in the ranking (1) 
(number of countries) 
Credit rating (2) 1992 
2,2 
2,6 
21,9 
32,1 
22,8 
-1,0 
27,0 
-1,3 
12,1 
1,3 
30,0 
1,5 
2,0 
26,1 
25,0 
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 
-1,* 
-0,5 
a a. 
20,5 
24,0 
-7,9 
14,2 
-9,2 
10,9 
1,0 
0,0 
1,4 
1,9 
24,6 
n.a. 
aa. 
9,1 
7,0 
2,1 
53,4 
225,3 
83,6 
No 
No 
No 
Not rated 
Not rated 
Mar Sep 
68 79 
(169) (170) 
Mar Sep 
62 69 
(127) (133) 
28.2 27.1 1994 
Latest data or 
estimates (E) 
2,0 .(E) 
-0,8 (E) 
n.a. 
29,2 
42,9 
-78,6 
n.a. 
-5,0 (E) 
10,0 (E) 
-1,4 (E) 
0,0 
2,2 
2,9 
26.2 (E) 
n.a. 
aa. 
n.a. 
n.a. 
n.a. 
65.3 (E) 
255,0 (E) 
46,1 (E) 
No 
5,2 
SBA 
(6794-6/95) 
On-Track 
Not rated 
Not rated 
Mar Sep 
92 96 
(167)(167) 
Mar Sep 
75 78 
(135) (135) 
26.3 24.6 
(1) The higher the score in the ranking, the lower the creditworthiness of the country. 
(2) 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. 
-55 
II-F-3 Country risk indicators 
Last update: 
27-Jau-95 Country: Belarus 
Real QDP growth rate (in %) 
Industrial production (H 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) 
Gestersi goveruseut balance (as % of GDP) 
Balance of payments. 
Imports in million US$ 
Exports in million US$ 
Trade Balance in million USS 
Current account balance in million US. S 
Currant account balance (in % of ODP) 
Net inflow of foreign direct investment (in million USD) 
Official FX reserves (end of period) 
m mio USD 
in months of imports 
External debt 
External debt 
(in convertible currencies, in bn USD, end of period) 
medium and long-term f> 1 year) 
short-term (-<1 year) 
Convertible debt service (in bn USD) 
principal 
interest 
External debt/ODP(%) 
External debt/exports of OAS (%) 
Debt service/exports of OAS (%) 
Arrears (on both interest and principal, in bn USD) 
Debt relief agreements and rescheduling 
IMF amageatents 
Type/ho 
(Date/-) 
On track/off track 
(-/Date) 
Indicators of Market's perceived creditworthiness 
Moody's long-term foreign currency rating (end of period) 
SAP 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 
-9,6 
-10.0 
0.6 
1560 
226 
aa. 
aa. 
-4.5 
3203 
3580 
377 
221 
0.7 
aa. 
aa. 
aa. 
aa 
aa. 
aa. 
aa. 
aa 
aa. 
aa. 
aa. 
aa. 
aa. 
Not rated 
Not rated 
Not rated 
Not rated 
132 
(169) 
Mar Sep 
- (126) 1993 
-11.6 
-10.0 
1,5 
1990 
2688 
aa 
aa 
-9.4 
3299 
2946 
-353 
-413 
-1,5 
10 
62 
0.3 
aa 
aa 
aa 
aa 
aa 
aa 
aa 
aa 
aa 
aa 
STF 
(08.93-8.94) 
Off track 
See footnote 
(5) 
Not rated 
Not rated 
Not rated 
Not rated 
Mar Sep 
148 139 
(169) (170) 
Mar Sep 
100 
(127) (133) 1994 
Latest data or 
estimates 
-26.0 
-35.0 
2.0 
1200 
26800 
a a, 
aa 
-12.0 
3125 
2650 
-475 
-502 
-2.4 
10 
85 
0.4 
aa 
aa 
aa 
197.0 
aa 
aa 
aa 
aa 
7.6 
aa 
likely 
with Russia 
on gas arrears 
STF 
(01.95) 
See footnote 
(5) 
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 ) For all 1994 data, preliminary estimates. 
(2) Countries are given a rating between A - E and a score between 1 - 100, with Band 100 representing the highest risk. 
(3) The higher the score in the ranking, the lower the creditworthiness of the countiy. 
(4) Countries are rated on a scale of zero to 100, with 100 representing the least chance of de&ult A given countiy may improve its rating 
and still fall in the ranking if also the average global rating for all rated countries improves. 
(5) IMF 1993 STF programme was not on track in early 1994. However, IMF staff considered favourably the Government programme adopted 
in Autumn 1994, which it intends to support with the second STF tranche by end-January 1995 and a stand-by arrangement later in 1995. 
-56-
n-T-J Cenntryrisklndicalers 
27-Jaa-M > Country: Bolsjaria 
Real QDP grown rata Cm M) 
' tosmtualprodactkw(» change) 
Unssneloymont rate (end of period) 
Inflation rats (end of period) 
Exchange rate (Leva par USD) (end of period 
Nonunal effective exchange rats (change, Q4/Q4) (- - dtprtclaUen) 
Real effective exchange rats (ehmg/i, Q4/Q4) (• - tkpnciation) 
Osneral government balance (as % efODP) 
Balance efpaynMuls 
Exports of CAS (m bn USD) 
Carrent account balance On K of QDP) 
Net inflow of foreign direct investment (in mio USD) 
Official FX reserves (end of period) 
in bnUSD 
in months of imports of OAS 
External debt 
External debt 
(ki convertible cumneiei, in bn USD, end of period) 
medium and long-term (> 1 year) 
short-teim (-< 1 year) 
Convertible debt service (in bn USD) 
principal 
interest 
External debt/ODP(H) 
External debt/exports of OAS (H) 
Debt esrvice/exports of CAS (H) 
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) 
SAP 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 
-5.6 
•11.0 
15,3 
79.4 
243 
-15.7 
43* 
-7.4 
4.0 
-9,2 
42 
1.0 
VI 
IV 
aa 
aa 
2.0 
1.4 
0.6 
144.0 
248,0 
39.0 
6.1 
Paris Crab 
(reached.) 
London CL 
(roO-oven) 
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 
-4,2 
-9.0 
1«3 
63,9 
333 
-3,1 
59,2 
-13* 
4* 
-7.9 
55 
0.7 
13 
123 
aa 
aa 
1.7 
1.1 
0.6 
124.0 
249.0 
32,0 
aa 
London Crab 
(roU-ovsn, and 
DDSR agreed 
m principle) 
No 
Not rated 
Not rated 
80 
E 
Mar Sep 
122 125 
(I69)(170) 
Mar Sep 
91 89 
027)(133) 
18.9 19.5 1994 
Latest date or 
4,0 
\2$ 
122.0 
663 
aa 
aa 
-6* 
3,9 (Q1-Q3) 
2,0 (E) 
aa 
1.1 
2.4 
103 
aa 
aa 
1,0 
03 
0.4 (E) 
117,0 (E) 
204,6 (E) 
19,0 (E) 
aa 
London Club 
DDSR 
(July) 
SBA 
0/94-3/95) 
Not rated 
Not rated 
80 (Aug) 
E(Aog) 
Mar 
88 
067) 
Mar Sep 
91 95 
(135)(135) 
193 20.8 
(1) Countries are given a rating between A-Eand a score between 1 -100, with Band 100 representing the highest risk. 
(2) The higher the score in the ranking, the lower the creditworthiness of die countiy. 
(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 rail in the 
ranking if also the average global rating for all rated countries improves. 
57> 
II-F-3 Country risk indicators 
Last update: 
27-Jaa-95 Country: Csed» Republic 
'Real OOP growth rate (in H) 
Industrial production ( H change) 
Unemployment (H 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 OAS (in mio USD) 
Current account balance (in H of QDP) 
Net inflow of foreign direct investment (in mio USD) 
Official FX reserves (end of period) 
in bnUSD 
m months of importa of OAS 
Extensa] 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 
mtorest 
External debt/GDP (%) 
External debt/exports of OAS (%) 
Debt service/exports of OAS (%) 
Arrears (on both interest and principal, in mio USD) 
Debt relief agreements and rescheduling 
IMF arrangements 
Type/no 
0>nte/-) 
On track/off track 
(-/Date) 
Indicators of market's perceived creditworthiness 
Moody's long-term foreign currency rating (end of period) ( 1 ) 
SAP 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 
1,9 
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 
Bal 
Not rated 
30 
B 
49 
(169) 
Mar Sep 
37 39 
(119)(125) 
47.1 46.1 1993 
-0,3 
-5,4 
3.5 
18,2 
293» 
4.2 
193 
0.7 
16728 
1.8 
450 
3,8 
2.7 
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 
BBB 
25 
B 
Mar Sep 
48 43 
(169)(170) 
Mar Sep 
42 40 
(127) (133) 
44.6 46.6 1994 
Latest data or 
estimates (E) 
2,1 1-Q3/Q1-Q3) 
2.7 1-Q3/Q1-Q3) 
3,1 
10.7 (Nov) 
27.8 (Nov) 
aa 
aa 
0.1 (B) 
18627 
0.7 (B) 
420 (Jan-Sep) 
5.8 (Nov) 
3.9 (Nov) 
9.1 (Q3) 
aa 
aa 
1,9 (E) 
aa 
aa 
25.8 (E) 
48.9 (E) 
10.2 (E) 
No 
No 
SBA 
On-track 
All 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 
035)(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. 
(4) 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. 
58 
IW-J C^aswryristtmamussra 
LaetuuéalK 
27-Jaa-»5 Csnnlij. Esfiisda 
Real GDP growth rate On *) 
Industrial production ( H change) 
Uneoiployinent rate (end of period) 
Inflation rate (end of period) 
Exchange rate (100 Krone per USD) (end of period) 
Nominal effective exchange rate (change, Q4/Q4) (•• depredation) 
Real effective exchange rate (change, Q4/Q4) (• - depreciation) 
General gsvonasmsst balance (us % of GDP) 
Financial balance (1) 
Pkcal balance (1) 
nshare of eaymsnti 
Exports of goods (in mio USD) 
Current account balance On * of GDP) 
Net inflow of foreign direct investment (m mio USD) 
Official FX reserves (end of period) 
bi mio USD 
in months of goods imports 
EsJerasJusM 
External debt 
(In convertible currencies, In bn USD, end of period) 
medium and long-term f> 1 year) 
short-term (-< 1 year) 
Convertible debt service On mio USD) 
principal 
interest 
External debt/GDP (K) 
External debt/exports of GANFS (%) 
Debt service/exports of GANFS (%) 
Arrears (on both interest and principal, in mio USD) 
Debt relief agreements and rescheduling 
IMF atrangi menti 
Type/no 
(Date/-) 
On track/off track 
(-/Date) 
Moody's long-term foreign currency rating (end of period) 
SAP long-term foreign currency rating (end of period) 
EIU countiy 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 
9533 
aa 
aa 
03 
03 
446,0 
0,0 
57,9 
195,2 
43 
27. 
aa 
aa 
03 
aa 
aa 
33 
5.9 
0,0 
No 
No 
SBA 
(9/92-9/93) 
On track 
Not rated 
Not rated 
80 
E 
Sep 
117 
(169) 
Mar Sep 
68 74 
(119)026) 
25.7 22.1 1993 
-33 
-27.0 
1,7 
35,7 
1.6 
aa 
aa 
-1.» 
801,0 
145,0 
384 
5,2 
1353 
aa 
aa 
133 
aa 
aa 
6,7 
12.1 
U 
No 
No 
SBA/STF 
(10/93-3/94) 
On track 
Not rated 
Not rated 
75 
D 
Mar Sep 
126 122 
(169)(170) 
Mar Sep 
81 84 
027)033) 
21.4 20.9 1994 
Latest date or 
4.0 
aa 
4,0 
40,0 
8.0 
aa 
aa 
•03 
-23 
881,0 
-7,0 
150,0 
445 
4.7 
228,1 
aa 
aa 
10,2 
IU. 
aa 
9.0 
16.6 
0,7 
No 
No 
STF 
3/94 
On track 
Not rated 
Not rated 
70 (Aug) 
D(Aug) 
Mar Sep 
105 102 
067)067) 
Mar Sep 
88 86 
(135)(135) 
20.7 23.6 
(1) Financial balance does not take into account govemment net lending, wherem 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 me creditworthiness of the country. 
(4) Countries are rated on a scale of zero to 100, with 100 representing the least chance of de&ult A given country may improve ib rating 
and still fall in the ranking if also the average global rating for all rated countries improves. 
59-
ll-f-J Coun4ryHok Indicators 
Last update: 
27-Jua-9S Country: Hnngary 
Raul OOP growth rata (in *) 
bidustrial produotioa ( H change) 
UucnaJuyinent (% of labour force) (end of period) 
bimmtmram (Deapee) 
Exctisssaa rate (forints per USD) (end cfperiod) 
Noiranmaffectrmexcbareynste (change, Q4fQ4) (--depreciation) 
Real effective exchange rate (change, Q4/Q4) (- - depredation) 
Censeal gavemmsat bataure (at H of COP) (CDS aVflutttou) 
Exports of O+NFS (in mio USD) 
Current account balance (in % of GDP) 
Net inflow of foreign direct «vestment (in niio USD) 
Official FX reserves (end of period) 
in bn USD 
in months of importa of merchandises 
External debt 
External debt 
(In convertible currencies. In bn USD, end of period) 
medium and long-term (> 1 year) 
snort-term (-< 1 year) 
Convertible debt service (in bn USD) 
principal (1) 
altèrent 
External debt/GDP (H) 
External debt/Exports of O+NFS (S) 
Debt service/Exports of O+NFS (H) 
Arrears (on bom interest and principal, in mio USD) 
Debt relief agreements and rescheduling 
IMF arrangements 
Type/no 
(Data/-) 
On track/off track 
(-/Date) 
Indicators ef market's perceived creditworthiness 
Moody's long-term foreign currency rating (end of period) 
SAP long-term foreign currency rating (end of period) 
EIU countiy 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 
123 
21,6 
84.0 
-5,4 
7,9 
-6\9 
13332 
0,7 
1471 
4,4 
6,1 
213 
19.3 
23 
4.7 
3.1 
1.6 
58.7 
161.3 
35.3 
No 
No 
EFF 
(2/91-2/94) 
Off track 
Summer 
Bal 
BB+ 
40 
B 
46 
(169) 
Mar Sep 
42 43 
(119)(126) 
41.7 42.3 1993 
-23 
4,0 
12.1 
21.1 
100,7 
-3.1 
10,2 
-7.0 
10898 
2328 
7.7 
8,2 
24.6 
22,8 
1.8 
5.0 
33 
1.7 
64.2 
225.4 
45.9 
No 
No 
SBA 
(9/93-12/94) 
On track 
Bal 
BB+ 
50 
C 
Mar Sep 
47 46 
(169)(170) 
Mar Sep 
43 43 
(127)(I33) 
44.3 44.8 1994 
3.0 (B) 
9.0 (Q1-OVQ1-Q3) 
10,4 
21.0 (Nov) 
111,0 (24 Jan 95) 
-12,1 (Q3/Q3) 
3.0 (Q2/Q2) 
-8,0 (B) 
9428 (B) 
-10,0 (E) 
1200 (E) 
6,8 (Oct) 
63 (Oct) 
28,2 
25.8 
2.3 
6.1 
4.4 
1.7 
77.5 
299.1 (Oct) 
64.7 (Oct) 
No 
No 
SBA 
First review 
uncompleted 
Bal 
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 aregiven a rating between A- Eand 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 de&ult A given country may improve its rating and 
stall fall in the ranking if also the average global rating for all rated countries improves. 
-60-
H.-F-3 Csuutry risk iudicaoacs 
LMÉ •B4UU4SK 
27-J*m-9S Country: larnol 
Real ODP growth rate (in H) 
Induatrial production ( H ohss^) (at corertant 1990 prices) 
UMmployinont rate (average) 
Oxanaser Price Index (Dec/Dec) 
Rxchange rate (sneqjalim per USD) (end of period) 
NctninaleflMxrreexcnansairate (change, Q4/Q4) (--deprecj 
Raul effective exchange rata (change, Q4/Q4) (--deprec) 
Coutrnl geTsruassut overall nutlet» (aa H of GDP) 
Bnlnuee of pnymeute 
Exports (in bn USD) 
Current account balance (m K of ODP) 
Net inflow of foreign direct investment (in mio USD) 
Oroes official FX reserves (end of period) (in months of total imports) 
in billions US$ 
in months of imports of OAS 
External debt 
External debt (gross external liabilities) 
Cut bn USD, end of period) 
medium and long-term f> 1 year) 
short-term (-< 1 year) 
Debt service (in bn USD) 
principal 
interest(areas) 
External debt/ODP(H) 
External debt/exports (H) 
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 
(-/Date) 
Indicators of market's perceived creditworthiness 
Moody's long-term foreign currency rating (end of period) 
SAP long-term foreign currency rating (end of period) 
Euromoney 
Position in the ranking (1 ) 
(number of countries) 
The Institutional Investor 
Position in the ranking (1 ) 
(number of countries) 
Credit rating (2) 1992 
6.6 
•tu 
9,4 
4764 
-9.7 
-43* 
-2.4 
13.3 
0.1 
•340 
5.127 
42 
33.6 
23,2 
10.4 
6.5 
Aa 
43 
523 
252.6 
31.0 
No 
No 
CCFF 
(3/92-3/93) 
On-track 
178 
Not rated 
BBB-
32 
(169) 
Mar Sep 
50 52 
(H9)(126) 
37.1 35.1 1993 
3^ 
10,0 
4986 
-«.1 
1,8 
-45 
143» 
-1.8 
aa 
6.382 
44 
36.1, 
aa 
aa 
6,4 
4,1 
43 
55,8 
2443 
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 
Utaatdataor 
6,8 (B) 
« (B) 
-7,8 (Nov) 
15 (Nov) 
3.018 
-1.1 
aa 
-40 (B) 
16.5 (B) 
-3.1 (B) 
100 (B) 
6.817 (Nov) 
45 (Nov) 
37.4 (B) 
aa 
aa 
aa 
aa 
aa 
aa 
226.7 Œ> 
aa 
No 
No 
No 
Not rated 
BBB+ 
Mar Sep 
30 00 
(167) (000) 
Mar Sep 
46 43 
(135)(135) 
43.4 46.5 
(1 ) The higher the score in the ranking, the lower the creditworthiness of the country. 
(2) Countries are rated on a scale of zero toi 00, with 100 representing the least chance-of de&ult A given country may improve 
its rating and still fall in the ranking if also the average global rating for all rated countries improves. 
61 
U-F-3 Ciuutiy risk mateeters 
Uu«uuaam; 
27-Jan-95 Country: Latvia 
Real GDP growth rate (m %) 
Industrial production ( H change) 
Unemployment (end of period) 
Inflation rate 
Exchange rate (Lars per USD) (end of period) 
Nominal effective excliange rate (change, Q4/Q4) (- - dépréciation) 
Real effective exchange rate (change, Q4IQ4) (--depreciation) 
Ciniralgivirnmin«hslanre(ae%ofCDP) 
Financial balance (2) 
Fiscal balance (2) 
Balance of nuynmnts 
Exports Cm mio USD) 
Current account balance (in % of GDP) 
Net inflow of foreign direct investment (m mio USD) 
Official FX reserves (end of period) 
in mio USD 
in months of imports of GAS 
External debt 
External debt 
(In convertible currencies, in mio USD, end of period) 
medium and long-term f> 1 year) 
short-term (•< 1 year) 
Convertible debt service (in mio USD) 
pnncipal 
interest 
External debt/GDP (S) 
External debt/merchandise exports (%) 
Debt service/roerchaivtisff exports (H) 
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) 
SAP long-term foreign currency rating (end of period) 
EIU country risk service (3) 
Score (end of period) 
Rating (end of period) 
Euromoney 
Position m the ranking (4) 
(number of countries) 
The Institutional Investor 
Position in the ranking (4) 
(number of countries) 
Credit rating (5) 1992 
-348 
-35.1 
23 
958,1 
0.843 
aa 
aa 
0.0 
-03 
825 
23 
14 
156 
40 
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)(I26) 
23.9 21.4 1993 
-140 
-346 
5,8 
343 
0395 
aa 
aa 
1,0 
0.6 
998 
8,6 
39 
510 
5,6 
311 
311 
0.0 
10 
aa 
aa 
147 
313 
0,4 
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)033) 
19.5 20.0 1994(1) 
Latest data 
or estimates (E) 
40 
aa 
7,0 
25,0 
0337 
aa 
aa 
-40 
-4,1 
951 
-1.6 
60 
596 
53 
445 
445 
0.0 
141 
46,8 
3.8 
No 
No 
SBA/STF 
(12/93-3/95) 
On track 
75 (Aug) 
D(Aug) 
Mar Sep 
104 125 
067)067) 
Mar Sep 
94 92 
(135)035) 
19.6 21.3 
(1) For aD data, preliminary estimates. 
(2) Financial balance does not take into account government net lending, whereas fiscal balance does. 
(3) Countries are givei a rating between A-E and a score between I -100, whhE and 100 representing the highest risk. 
(4) The higher the score m the ranking, the tower the creditworthiness of 
(5) Countries sre rated on a scale of zero to 100, with 100 representing the least chance of default A given country may improve its rating 
and stall fall in the ranking if also the average global rating for all rated countries improves. 
-62-
U-V-i Csuutryrtsfcmakators 
Laatupunta: • 
27-Jan-9S Country: Utawanm 
Real GDP growth rate (m\ %) 
Industrial production (% change) 
Unemployment rate (end of period) 
Inflation rate (end of period) 
Exchange rate (Litas per USD) (end of period) 
Nominal effective exchange rate (change, Q4/Q4) (- » depreciation) 
Real effective exchange rate (change, Q4/Q4) (--depreciation) 
Cimrsl i* i il urntl bshinrs (as H of CDP) 
Financial balance (1) 
Fiscal balance (1) 
Balance of payments 
Exports of GAS (in nno USD) 
Current account balance (m % 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 GAS 
External debt 
External debt 
(In convertible currencies, in bn USD, end of period) 
medium and long-term f> 1 year) 
short-term (-< 1 year) 
Convertible debt service (in mio USD) 
pnncipal 
interest 
External debt/GDP (H) 
External debt/exports of GAS (%) 
Debt service/exports of GAS (%) 
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 credltworthuwss 
Moody's long-term foreign currency rating (end of period) 
SAP 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 
13 
1161.1 
13 
aa 
aa 
0.6 
0,7 
1145 
M 
10 
106 
46 
983 
aa 
aa 
40 
aa 
aa 
5.4 
73 
03 
No 
No 
SBA 
(10/92-9/93) 
On track 
Notrated 
Notrated 
80 
E 
Sep 
118 
069) 
Mar Sep 
73 80 
(119)(126) 
23.7 20.7 1993 
-163 
-47.0 
1.6 
188.6 
33 
aa 
aa 
«3 
-4,6 
1877 
-63 
23 
410 
44 
3453 
aa 
aa 
15.0 
aa 
aa 
113 
163 
0.7 
No 
No 
SBA/STF 
(10/93-3/94) 
On track 
Notrated 
Notrated 
75 
D 
Mar Sep 
134 130 
(169)(170) 
Mar Sep 
91 93 
027)033) 
18.9 19.0 1994 
latest data or 
estimates 
13 
aa 
40 
38.0 
4.0 
aa 
aa 
-13 
-4.0 
2313 
-4.8 
60 
600 
2,7 
580 
aa 
aa 
25,4 
aa 
aa 
10,6 
25,0 
1,0 
No 
No 
STF (10/93-3/94) 
EFF (10/94-11/95) 
On back 
Notrated 
Notrated 
75 (Aug) 
D(Aug)-
Mar Sep 
110 121 
(167)067) 
Mar Sep 
97 96 
(I35)(135) 
18.4 20.0 
(1) Financial balance does not take into account government net lending, wnerem 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 me 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 de&ult A given country may improve its rating 
and stall faD in the ranking if also the avenge global rating for all rated countries improves. 
-63 
ttJM CaatB^iikkiaMlkators 
Idumft lattaummtsK 
27Jaa-M Country: Moldova 
Real GDP growth rate (in %) 
Industrial production (Hcrouigc) 
Uhemptoyinent (S of labour farce) (end of period) 
Inflationrate (end of period) 
Excraang» rate (hsu per USD) (end of period) 
NotmneJeffectrraexclsang«rate (change,Q4/Q4) (--depreciation) 
Real effective excrsange rate (change, Q4/Q4) (--depreciation) 
Geamral gsvsmmsnt hawurs (as % of GDP) 
BsJsuKeofpayuMats 
V 
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 weeks of imports of inerchandiaes 
External debt 
External debt 
(in convertible currencies, in mio USD, end of period) 
medium and long-term f> 1 year) 
short-term (-< l.year) 
Convertible debt service (in mio USD) 
principal 
interest 
External debt/GDP (%) 
External debt/ merchandise exports (tt) 
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) 
SAP 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 
aa 
aa 
2198.0 
aa 
aa 
-23.4 
aa 
aa 
aa 
45 
0.1 
aa 
aa 
aa 
aa 
aa 
aa 
aa 
aa 
aa 
aa 
aa 
Notrated 
Notrated 
Notrated 
Sep 
156 
(169) 
Notrated 1993 
-8.7 
aa 
aa 
837 
3.00 
aa 
aa 
, -*\» 
451 
-11.2 
14.0 
76.6 
6.3 
154.0 
aa 
aa 
5.0 
aa 
aa 
10.8 
34.3 
1.1 
No 
No 
SBA 
(3/93-3/94) 
On-track 
Notrated 
Notrated 
Notrated 
Mar Sep 
159 160 
(169)(170) 
Notrated 1994 
Latest data or 
MtmmtosfB) 
•31.0 
-34.0 
1.0 
10S.1 
4,00 (Q3) 
aa 
aa 
-7,7 <B) 
511 (B) 
-15.4 <E) 
25 <E) 
118 (Q3) 
11.2 (Q3) 
550,4 (B) 
aa 
aa 
49.4 (E) 
aa 
aa 
26,2 (E) 
91.5 (B) 
8.2 (E) 
No 
No 
SBA 
(12/93-3/95) 
On-track 
Notrated 
Notrated 
Notrated 
Mar Sep 
148 155 
(167)067) 
Notrated 
(1) Countries ara given a rating between A -Eandascorebetween 1 -100. withEand 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 countriea improves. 
•64-
H-r-3 Country risk mo^ators 
UmtupautK 
27sJas>9S Cauuny Tr «mania 
Real GDP growth rate (at %) 
bvfcjstrial production ( H change) 
Unemployment rate (end of period) 
Inflation rate (Dee/Dec) 
Exchange rate (lei per USD) (end of period) 
Noininal effective exchange rate (change, Q4/Q4) (- - depredation) 
Reel offa^ exchange rate (change, Q4/Q4) (--depreciation) 
General govoraauont balance (as % of CDF) 
Balance of payments 
Exports of GAS Cm mio USD) 
Current account balance (in K of GDP) 
Net inflow of foreign direct investment (m mio USD) 
Official FX reserves (end of period) 
in mio USD 
in months of imports of GAS 
External dabt 
External debt 
(in convertible currencies, in bn USD, end of period) 
medium and long-term f> 1 year) 
short-term (-< 1 year) 
Convertible debt service (in mio USD) 
principal 
mterest 
External debt/GDP (%) 
External debt/exports of GAS (S) 
Debt service/exports of GAS (%) 
Arrears (on bom interest and principal, in mio USD) 
Debt relief agreements and rescheduling 
IMF arrangomiarti 
Type/no 
(Date/-) 
On track/off track 
(-/Date) 
Indicators of marker's perceived creditworthiness 
Moody's long-term foreign currency rating (end of period) 
SAP 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 
-146 
-241 
M 
1983 
• 460 
-74* 
-24.0 
-43 
4299 
•83 
73 
93 
03 
33 
44 
1.1 
176 
85 
91 
18,1 
95.1 
4.1 
No 
No 
SBA 
(5/92-3/93) 
Off track 
Dec 92 
Notrated 
Notrated 
60 
D 
72 
(169) 
Mar Sep 
69 68 
019)026) 
25.6 24.8 1993 
13 
7.7 
93 
2953 
127» 
-563 
39.7 
. -0.1 
4882 
-53 
48 
52 
0.1 
4.7 
33 
1.4 
312 
147 
165 
21.4 
129.6 
6.4 
No 
No 
No 
Notrated 
Notrated 
65 
D 
Mar Sep 
66 75 
069)070) 
Mar Sep 
73 75 
027)033) 
24.2 24.4 1994 
Latest data or 
èstsmtosfE) 
40 (E) 
5.1 (Nov) 
103 (Nov) 
693 (B) 
1800 
-29,4 
aa 
-45 (E) 
4691 (Oct) 
-33 (E) 
172 (June) 
650 
13 
9.0 (E) 
aa 
aa 
449,0 
224,0 
225,0 
233 (E) 
191,4 (E) 
10,0 (E) 
No 
No 
SBA/STF 
(5/94-12/95) 
On track 
Notrated 
Notrated 
65 (Aug) 
D(Aug) 
Mar Sep 
74 77 
(167)067) 
Mar Sep 
76 74 
035)035) 
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 the ranking, the tower the creditworthiness of the country. 
(3) Countries are rated on a scale of zero to 100, with 100 representing the least chance of de&ult A given country may improve ite rating 
and stall fall in the ranking if also the average global rating for aO rated countries improves. 
•65-
II-F-3 Country risk indicators 
Last update: 
27-Jan-*5 Country: Russia 
Real GDP growth rate (in %) 
Industrial production ( % change) 
Unemployment rate (end of period - ILO definition) 
Inflation rate (Dee/Dec) 
Exchange rate ( Rbs per USD) (end of period) 
Nominal exchange rate (change, Q4/Q4) (- - depreciation) 
Real exchange rate (*) (change, DocJDoc.) (- - depreciation) 
General government balance (as % of GDP) 
Balance of payments 
Exports of GAS (m 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) 
in mio USD 
in months of imports of GAS 
External debt 
' External debt 
(in convertible currencies, in bn USD, end of period) 
medium and long-term (> 1 year) 
short-term (•< i year) 
Convertible debt service (in bn USD) 
principal 
interest 
External debt/GDP (%) 
External debt/exports of GAS (%) 
Debt service/exports of GAS (%) 
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) 
SAP long-term foreign currency rating (end of period) 
EIU countiy 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 
aa 
2300 
414.5 
(Q4/Q1) -55,6 
68,7 
-18.8 
57 
-1,2 
0,7 
40 
0,5, 
78,7 
65,7 
13,0 
15,6 
10,4 
5,2 
24,0 
137,0 
25,0 
11,8 
Paris Chib 
(deferrals) 
London Club 
(roD-oven) 
1st credit 
tranche 
Notrated 
Notrated 
95 
E 
129 
(169) 
Mar Sep 
- 73 
- (126) 
- 23.6 1993 
-12,0 
-16.4 
5,1 
840 
1247 
•645 
66,9 
-8,0 
69 
1,8 
0,7 
3,3 
0,9 
83,7 
70,6 
13,1 
19.6 
14,7 
4,9 
26,0 
1240 
29,0 
11,0 
Paris Chib 
(reached.) 
STF 
(07.93-07.94) 
Off track 
Notrated 
Notrated 
95 
E 
Mar Sep 
141 137 
(169)(170) 
Mar Sep 
87 92 
(127)(133) 
20.2 19.0 1994 
Latest data or 
estimates 
-15,0 
-21,0 
6,8 
203 
3571 
aa 
aa 
-10,0 
48 
45 
(Jan/Jun) 0.4 
(Aug) 1.4 
0,5 
85,0 
aa 
aa 
213 
aa 
aa 
30,9 
177,1 
44,4 
aa 
Paris Chib 
(reached.) 
STF 
(07.93 - 07.94) 
On track 
See footnote 
(4) 
Notrated 
Notrated 
90 (Aug) 
E(Aug) 
Mar Sep 
138 136 
(167)(167) 
Mar Sep 
98 100 
(135) (135) 
18.1 18.4 
(1) Countries are given a rating between A-E and a score between 1 - 100, with E and 
(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 average global rating for all rated countries improves. 
(4) Second tranche disbursed in April 94. 
(*) Real exchange rate: (actual rate x US price level) / (Russian price level) 
66-
U-F-J Country risk Indicators 
Last update: 
27-Jaa-9S Country: Slovak Republic 
Real GDP growth rate (in H) 
Industrial production ( S change) 
Unemployment (S of labour force) (end of period) 
Inflation rate (Doe/Dec) 
Exchange rate (SK's per USD) (end of period) 
Nominal effective exchange rate (change, Q4/Q4) (- - depreciation) 
Real effective exchange rate (change, Q4/Q4) (• - depreciation) 
Genera! government balance (as H of GDP) 
Balance of pnymonla 
Exports of GAS (in mio USD) 
Current account balance (in % of GDP) 
Net inflow of foreign direct investment (in mio USD) 
Official FX reserves (end of period) 
m mio USD 
in months of imports of GAS 
external debt 
External debt 
(In convertible currencies, in bn USD, end of period) 
medium and long-term O 1 year) 
short-terra ("< 1 year) 
Convertible debt service (in mio USD) 
pnncipel 
interest 
External debt/GDP (%) 
External debt/exports of GAS (%) 
Debt service/exports of GAS (%) 
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) 
SAP 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 
-7.0 
-12,8 
10,4 
9.1 
28,9 
1.0 
6,8 
-13,1 
8219 
1.7 
100 
356 
0,7 
2,6 
41 
0,4 
675 
415 
260 
25,6 
31,2 
8,2 
No 
No 
SBA 
(4/92-4/93) 
on-track but 
expired with 
dissolution 
ofCSFR 
Bal 
Notrated 
Notrated 
Notrated 
58 
(169) 
Mar-Sep 
37 39 
(119)(125) 
47.1 46.1 1993 
-4,1 
-8.6 
14.4 
25.1 
33.2 
-4.9 
16.7 
-7.5 
7568 
-4,2 
134 
395 
0,9 
3,4 
aa. 
aa 
674 
490 
184 
30,5 
44,5 
8,9 
No 
No 
STF 
(7/93- ) 
On-track 
Notrated 
Notrated 
Notrated 
Notrated 
Mar Sep 
56 63 
(169)(170) 
Mar-Sep 
57 57 
(127)(133) 
31 30.6 1994 
Latest data or 
estimates (E) 
43 (Q1-Q3/Q1-Q3) 
93 (Q3) 
14.3 (Oct) 
140 (E) 
31,3 
-8,4 (Q2/Q2) 
0,8 (Q2/Q2) 
-4,0 (E) 
8903 (E) 
3.0 (E) 
100 (E) 
1725 
45 
4,4 
aa 
aa 
650 (E) 
400 (E) 
250 (E) 
35,0 (E) 
49,4 (F) 
7,3 (F) 
No 
No 
STF 
(-7/94) 
SBA 
(7/94-3/96) 
On-track 
Notrated 
BB-
50 (Aug) 
C(Aug) 
Mar Sep 
64 66 
(167)(167) 
Mar Sep 
59 59 
035) (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 may improve its rating 
and still fall in the ranking if also the average global rating for all rated countries improves. 
-67-
H-F-J Cooatry risk iadicators 
Last update: 
17-Jan-9S Country. Ukraine 
Real ODP growth rate Cm H) 
Industrial production ( H change) 
Uneinploymoat rate (end of period) 
Inflation rate (Dec/Dec) 
Exchange rate (Krb per USD) (end of period) 
-auction 
-official 
Nominal effective exchange rate (change, Q4/Q4) (. - depreciation) 
Real effective exchange rate (change, Q4/Q4) (- - depreciation) 
General govormnont balance (as % of GDP) 
Balance of payments 
Exports of GAS (m bn USD) 
Current account balance (excL transfers) (m % of ODP) 
Net inflow of foreign direct investment (in bn USD) 
dross official FX reserves (end of period) 
in mio USD 
in months of imports of OAS 
External debt 
External debt 
(in convertible currencies, in bn USD, end of period) 
medium and lung-term (> 1 year) 
short-term (-< 1 year) 
Convertible debt service paid (in mio USD) 
principe! 
interest 
External debt/ODP(H) 
External debt/exports of GAS (H) 
Debt service/exports of OAS (%) 
Arrears (on both interest and principal, m bn USD) 
Debt rsbef 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) 
SAP long-term foreign currency rating (end of period) 
EIU country risk service (1) 
Score (end of period) 
Rating (end of period) 
Eoromoney 
Position m the ranking (2) 
(number of countries) 
The Institutional Investor 
Position in the ranking (2) 
(number of countries) 
Credit rating 0) 1992 
-17,0 
-«.5 
0 
2000 
749 
638 
aa 
aa 
-293 
11.4 
-3,7 
aa. 
400 
0,4 
3,48 
aa 
aa 
aa 
aa. 
aa 
21,4 
30,5 
aa 
0,264 
-
Notrated 
Notrated 
100 
E 
122 
(169) 
Mar Sep 
- 79 
-(126) 
- 211 1993 
-14,2 
-8,0 
03 
10155 
25000 
12610 
aà 
aa 
-9.7 
15,9 
-6,4 
0,05 
980 
0.7 
4.12 
aa. 
aa 
75,0 
aa 
aa 
273 
25,9 
03 
0348 
-
Notrated 
Notrated 
100 
E 
Mar Sep 
142 146 
(169)(170) 
Mar Sep 
95 96 
(127) (133) 
18.2 18.2 1994 
Latest date or 
estimates (E) 
-263 (E) 
-273 
03 
386 
130000 
108000 
aa 
aa 
-10,0 (E) 
15,2 (E) 
-83 (E) 
0,09 (E) 
550 (Sept) 
0.4 
73 
aa 
aa 
aa 
aa 
aa 
35.4 (E) 
493 (E) 
aa 
2J14 
rescheduling 
Turkmenistan 
STF 
26 Oct 94 
on track 
Notrated 
Notrated 
100 (Aug) 
E(Aug) 
March 
149 
(167) 
Mar Sep 
111 113 
035)(I35) 
15.1 14.5 
(1) Countries sre given a rating between A - E and a score between 1 -100, withEand 100 representing the highest risk 
(2) The higher the score in the ranking, the lower the creditworthiness of the countiy. 
0) Countries are rated on a scale of aero to 100, with 100 representing the least chance of de&ult A given country may improve ite rating 
and still fall in the ranking if abo the average globalTating for all rated countries improves. 
-68-
TABLEl 
CAPITAL OUTSTANDING IN RESPECT OF OPERATIONS AUTHORISED 
Operation 
MEMBER STATES 
A. Balance of payments 
1. Greece I 
2. Greece II 
3. Italy 
B. Other 
4. Euratom 
5. NCI and 
NCI earthquakes 
6. ED3 Mediterranean, 
Spain, Greece, Port 
MEMBER STATES - TOTAL 
THIRD COUNTRIES 
A Financial assistance 
1. Hungary 
2. Czech Republic 
3. Slovak Republic 
4. Bulgaria 
5. Romania 
6. Algeria 
7. Israel 
8. Baltic States 
9. Moldova 
10. Ukraine 
11. Former Soviet Union 
B. Other 
12. EIB Mediterranean 
13. EIB Central A Eastern Europe I 
14. EIB Central & Eastern Europe II 
15. EIB Asia, Latin America 
16. 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 
1250 
€282 
1700 
3000 
750 
500 
17127 
43457 Capital 
outstanding 
30.06.94 
1000 
4005 
862 
1880 
527 
8274 
790 
250 
125 
290 
455 
250 
160 
110 
934 
1634 
390 
2 
133 
5524 
13798 Capital 
outstanding 
31.12.1994 
1000 
4022 
779 
1570 
473 
7843 
790 
250 
125 
360 
455 
400 
160 
110 
25 
810 
1688 
572 
2 
46 
133 
5925 
13769 Remainder to be 
disbursed 
31.12.1994 
0 
1200 
4000 
0 
0 
0 
5200 
260 
0 
130 
40 
125 
200 
0 
110 
20 
85 
290 
3804 
1126 
2998 
704 
9892 
15092 (1) 
(2) 
1 No disbursement is planned. 
2 The third and fourth tranches had still not been paid at 31 December 1994. So far, the Italian Government has not requested 
payment 
ANNEX TO TABLE 1 
SITUATION IN RESPECT OF EIB OPERATIONS AT 31 DECEMBER 1994 
Operations 
EIB Mediterranean 
Spain, Greece, Portugal 
Third countries EIB Med 
Central & Eastern Europe I 
Central & Eastern Europe 11 
Asia, Latin America Credit line 
authorized 
1500 
6282 
1700 
3000 
750 Loans made 
available, minus 
cancellations 
1465 
4125 
1650 
921 
319 Initial 
disbursement 
1603 
2478 
574 
2 
46 Amount 
outstanding at 
30.6.1994 
473 
1688 
572 
2 
46 
MB: The fact that the initial disbursement sometimes exceeds the authorized ceiling is due to differences in the ecu 
rate between the date on which the contracts were signed and 31 December 1994. 
-69 
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.EIBMed.01d.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 Med 
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 Med 
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) 1994 
200 
270 
656 
91 
1217 
110 
253 
81 
188 
50 
683 
1900 
152 
. 130 
2 
133 
417 
79 
25 
13 
29 
46 
16 
25 
60 
11 
120 
21 
24 
468 
885 
2785 
595 
291 1995 
47 
458 
81 
587 
95 
254 
62 
133 
41 
586 
1173 
350 
494 
139 
14 
133 
1130 
79 
25 
13 
36 
46 
16 
40 
112 
11 
3 
120 
39 
3 
9 
552 
'682 
2855 
1 364 
318 1996 
500 
5G0 
153 
315 
75 
1543 
95 
254 
58 
96 
34 
537 
2080 
260 
' 205 
138 
27 
630 
44 
25 
13 
36 
46 
16 
40 
15 
11 
3 
110 
39 
4 
402 
1032 
3112 
724 
308 1997 
459 
537 
74 
1069 
48 
213 
43 
70 
27 
401 
1469 
80 
127 
63 
140 
160 
250 
108 
144 
35 
1107 
18 
25 
13 
36 
46 
16 
40 
9 
11 
3 
100 
37 
4 
358 
1465 
2934 
751 
714 1998 
500 
1000 
92 
92 
58 
1742 
48 
213 
10 
22 
21 
313 
2054 
100 
123 
62 
150 
185 
153 
46 
4 
823 
10 
13 
6 
22 
46 
15 
il 
3 
89 
34 
4 
253 
1076 
3130 
811 
265 1999 
16 
41 
51 
108 
159 
3 
13 
15 
190 
298 
190 
152 
54 
4 
400 
7 
27 
15 
11 
3 
78 
31 
3 
175 
575 
873 
323 
252 2000 
2522 
13 
41 
45 
2621 
159 
1 
10 
11 
181 
2802 
80 
110 
5 
142 
52 
4 
393 
7 
8 
15 
11 
3 
67 
27 
3 
140 
533 
3335 
302 
231 2001 
71 
21 
92 
7 
7 
14 
106 
70 
150 
5 
130 
52 
5 
412 
7 
10 
2 
57 
23 
3 
102 
514 
621 
159 
355 TOTAL 
1200 
4022 
1049 
2211 
496 
8978 
395 
1505 
258 
539 
207 
2905 
11883 
790 
250 
125 I 
360 
455 
160 
400 
959 
110 
10 
1128 
282 
17 
266 
5312 
230 
113 
58 
180 
265 
64 
200 
196 
77 
20 
741 
251 
24 
33 
2450 
7762 
19645 
4 999 
2 763 
-70-
TABLE3 
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 
1. Greece 
2. Italy 
B. Structural loans 
3. Euratom + NCI 
4. ËIB Sp; Gr. Port 
Capital - subtotal 
INTEREST 
A Balance of payments 
1. Greece 
2. Italy 
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. Euratom, C+E Eur. 
B. Guarantees 
17. EIB Med 
18. EIB C+E Eur. I+ 11 
19. EIB, Asia. Latin America 
20. Aid, Russia, Ouar. SOOm 
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 SUtes 
14. Moldova 
15. Ukraine 
16. Euratom, C+E Eur. 
B. Guarantees 
16. EIB Med. 
J 7. EIB C+E Eur. I + 11 
18. EIB, Asia. Latin America 
19. Aid, Russia, Guar. SOOm 
Interest • subtotal 
NON-MEMBER 
COUNTRIES-TOTAL 
GRAND TOTAL 
(Eastern Europe) 
(Other non-member countries) 1994 
200 
926 
91 
1217 
no 
253 
270 
50 
683 
1900 
152 
130 
2 
133 
417 
79 
25 
13 
29 
45 
16 
25 
80 
11 
148 
46 
24 
541 
957 
2857 
639 
319 1995 
505 
81 
587 
95 
339 
196 
41 
671 
1258 
350 
566 
139 
14 
133 
1202 
92 
25 
16 
38 
52 
16 
50 
127 
17 
3 
2 
8 
153 
85 
5 
9 
697 
1899 
3157 
1536 
363 1996 
500 
500 
468 
75 
1543 
95 
595 
154 
34 
878 
2421 
260 
248 
138 
27 
673 
70 
25 
26 
40 
58 
16 
60 
24 
22 
5 
9 
25 
225 
192 
19 
815 
1488 
3909 
1030 
458 1997 
995 
74 
1069 
48 
638 
113 
27 
825 
1894 
80 
127 
63 
140 
160 
250 
197 
144 
35 
1196 
44 
25 
26 
40 
58 
16 
60 
18 
22 
5 
9 
45 
323 
279 
39 
1009 
2205 
4098 
1213 
992 1998 
500 
1000 
184 
58 
1742 
48 
638 
31 
21 
737 
2479 
100 
123 
62 
150 
185 
208 
123 
13 
964 
36 
12 
19 
26 
58 
35 
22 
5 
9 
65 
399 
365 
56 
1107 
2071 
4550 
1360 
711 1999 
57 
51 
108 
553 
16 
15 
583 
692 
190 
289 
232 
27 
738 
26 
13 
11 
40 
35 
22 
5 
9 
85 
423 
394 
63 
1126 
1864 
2555 
1027 
837 2000 
2522 
54 
45 
2621 
553 
11 
11 
575 
3196 
80 
110 
5 
10 
378 
308 
46 
937 
26 
13 
11 
21 
35 
22 
5 
9 
102 
405 
383 
63 
1095 
2032 
5228 
1105 
927 2001 
2000 
71 
21 
2092 
340 
7 
7 
354 
2446 
70 
150 
9 
17 
23 
420 
360 
57 
1106 
26 
13 
11 
13 
35 
11 
4 
9 
107 
300 
349 
58 
936 
2042 
4488 
1022 
1020 TOTAL 
1200 
6022 
3260 
496 
10978 
395 
3908 
797 
207 
5307 
16285 
790 
250 
125 
360 
455 
160 
400 
1163 
110 
14 
17 
33 
1846 
1101 
143 
266 
7232 
399 
112 
139 
206 
345 
64 
335 
249 
149 
31 
96 
437 
2376 
2093 
303 
33 
7323 
14556 
30841 
8971 
5584 
-71-
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. 
L 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. 
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. 
- 72 -
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. 
H. CALCULATION 
Some of the amounts indicated are the result of estimates made on the basis of the 
following assumptions. 
Generally speaking, the exchange rates for loans in currencies other than the ecu are 
assumed to have been stable since 31 December 1994. 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 will be 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. 
-73-
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 1995. 
2. Hungary II: ECU 180 million has been granted and paid out in full. 
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). No tranche had been paid at 31 
December 1994. 
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 III: This is a seven-year loan of ECU 125 million to be disbursed 
in two tranches. No tranche had been disbursed at 31 December 1994. It 
is assumed that the first tranche of ECU 65 million will be disbursed in 
1995 and the second tranche of ECU 60 million in 1996. 
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 1995. 
10. Ukraine: ECU 85 million is to be lent in one tranche for a maximum term 
often years. At 31 December 1994 the loan had still not been paid out. 
-74-
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 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). No tranche had been paid at 31 
December 1994. 
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). 
-Loans not disbursed (Loans not signed and loans signed but not yet 
disbursed) 
The following table shows the situation as regards loans which have not been 
disbursed. 
Year 1995 1996 TOTAL 
Mediterranean countries4 2 7265 1078 3 804 
Central and Eastern Europe I and II 2 8046 1 270 4 074 
Other non-member countries 4547 250 704 
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. 
In the absence of a financial statement, all loans still to be committed under the financial protocols tor 
the Mediterranean countries expiring at the end of 1996 have been spread evenly over the period 
1995-96. 
This amount breaks down into ECU 1 647 million in loans to be disbursed under contracts signed 
before 31 December 1994 and ECU 1 078 million in loans to be signed and disbursed in 1995. 
This amount breaks down into ECU 1 995 million in loans to be disbursed under contracts signed 
before 31 December 1994 and ECU 809 million in loans to be signed and disbursed in 1995. 
This amount breaks down into ECU 273 million in loans to be disbursed under contracts signed 
before 31 December 1994 and ECU 181 million in loans to be signed and disbursed in 1995. 
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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. 
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 31 December 1994 came to 
ECU 204 million. 
3. Euratom, countries of Central and Eastern Europe 
Of the ECU 1 100 million involved, it is assumed that ECU 150 million will 
be disbursed in 1995, ECU 200 million in each of the four following years 
and ECU 150 million in 2000. 
It is assumed that the loans will be for an average term of twenty years with 
a five-year period of grace. 
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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 EIB 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 14.0008 
NCI 6.830 
Euratom 4.0009 
EIB; Spain, Greece, Portugal 1.500 
Member States - total 26.330 
9 Authorized amount outstanding: once this figure is reached, further loans may be granted as 
previous operations are repaid. 
Including ECU 1 100 million which may be granted to the countries of Eastern Europe and the 
CIS. 
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B. Non-member countries 
Hungary I 870 
Hungary II 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 
Algeria II 200 
former Soviet Union I 408 
former Soviet Union II 1.250 
Baltic States 220 
Moldova 45 
Ukraine 85 
EIB, old protocols 3.032 
EIB, Eastern and Central Europe I 1.700 
EIB, Eastern and Central Europe II 3.000 
EIB, new protocols 1.450 
EIB, horizontal financial cooperation 1.800 
Other non-member countries 750 
Non-member countries - total 17.035 
Grand total 43.365 
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. 
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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COM(95) 182 final 
DOCUMENTS 
EN 01 
Catalogue number : CB-CO-95-202-EN-C 
ISBN 92-77-88732-X 
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