ANNUAL REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT on the borrowing and lending activities of the Community in 1995
Date: 1996-07-24
Institutions: European Commission
Subjects: Community loan, EU borrowing, EU financing, New Community Instrument, activity report

COMMISSION OF THE EUROPEAN  COMMUNITIES 

Brussels,  24.07.1996 
COM(96) 384  final 

ANNUAL  REPORT  FROM  THE  COMMISSION 
TQ  THE COUNCIL  AND THE EUROPEAN  PARLIAMENT 

on the borrowing and lending activities of the  Community in  1995 

and 

REPORT FROM  THE  COMMISSION 
TO THE COUNCIL  ANP THE EUROPEAN  PARLIAMENT 

on the rate of utilization of the New Community Instrument (NCI) 
(half-year from  1 July  1995 to 31 December  1995) 

CONTENTS 

INTRODUCTION 

A. 

THE COMMISSIONS  ANNUAL  REPORT TO THE COUNCIL AND  TO  THE 
EUROPEAN  PARLIAMENT  ON  THE  BORROWING  AND  LENDING 
ACTIVITIES  OF THE COMMUNITY  IN  1995 

1. 

Community borrowing 

2. 

3. 

4. 

5. 

Lending within the Community 

Lending outside the Community 

The European Investment Fund 

Budgetary impact of lending 

Statistical annex 

B. 

THE  COMMISSION'S  REPORT  TO  THE  COUNCIL  AND  TO  THE 
EUROPEAN PARLIAMENT  ON  THE  RATE  OF  UTILIZATION  OF  THE 
NEW  COMMUNITY  INSTRUMENT  (NCI)  (half-year  from  1 July  1995  to 
31 December  1995) 

1. 

2. 

Overall situation at 31 December  1995 

Breakdown of loans by country and sector 

Statistical annex 

REPORT ON THE BORROWING AND LENDING ACTIVITIES 
OF THE COMMUNITY 

INTRODUCTION 

A.  Annual report 

This annual report is drawn up in accordance with the Council Decisions establishing 
the New Community Instrument (NCI)1 and lending instruments for Euratom research 
and  finance.2 
In  addition,  Parliament,  in  its  Resolution  on  improving  political 
monitoring  of  the  Community's  borrowing  and  lending  activities,3  called  for  the 
activities of the ECSC and the EIB to be included.  The present  annual report  covers 
1995; it is the sixteenth report published by the Commission and is intended to comply 
with the obligation imposed on it by the Council and Parliament to provide the  fullest 
information possible on all these activities. 

The European Union's financial activities in  1995 were mainly devoted  to  completing 
the  implementation  of  the  innovative  instruments  decided  at  preceding  European 
Summits and  to  developing the more conventional  instruments,  despite the  sluggish 
pace  of activity  on the international financial markets.  As a result,  EIB  lending  has 
increased substantially, in particular as part of the European growth initiative aimed at 
accelerating the financing of the trans-European networks.  As for the outside world, 
the  European  Union's  activities were  extended  when  the  EIB  implemented  the  new 
Council Decisions concerning Albania, Turkey and the peace process in Graza and the 
West Bank.  In addition, in the context of the process of democratic normalization in 
the world,  the Union,  by means of EIB loans, was present  for  the first time in Haiti 
and in South Africa. 

The utilization  of these instruments  has had  an effect  on the  activity  of the  facilities 
established in  1994, in particular the European Investment Fund (EIF) and the budget 
Guarantee Fund for  external actions.  In view of the expansion of these activities, the 
Council began to  consider4 the nature  of the risks incurred  (commercial  or  political) 
and the best way of apportioning them.  This is why the November 1995 

Article 6 of Decision 78/870/EEC (OJ No L 298 of 25 October 1978); 
Article 7 of Decision 81/19/EEC (OJ No L 37 of 10 February 1981); 
Article 7 of Decision 81/1013/EEC (OJ No L 367 of 23 December 1981); 
Article 6 of Decision 82/169/EEC (OJ No L 78 of 24 March 1982); 
Article 7 of Decision 83/200/EEC (OJ No L 112 of 28 April 1983); 

Article 9 of Decision 87/182/EEC (OJ No L 71 of 14 March 1987). 

Article 4 of Decision 77/270/Euratom (OJ No L 88 of 6 April 1977). 

Doc. PE/67134 of 5 March 1981 (OJ No C 287 of 9 November 1981). 
Statement annexed to Council Decision 93/696/EC; OJ No L 321 of 23 December 1993. 

Council  asked  the  Commission,  together  with  the  EIB,  to  submit  a  report  on  the 
possibility  of  part  of  the  risk  being  shared  between  the  Bank  and  the  Community 
budget. 

B.  Half-yearly  report 

With a view to  ensuring that  borrowings  designed  to  promote  investment  within the 
Community are continuously monitored, the  1983 and  1987 Decisions concerning the 
NCI  also provide for  the Commission  to  present  Parliament  and  the  Council  with  a 
six-monthly report about the rate of utilization of the NCI borrowing tranches.  Part 
B of this  document  therefore  provides  an account  of NCI  activities  over  the  period 
from 1  July to 31 December 1995. 

A. THE COMMISSIONS  ANNUAL REPORT 

TO THE COUNCIL AND TO THE EUROPEAN  PARLIAMENT ON THE 
BORROWING AND LENDING ACTIVITIES OF THE COMMUNITY  IN 1995 

1.  COMMUNITY  BORROWING 

1.1 

In  order  to  attain  the  objectives  of  the  Treaty  covering  the  territory  of  the 
Community,  the  Commission  has  been  empowered  to  borrow  funds  on  the  capital 
market.  These  borrowings  are  intended  for  financing  loans  for  Member  States  in 
balance-of-payments difficulties  (ceiling of ECU  14 billion), for research and  financing 
in connection with nuclear power stations (current  Euratom  ceiling of ECU 4 billion), 
for  encouraging  investment  in the Community under the NCI  (current  ceiling of ECU 
6.8  billion)  and,  under  the  ECSC  Treaty,  for  promoting  productive  capacity  or 
conversion projects  in the coal and steel industries. 

On  the  basis  of  the  agreements  concluded  with  non-Community  countries,  the 
Commission  is empowered  to  borrow  to  finance  programmes  of  financial  assistance 
for  the  countries  of  Central  and  Eastern  Europe,  for  the  African,  Caribbean  and 
Pacific  (ACP)  countries  and  for  measures  adopted  pursuant  to  the  Mediterranean 
protocols. 

Within  and  outside  the  Union,  the  European  Investment  Bank  (EEB)  has  been 
closely involved  in the financing  of common policies and priorities, to the point where 
its borrowings  account  for  most  issues  (see  Table  1).  Also,  the  enlargement  of  the 
Community  to  fifteen  at  the beginning  of  1995  required  technical  adjustments  to  the 
Statute  and  an  increase  in  the  Bank's  capital,  which  consolidate  its  position  as  the 
Union's principal financial  instrument. 

1.2  The  volume  of  borrowing  in  the  market  by  these  Community  institutions  in  1995 
totalled  ECU  13.2  billion,  a  fall  of  13.2%  over  the  previous  year  (Table  1).  The 
decline is slightly  smaller  for  funds  borrowed  by the EIB  (down  12.7%).  As regards 
issues made by the Commission  (allocated  borrowings), the fall  is in keeping with the 
guidelines  laid  down  by  the  Council  for  disengaging  the  Commission  from  certain 
activities - mainly  the  activities  of  the  ECSC  and  implicitly  those  of  the  NCI  and 
Euratom - in favour  of the EIB. 

The  fall  in EIB  borrowings  is not  attributable  to  the  pace  of activity,  as will be  seen 
below, but above all to the market  situation and in particular the reduction  of inflation 
and the fall  in interest  rates.  Lower  interest  rates  have encouraged  the Bank's  clients 
to  repay  certain  loans in advance to  a larger  extent  than the institution itself has  done 
in relation  to  its  own  borrowings.  The  result  was  an  increase  in  liquidity  and  hence 
less need to borrow in order to finance the demand for loans, which is still increasing. 

This  situation  was  less  marked  in the  OECD  countries,  where  inflation  did  not  slow 
down  so  sharply,  which  is  why  the  slowdown  in  borrowing  issues  for  the  area  as  a 
whole  was  more  moderate  (down  8.3%).  Overall,  however,  the  European 
Institutions' share of borrowing in the OECD area declined  slightly,  falling from 4.9% 
in  1994  to  4.7%  in  1995.  Taking  account  of  redemptions  and  cancellations,  the 
amount  of  borrowing  outstanding  at  31 December  1995  was  ECU  102.9 billion, 
compared with ECU  100.2 billion in  1994 (see Table 2 in Annex). 

In  1995,  the  uncertainties  which  appeared  on the  foreign  exchange  markets  between 
the  currencies  traditionally  used  for  transactions  (dollar,  yen,  ecu)  weakened  the 
demand  for  borrowings  in  those  currencies.  Conversely,  the  proportion  of 
borrowings  denominated  in  stable  Community  currencies,  particularly  the  Grerman 
mark  and  the  Italian  lira,  increased;  demand  for  the  lira  was  supported  by  the  large 
volume  of  lending  by  the  EIB  in  Italy  and  the  fact  that  it  is  considered  to  be 
undervalued. 

Table  1 

Issues on the International  market 

(ECU billion) 

1. Community 
ofwhloh: 

1.1  ECSC 
1.2  EC (a) 
1.3  Euratom 
1.4  EIB 

1988 

1990 

1991 

1992 

1993 

1994 

1995 

9,6 

10,5 

125 

109 

15,7 

20,1 

15£ 

132 

Cv9 
0,9 
0,1 
7,7 

0,9 
0,5 

9,0 

1,1 
0,4 

1,4 
1,7 

1,5 
1,2 

0,9 
5,0 

110 

1517 

130 

14,2 

08 
0,3 
0,1 
142 

0,4 

OA 

124 

2.  OECD  countries  (b) 

151,2 

193,1 

141,5 

2003 

2127 

337,0 

309,7 

2818 

3. Community share 

6,3 

5,4 

a8 

$1 

7,4 

6,0 

49 

4,7 

( 1 a s % o f 2) 

4. International issues by selected ourrendes 

4.1  US  «(b) 
4.2  YEN(b) 
4.3  ECU 

4.4  U S * a s % o f2 
4.5  Yen as  % of 2 
4.6  ECU as % of 2 

630 
134 
9,5 

41,7 
89 
6,3 

106,6 
142 
114 

56£ 
7,4 
5,9 

55,0 
17,9 
14,1 

38,9 
127 
10,0 

65,9 
29,1 
26,0 

31,6 
HO 
125 

79,5 
26,0 
17,1 

37,4 
122 
80 

12B,1 
37,9 
6,1 

37,4 

11.2 

13 

125,5 
56,5 
6,4 

406 
183 
21 

110,4 
49,3 
5,4 

389 
17,4 
1,9 

(a) 

(b) 

NCI  -«balance of payments. 

Calculations based on fie yearly average exchange rate of tie ecu. 

Source: 

EC and OECD. 

The  bulk  of  Community  borrowing  in  1995  was  contracted  at  fixed  rates;  however, 
the persistent downward trend of interest rates gave a strong stimulus to  variable-rate 
issues.  For the EIB, the proportion of such issues reached 40% of the total. 

2, 

LENDING WITHIN THE COMMUNITY 

2.1  Economic  activity  in the  Community  on  average  increased  steadily  (2.7%)  in  1995, 
although it tended to weaken in the second half-year.  The recovery was mainly led by 
the strong export performance  of the European economies and by the acceleration  of 
investment.  Real  investment  in the  Community,  as measured  by gross  fixed  capital 
formation  (GFCF), rose by 4.5%. 

In spite of the economic recovery, the declining profile  of activity during the year did 
not permit  the hoped-for  reduction  in unemployment,  in accordance  with the wishes 
expressed  by  the  European  Council  meeting  in  Corfu  and  Essen. 
In  these 
circumstances, the need to pursue the proposed  structural  reforms  and to implement 
the strategy set out in the Commission's White Paper on growth, competitiveness and 
employment seems increasingly urgent. 

2.2 

In this context,  EIB support for the Community's  internal objectives was stepped 
up.  In  1995  loans  signed  for  projects  in the  Community  totalled  ECU  18.6 billion, 
compared with ECU  17.7 billion in 1994, an increase of 5.2%.  Projects were  financed 
in all the fifteen Member States, helping to  create an investment  volume estimated  at 
ECU 53 billion,  or  some  4%  of  the  GFCF  achieved  in  the  Union.  A  significant 
volume of lending took place in Austria,  Sweden and Finland in the first year of their 
accession.  The  most  appreciable  increase  in  loans  was  seen  in  Germany,  Ireland, 
Portugal, Italy and Luxembourg (Table 2). 

In  1994,  the  ED3  adapted  its  loan  conditions  to  the  specific  requirements  of 
establishing  coherent  and  efficient  networks,  essential  for  intra-Community  trade. 
The Bank  thus became directly involved  in financing  the trans-European  networks 
and more especially in the priority projects identified  by the Essen European Council. 
Under  this heading,  it  approved  loan commitments  of ECU 7.6  billion  at  the  end  of 
1995. 

The  financing  of  investment  contributing  to  regional  development  and  to  the 
strengthening  of  economic  and  social  cohesion  in  1995  remained  the  Bank's  most 
important  sector  of  activity,  representing  over  two-thirds  of  lending.  These  loans 
were  concentrated  in  the  areas  qualifying  for  support  under  the  Structural  Funds, 
especially  in the  "cohesion"  countries  and  in  Germany's  eastern  regions.  Since  the 
reform  of the  Funds  in  1989, loans  have  totalled  ECU 71 billion,  helping  to finance 
investment estimated at ECU 212 billion (see Table 5 in Annex). 

Last  year  financing  for  infrastructure  in  the  communications  sector  increased 
appreciably,  totalling  ECU 6.6 billion  compared  with  ECU 5.7 billion  in  1994. 
Financing  for  the  transport  sector  totalled  ECU 5.5 billion,  most  of  which  was 
directed toward road and railway infrastructure  (ECU 4.7 billion).  Major works were 
also  carried  out  on  airport  (Bordeaux,  Dublin,  Frankfurt)  and  port  infrastructure 
schemes.  However,  lending for telecommunications fell, after having risen sharply for 
several years. 

Tafate2 

S f r u d u » c f B B I e t » * n g ( k a n c o r » Y^ 

Belçjun 

Denmark 
Germany 
Ghaace 

Spain 

Franco 
Mand 
Italy 
Luxembourg 
n  rti 
fn 
ii 11 
NBuKnanos 
Ftrlugal 
unttaaningnom 

Au&ia 

Finland 
Smckn 
Other  (ArictelQ 
Community total 

1987 
ECUrrillion 

1993 

1994 

1995 

%  ECUrrillion 

ECUrrillion 

%  ECUrrillion 

% 

37,1 

3133 

27$5 

1643 

7374 
1.0035 
1736 
31122 
1,6 
130 

1.1337 

Q5 
42 
37 
22 
35 
135 

24 
41,8 
Q0 
Q2 
52 
152 

371,6 

875,5 

20936 

511,1 

4006,1 

2206,5 

3332 
3362Û 

3737 

1.4838 

1.929,1 

^^ 
49 
113 
23 
22,6 
124 
22 
190 
00 

21 
94 

6153 
8437 

24073 
5347 
3011,5 

2477,4 

291,1 
3099,5 
31 
3935 
1.109,7 

35 

43 

136 

30 

17,0 

140 

1,6 

17,5 

Q0 

23 

33 

1Q9 

2454,7 

139 

1037 

7.4503 

tf 
1030 

1110 

17.7242 

Q6 
1QQ0| 

835 
632 
133 

2603 

Q5 

03 

Q1 

1,5 

17.6813 

1030 

6630 

8230 

27150 

5230 

28130 
22070 
327,0 
34330 
79 
3130 

12320 

2244,0 

242 

179 

273 
5190 
136040 

36 
44 
146 
28 
131 
113 
13 
135 
04 
1,7 
36 
121 
13 
1,0 
1,5 
23 

1030 

The  Bank,  which  is  careful  to  ensure  that  all  the  projects  it  finances  comply  with 
Community  standards  concerning  the  environment  and  the  environmental  impact, 
went  a step further  in  1995  by granting  loans worth ECU 6 billion for  this  objective, 
i.e.  over  one-third  of  all  funding.  This  increase  is  due  to  the  application  of  national 
and  Community  standards,  and  to  the  development  of  specific  programmes 
concerning  air and water  quality,  the  discharge  of  effluent  into  the  atmosphere,  and 
the better management of domestic or industrial waste. 

1995 was  also marked by a pick-up in individual loans for  industrial  projects  and in 
global  loans  for  SMEs.  Since  July  1995  the  eligibility  criteria  for  loans  have  been 
extended to new types of investment in the services and distribution sector,  and to the 
advance financing  of research and development.  Overall,  lending  in this area totalled 
ECU 3.5  billion,  double  what  was  signed  in  1994,  a  year  when  activity  was 
particularly  low.  This  increase  partly  reflects  the  popularity  of  the  interest  subsidy 
facility,  which  was  offered  to  employment-creating  SMEs  by  the  Copenhagen 
Summit.  The  facility  had been intended  to  run until  31 July  1995,  but was  extended 
until  December  to  enable  the  new  Member  States  to  take  advantage  of  the 
arrangements.  At  the  end  of  1995,  the  amount  of  ECU  1 billion  was  totally 
committed;  some  4  400  European firms benefited,  enabling  some  45  000 jobs  to  be 
created. 

2.3. 

Looking  ahead  to  the  expiry  of  the  ECSC  Treaty  in  2002,  the  Commission  in  its 
Decision  of  28 June  1994  redefined  the  conditions  of  ECSC  borrowing  and  lending 

policy.  On this basis, loans  signed  in the  Community  totalled  ECU 360.4  million in 
1995, a decrease of 46.5% on  1994 (see Table 3). 

This decrease was caused by both the unpropitious economic conditions in the ECSC 
areas  and  the  policy  of  the  progressive  disengagement  of  the  ECSC  instrument  in 
accordance with the guidelines laid down. 

Table  3 

ECSC  loans in  1995 

I 

(ECU "000) 

Article  54 

Article  56 

Housing 

Total 

28.627,1 

39.809,5 

17.781,4 

60.565,3 

12.523,7 

10.178,0 

56.990,0 

98.512,6 

4.744,6 

7.257,5 

9.380,3 

2.382,5 

7.956,6 

1.766,9 

438,7 

1.495,1 

47,5 

89.192,4 

14.906,2 

10.178,0 

104.756,1 

100.279,5 

22.964,7 

8.752,6 

9.380,3 

47,5 

Italy 

France 

Greece 

Portugal 

Netherlands 

Germany 

United  Kingdom 

Spain 

Belgium 

Luxembourg 

Ireland 

Denmark 

Total 

86.218,0 

260.152,0 

14.087,3 

360.457,3 

2.4  As regards  NCI  activities,  it  should  be  noted  that  no  new  lending  operations  have 

been undertaken since 1991 (Table 4). 

2.5  The  facility  providing  medium-term  financial  assistance  for  Member  States' 
balances  of  payments  was  activated  in  recent  years  in  favour  of  Greece  and  Italy. 
Italy  obtained  a  loan  of  ECU  8  billion  to  be  disbursed  in  four  tranches  (Council 
Decision  93/67/EEC  of  18 January  1993).  The  Council Decision provided  that  the 
third  and  fourth  tranches  could  be  paid  not  earlier  than  1  February  1994  and 
1 February  1995.  The  Italian  Government  did  not  request  these  two  tranches,  the 
provision of which no longer seems necessary. 

In these circumstances and taking into  account the commitments already entered  into 
in favour of Greece, the total amount of loans outstanding under this facility remained 
at ECU 5 billion at 31 December  1995, the authorized  ceiling being ECU  14 billion to 
be financed where necessary through the capital market. 

Table 4 

NCJ loans at 31 December  1995 

1 

(ECU million) 

Financial agreements 

N ai 

ITALY 

GRŒCE 

Nail 

Nam 

NOIV 

TOTAL 

Reconstr 

Reconstr. 

Global loans  0 

Productive sector (*) 

Infrastructure 

Biergy 

Total contracts signed, net (**) 

BB loans (own resources) 

5,4 

53a5 

446,7 

990,5 

598,7 

ao,o 

4033 

2138,0 

6683 

3227,4 

10,6 

279A 

3003 

465,3 

258,3 

15,9 

1.961,9 

1.0053 

598,7 

351,6 

acto 

997,5 

2861,6 

6683 

6197,2 

351,6 

Authorized ceilings 

Balance 

1.CCQO 

1.000,0 

9,5 

49,7 

ao,o 

0 

1.000,0 

3.000,0 

750,0 

6830,0 

25 

133,4 

81,2 

267,5 

0  Industry and agicUture 

D  Contracts sigied less cancellations 

3. 

LENDING OUTSIDE THE COMMUNITY 

This  activity  involves  those  countries  with  which  the  Community  has  concluded 
cooperation  agreements.  A  substantial  volume  of  resources  is  being  provided  in 
forms appropriate to the specific circumstances of the countries in question (Table 5). 

3.1 

In  the  context  of  the  support  for  the  adjustment  and  reform  programmes  of  third 
countries, the Community continued to provide macroeconomic assistance in the form 
of balance-of-payments  and  structural  adjustment  support  loans to  complement 
the  IMF  programmes. 
In  the  case  of  the  central  and  east  European  countries, 
Community support has been provided within the G-24  framework. 

In  1995 disbursements made for this purpose and corresponding to loans previously 
approved amounted to ECU 285 million.  They break down into ECU 100 million for 
the  Mediterranean  countries  (Algeria);  ECU 80 million  for  the  CEEC 
(Lithuania: 
ECU 25m,  Romania:  ECU 55m); and ECU  105 million for  the  CIS  (Moldavia: ECU 
20m, Ukraine: ECU 85m).  In addition to this, new loans of 

a  maximum  of  ECU  255m  were  approved  in  1995  (Belarus:  ECU 55m;  Ukraine: 
ECU 200m), and ECU 30m of this sum was actually disbursed in 1995 to Belarus. 

3.2  Under  the  Council  Decision  of  December  1991  relating  to  the  commercial  credit 
facility  of ECU  1250m in favour  of the new independent  states of the former  USSR 

10 

(CIS),  the  actual  payments  made  in  1995,  corresponding  to  loans  signed  earlier, 
amounted to ECU 95.0 million (Azerbaijan: ECU 36.2m; Uzbekistan: ECU 58.7m). 

Since  no  new  operation  was  decided  in  1995,  the  total  amount  of  credits  granted 
under the facility remained at the same level as in 1994, i.e. ECU  1 133 million. 

Table  5 

Financing outside the Community in 1995 

I 

(ECU million) 

B  E 1 

Financial 

EC and EDF 

support for 

budgetary 

Own 

countries  (1) 

resources 

(2) 

resources 

Total 

ACP-OCT 

Mediterranean  basin 

CEEC 
as 
Latin America, Asia 

225,0 

23,0 

100,0 

80,0 

230,0  (3) 

Total 

410,0 

248,0 

Disbursements. 

250,0 

1.015,0 

1.005,0 

288,0 

2.558,0 

475,0 

1.138,0 

1.085,0 

230,0 

288,0 

3.216,0 

(1) 

(2) 

(3) 

Signed and managed  by the EIB outofthe  budgetary resources ofthe  ECorlhe  European 

Development Fund (EDF) 
Balance-of-payments  loans and commercial credits. 

3.3  EIB  financing  outside  the  Community  is  also  made  available  as  part  of  the 
Community's cooperation policy with third countries.  Such financing rose sharply in 
totalling  ECU 2 806 million; 
1995,  up  24.9%  on 
ECU 2 558 million  was  financing  from 
resources,  and 
ECU 248 million came from  operations using risk capital drawn from Community  or 
Member States* budgetary funds (Table 5). 

the  previous  year,  and 

the  Bank's  own 

The  substantial  increase  in  these  loans  is  due  both  to  the  stepping-up  of  activities 
outside the Union and their extension to new geographical areas.  The stepping-up of 
lending  activities  was  very  marked  in  the  Mediterranean  and  in  Latin America  and 
Asia  (ALA),  while  it  stabilized  in central  Europe  and  in the  African,  Caribbean  and 
Pacific  countries.  Loans  were  also  granted  for  the first time to  South  Africa,  Haiti 
and Palestine. 

In  the  African,  Caribbean  and  Pacific  (ACP)  countries  and  the  Overseas 
Countries  and  Territories  (OCT),  the  EEB  provided  assistance  amounting  to 
ECU 430 million (against ECU 462 million in  1993), of which ECU 225m was in the 
form of risk capital from the resources ofthe European Development Fund (EDF). 

11 

In  sectoral  terms,  two-thirds  of  financing  (ECU 291m)  went  to  basic  infrastructure 
(roads,  public works,  ports and airports).  Energy  production  and transportation  and 
the  exploitation  of  hydrocarbons  received finance totalling  ECU  108 million.  Works 
to  supply  drinking water and sewerage  works  received  ECU  105m,  while  lending  for 
communications infrastructure totalled ECU 78 million. 

In  Africa,  the  first  global  loans,  based  on  a  separate  protocol,  and  totalling 
ECU 45  million, were made in the Republic of South Africa. 

in 

on 

the 

countries 

seaboard 

the  Mediterranean 

Lending 
totalled 
ECU  1 038 million  in  1995,  of  which  ECU 23 million  were  drawn  from  own 
resources.  Over  two-thirds  of  the  loans  (ECU 718 million)  are  financed  under 
non-protocol  horizontal  financial  cooperation 
for  regional  cooperation  and 
environmental  protection  projects; loans under the  current bilateral  protocols  totalled 
ECU  320m.  Operations  encompassed  eleven  countries  and  centred  on  improving 
transport infrastructure,  water resource management,  sewerage  and irrigation,  and the 
generation  and  transportation  of  energy.  A  line  of  ECU  125m  in global  loans  was 
also  used  for  small  investments  carried  out  by  local  authorities  and  private  sector 
firms. 

Under the European Union's initiative  to  support  the  Middle  East  peace  process,  the 
EIB  in  October  1995  signed  the  "framework  support  agreement"  between  the  Bank 
and  the  Palestinian  Authority.  Global  loans  totalling  ECU 26 million  (of  which 
ECU 6 million  came  from  risk  capital)  were  signed  at  the  end  of  1995  for  the 
financing  of  new  investment  in  industry,  the  agri-foodstuffs  sector,  tourism  and 
services in Gaza and on the West Bank.  Support for the peace process should be  seen 
in  a  wider  regional  context  characterized  in  1995  by  loans  in  Jordan,  for  the 
reconstruction  of  the  Lebanon  and  for  investment  involving  Israeli  and  Egyptian 
operators. 

Lending  of  ECU  15 million  to  Malta  and  ECU  10 million  to  Cyprus  is  intended  to 
enable  compliance  with  the  Community  Directives  on  the  discharge  of  waste  water 
and the extension of urban sewerage installations. 

In  the  central  and  east  European  countries  (CEEC),  lending  amounted  to 
ECU  1 005 million in  1995 (ECU 957 million in  1994).  Ten countries received loans, 
including  Albania for the first time.  Most of these loans (97%) were 

provided  under  the  Decision  of  the  Board  of  Governors  of  May  1994  for  a 
In  addition, 
programme  of  ECU 3 billion  with  a  Community  budget  guarantee. 
ECU 32 million  were  advanced  to  Slovenia  under  the  protocol  which  entered  into 
force in 1993. 

Several  of  these  loans  contributed  to  projects  which  are  the  direct  adjuncts  to 
trans-European  networks.  The  productive  sector  also  received  global  loans  totalling 
ECU 315m in six countries. 

Lastly,  eight  countries  in  Latin  America  and  Asia,  signatories  to  cooperation 
agreements  with  the  European  Union, 
received  loans  totalling  ECU 288 million. 
These  operations  were  mounted  under  the  authorization  given  by  the  Board  of 

12 

Governors  in February  1993  to  finance  capital  investment  of  mutual  interest  to  the 
country  concerned  and  the  Union  or  involving  European  partners,  up  to  a  ceiling 
amount  of  ECU 750 million  over  a  period  of  three  years.  By  end-1995 financing 
under this heading had amounted to ECU 607 million. 

3.4  On  5  March  1990  the  Community  decided  to  make  ECSC  loans  available  for 
financing  industrial investment projects in Poland and Hungary up to a ceiling of ECU 
200m.  Since  1991 that  decision  has  also  applied  to  the  Czech  and  Slovak  Federal 
republics, Bulgaria and Romania. 

No  new  loan  has  been  concluded  since  the  ECU  42m  loan,  signed  in  1994  and 
disbursed in 1995, to finance investment in a steel plant in Poland. 

3.5  On 21 March the Council decided  to authorize the Commission to contract  Euratom 
borrowings  the  proceeds  of which  will  be  allocated  in  the  form  of  loans  to finance 
improvements  in the  efficiency  and  safety  of nuclear  power  stations  in  some  CEEC 
and CIS countries.  Under the global ceiling fixed by the Council, an amount of some 
ECU 1.1  billion could be granted under this facility. 

In  1995  the  appraisal  of  projects  was  actively  continued,  but  because  of  their 
technical,  as well  as political,  complexity,  no financing project  has reached  the final 
decision-making stage. 

3.6  The Community and the EIB are both shareholders and close partners ofthe  EBRD: 
they each hold 3% ofthe  Bank's capital.  They work in close cooperation  and match 
their resources: the Commission provides technical assistance for projects  undertaken 
by  the  EBRD,  while  the  EIB  and  the  EBRD  are  helping  to  finance  a  number  of 
projects in central and eastern Europe. 

According  to  the  EBRD's  annual  report  for  1995,  the  Board  approved  134  new 
projects  in  the  CEEC  and  the  former  Soviet  Union  (against  106 in  1994).  Signed 
commitments  amounted  to  ECU 2 billion  (against  ECU  1878m in  1994).  In view  of 
the increase in demand,  equity holdings as a proportion  of the Bank's entire activities 
rose from 21% to 24% during  1995, i.e. ECU 695m. 

4. 

THE EUROPEAN  INVESTMENT FUND 

The European  Investment  Fund  (ELF), which has been  operational  since June  1994, 
expanded its activity of providing guarantees for the financing of projects forming part 
of trans-European networks (TEN)  and those undertaken  by small and medium-sized 
enterprises.  The Fund  now has 78 shareholders,  consisting  of 76 banks and  financial 
institutions  from  the  member  countries  of  the  Union  together  with  the  European 
Commission  and  the  EIB.  At  the  end  of  1995  the  subscribed  capital  stood  at 
ECU  1  784 million, i.e. 89.2% ofthe  authorized capital of ECU 2 billion. 

Since it  was  set up  28  operations,  corresponding  to  a volume of ECU  1441m,  have 
been  approved;  operations  signed  total  ECU 631.8m.  TEN  projects  accounted  for 
91% ofthe  total, with the remainder being granted for SME projects. 

13 

The  TEN  projects  signed  in  1995  related  to  the  transport,  telecommunications  and 
energy  sectors. 
In  December  1995  the  Commission  and  the  Fund  signed  an 
agreement  on  a  pilot  project  entitled  "Growth  and  Environment",  under  which  a 
partial EEF guarantee will be provided for SME projects which have positive  spin-offs 
for the environment.  In this connection, the Fund has examined and offered  guarantee 
contracts to a number of shareholder banks. 

5. 

BUDGETARY IMPACT OF LENDING 

The  Community's  general  budget  is  affected  by  lending  activity  where  loans  are 
accompanied by interest subsidies and/or budget guarantees. 

5.1 

Interest subsidies 

Interest  subsidies  are  granted  in  the  Community  in  the  following  fields:  (i)  the 
industrial conversion of coal and steel areas (Article 56 of the ECSC Treaty); (ii) the 
reconstruction  of the  disaster-hit  areas of Italy  and  Greece,  where they  are paid  out 
via the EBB as borrowings  are repaid;  (iii) in the  context  ofthe  "SME facility"  (see 
Table 7 in Annex). 

No  industrial  loans  at  reduced  rates  for  investment  projects  designed  to  promote 
consumption  of  Community  coal  (Article  54,  second  paragraph)  have  been  made. 
With regard  to the granting  of subsidies for  conversion  loans in coal and  steel  areas 
(Article  56),  interest  subsidies  amounted  to  ECU  11.5 million  in  1995  against 
ECU 114.3min  1993 and ECU 51.1m in 1994. 

The  Copenhagen  European  Council  of  June  1993  increased  by  ECU  3  billion  the 
temporary  facility  agreed  in  Edinburgh  for  major  infrastructure  projects.  Of  that 
amount,  ECU  1 billion  are  directed  towards  strengthening  the  competitiveness  of 
small  and  medium-sized  European  enterprises  and  would  carry  interest  subsidies 
linked  to  the  creation  of  employment.  The  subsidy  amounts  to  ECU  3 000 
peradditional job created  (equivalent  on average to a 2% interest  rebate).  Following 
the adoption ofthe  Council decision of  19 April  1994, the EIB  started  to sign global 
lending  agreements  with  financial  intermediaries  in  all Member  States  in the  second 
half  of  1994. 
to  beneficiaries  was  closed  on 
15 December  1995, the  entire  budget  of  ECU  1  billion  having  been  allocated.  The 
budgetary  payments  for  this  facility  amounted  to  ECU  65.5m  in  1994  and  to 
ECU 2.8m in  1995, which demonstrates the speed with which loan applications were 
made, and consequently the interest aroused by this facility. 

The  allocation  of 

loans 

Interest  subsidies  are  also  provided  in  connection  with  EIB  loans  outside  the 
Community (see Table 8 in Annex). 

14 

5.2  Budget  guarantees 

5.2.1  Coverage 

All  the  outstanding  borrowing  contracted  by  the  Community  to  finance  loans 
managed  by the  Commission  (Euratom,  NCI,  balance  of  payments)  is  guaranteed  by 
the general budget. 

The Bank's loans from own resources  granted to  non-Community  countries in pursuit 
of  the  Community's  policy  of  providing  financial  assistance  for  development  are 
covered  by  a guarantee  agreement.  The  guarantees  are  provided  by Member  States 
for loans in ACP countries and by the Community for Mediterranean,  Central and east 
European (CEEC)  countries,  the  countries  in Latin America  and Asia with which  the 
European Union has concluded  cooperation agreements and South Africa. 

Details  of  the  Community  budget  guarantees  provided  in  this  connection  are  as 
follows: 

(i)  EBB loans  to  Mediterranean  countries:  these  loans  are  covered  by  a  global 

Community guarantee for 75% ofthe  amount of loans signed. 

At  the  end  of  1995  outstanding  loans  totalled  ECU  2  167 million,  of  which 
ECU 385 million  were  accounted  for  by  loans  in  Spain,  Greece  and  Portugal 
(pre-accession)  and ECU  1 782 million by loans  in non-member  Mediterranean 
countries. 

(ii)  EIB  loans  to  the  CEEC: loans contracted are fully covered by the  Community 
guarantee.  At  31  December  1995,  the  ED3  opened  ECU  1 647 million  in 
credit  to  these  countries  out  of  a total  allocation  of  ECU  1.7 billion under  the 
budget  heading CEEC I.  The total  amount  outstanding  for loans  at the  end  of 
1995 totalled ECU 837 million. 

At the end of  1993  the Community renewed its guarantee to cover EIB  lending 
to  the  CEEC,  including  the  Baltic  States  and  Albania,  up  to  a  ceiling  of 
ECU 3 000 million over the following three years (CEEC II).  At 

31 December  1995  the  EIB  opened  credit  worth  ECU  1 894 million  from  this 
allocation.  At the same date the amount ofthe  guarantee outstanding was  only 
ECU 96m. 

(iii)  EIB  loans  to  other  third  countries: 

loans  granted  to  Latin  American  and 
Asian  countries  with  which  the  Community  has  concluded  cooperation 
agreements  are fully  covered  by the  Community  guarantee.  This  programme 
was  decided 
in  February  1993  and  relates  to  a  global  amount  of 
ECU 750 million  over  a period  of  three  years,  with  a  ceiling  of  ECU 250m  a 
In  1995  loans  signed  stood  at  ECU  607m,  while  the  guarantee 
year. 
outstanding at the end ofthe  year amounted to ECU  149 million. 

15 

(iv)  EEB  loans  to  South  Africa:  in  June  1995  the  Community  provided  its 
guarantee  for  loans  made  by  the  EIB  in  South  Africa  over  the  following  two 
years  up  to  a  maximum  amount  of  ECU 300 million.  These  loans  are  fully 
guaranteed  by the Community budget.  At  31 December  1995  the  EIB  opened 
credit worth ECU 45 million but nothing has been disbursed. 

The  Community  decided  in  1991  to  provide  a  guarantee  covering  98%  of  a 
bank  loan  to  the  former  USSR  up to  a ceiling  of ECU  500m  (ECU  406m  in 
capital)  for  imports  of agricultural  and  food  products.  In February  1992,  this 
credit was allocated exclusively  to  Russia.  The credit was  repaid in full  at the 
end of  1995. 

5.2.2  Outstanding guarantees at 31 December  1995 

At the  end  of  1995  the outstanding  guarantees  provided  by the  Community  budget, 
the details  of which  are given in Table 6,  exceeded  ECU  13  billion,  more than 44% 
of  which  were  for  countries  outside  the  Community.  Compared  with  1994,  total 
outstanding  guarantees  have  decreased  by  ECU 655 million.  However,  the 
proportion  of  commitments  in  relation  to  non-Community  countries  has  increased 
steadily from 37.5% in 1992 to 44% at present. 

The annual risk covered by the general budget,  which concerns the repayment of the 
debt  (principal  and  interest),  stood  at  ECU 2  855 million  in  1995,  of  which 
ECU  1 682 million related to third countries. 

At  31  December  1995  the  Community's  claims  not  as  yet  honoured  by  defaulting 
debtors  stood  at ECU 296.52 million,  of which ECU 68.2 million are owed  by  some 
republics ofthe  former Yugoslavia  and ECU 228.3  million by the independent  states 
ofthe  former USSR,  Tajikistan, Armenia, Georgia and Turkmenistan. 

All  the  provisional  drawings  on  the  Commission's  cash  resources  in  respect  of  the 
guarantee  have  been  regularized  by  the  budget  up  to  1993  and  by  the  budget 
Guarantee  Fund  since  its  establishment  by  Council  Regulation  (EC,  Euratom) 
No  2728/94 of 31  October  1994. 

16 

Table  6 

Capital  outstanding on guaranteed  operations (at 31 Dec 1995) (1) 

Operation 

Member  States 

A.  Balance  of  payments 

1.  Greece  I 
2.  Greece  II 
3.  Italy 

B. Other 

4.  Euratom  (2) 
5. NCI (including earthquake  reconstr. 
6.  EJB Mediterranean  (E,GR,P) 

Non-Communitv  countries 

A.  Financial  assistance 

1.  Hungary 
2. Czech  Republic 
3. Slovak  Republic 
4.  Bulgaria 
5.  Romania 
6.  Algeria 
7.  Israel 
8. Baltic  States 
9. CIS 

10.  Moldavia 
11.  Ukraine 
12.  Belarus 

B. Other 

13. SB  Mediterranean 
14. EIB CEEC I and  II 
15.  EIB Latina  America, Asia 
16. South Africa 
17. CIS  guarantee 

(ECU million) 

Amount 
ceiling 

Amount 
outstanding  at 
31 Dec 1994 

Amount 
outstanding  at 
31 Dec 1995 

26.330 

14.000 

4.000 
6.830 
1.500 

17.782 

5.170 
1.050 
250 
255 
400 
580 
600 
160 
220 
1.250 
45 
285 
75 

12.612 
6.362 
4.700 
750 
300 
500 

7.844 

5.022 

1.000 
4.022 

2.822 
779 
1.570 
473 

5.926 

3.485 
790 
250 
125 
360 
455 
400 
160 
110 
810 
25 

2.441 
1.688 
574 
46 

133 

7.263 

5.045 

1.000 
4.045 

2.218 
720 
1.113 
385 

5.851 

2.987 
440 
250 
125 
360 
510 
500 
160 
135 
347 
45 
85 
30 

2.864 
1.782 
933 
149 

TOTAL 

44.112 

13.770 

13.114 

(1) Exchange  rate as  at31/12/95. 
(2) Extension of Euratom loans to certain third countries  (Council Decision of 21/03/94). 

17 

STATISTICAL ANNEX 

18 

Table 1 

Trend of borrowing and lending in the Cornrnunity 

(ECU million) 

(BCU rate at year-end) 

1985 

1986 

1987 

1938 

1989 

1990 

1991 

1932 

1993 

1994 

1995 

I. Borrowing 

ECSC 

1.265 

1.517 

1.487 

880 

913 

1.086 

1.446 

1.474 

906 

644 

386 

Balance of payments (1) 

862 

880 

360 

1.695 

1209 

4.969 

245 

410 

Euratom 

Nd 

344 

488 

853 

93 

860 

541 

611 

945 

522 

76 

49 

-

49 

70 

66 

Total Commission 

2469 

a408 

3.811 

1.918 

1.435 

1.512 

3190 

2683 

5.877 

1.008 

862 

BB(2) 

Total EC 

II. Lending 

5.699 

6.786 

5.593  7.663 

9.034  10.996  13.672  12974  14224  14.148  12395 

ai68  10.194 

9.404 

9.584  10.469  12508  16.862  15.657  20.101  15.156  13257 

ECSC 

1.010 

1.069 

969 

908 

700 

993 

1.382 

1.486 

918 

Balance of payments (1) 

862 

860 

360 

1.695 

1209 

4.969 

Euratom 

NCI 

211 

443 

884 

393 

314 

425 

357 

78 

24 

39 

9 

30 

403 

410 

674 

245 

49 

Total Cornrrisdon 

2105 

2767 

2568 

1355 

778 

1.367 

3.116 

2454 

5.917 

968 

813 

BB(3) 

Total BC 

5.641 

a678 

6.967 

8.844  11.507  12605  14.438  16.066  17.724  17.682  18.604 

7.746 

9.445 

9.535  10.109  12285  13972  17.554  18520  23.641  18.650  19.417 

Note: The differences between total borrowing and lending by the Commission are due to borrowing operations undertaken 

for refinancing purposes and to changes in fe  balance of loans not assigned by the end ofthe year. 

The differences between borrowing and lending by the EIB are due to the fact that EIB lending operations are f nanced both 

from borrowings and from the Bank's own  resources. 

(1)  Mechanism for providing financial support for Member States and assistance for non-member coutries. 
(2)  Total resources raised. 
(3) 

Loans signed out of own resources, no accourt being taken ofthe guarantees provided by the EIB to promoters (none 

in 1995) or of operations financed out of NCI  resouces. 

19 

Table  2 

Community  borrowings  outstanding  (at year-end)  (1)  (2) 

(ECU  million) 

ECSC 

EIB 

Euratom 

NCI 

Sub-total 

borrowings 

borrowing 

Balance-of-pa 

Total 

1982 

1963 

1984 

1985 

1986 

1987 

1988 

a i 78 

16570 

1.272 

1.747 

25.767 

a539 

20.749 

1.680 

a269 

32237 

7.119 

25.007 

1.892 

4432 

38.450 

7.034 

2a736 

2013 

4960 

4Û743 

a761 

30271 

2168 

5.202 

44.402 

6689 

31557 

2500 

5229 

46.375 

6825 

36.928 

2164 

5514 

51.431 

1989  (3) 

a738 

42330 

1.945 

5.122 

55.135 

591 

4.610 

4932 

3236 

1.890 

2997 

2459 

2075 

1990 

1991 

1992 

1993 

1994 

1995 

a673 

4a459 

1.687 

4542 

61.361 

(4)2045 

7.139 

5a893 

1.563 

a817 

71.412 

7.327 

67.784 

1.338 

a326 

79.775 

7.331 

78.661 

1.018 

2202 

89212 

a548 

8a673 

&966 

87.079 

779 

720 

1.570 

92570 

1.113 

94878 

3516 

4.026 

5204 

7.697 

a032 

2a358 

3&847 

4a382 

4a979 

46292 

49.372 

5a890 

58210 

6a405 

74.928 

aaaoi 

94.416 

10Q267 

102910 

(1)  The conversion rates used were those obtained on 31 December of each year. As the majority of borrowings 

are denominated in national currencies,*-» difference betweentwo year-ends relects,onihe one hand,changes 

in the valuation of te  e*sfing stock and, on tie other, tie net volume of borrowings during tie year. 

(2)  Original  amount  of  borrowings,  plus  or  minus  repayments  of  tie  principal, cancellations,  annulments  and 

e>change-rate adjustments. 

(3)  As from 1989including shortterm (newEIB approach). 

(4)  As from 1990also includes balance-of-payments and Inarcial assistance for non-member countries. 

20 

Table  3 

Community borrowings in 1995,  by currency 

J  (ECU mill 

ion) 

EIB  Euratom 

ECSC 

Balance-of- 
NCI Payments(l) 

Total 
Borrowing 

1995 
% 

1994 
% 

400 

410 

ECU 

BFR 

DKR 

DM 

ESC 

FF 

DRA 

HFL 

IRL 

LFR 

LIT 

OSC 

PTA 

SFM 

SVK 

UKL 

2397 

1.004 

- 

- 

342 

149 

145 

135 

193 

a343 

1.574 

18 

77 

996 

- 

- 

- 

- 

- 

- 

- 

Sub-total 

1Q773 

SFR 

USD 

YEN 

CAD 

323 

528 

771 

Sub-total 

1.622 

TOTAL 

12395 

7 

- 

182 

10 

14 

9 

46 

20 

98 

386 

- 

- 

386 

66 

66 

66 

- 

- 

- 

- 

- 

- 

- 

- 

410 

810 

7 

2579 

1.014 

356 

149 

145 

135 

202 

ai 
0,1 

19,5 

7,6 

2,7 

1,1 

1,1 

1,0 

1,5 

a389 

25,6 

1.594 

18 

77 

1.094 

11.569 

389 

528 

771 

120 

0,1 

0,6 
a3 

87,3 

29 

4,0 

5,8 

4,1 

5,5 

0,3 

14,1 
a9 
7,7 

Q2 

4,4 

1,2 

1,3 

17,0 

0,4 

6,5 

12,3 

7a8 

5,6 

11,1 

4,4 

1.688 

127 

21,2 

410 

ia257 

100,0 

100,0 

(1) 

Balance of payments and fnancial assistance for non-member countries. 

21 

Table 4 

Lending intfn C u i m u i t y in  1994and  1995  by sector and instaurent 

(ECUrrillion) 

ECSC 

JBffi. 

Euratom 

Nd(D 

Total 

%of total 

1994 

1995 

1994 

1995 

1994 

1995 

1994 

1995 

1994 

1995 

1994 

1995 

Producflve sector 

3337 

3m 

389*3  4617,1 

of w f t tr  allocators 

ftomglobal loans 

21Q0 

2213 

1.7936  29549 

114 

114 

39124  4933/U 

228 

27A\ 

20180 

3 1 ^7 

11,7 

17,5 

Infrastructure 

3337 

141 

96182  10031,5 

99329  1QCB5,6 

57.7 

56£ 

crfwttdrtalloGtions 

tomgjobal loans 

B w gy 

of whldt allccalcns 

tomojobal loans 

8075 

12990 

897,5 

12330 

52 

73 

33839 

3083,1 

33339 

30831 

195 

170 

ea3 

S98i 

6213 

933 

Q4  Qd 

TOTAL 

6734 

3304|  1662V4  17.^1,7 

114 

173392  181421 

100 

100 

'D 

Rraiang gated (indvidjd leers axl alosalcreforfigobà loans) 

22 

Table  S 

Financing  in  the  Community  by the  EIB  in  1994  and  1995, 

by  economic  objective 

1.  Regional  development 

1.1  By  country 

Belgium 

Denmark 

G e r m a ny 

Greece 

S p a in 

France 

Ireland 

Italy 

L u x e m b o u rg 

Netherlands 

Portugal 

United  Kingdom 

Austria 

Finland 

S w e d en 

1.2  By  m a j or  sector 

Energy 

Transport 

Telecommunications 

W a t e r,  sewerage 

Other  infrastructure 

Industry,  agriculture 

Services 

2.  Infrastructure  of  Community  interest 

2.1  Transport 

2.2  Telecommunications 

2.3  Other 

3.  Environmental  protection  and  improvement 

3.1  Environment 

3.2  T o wn  planning 

4.  Energy 

4.1  Indigenous  resources 

4.2  Import  diversification 

4.3  Efficient  use  of  energy 

5.  Industrial  competitiveness 

1994 

1995 

ECU  million 

ECU  million 

12.035,1 

100 

12.143,5 

100 

178,6 

506,9 

1.801,6 

632,1 

2.659.2 

1.571,7 

237,7 

2.159,2 

17,7 

1.127.1 

1.143,3 

2.104,4 

4.209,8 

1.925,2 

766,2 

404.0 

2.09Z9 

532,6 

5.698,3 

3.543,2 

2.155,1 

4.866,0 

3.152,1 

1.713,9 

3.525,6 

850,8 

919,8 

1.755,0 

1.791,5 

1.5 

4,2 

15,0 

5,3 

22,1 

13,1 

2,0 

17,9 

0,1 

9.4 

9,5 

17,5 

35,0 

16,0 

6,4 

3,4 

17,4 

4.4 

100 

62,2 

37,8 

100 

64,8 

35,2 

100 

24,1 

26,1 

49,8 

249,0 

304,0 

1.786,3 

335,7 

2.697,0 

1.440,1 

165,5 

2.458,8 

79,3 

24,0 

1.252,8 

1.258,6 

63,8 

23,7 

4,7 

2.009,0 

4.385,0 

885,0 

1.229,0 

385,0 

2.534,0 

718,0 

6.592,0 

5.494,0 

1.098,0 

6.044,0 

3.972.0 

2.072,0 

3.433,0 

1.037,0 

894,0 

1.502.0 

3.450,0 

2,1 

2,5 

14,7 

2,8 

22,2 

11,9 

1,4 

20,2 

0,7 

0,2 

10,3 

10,4 

0,5 

0,2 

0,0 

16,5 

36,1 

7,3 

10,1 

3,2 

20,9 

5,9 

100 

83,3 

16,7 

100 

65,7 

34,3 

100 

30,2 

26,0 

43,8 

of  w h i c h:  small  a nd  medium-sized  enterprises (1) 

1.693,4 

6.776 

2.881,0 

N u m u ui 

Numb» 

11.736 

(1) 
N.B. 

Including  allocations  from  NCI global  l o a n s. 
As  some  loans  serve  a  number  of  purposes  simultaneously,  the  amounts  shown  under  the  different 
headings  c a n n o t be  a g g r e g a t e d. 

23 

Table6 

Geographical breakdown of lending (1) in the Community In 1994 and 1995 

1994 

Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
United Kingdom 
Austria 
Finland 
Sweden 
Art  18 (2) 
Total 

1995 

Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Portugal 
United Kingdom 
Austria 
Finland 
Sweden 
Art  18 (2) 
Total 

ECSC 

EIB 

Euratom 

NCI 

(ECU  million) 

Balance  of 
payments 

Amount 

% 

39,8 
82,1 
143,4 
0,0 
30,7 
14,5 

0,1 
29,3 

333,8 

673,7 

615,3 
849,7 
2407,9 
534,7 
aon,5 
2477,4 
291,1 
a099,5 
5,1 
399,5 
1.109,7 
2454,7 
89,5 
60,2 
15,3 
260,8 
17.681,9 

655,1 
931,8 
2551,3 
534,7 
a0422 
2491,9 
291,2 
312a8 
5,1 
399,5 
1.109,7 
2788,5 
89,5 
60,2 
15,3 
260,8 

ia355,6 

ECSC 

EIB 

Euratom 

NCI 

Balance  of 
payments 

Amount 

% 

a7 

104,8 

229 
14,9 

89,2 
9,4 

10,2 
100,3 

666,0 
825,0 
2715,0 
525,0 
281*0 
2207,0 
327,0 
a435,0 
79,0 
319,0 
1.2320 
2244,0 
2420 
179 
273 
519 

360,4 

iaeo4,o 

67a7 
825,0 
2819,8 
525,0 
2840,9 
2221,9 
327,0 
a524,2 
8a4 
319,0 
1.2422 
2344,3 
2420 
179,0 
273,0 
519,0 

ia964,4 

3,6 
5,1 
ia9 
29 
16,6 
ia6 
1.6 
17,0 
0,0 
22 
6,0 
15,2 
0,5 
0,3 
0,1 
1,4 

100 

a6 
4,4 
14,9 
28 
15,0 
11,7 
1,7 
ia6 
0,5 
1,7 
6,6 
124 
1,3 
0,9 
1,4 
27 
100 

(1) 
(2) 

Loans granted 
Community projects Ihatcannotbe located ina  particular Member State (e.g. telecommunication cables 
and satellites, North Sea Oil). 

24 

Table  7 

Interest subsidies  paid  out in the  Community  by the  various 

Community  mechanisms,  1977-1995 

I  (ECU million) 

Non-discounted  systems  (1) 

Discounted  systems  (2) 

ECSC Art54  ECSC  Art.56 

Employmen  Earthquake 

EMS 

ERDF 

SME 

Year 

(restruot) 

(oonvers.) 

in Portugal 

reconstr. 

facility 

1977 

1978 

1979 

1980 

1981 

1982 

1983 

1984 

1985 

1986 

1987 

1988 

1989 

1990 

1991 

1992 

1993 

1994 

1995 

(1) 

(2) 

1,3 

9.8 

10.4 

25,7 

7,6 

10.5 

4,0 

6.2 

3,6 

5.9 

24 

3,0 

26 

1.3 

1,0 

27 

16,5 

8,0 

33,4 

6,3 

19,3 

7,1 

34,0 

74,9 

33,1 

35,6 

38,6 

425 

40,6 

48,6 

106,0 

114,3 

51,1 

11,5 

121 

200,0 

197,0 

193,2 

209,8 

200,0 

4,0 

3,9 

3,0 

14,4 

24,4 

28,4 

28,6 

28,6 

27,8 

28,6 

23,1 

20,1 

17,2 

65,5 

28 

Interestsubsidies spread overtime and charged to the funds setaside forthis purpose  in the 

annual budgets. 

Interestsubsidies  paid by the Commission after discounting to a presentvalue, and charged 

to the budgetas a single sum in tie  initial year. 

25 

Table 8 

Programmas of financial assistance outside the Community in force or under negotiation at 31/12/1985 

(InMioKU) 

Agreement 

CuratJori  Loans 

Operations  from 

Macro-flnandal 

BCSC 

Total 

from 

budgetary resources 

assistance (3) 

loans 

committed 

BBown 

resK capital 

Non-repayable 

Granted 

Osbursed 

ACPStatas-OCT 

ACP 

OCT 

ACP 

OCT 

South Africa 

MedrterrxountrlesfS) 

Turkey 

Algeria 

Morocco 
Tunisia 
Egypt 

Jordan 
Lebanon 
Syria 

Israel 
Gaza and Ctsjordanla(6) 

Malta 

Cyprus 

"Nan-protocoT 

horizontal financial 

-Rrst financial Rotocd 

Fourth Lomé Convention 

Qxrcl Decision 

-Second Financial Rotocd 

Fourth Lomé Gbnvenfion 

Qjurici Decision 

Cbuncl Decision 

1996 

1996 

2000 

2000 

1997 

Kbt yet in force 

Fourth Financial Rotocd 

2000 
1996 

Fourth financial protocol 

Third financial protocol 

Fourth financial protocol 

Fourth financial Rctocd 

Counci Decision 

Fourth financial Rotocd 

1996 

1998 

Fourth Financial Rotocd 

1998 

resources 

operations 

aid 

0) 

(2) 

(3) 

1,200 
25 

825 

25 

9.975  (4 

115  (4 

35 
300 

750 
280 

220 

168 

310 

80 

45 

110 

115 

82 

250 

30 

50 

1,000 
33 

11,967  (4; 
100  (4 

600 

500 

160 

160 

18 

25 

15 

16 

2 

2 

2 

2 

52 
193 

101 

242 

44 

22 

34 

41 

250 

13 

22 

cooperation 

Counci Decision 

1996 

1,800 

25 

205 (7j 

Czech FkpuoUc, 
Slovak RipuMc, 

Bulgaria. 

Baltic States, 

tingary, 

Fbmanta, 

Albania. 

Slovenia 

as 
Former USSR 

Moldova 

Ukraine 

Belarus 

Counci Decision 

financial  protocol 

1996 

1997 

3,000 
150 

_20J81 

250 

255 

400 

220 

1,050 

580 

105  (9) 

250 

125 

360 

135 

790 

510 

85 

1,250  (10) 

1,133 

45 

285 

55 

45 

85 

30 

Latin American and 
Asian countries 

Counci Decision 

1996 

750 

d) 

(2) 

(3) 

(4) 

(5) 

(6) 
(7) 
(8) 
(9) 
(10) 

Loans attracting interest subsides from the Hjropean Devebprrent F^  in the case of projected the ACP S r a^ 
general budget of the Bjropean Cbrrrrunibes in the case tf projector certain Medterraneanca 

interest subsidies are charged to non-repayable aid 

Granted and managed by the BB 

Granted and managed by the Corrrrfesion. 

hdudng amounts intended fa  interest subsides on BB loans. 

The arrtxjrte avaiabë under tre previous financial p r^ 

(Lebanon, Syria) a  residual amounts. 

Loans fromown resources wB be attributed to 'non-prctoccf cooperation. 

West Bank and Gaza strip; loans from own resources are covered by tre'NxvprcAxof hortecrtalfiraic^ 

hcludng some HU100 rrilon of interest subsides fa  FJB bare in the err^ronrrental sector. 

Nan-repayable assistance (straight grant). 

Commercial credts. 

26 

12,000 

165 

14.625 

165 

300 

5,630 

950 

438 

284 

568 

126 

69 

146 

158 

242 

500 

45 

74 

2,030 

8.030 
250 
255 
400 
220 
1,050 

580 

105 

3,000 

170 

1,635 
1,250 

45 

285 

55 

750 

B. THE COMMISSION'S REPORT TO THE COUNCIL 
AND TO THE EUROPEAN PARLIAMENT 

on the rate of utilization  ofthe 
New Community Instrument (NCI) 
(half-year from 1  July 1995 to 31 December  1995) 

1.  Overall situation at 31 December 1995 

Council  Decisions  83/200/EEC  (Article  6)  and  87/182/EEC  (Article  8)  on  the 
financing  of the NCI require the Commission to  draw up a six-monthly report  on the 
rate of utilization ofthe tranches of NCI III and IV. 

The present report covers the period from 1  July 1995 to 31 December  1995. 

The  different  legal  bases  determine  the  method  of  assessing  the  amount  of  loans 
signed in relation to the maximum authorized borrowing: 

(i) 

for NCI III, the volume of loans is lower than that of borrowings in order to 
take  account  of  the  currencies  borrowed  and  the  associated  costs  and 
expenses; 

(ii) 

for NCI IV, the ceiling applies to the loans signed. 

At  the  end  of  1995  the  situation  regarding  the  use  of  the  tranches  for  which  a 
six-monthly report has to be drawn up was as follows: 

Use of NCI: situation at 31.12.1995 

(ECU million) 

Ceiling 

Amounts used 

Balance 

NCI III 

NCI IV 

3.000 

750 

2.862 

669 

138  n 

81 

H  The special borrowing of ECU lOOmillion for European innovation 

projects has notyetbeen authorized by the Council. 

The borrowing  operations carried  out  in the six months under  review with  a view to 
financing  NCI activities or refinancing previous activities are shown in  Annex 2(B). 

27 

2. 

Breakdown  of loans  by country  and  sector 

The table  below  provides  an overall  view  of loans  signed,  converted  into  "borrowing 
equivalents"  at  31  December  1995.  The  loans  in  the  various  currencies  have  been 
converted  into  ecus  at  the  exchange  rate  in  force  on  the  last  working  day  of  the 
quarter preceding the signing ofthe  contract. 

Distribution of loans signed by country at 31.121995 

| 

(ECU million) 

Country 

N ai 

Nan 

Nam 

Naiv 

Na 
Reconstr. 

Total 

% 

Belgium 

Denmark 

Greece 

Spain 

France 

Ireland 

Italy 

Netherlands 

Portugal 

UK 

Total 

66,8 

70,0 

239,0 

479,9 

100,6 

114,9 

125,0 

116,6 

473,4 

23,6 

6^2 

1102 

72,3 

303,0 

111,2 

69,2 

938,7 

68,4 

80,0 

23,6 

533,5 

306,1 

187,4 

1.206,0 

424,0 

1.228.5 

285.7 

598,7 

a066,3 

3,2 

29,9 

134,9 

67,1 

109,3 

9.9 

95,8 

3,2 

39,8 

407,1 

0,4 

8,6 

4,9 

3,0 

19,5 

6,8 

49,5 

0,1 

0,6 

6.6 

990,5 

997,5 

2861,6 

6583 

678,7 

6197,1 

100,0 

SECTOR 

Productive sector 

Infrastructure 

N am 
NCMV 

52,8% 
100.0 % 

26,5% 

Energy 

20,7% 

100,0% 
100,0% 

NIC IV is of interest because of its special features,  such as the options of  converting 
loans  into  risk  capital,  using  loans  to  finance  the  purchase  of  intangible  assets  and 
deferring interest payments. 

No  loan transactions have been carried out since 1991. 

28 

STATISTICAL ANNEX 

29 

NCI  IV  LOANS 

CEILING:  ECU 750  MILUON  (1)  -  (Situation  at  31.12.1995) 

Breakdown by country (2) 

Annex 1 

UK 

Ref. 

Project description 

Date of 
contract 

ECU 

m illion (2) 

64/87 
64/87 
68/87 
68/87 
69/87 
69/87 
70/87 
70/87 
70/87 
70/87 
70/87 
71/87 
7V87 
73/87 
105/87 
105/87 
106/87 
107/87 
107/87 
108/87 
108/87 
110/87 
CV87 
M 8/8 7 
M 8/8 7 
M 8/8 7 
M 8/8 7 
206/87 
206/87 
207/87 
207/87 
23V87 
64/88 

»l/88 
101/88 
101/88 
101/88 
»3/88 
B3/88 
103/88 
H3/88 
109/88 
128/88 
128/88 
135/88 
D5/88 
185/88 
185/88 
199/88 
237/88 
237/88 
237/88 
237/88 
175/89 
119/90 
119/90 
48/91 

I. LOANS SIGNED 
FIH(SmallBusiness)PG-VI/A 
FIH(SmallBusmess)PG-VI/B 
BNL-PMI  V/A 
BNL-PMI V/B 
IMI-PMI  V/A 
IMI-PMI  V/B 

MEDIOCR. CENTR. - PMI I V/A 
MEDIOCR. CENTR. - PMI I V/B 
MEDIOCR. CENTR. - PMI IV/C 
MEDIOCR.CENTR. -PMI IV/D 
MEDIOCR. CENTR. - PMI IV/E 
INTERBANCA -PMI  IV/A 
INTERBANCA-PMI IV/B 
BPI-PGV 
CENTROBANCA -PMI  IV/A 
CENTROBANCA -PMI  IV/B 
SAN PAOLO Agrohdustria II 
CREDIOP-PMII/A 
CRBDIOP-PMII/B 
BANCO DI NAPOLI - PMI A 
BANCO DI NAPOLI - PMI B 
B°DE SANTANDER - P YME 
B°DE BILBAO-PYME 
EFIBANCA-PMI  IV/A 
EFIBANCA-PMI  IV/B 
EFIBANCA-PMI IV/C 
EFIBANCA-PMI IV/D 
B°DE VIZCAYA-PYMEA 
B°DE VIZCAYA-PYMEB 
B°ESPANOLDE CREDITO -PYME 
B°ESPANOLDE CREDITO-PYME 
CREDITNATIONAL-PMIIII 
INVBSTORS IN INDUSTRY -
GROUPED LOAN V 
EFIBANCA-PMI  V/A 
EFIBANCA-PMI  V/B 
EFIBANCA-PMI  V/C 
BFIBANCA-PMI  V/D 
MEDIOCR. LOMBARDO - PMI A 
MEDIOCR. LOMBARDO - PMI B 
MEDIOCR. LOMBARDO - PMI C 
MEDIOCR. LOMBARDO - PMI D 
BARCLAYS BANK II GL 
CENTROBANCA -PMI  V/A 
CENTROBANCA -PMI  V/B 
CREDIOP-PMI  Il/A 
CREDIOP-PMIII/B 
BANCO DI SICILIA  - PMI  Il/A 
BANCO DI SICILIA - PMI II/B 
CREDIT INDUSTRI EL ET COMML. 
IMI-PMI  VI/A 
IMI-PMI  VI/B 
IMI-PMIVI/C 
IMI-PMI  VI/D 
BARCLAYS BANK III/A 
KREDIETBANK N.V. -GL 
KREDIETBANK N.V. -GL 
B°ESPANOL DB CREDITO PG PY 

15.09.87 
24.05.88 
12.10.87 
12.10.87 
31.07.87 
31.07.87 
15.09.87 
10.12.87 
03.02.88 
16.03.88 
23.06.88 
07.10.87 
07.10.87 
22.07.87 
1112.87 
IL 12.87 
05.1187 
18.12.87 
18.12.87 
18.12.87 
18.12.87 
24.07.87 
23.07.87 
17.12.87 
H. 12.87 
24.06.88 
24.06.88 
17.12.87 
30.1188 
18.12.87 
18.1188 
05.02.88 
28.12.88 

05.10.88 
05.».88 
16.0189 
16.0189 
10.10.88 
10.10.88 
06.02.89 
06.02.89 
21.12.88 
19.12.88 
19.12.88 
09.12.88 
09.12.88 
25.05.89 
25.05.89 
29.1188 
19.12.88 
19.12.88 
06.02.89 
06.02.89 
30.1189 
20.12.90 
20.12.90 
28.05.91 

TOTAL I 

II. LOANS APPROVED, 

AWAITING SIGNATURE 

BALANCE 

CEILING 

DK 

3180 
3143 

20,19 
3164 

9,37 
8,60 
12,04 
10,94 

18,04 
5,54 

25,44 

3180 
31.43 
18,68 
8,01 
37,29 
15,98 
6.19 
5,88 
4,81 
3,27 
18,98 
9,34 
4,00 
9.91 
9,34 
4.00 
13,34 
4,67 
2,00 
4,60 
197 
20,19 
3164 
4,67 
2,00 
4.55 
195 
9,37 
8,60 
12,04 
M,94 
20,00 
20,90 

4,53 
194 
4.57 
196 
6,79 
2,91 
9,14 
3,92 
45,55 
13,23 
5,67 
4,53 
194 
4,58 
196 
52,32 
9,06 
3,88 
13,72 
5,88 
29,38 
18,04 
5,54 
25,44 

9,91 

18,68 
8,01 
37,29 
15,98 
6,19 
5,88 
4,81 
3,27 
18,98 
9,34 
4,00 

9,34 
4,00 
D.34 
4,67 
2,00 
4,60 
197 

4,67 
2,00 
4,55 
195 

20,00 

20,90 

4,53 
194 
4,57 
196 
6,79 
2,91 
9,14 
3,92 

13,23 
5,67 
4,53 
194 
4,58 
196 

9,06 
3,88 
13,72 
5.88 

52,32 

45,55 

29.38 

668,82 

23,58 

63,23 

118,22 

72,32 

285.73 

9,91 

95,83 

0,00 

SU8 

750,00 

(1) JO L°. 271 of 14.03.1987 (loans ceiling). 
(2) Conversion rates aie those obtained on the last working day of the quarter preceding the signing of each loan. 

30 

NCI BORROWING, BY CURRENCY 

Annex  2 

A.-Debt  outstanding  at 31.12.1995 (1) 

|| 

Currency 

(million) 

Equivalent  in 

ECU  miHion(2) 

90.0 

90.0 

408-6 
2,100.0 

387.5 

1,000.0 

1 2-0 

100.0 

250.0 

216.9 
326.1 

183.8 

25.8 

14.2 

66.1 

190.2 

| 

| 

1/113.1 

ECU 

BFR 
DM 
FF 

HFL 

LFR 

LIT 

PTA 
UKL 

CAD 
SFR 

USD 

YEN 
Total 

B.- New operations: 1.07.1995 - 31.12.1995 

| 

Equivalent in MECU (3) 

Date 

Duration 

Coupon 

of issue 

24.11.95 

24.11.95 

24.11.95 

24.11.95 

(years) 

2 

3 

5 

4 

(%) 
3 

3.5 

4 

3.75 

Currency 

(million) 

Fresh 

Re 

capital (1) 

financings 

FS25 

FS25 

FS25 

FS25 

-

-

-

-

16.5 

16.5 

16.5 

16.5 

(1) Excluding  refinancing  operations,designed to reduced Die costofservicing  existing 

debt initially conlracted athigher  interestrates. 

(2) Exchange  rates as at31.12.1995 
(3) Exchange  rates  atsignature. 

31 

ISSN 0254-1475 

COM(96) 384  final 

DOCUMENTS 

EN 

01  09 

Catalogue number  :  CB-CO-96-382-EN-C 

ISBN 92-78-07369-5 

Office  for Officiai Publications of the European Communities 

L-2985 Luxembourg 

3Z