The Commission's annual report to the Council and to the European Parliament on the borrowing and lending activities of the Community in 1996
Date: 1997-06-19
Institutions: European Commission
Subjects: Community loan, EU borrowing, EU statistics, report

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels,  19.06.1997 
COM(97) 312 final 

THE COMMISSION'S ANNUAL REPORT 
TO THE COUNCIL AND TO THE EUROPEAN PARLIAMENT 
ON THE BORROWING AND LENDING ACTIVITIES 
OF THE COMMUNITY IN 1996 

and 

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 to 31 December 1996) 

INTRODUCTION 

CONTENTS 

A.  THE  COMMISSION'S  ANNUAL REPORT  TO THE COUNCIL  AND TO  THE 
EUROPEAN  PARLIAMENT  ON  THE  BORROWING  AND  LENDING 
ACTIVITIES OF THE COMMUNITY IN 1996 

1. 

Community borrowing 

2. 

3. 

4. 

5. 

B. 

Lending within the Community 

Lending outside the Community 

The European Investment Fund 

Budgetary impact of lending 

Statistical Annex 

THE  COMMISSION'S  REPORT  TO  THE  COUNCIL  AND  TO  THE 
EUROPEAN PARLIAMENT  ON THE RATE OF UTILIZATION OF THE NEW 
COMMUNITY 
to 
(NCI) 
31 December  1996) 

INSTRUMENT 

(half-year 

1  July 

from 

1.  Overall situation on 31 December  1996 

2. 

Breakdown of loans by country and sector 

Statistical Annex 

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  1996; it is the  seventeenth  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. 

In  financial  terms,  1996 was  marked  by  a  very  substantial  upturn  in  activity,  which 
was  triggered  by  a modest  recovery  in real  growth  (real  GDP  up  1,6%)  and  a  very 
clear  improvement  in  the  fundamentals  (low  inflation,  sound  public  finances,  falling 
interest  rates, buoyant world trade).  The improvement  in the economic  environment 
stimulated financial investment  and  issues  of long-term  securities, particularly  during 
the  second  half-year.  Conversely,  the  lending  instrument  registered  a  downturn  for 
the whole of the OECD area (Table 1). 

For  reasons  specific  to  them,  the  Community  lending  instruments  followed  similar 
trends  in  1996.  However,  EEB  lending  recorded  a  significant  increase  within  the 
Union  (up  12,6%),  with  activity  focusing  on  support  for  assisted  regions,  financing 
for  trans-European  networks  and  projects  in  the  new  Member  States.  In  contrast, 
following  the  exceptional  results  of  1995,  activity  outside  the  Union  slowed  as  the 
result  of  an unfavourable  political  climate  in  certain  countries  and  the  expiry  of  the 
mandate  conferred  on  the  Bank  by  the  Community  in  Latin  America  and  Asia, 
renewal negotiations having taken longer than anticipated. 

Since the EEB's mandate for the above area expired sooner than for the other regions, 
the  Commission  proposed  an  interim  programme  to  the  Council  in  January  1996 
which the Council approved in December  1996 for an amount of ECU 275 million. 

Taking the view that  it  was  more  equitable  to  renew  these  mandates  simultaneously 
and to make their expiry dates tally with the period  covered by the financial prospects 

1  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). 

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

3  Doc. PE/67134 of 5 March  1981 (OJ No C 287 of 9 November  1981). 

3 

Taking the view that  it was more equitable to renew these mandates  simultaneously 
and  to  make  their  expiry  dates  tally  with  the  period  covered  by  the  financial 
prospects  establishing  the  budgetary  reserve,  the  Commission  proposed  to  the 
Council that the EEB's mandate in all third  countries for  1997-2000 be renewed,  on 
a  comprehensive  basis,  for  three  years.  On  that  basis,  the  Council  decided  at  the 
beginning  of  1997  to  guarantee  from  the  Community  budget  for  70%  of  loans 
signed,  on  principal  and  interest,  within  the  limit  of  ECU 7 105 million.  The 
mandate breaks down as follows (Table 8 in the Annex): 
-  CEEC 
-  Mediterranean basin 
-  Third countries of Latin America and Asia  ECU 
ECU 
-  South Africa 

ECU  3 520 million 
ECU  2 310 million 
900 million 
375 million 

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 1996. 

I 
H 
j 
1 
I 
i 

A. THE COMMISSION'S ANNUAL REPORT 

TO THE COUNCIL AND TO THE EUROPEAN PARLIAMENT ON THE 
BORROWING AND LENDING ACTIVITIES OF THE COMMUNITY IN 1996 

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 must finance  the construction  cf,  and  improvements  to, 
nuclear  power  stations  (current  Euratom  ceiling  of  ECU 4 billion),  investment  in 
the Community  under the NCI (current  ceiling of  ECU 6.8 billion)  and,  under  the 
ECSC Treaty,  promote productive  capacity  or  conversion  projects  in the  coal  and 
steel 
loans  for  Member  States  with 
balance-of-payments  difficulties  (ceiling  of  ECU  14 billion).  The  amounts  still 
available are indicated in the paragraphs corresponding to each instrument. 

industries  and,  where  appropriate, 

On  the  basis  of  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  (EIB)  has  been 
closely  involved  in  the  financing  of  common  policies  and  priorities,  to  the  point 
where its borrowings account for most Community issues (Table 1). 

1.2.  The  volume  of  borrowing  in  the  market  by  the  Community  institutions  in  1996 
totalled  ECU  18 billion,  an  increase  of  36,4%  on  the  previous  year  (Table  Ï). 
Although  smaller  than  the  increase  recorded  by  bonds  issued  by  OECD-area 
countries  on international  markets, the Community  figure  is not far  short  of  it.  It 
basically  resulted  from  issues made by the EIB to finance  activities  falling  within 
its remit.  The issues made by the Commission (allocated borrowings)  continued  to 
follow  the guidelines  laid  down  by  the  Council  for  disengaging  the  Commission 
from  certain activities in favour of the EIB. 

Overall, the share of Community  issues remained virtually stable in relation to that 
of  bonds  issued  in  the  OECD  area.  Eurobonds  recorded  substantial  gains, 
increasing by more than 64% on a year-on-year basis. 

The  more  optimistic  climate  on  financial  markets,  falling  interest  rates  and  the 
prospect  of  a  modest  recovery  in  economic  activity  tended  to  discourage 
variable-rate issues, whose relative share declined again. 

Table 1 
Capital borrowed on the international markets 

(ECU billion) 

1. European Institutions 

10,5 

12,5 

16,9 

15,7 

20,1 

15,2 

13,2 

18,0 

1989 

1990 

1991 

1992 

1993 

1994 

1995 

1996 

of which: 

1.1  ECSC 
1.2  EC (a) 
1.3  Euratom 
1.4  EIB 

2. OECD countries (b) 
(by instrument) 

0,9 
0,5 

9,0 

1,1 
0,4 

1.4 
1,7 

1,5 
1,2 

0,9 
5,0 

11,0 

13,7 

13,0 

14,2 

0,6 
0,3 
0,1 
.14,2 

0,4 
0,4 

0,3 
0,1 

12,4 

17,6 

2.1 Bond issues 

232,2 

180,5 

240,2 

257,1 

410,8 

360,3 

357,3 

559,6 

of which: Eurobonds 

193,2 

141,4 

200,5 

212,7 

337,0 

309,7 

283,9 

465,9 

2.2 Loans 

117,5 

103,3 

99,9 

96,0 

123,7 

202,7 

285,9 

274,0 

3. Bond issues by the 

European Institutions 
as a % of OECD 

3.9 

6,1 

5,7 

5,1 

3,5 

3,9 

3,5 

3,2 

(a) 
(b) 

NCI + balance of payments, 
Calculations based on yearly average exchange rate of the ecu, 
Source:  OECD & EU 

2. 

LENDING WITHIN THE COMMUNITY 

2.1. 

In  most  Community  countries  the  fundamentals  improved  and  economic  activity 
slowed  in  1996  (real  GDP  up  by  1,6%,  against  2,5%  in  1995).  Although  exports 
continued  to  perform  well  (up  3,3%  in  real  terms),  investment  in  general,  and 
particularly  in  the  building  industry  and  public  works,  was  affected  by  the  close 
monitoring of public deficits. 

Good inflation  figures in virtually all countries and a sharp fall in interest rates had not 
given  rise to  a sufficient  labour  market  recovery  for  unemployment  to be reduced  by 
the end of  1996.  However, investment by SMEs started to pick up. 

2.2, 

In  this  context,  reflecting  the  commitment  to  creating  a  macro-economic  climate 
favourable  to  EMU,  the  EIB  granted  loans  in  the  European  Union  to  the  tune  of 
ECU 20,95  billion  as  against  ECU  18,6  billion  in  1995,  an  increase  of  12,6% 
(Table 2).  The  funding  helped  to  create  an  investment  volume  estimated  at 
ECU 60 billion,  or  some  5% of the gross fixed  capital formation  (GFCF)  achieved in 
the  Union.  Â  significant  volume  of  lending  took  place  in  Austria,  Sweden  and 
Finland,  with  the  amount  virtually  double  that  of  1995,  the  first  year  of  their 
accession.  However,  the  most  appreciable  increase  in  loans  was  seen  in  the 
Netherlands, Italy, Greece, France and Germany. 

The  financing  of  investment  contributing  to  regional  development  and  to  the 
strengthening  of  economic  cohesion  remained  one  of  the  Bank's  main  concerns  in 
1996  (Table 5  in the  Annex)  and  accounts  for  more  than  two-thirds  of  total  loans. 
These  loans  were  concentrated  in  areas  qualifying  for  support  under  the  Structural 
Funds, especially in the "cohesion" countries, Germany's eastern regions and  southern 

s 

Italy,  where  financing  returned  to  1994  levels  Since  the  reform  of the  Funds in 
1989,  loans  for  regional  development  have  totalled  ECU 85  billion,  helping  to 
finance investment estimated at ECU 249 billion. 

Several years ago the EIB adapted its loan conditions to the specific requirements of 
establishing coherent networks, essential for intra-Community trade.  The Bank thus 
became  directly  involved  in  financing  trans-European  networks  and  more 
especially in the priority projects identified by the Essen European Council.  Under 
this heading,  it  had  approved  loan  commitments  of ECU  10,7 billion  by the  end  of 
1996.  The Bank has made approximately ECU 30 billion available within the Union 
since  1993  for  the  establishment  of  trans-European  networks  in  transport,  energy 
transfers  and  telecommunications.  The  facilities  offered  by  the  special  TEN s 
window have been applied whenever possible. 

'VS.-

Table 2 

Structure of  EIB tending (loan  contracts  signed)  - Geographical  distribution 

Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
United  Kingdom 
Other  (Article  18) 

Community  total 

ACP-OCT  ; RSA 
Mediterranean 
CEEC 
Latin America,  Asia 

Non-Community  total 

1S93 
ECU million 

1SS4 
ECU  million 

372 
876 
2 097 
511 
4 005 
2 206 
388 
3 362 

380 

1 489 

1  929 
111 
17 724 

22G 
661 
882 
99 
1  887 

1.9 
4,5 
10,7 
2.6 
20,4 
11.2 
2,0 
17.1 
0.0 
1.9 
0,0 
7.6 
0,0 
0,0 
9,8 
0.6 

90,4 

1.2 
3,5 
4.5 
•0,5 

9,6 

615 
650 
2 408 
535 
3 012 
2 477 
291 
3  100 
5 
400 
90 
1  110 
60 
15 
2 455 
261 
17 682 

462 
607 
957 
220 
246 

199S 
ECU  million 

%Ti 
3.1 
4,3 
12,1 
2,7 
15,1 
12,4 
1,5 
15,6 
0,0 
2.0 
0.4 
5,6 
0.3 
0,1 
12,3 
'  1.3 
88,7 

2,3 
3.0 
4.8 
1.1 
11.3 

665 
825 
2 715 
525 
2 818 
2 207 
327 
3 435 
79 
319 
242 
1 232 
179 
273' 
2 244 
519 
18 604 

475 
1 038 
1005 
288 
2 606 

1986 
ECU  million 

657 
688 
3 022 
721 
2 553 
2 509 
189 
4  121 

766 
490 
1  294 
302 
846 
2 386 
402 
20 94S 

452 
681 
1  116 
45 
2 294 

% 
3.1 
3,9 
12.7 
2.5 
13,2 
10,3 
1.5 
16,0 
0.4 
1.5 
1,1 
5,8 
0.8 
1.3 
10,5 
2,4 
86,9 
2,2 
4,8 
4,7 
1.3 
13,1 

2,8 
3,0 
13,0 
3.1 
11,0 
10,8 
0.8 
17,7 
0,0 
3,3 
2,1 
5.6 
1.3 
3,6 
10,3 
1.7 
90,1 

1,9 
2,9 
4,8 
0,2 
9.9 

TOTAL  LOANS  SIGNED 

19611 

100,0 

19 928 

100,0 

21 410 

100,0 

23 240 

100,0 

in 

infrastructure 

the  communications  sector  amounted 

Financing  for 
to 
ECU 6 506 million,  holding  steady  in  relation  to  the  previous  year.  Financing  for 
the transport  sector totalled  ECU 4 500 million, most  of which was directed  toward 
road  and railway infrastructure  (ECU 4 200 million). Financing was  made  available 
for  the new  Athens  international  airport.  Lending  rose  sharply  in the  telecommuni 
cations field,  returning to the level of previous years following  last year's fall. 

The Bank, which assesses the  environmental  impact  of all the  projects  it  finances 
and  is  careful  to  ensure  that  they  comply  with  the  relevant  Community  standards, 
granted  loans worth ECU  5 875 million for that objective in 1996, thus maintaining 

the  average 

level  of  previous  years  (30%  of  all 

funding  at 
financing). 
ECU 4 209 million was  earmarked  for  programmes  concerning  air  and  water  quality 
and  waste  processing.  Urban  renewal  schemes  accounted  for  ECU  1  666 million. 
Financing 
to 
ECU 4 031 million.  Financing was stepped up for  a wide range of projects  involving 
the use of natural gas (power stations, transport, distribution and storage). 

substantially 

objectives 

increased 

energy 

1996 

for 

in 

1996 was  also marked  by a clear pick-up in individual loans for  industrial  projects. 
Advances on global loans for  SMEs held steady at a high level after  the sharp increase 
recorded  the  previous  year.  Overall, lending for  industrial  objectives  amounted  to 
ECU 3 776 million,  of  which  ECU  1 182 million  consisted  of  individual  loans  and 
ECU 2 594 million advances on global loans for more than  11 000 SMEs. 

By the end of  1995 the ECU  1  billion allocated to the facility for  employment-creating 
SMEs had been advanced  in full,  enabling the creation of some 45 000 new jobs.  By 
the end  of  1996 2 451  SMEs confirmed  that about 28 000 jobs had been created  and 
sustained for six months. 

2.3. 

As part  of arrangements  for  ECSC  borrowing/lending  activities  decided  on by the 
Commission in June  1994 (OJ No  175 of 28 June 1994) with a view to  the expiry of 
the  ECSC  Treaty  on  23 July 2002,  amounts  paid  out  under  new  loans  within  the 
Community declined sharply in relation to the previous year (Table 3). 

Table 3 

ECSC loans in 1996 

(ECU thousand) 

Article 54 

Article 56 

Article 95 

Housing 

Total 

Belgium 
Dan mark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
United Kingdom 

Non-EU 

Total 

12 183 

30 466 
34 911 

5 951 

23 009 

16 721 
11 548 

58 924 

578 

50 398 

77 560 

167 129 

15 563 

15 563 

1074 
113 
9 663 
154 
3 589 
1800 
20 
1 937 
309 
183 

208 
357 

7 025 
113 
32 672 
154 
32 493 
13 348 
20 
91327 
35 220 
183 
578 
208 
50 755 
15 563 

19 407 

279 659 

2.4.  As  regards  NCI  activities,  repayments  have  continued  and  loans  have  been  repaid 
virtually in full  in some countries.  No new lending  operations  have been  undertaken 
since  1991 (Table 4). 

Table  4 

NCI loans at 31 December  1996 

Reconstr. 

Reconstr. 

(ECU  million) 

Financial  agreements 

NCI 

ITALIE 

GRECE 

NCI II 

NCI III 

NCI IV 

TOTAL 

Global  loans  (*) 

406,8 

2  138.0 

668.8 

3  213.5 

Productive  sector  (*) 

5.4 

10,6 

Infrastructure 

Energy 

538.5 

598,7 

80,0 

279.4 

465,3 

446,7 

300,8 

258,3 

15,9 

1  961,9 

1  005.8 

Total  contracts  signed, net (**) 

990,5 

598.7 

80,0 

997.5 

2  861.5 

668,8 

6  197.1 

EIB  loans  (own  resources) 

351,6 

351.6 

Authorized  ceilings 

1 000,0 

1  000,0 

80,0 

1  000,0 

3 000,0 

750,0 

6  830.0 

Balance 

(*) 

(**) 

9,5 

49.7 

0.0 

2,5 

138,4 

81,2 

267.5 

Industry and  agriculture 

Contracts  signed less  cancellations 

2.5.  No  financing  applications  for  nuclear  projects  within  the  Community  under  the 
ECU  1,1 billion  Euratom  ceiling  have  been  made  in  recent  years.  However,  a 
number of projects outside the Community are currently being examined (see 3.5). 

2.6.  The  facility  providing  medium-term  financial  assistance  for  Member  States' 
balances  of  payments  was  not  activated  last  year.  Taking  account  of  amounts 
disbursed  in  the  past  to  Greece  (ECU  1  billion - first  tranche  of  the  1991  loan  of 
ECU 2,2 billion)  and  to  Italy  (ECU 4 billion - first  two  tranches  of  the  1993  loan  of 
ECU 8 billion)  and  repayments  effected 
in  1996,  the  total  amount  of  loans 
outstanding under this facility  amounted to ECU 4 billion at 31 December  1996.  The 
available margin to  be financed  by Community  loans on the  capital  market  therefore 
amounted to ECU  10 billion. 

3. 

LENDING OUTSIDE THE COMMUNITY 
Lending  activities with  countries  having  concluded  cooperation  agreements  with  the 
Community tailed off following  a period of continuous expansion in recent years. 

3.1.  Macroeconomic 

assistance 

form 
for 

the 
loans 

in 
support 

and 
structural-adjustment 
to 
ECU  155 million  in  1996  (Table 5).  Disbursements  made  for  this  purpose  and 
corresponding  to  loans previously  approved  amounted  to ECU  140 million,  of which 
ECU 40 million was  allocated  to  CEEC  (Bulgaria)  and  ECU  100 million  to  the  CIS 
(Ukraine).  In addition to this, new loans approved  in  1996 included the  disbursement 
of ECU  15 million to Moldova. 

of  balance-of-payments 
third 

amounted 

countries 

3.2.  No  new  disbursements  were  made  in  1996  under  the  Council Decision  of 
December  1991  relating  to  the  commercial  credit  facility  of  ECU  1  250 million  in 
favour  of the new independent states of the former USSR (CIS). 

Since no new operations were decided on in  1996, the total amount of credits granted 
under  the  facility  remained  at  the  same  level  as  in  1995,  i.e.  ECU  1 133 million 
(Table 8 in the Annex). 

3.3.  EIB  financing  outside  the  Union  amounted  to  ECU 2 294 million  in  1996,  about 
18%  down  on  the  previous  year  (Table 2).  ECU 2  190 million  of  this  amount  was 
financed  from  the Bank's own resources, with the remaining ECU  104 million  funded 
from  operations  using  risk  capital  drawn  from  Community  or  Member  States' 
budgetary funds  (Table 5). 

Lending activities were partly influenced  by the process of renewing the mandates for 
Latin America and Asia (ALA), which took longer than anticipated, and by the 
unfavourable political climate in some regions. 

The  loan  total  increased  in  the  CEEC  and  in  South  Africa  but  fell  in  the  African, 
Caribbean  and  Pacific  (ACP)  countries  and  the  Overseas  Countries  and  Territories 
(OCT), in the Mediterranean and in Latin America and Asia (ALA). 

3.3.1.In  the  ACP  countries  and  the  OCT,  the  EIB  provided  assistance  amounting  to 
ECU 396 million (against ECU 430 million in  1995), of which ECU 99 million was in 
the  form  of  risk  capital  from  the  resources  of  the  European Development Fund 
(EDF). 

Two-thirds  of financing  (ECU 256 million) went to  basic infrastructure  necessary  for 
Industry  received  finance 
the  economic  development  of  the  countries  concerned. 
totalling  ECU 42 million  in  the  form  of  individual  loans  and  ECU 98 million  in  the 
form  of  global  loans  concluded  with  local  financial  institutions  for  the  financing  of 
small businesses. 

3.3.2. Lending  in the countries  on  the Mediterranean  seaboard  totalled  ECU 681 million 
in  1996,  of which  ECU 5 million was  drawn  from  awn  resources.  ECU 562 million 
of  the  loans  was  financed  under  non-protocol  horizontal  financial  cooperation  for 
communications  and  environmental  protection  projects.  Loans  under  the  current 
bilateral protocols totalled ECU  119 million. 

The  breakdown  per  sector  shows  the  importance  of  projects  designed  to  control 
domestic  pollution  (waste-water  collection  and  treatment  facilities)  and  industrial 
pollution (decontamination project for  a petrochemicals plant in Algeria and provision 
of  desulphurization  equipment 
total 
ECU 380 million,  or  56%  of  financing  for  the  year,  went  directly  to  environmental 
protection. 

in  a  power  station 

in  Turkey). 

In 

Loans  totalling  ECU 53 million  were  granted  to  Gaza  for  improvements  to  water 
distribution networks and the construction  of a port. 

3.3.3. In  the  CEEC,  lending  to  ten  countries  totalled  ECU  1 116 million  in  1996 
(ECU  1  005 million in  1995).  Virtually all of these loans (97%) were provided  under 
the  Decision  of  the  Board  of  Governors  of  May  1994  for  a  programme  of 
ECU 3 billion with a Community budget guarantee.  In addition,  ECU 30 million was 
advanced  to  Slovenia under the protocol which entered  into force  in  1993.  The bulk 
of  these  loans,  with  the  exception  of ECU 50 million  in  global  loans,  supported  the 

10 

development  of  basic  infrastructure,  essentially  communications, 
contributed to projects forming part of priority transport corridors. 

Several  of  them 

3.3.4. Under the authorization given by the Board of Governors in February  1993 to finance 
investment  in  Latin America  and  Asia,  a  transaction  was  signed  in  Argentina 
(ECU 45 million) to improve road  infrastructure. 

3.3.5. The  Bank  continued  to  provide  financing  to  South Africa  in  1996  with  a  loan  of 

ECU 56 million for the extension of the electricity distribution network. 

Table 5 

Financing outside the Community in 1996  j 

(ECU million) 

ECSC 

Balance-of-
payments 
support 

(1) 

EC and EDF 
budget 
resources 

(2) 

Own 
resources 
(3) 

Total 

E IB 

ACP-OCT 
Mediterranean  basin 
CEEC 
CIS 
Latin America, Asia 
South Africa 

99 
5 

16 

40 
115 

Total 

16 

155 

I 

104 

297 
676 
1 116 

45 
56 
2 190 

396 
681 
1 172 
115 
45 
56 
2 465 

Disbursements. 

(1) 
(2)  Granted and maintained by the EIB out of the budgetary resources of the EC or the 

European Development Fund (EDF) 
Signed loans. 

(3) 

| 

3.4.  Outside  the  Community,  a  single  ECSC  loan  of  ECU  15,5 million  was  granted  in 

1996.  The beneficiary was a steel company undergoing restructuring. 

3.5.  The  Council's  decision  of 21 March  1994 made  Euratom  loans  available  to  CEEC 
and  CIS countries with a view to improving the safety and efficiency  of their nuclear 
power  stations.  The  available  amount  is  about  ECU  1,1 billion,  taking  the  current 
global ceiling fixed by the Council into account. 

Several  projects  are being  appraised  in Ukraine,  Bulgaria,  Russia  and  Lithuania,  but 
given  the  political  and  technical  complexity  of  projects  of  this  type,  no  decision  to 
provide funds was taken in 1996. 

3.6.  The Community and EEB are both shareholders and close partners of the EBRD: they 
each  hold  3%  of  the  Bank's  capital,  work  in  close  cooperation  and  match  their 
resources. 

According  to  the  EBRD's  annual  report  for  1996,  the  Board  approved  119  new 
projects  in the CEEC and the former  Soviet Union (against  134 in  1995), for  a total 
amount  of  ECU 2,8 billion,  or  about  10%  more  than  in  1995  on  the  basis  of 
reevaluated  figures.  Signed  commitments  amounted  to  ECU 2,2 billion  in  1996. 

11 

Equity holdings as a proportion of the Bank's entire activities fell from 24% in  1995 
to  19% in  1996, i.e. ECU 526 million. 

4. 

THE EUROPEAN  INVESTMENT FUND 

In  1996, the EIF was able to  complete the major  preparatory work  carried  out  since 
its  creation  in  June  1994  and  thus  record  a  sharp  rise  in  the  number  of  operations 
signed.  Twenty-two  operations were signed during the year involving a total  amount 
of  ECU 833 million,  which  takes  the  overall  volume  of  operations  signed  since  its 
creation  to  ECU  1  464 million.  The  proportion  of  this  amount  taken  up  by 
infrastructure  projects  linked  to  the Trans-European  Networks  (TEN)  programme  is 
78%,  with the remaining  22% of commitments  going to  support  small  and  medium-
sized enterprises. 

The infrastructure  projects which received Fund guarantees were in the transport  and 
energy sectors.  Guarantees granted to SME projects concentrated  on support for  the 
start-up  phase  of  the  "Growth  and  environment"  pilot  programme.  This  is  an 
initiative of the  European  Parliament  for  which  the  Commission  budget  is  financing 
the cost  of loan guarantees for  SMEs which carry out projects  of potential benefit  to 
the environment.  Of the thirteen  operations  approved  under this programme  (to  the 
tune  of ECU 392 million),  six  (totalling  ECU  162 million)  have been  negotiated  and 
signed with financial intermediaries in five Member States. 

As provided for in its Statutes, the EIF was authorized in  1996 to become involved in 
equity participations.  An amount  of ECU 75 million was earmarked  for this  purpose 
up to the end of  1998.  A series of operations were identified  and  examined  in  1996, 
and the first  contracts were scheduled to be signed at the start of 1997. 

At  the  end  of  1996, the Fund's  assets  stood  at  ECU  1  786 million,  or  89,3% of  the 
authorized  capital  of  ECU 2 billion.  This  has  been  subscribed  by  78  shareholders 
made  up  of  76  financial  institutions,  the  European  Union  (represented  by  the 
Commission) and the EIB. 

5. 

BUDGETARY  IMPACT OF LENDING 

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

5.1.  Interest subsidies 

Interest subsidies are granted by the Community in the following  fields (see Table 7 in 
Annex): 

a)  the industrial conversion of coal and steel areas (Article 56 of the ECSC Treaty), 
b)  the  reconstruction  of  the  disaster-hit  areas  of  Italy,  Greece  and  Portugal 

(Autonomous Region of Madeira), and 

12 

c)  in the context of the "SME facility". 

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  subsidies  for  conversion  loans  in  coal  and  steel  areas  (Article  56), 
interest  subsidies amounted to ECU 36,8 million in  1996 against ECU  11,5 million in 
1995 and ECU 51,1 million in 1994. 

The Council Decision on reconstruction following the earthquake on Madeira in 1993 
lays  down  that  interest  subsidies  on  EIB  loans  are  to  be  paid  directly  by  the 
Commission to the Autonomous Region of Madeira and no longer via the EIB, as had 
been the case for the earthquakes in Greece and Italy. 

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  is  earmarked  for  measures  to  strengthen  the  competitiveness 
of  European  small  and  medium-sized  enterprises  and  is  combined  with  interest 
subsidies  linked  to job  creation.  The  subsidy  amounts  to  ECU 3 000  per  additional 
job  created  (equivalent  on  average  to  a  2%  interest-rate  reduction).  The  Council 
Decision of  19 April  1994 allowed the EIB to  start  signing global lending  agreements 
with  financial  intermediaries  in  all  Member States  in  the  second  half  of  1994.  The 
allocation  of  loans  ended  on  15 December  1995, the  entire  budget  of  ECU  1  billion 
having been used up. 

By the  end  of  1996, 48% of this facility  had  been  spent:  a total  of ECU 480 million 
had  been  allocated  to  2 536  firms.  It  is  thought  that  the  entire  budget  could  be 
disbursed  in  1997,  with  some  4 500 firms benefiting.  Budgetary  payments  for  this 
facility  amounted  to ECU 2,8 million in  1995 and ECU  17,5 million in 1996. 
Interest  subsidies  are  also  provided  in  connection  with  EIB  loans  outside  the 
Community (see Table 8 in Annex). 

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. 
In  this  connection,  the  Community  budget  was  involved  in  an  ECU  15 million 
"balance-of-payments  loan" to Moldova in 1996. 
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  the  OCT  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: 

13 

a)  EIB  loans  to  Mediterranean  countries:  These  loans  are  covered  by  a  global 

Community guarantee for 75% of the amount of loans signed. 
At  the  end  of  1996,  outstanding  loans  totalled  ECU  2 357 million,  of  which 
ECU 265 million  was  accounted  for  by  loans  in  Spain,  Greece  and  Portugal 
(pre-accession)  and  ECU  2 092 million  by  loans  in  non-member  Mediterranean 
countries. 

b)  EIB  loans  to  the  CEEC:  Loans  contracted  are fully  covered  by the  Community 
guarantee.  At  31 December  1996, the EIB  had  advanced  ECU  1  628 million  to 
these  countries  out  of  a  total  allocation  of  ECU  1,7 billion  under  the  CEEC  I 
Agreement.  The total amount  outstanding for loans at the end of  1996 was ECU 
971 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 billion 
over the subsequent three years (CEEC II Agreement).  At 31 December  1996 the 
EIB had advanced  ECU 2 980 million from  this allocation.  At the same date,  the 
amount of the guarantee outstanding was only ECU 335 million. 

c)  EIB  loans  to  third  countries  in  Latin  America  and  Asia:  Loans  granted  to 
those countries with which the Community has concluded  cooperation  agreements 
are fully  guaranteed  by the Community budget.  This programme was adopted  in 
February  1993 and relates to a global amount of ECU 750 million over a period  of 
three years, with a ceiling  of ECU 250 million a year.  At the  end  of  1996, loans 
signed  stood  at  ECU  647  million,  while  disbursements,  the  amount  of  which  is 
covered  by 
On 
12 December  1996,  the  Council  authorized  an  interim  guarantee  for  one  year 
restricted  to  an  overall  loan  ceiling  of  ECU 275 million,  expiring  in  June  1997. 
This decision enabled the link to be made between the initial mandate conferred  on 
the Bank in this region and the global multi-annual mandate for  all third  countries 
approved by the Council at the start of 1997. 

stood  at  ECU 204 million. 

the  budget  guarantee, 

d)  EIB loans to South Africa: In June  1995, the Community provided its guarantee 
for  loans to be granted by the EIB in South Africa  over the subsequent  two years, 
up  to  a maximum  amount  of ECU 300 million.  These loans  are  fully  guaranteed 
by  the  Community  budget.  At  31 December  1996,  the  EIB  had  advanced 
ECU  101 million  while,  on  the  same  date,  the  outstanding  guarantee  relating  to 
principal and interest was only ECU 32 million (Table 6). 

14 

5.2.2  Outstanding guarantees at 31 December 1996 

the  proportion  of  commitments 

At  the  end  of  1996,  outstanding  guarantees  provided  by  the  Community  budget, 
which, as indicated, relate to the amount of loans disbursed, details of which are given 
in Table 6, stood  at some ECU  12 billion, more than  53% of which was for  countries 
outside  the  Community.  Compared  with  1995,  total  outstanding  guarantees  were 
down  by  ECU  1  238 million.  However, 
to 
non-Community  countries  has  increased  steadily  from  37,5%  in  1992  to  53%  at 
present. 
The annual risk  covered  by the general budget,  which  concerns the repayment  of the 
debt  (principal  and  interest),  stood  at  ECU 3 149 million  in  1996,  of  which 
ECU  1  081 million related to third countries. 
At  31  December  1996,  amounts  paid  out  by  the  Community  and  not  yet  repaid  by 
defaulting  debtors stood at ECU 330,7 million, of which ECU 84,4 million is owed by 
some of the republics of the former  Yugoslavia  and ECU' 246,3 million by  Tajikistan, 
Armenia and  Georgia. 
All  provisional  drawings  on  the  Commission's  cash  resources  in  respect  of  the 
guarantee  have been  settled  from  the budget  up  to  1994 and,  since  its  establishment 
by Council Regulation No 2728/94 of 31 October  1994, by the Guarantee Fund. 

15 

Table 6 
Capital outstanding  on  guaranteed  operations  (at 31 Dec 1996) 

(ECU  million) 

Operation 

Amount 
ceiling 

Amount 
outstanding at 
31.12.95(1) 

Amount 
outstanding at 
31.12.96(2) 

Member  States 

A.Balance of  payments 
1.  Greece 
2.  Italy 
B.  Other 
3.  Euratom  (3) 
4.  NCI 
5.  EIB  Mediterranean  (E, GR,  P) 

Non-Community  countries 

A.  Financial  assistance 
1.  Hungary 
2.  Former  USSR 
3.  Czech  Republic 
4.  Sol va k  Republic 
5.  Bulgaria 
6.  Romania 
7.  Estonia 
8.  Latvia 
9.  Lithuania 
10.  Israel 
11.  Algeria 
12.  Moldova 
13.  Ukraine 
14.  Belarus 

B.  Other 
15.  Mediterranean 
16.  CEEC  I and  II 
17.  Latin America,  Asia 
18. South Africa 

TOTAL  GENERAL 

26  330 

14 000 

4 000 
6 830 
1500 

17 422 

5 035 
1050 
1250 
250 
125 
400 
580 
40 
80 
100 
160 
600 
60 
285 
55 

12 387 
6 362 
4 700 
1025 
300 

43 752 

7 263 

5  564 

1000 
4 045 

720 
1  113 
385 

5 851 

2 987 
440 
347 
250 
125 
360 
510 
20 
40 
75 
160 
500 
45 
85 
30 

2 864 
1782 
933 
149 

500 
3 479 

572 
748 
265 

6  312 

2 679 
180 
144 
250 
125 
400 
510 
20 
40 
75 
160 
500 
60 
185 
30 

3 634 
2 092 
1  306 
204 
32 

13 114 

11 876 

(1)  Exchange  rate as at 31.12.1995. 

(2) Exchange  rate as at 31.12.1996. 

(3) Extension of  Euratom  loans to certain third countries (Council  Decision of 21 March  1994). 

16 

STATISTICAL ANNEX 

17 

Table 1 

Trend of borrowing and lending In the Community 

(ECU million) 

(ECU rate at year-end) 

1985 

1986 

1987 

1988  1989 

1990 

1991 

1992 

1993 

1994 

1995 

1996 

I. Borrowing 

ECSC 

1265 

1517 

1487 

880 

913 

1086 

1446 

1474 

908 

644 

386 

298 

Balance of payments (1 ) 

Euratom 

NCI 

862 

488 

541 

344 

860 

860 

853 

93 

611 

945 

522 

76 

49 

49 

70 

66 

350 

1695 

1209 

4 969 

245 

410 

155 

Total Commission 

2 469 

3 408 

3811 

1918 

1435 

1512 

3190 

2 683  5 877 

1008 

862 

453 

EIB (2) 

Total EC 

II. Lending 

5 699 

6 786 

5 593 

7 666 

9 034  10 996  13 672  12 974  14 224  14 148  12 395  17 553 

8168  10194 

9404 

9584  10 469  12 508  16 862  15657  20101  15156  13 257  18006 

ECSC 

1010 

1069 

Balance of payments (1) 

Euratom 

NCI 

862 

443 

393 

211 

884 

969 

860 

314 

908 

700 

993 

1382 

1486 

918 

674 

350 

1695 

1209 

4969 

245 

403 

410 

280 

155 

49 

425 

357 

78 

24 

39 

9 

30 

Total Commission 

2 105 

2 767 

2568 

1265 

778 

1367 

3116 

2 704 

5 917 

968 

813 

435 

EIB (3) 

Total EC 

5 641 

6 678 

6 967 

8 844  11507  12 605  14 438  16 066  17 724  17 682  18 604  20 946 

7 746 

9 445 

9 535  10109  12 285 

13 972  17 554  18 770  23 641  18 650 

19  417 

21381 

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

for refinancing purposes and to changes in the balance of loans not assigned by the end  of the year. 
The differences between borrowing and lending by the EIB are due to the fact that EIB lending operatbns are financed both 
from borrowings and  from the  Bank's own resources. 

(1)  Mechanism for providing financial support for Member States and assistance for non-member countries. 
(2)  Total resources raised. 
(3)  Loans signed out of own  resources, no account being taken of the guarantees provided by the  EIB to promoters 

or of operations financed out of NCI  resources. 

18 

Table 2 

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

(ECU million) 

ECSC 

B B ( 3) 

Euratom 

NIC 

Sub-total 

borrowings 

borrowing 

Balance-of-pay. 

Total 

6178 

16  570 

1272 

1747 

25 767 

591 

26 358 

6 539 

20 749 

1 680 

3 269 

32 237 

7119 

25 007 

1892 

4 432 

38 450 

7 034 

26 736 

2 013 

4 960 

40 743 

4 610 

4 932 

3236 

36 847 

43 382 

43 979 

6 761 

30 271 

2168 

5 202 

44  402 

1  890 

46 292 

6 689 

31 957 

2 500 

5 229 

46 375 

6 825 

36 928 

2164 

5 514 

51431 

6 738 

42 330 

1945 

5122 

56135 

2 997 

2459 

2 075 

6 673 

48 459 

1 687 

4 542 

61 361 

(4)2 045 

7139 

58 893 

1563 

3 817 

71412 

7 327 

67 784 

1 338 

3 326 

79 775 

7  331 

78 661 

1018 

2 202 

89 212 

6 548 

83 673 

5 966 

87 079 

4 656 

96 649 

779 

720 

572 

1 570 

92 570 

1113 

94 878 

748 

102  625 

3 516 

4026 

5204 

7  697 

8 032 

6658 

49 372 

53 890 

58 210 

63 406 

74 928 

83 801 

94 416 

100 267 

102  910 

109 283 

1982 

1983 

1984 

1985 

1986 

1987 

1988 

1989 

1990 

1991 

1992 

1993 

1994 

1995 

1996 

(1) 

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

are denominated in national currencies, the difference between two year-ends reflects, on the one hand, changes 

in the valuation of the existing stock and, on the other, the net volume of borrowings during the year. 

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

exchange-rate adjustments. 

(3)  As from 1989 including short term. 

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

19 

Table 3 

Community borrowings in 1996,  by currency 

EIB  Euratom 

ECSC 

NCI  Payments(1)  Borrowing 

Balance-of- 

Total 

(ECU million) 

1995 
% 

1996 
% 

ECU 
BEF 
DKK 
DEM 
GRD 
ESP 
FRF 
IEP 
ITL 
LUF 
NLG 
PTE 
FIM 
SEK 
GBP 
Sub-total 
CHF 
JPY 
USD 
ZAR 
Sub-total 
TOTAL 

(1) 

500 
19 
88 
5 285 
97 
2 035 
655 
102 
4 398 
65 
84 
358 
34 
191 
2168 
16 079 
165 
580 
698 
33 
1 476 
17 555 

6 

64 

29 
7 

53 
35 

50 
244 

54 

54 
298 

155 

155 

155 

655 
25 
88 
5 349 
97 
2064 
662 
102 
4 451 
100 
84 
358 
34 
191 
2 218 
16 478 
165 
580 
752 
33 
1530 
18008 

6,1 
0,1 

19,5 
1,1 
12,0 
2,7 
1,0 
25,6 
1,5 
1,1 
7,6 
0,1 
0,6 
8,3 
87,3 
2,9 
5,8 
4,0 

12,7 
100,0 

3,6 
0,1 
0,5 
29,7 
0,5 
11,5 
3,7 
0,6 
24,7 
0,6 
0,5 
2,0 
0,2 
1,1 
12,3 
91,5 
0,9 
3,2 
4,2 
0,2 
8.5 
100,0 

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

Table 4 

Lending in treConrnxifty in 1995 and 1996,  by sector and instrument 

ECSC 

BB(1) 

Euratom 

Na(1) 

Total 

% of total 

1995 

1996 

1995 

1996  1995  19961  1995  1996 

1995 

1996  1995  1996 

(ECU million) 

Productive sector 

346 

248 

4617 

4477 

4963 

4725 

27,4  23,5 

of which: allocations 

from global loans 

222 

178 

2955 

2630 

3177 

2808 

17,5  14,0 

infrastructure 

14 

20 

10082 

10388 

10096 

10408 

55,6  51,8 

of which: allocations 

from  global loans 

Energy 

of which: allocations 

from global loans 

1299 

1535 

1299 

1539 

7,2 

7,6 

12 

3083 

4945 

3083 

4957 

17,0  24,7 

100 

279 

too 

27a 

0,6 

1,4 

TOTAL 

360 

280 

17782 

198101 

18142 

20090}  100,0  100,0 

(1) 

Financing granted (individual loans and allocations from global loans) 

20 

Table 5 

Financing  in the Community by the  EIB In 1995 and 1996, 

by economic  objective 

1.  Regional  development 

12 143,5 

100,0 

13 805,0 

100.0 

1995 

1996 

ECU million 

•/. 

ECU million 

% 

1.1  By  country 
Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 

Sweden 

United  Kingdom 

1.2  By major  sector 
Energy 

Communications 
Environment  and  various 
Industry, services,  agriculture 

249,0 
304,0 

1 786,3 
335,7 

2 697,0 
1 440,1 
165,5 
2 458,8 
79,3 
24,0 
63,8 
1 252,8 
23,7 
4,7 

1 258,6 

2 009,0 

5 270,0 

1 614,0 

3 252,0 

2,1 
2,5 

14,7 
2,8 

22,2 
11,9 
1,4 
20,2 
0,7 
0,2 
0,5 
10,3 
0,2 
0,0 

10,4 

16,5 

43,4 

13,3 

26,8 

236,0 
397,0 
2 297,0 
730,0 
2 352,0 
1615,0 
108,0 
2 853,0 

17,0 
254,0 
1 288,0 
10,0 

317,0 
1 331,0 

4 076,0 
4 640,0 
1 826,0 

3 263,0 

1,7 
2,9 
16,6 
5,3 
17,0 
11,7 
0,8 
20,7 

0,0 
0,1 
1,8 
9,3 
0,1 

2,3 
9,6 

29,5 
33,6 
13,2 

23,6 

2. Communications  infrastructure 

6 592,0 

100,0 

6 506,0 

100,0 

2.1  Transport 
2.2  Telecommunications 
2.3  Other 

5 494,0 
1 098,0 

83,3 
16,7 

4 500,0 
2 006,0 

69,2 
30,8 

3. Environmental  protection  and  improvement 

6 044,0 

100,0 

5 875,0 

100,0 

3.1  Environment 
3.2 Town  planning 

4.  Energy 

4.1 Indigenous  resources 
4.2 Import  diversification 
4.3  Efficient  use of  energy 

5. Industrial  competitiveness 

3 972,0 
2 072,0 

3 433,0 

1 037,0 
894,0 
1 502,0 

3  450,0 

of which: small and medium-sized  enterprises  (1) 

2 881,0 

65,7 
34,3 

100,0 

30,2 
26,0 
43,8 

Number 
H736 

4 209,0 
1 666,0 

4 031,0 

547,0 
2 011,0 
1 473,0 

3 776,0 

2 594,0 

71,6 
28,4 

100,0 

13,6 
49,9 
36,5 

Number 
j i 034 

(1) 
N.B. 

Including allocations from NCI global loans. 
As some financing serves a number  of purposes, the amounts shown under the  different 
headings cannot be aggregated. 

21 

Table 6 

Geoqraphical breakdown of lending (1) in the Community in 1995 and 1996 

1996 

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

1995 

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

(ECU million) 

ECSC 

EIB 

Euratom 

NCI 

Balance of 
payments  Amount 

% 

7,0 
0,1 
32,7 
0,2 
32,5 
13,3 

91,3 
35,2 
0,2 
0,6 
0,2 

50,8 

264,1 

657,5 
688,0 
3 021,6 
721,1 
2 552,6 
2 509,2 
188,7 
4  120,7 

765,7 
489,9 
1 293,8 
302,1 
846,5 
2 386,2 
402,5 
20 946,1 

664,5 
688,1 
3  054,3 
721,3 
2 585,1 
2 522,5 
188,7 
4  212,0 
35,2 
765,9 
490,5 
1 294,0 
302,1 
846,5 
2 437,0 
402.5 
21 210,2 

3,1 
3,2 
14,4 
3,4 
12,2 
11,9 
0,9 
19,9 
0,2 
3,6 
2,3 
6,1 
1,4 
4,0 
11,5 

100 

ECSC 

EIB 

Euratom 

NCI 

Balance of 
payments  Amount 

% 

8,7 

104,8 

22,9 
14,9 

89,2 
9,4 

10,2 

100,3 

360,4 

665,0 
825,0 
2 715,0 
525,0 
2 818,0 
2 207,0 
327,0 
3 435,0 
79,0 
319,0 
242,0 
1 232,0 
179,0 
273,0 
2 244,0 
519.0 
18 604,0 

673,7 
825,0 
2  819,8 
525,0 
2 840,9 
2 221,9 
327,0 
3 524,2 
88,4 
319,0 
242,0 
1 242,2 
179,0 
273,0 
2 344,3 
519,0 
18 964,4 

3,6 
4,4 
14,9 
2,8 
15,0 
11,7 
1,7 
18,6 
0,5 
1,7 
1,3 
6,6 
0,9 
1,4 
12,4 
2.7 
100 

(1) 
(2) 

Loans granted 
Community projects that cannot be located in a particular Member State (e.g. tele-
communication cables and satellites, North Sea Oil). 

22 

Table 7 

Interest subsidies paid out in the Community by the various 

Community mechanisms 1977-96 

(ECU  million) 

Non-discounted systems (1) 

Discounted systems (2) 

ECSC Art 54 

ECSC Art 56 

Year 

(restrict) 

(convers.) 

Employment 
in Portugal 

Earthquake 

reconstr. 

EMS 

ERDF 

SME 

facility 

1977 

1978 

1979 

1980 

1981 

1982 

1983 

1984 

1985 

1986 

1987 

1988 

1989 

1990 

1991 

1992 

1993 

1994 

1995 

1996 

(1 ) 

(2) 

(3) 

12,1 

200,0 

197,0 

193,2 

209,8 

200,0 

1.3 

9,8 

10,4 

25,7 

7,6 

10,5 

4,0 

6,2 

3,6 

5,9 

2,4 

3,0 

2,6 

1,3 

1,0 

2,7 

16,5 

8,0 

33,4 

6,3 

19,3 

7,1 

34,0 

74,9 

33,1 

35,6 

38,6 

42,5 

40,6 

48,6 

106,0 

114,3 

51,1 

11,5 

36,8 

4,0 

3.9 

3,0 

14,4 

24,4 

28,4 

28,6 

28,6 

27,8 

26,6 

23,1 

20,1 

17,2 

0,5 (3) 

65,5 

2,8 

17,5 

Interest subsidies spread over time and charged to the  funds set aside for this purpose in the 
annual budgets. 
Interest subsidies paid by the Commission after discounting to a present value, and charged 
to the  budget as a single sum  in the initial year. 
Interest subsidies of ECU  475  500  paid directly by the Commission to the Autonomous Region 
of Madera (Council Decision 95/250/EC of 29 June 1995). 

23 

Table 8 

Financial assistance outside the Community  In force or under negotiation at 31.12.1996 

| 

Operations from 

EIB resources 

Operations  from 

budget  resources 

(ECU million) 

Balance of  payment 

assistance (4) 

Agreement 

Second Financial Protocol 

Fourth Lomé Convention 

Council Decision 
Council Decision 

Council Decision (7) 

Euro-Medterranean 
partnership (7) 

End of 

period 

2000 

2000 

1997 

2000 

2000 

Special financial cooperation 
not yet in force 
Fourth Financial Protocol 
Fourth Financial Protocol 

Council Decision (7) 

2000 
1998 
1998 

2000 

Risk  capital 

Non-repayable 

ECSC 

Ceiling 

operations 

aid 

Granted 

Disbursed 

1693 

1658 

35 
300 

375 
3140 

2 310 

750 
30 
50 

3 520 

(2) 

1030 

1000 

30 

(3) 

12102 

11967 

135 

(5) 

(5) 

204 

3460 

200  (8) 

3 425 

(9) 

760 

600  (10) 
160  (11) 

660 

500 
160 

2 
2 

13 
22 

4564  (13) 

2730 

2315 

16 

Financial protocol 

1997 

150 

20  (14) 

250 
125 
400 

40 
80 
100 
1050 

580 
105  (12) 

250 
125 
400 

20 
40 
75 
790 

510 
105 

1650 

1408 

1  250  (15) 

1  133 

60 

285 

55 

60 

185 

30 

ACP States-OCT 
ACP 

OCT 

South Africa 

Mediterranean  countries(6) 
Algeria, Cyprus, Egypt, 
Israel, Jordan, Lebanon, 
Malta, Morocco, Syria, 
Tunisia, Turkey, Gaza 
and West Bank 

Turkey 

Malta 
Cyprus 

CEEC 
Czech Republic 

Solvak  Republic 
Bulgaria 

Estonia 

Latvia 
Lithuania 

Hungary 
Romania 

Albania 

Slovenia 
as 
Former URSS 

Moldova 

Ukraine 

Belarus 

Latin American and 
Asian countries 

1 
| 

Council Decision 
Council Decision (7) 

1997 
2000 

275 
900 

(1) 

Loans attracting interest subsidies from the European Development Fund in the case of projects in the ACP States and the OCT and 
from the gênerai budget of the European Communities in the case of projects in certain Mediterranean countries  The neccessary 
amounts for the interest subsidies are charged to non-repayable aid. 

(2)  Granted and managed by the SB. 
(3)  Granted and managed by the Commission. 
(4)  Cumulated amounts since 1990.  These operations are granted and managed by the Commission 
(5) 
(6)  The amounts available under the previous financial protocols may be used at the same time, whether that involves all of the sums 

Indudng amounts intended for interest subsidies on EIB loans. 

earmarked or residual amounts. 

lrcicativeanK>untcrBrgedtotheron-repa^ 
Inducing amounts reserved for risk-capital operations and interest subsidies for EIB finance to environmental projects. 

(7)  Part of the multi-annual overall mandate approved on 14 April 1997. 
(8) 
(9) 
(10)  Algeria 
(11) 
(12)  Non-repayable advances. 
(13)  PHARE Programme for the period 1996-99, managed by the Commission. 
(14)  Only for interest subsidies for BB loans for transport projects of common interest. 
(15)  Commercial credrts 

Israel 

24 

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 to 31 December 1996) 

1.  Overall situation on 31 December 1996 

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

This report covers the period from  1  July  to 31 December 1996. 

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

a)  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; 

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

At the end  of  1996, 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  31.12.1996 

(ECU  million) 

Ceiling 

Amounts  used 

Balance 

NCI III 

NCI IV 

3  000 

750 

2  862 

669 

138 

(*) 

81 

(*)  The  special  borrowing  of  ECU  100  million  for  European  innovation 

projects  has  not  yet  been  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. 

25 

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  1996.  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 of the contract. 

Distribution  of  loans  signed  by country at  31.12.1996 

(ECU million) 

Country 

NCII 

NCII! 

NCI III 

NCI IV 

NCI 

Total 

Belgium 

Denmark 

Greece 

Spain 

France 

Ireland 

Italy 

Netherlands 

Portugal 

UK 

Total 

66,8 

70,0 

239.0 

479,9 

134,9 

990,5 

Reconstr. 

80,0 

23,6 

63,2 

118,2 

72,3 

23,6 

533,5 

306,1 

187.4 

1 206,0 

424,0 

303,0 

111,2 

69,2 

938,7 

68,4 

1 228,5 

285,7 

598,7 

3  066,3 

3,2 

29,9 

109,3 

9,9 

95,8 

3,2 

39,8 

407,1 

100,6 

114,9 

125,0 

116,6 

473,4 

67,1 

% 

0,4 

8,6 

4,9 

3,0 

19,5 

6,8 

49,5 

0,1 

0,6 

6,6 

997,5 

2 861,6 

668,8 

678,7 

6  197,1 

100,0 

SECTOR 

Productive  sector 

Infrastructure 

Energy 

NCi III 
NCI IV 

52,8  % 
100,0  % 

26,5  % 

20,7  % 

100,0% 
100,0% 

NCI  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, etc. 

No loan transactions have been carried out since 1991. 

26 

STATISTICAL ANNEX 

27 

N CI IV  LOANS 

CEILING:  E CU  750  M I L L I ON ( I) - (SKuattai at  3 1 . 1 2 . 1 9 K) 

Annex 1 

Ref. 

Project description 

Date of 

contract 

ECU 

million  (2) 

DK. 

E 

IF 

it 

UK 

Breakdown by oounby ( 2) 

6 4 *7 

64/87 

68/87 

68/81 

69/B7 

69/87 

7(V87 

7CV87 

70/87 

70/B7 

70/87 

71/87 

71/87 

73/87 

103/87 

105/87 

106/37 

107/87 

107/87 

108/87 

108/87 

110/87 

121/87 

148/87 

1 4 » 87 

148/87 

14SV87 

206/87 

206/87 

207/87 

207/87 

231/87 

6 * *S 

101/88 

101/88 

101/88 

101/88 

103/88 

$03/88 

103/88 

103/S8 

10SVÏ88 

128/88 

135/88 

135/88 

185/88 

185/88 

199/88 

237/S8 

237/88 

237/88 

237/88 

175/89 

119/S0 

119/90 

48/91 

I. LOANS  SIGNED 

FIH (Small  Busmen) P G - WA 

FlH(SmaU  Business) PG-VI/B 

B N L - P M I V /A 

B N L - P M I V /B 

I M I - P M I V /A 

I M l - P M I V /B 

MBDICCR  C E N T O - P M 1 1 V /A 

MBDICCR  CENTR.  - PMI IV/B 

MEDICCR  C E N T R . - P M I I V /C 

MBDICCR. C E N T R - P MI  IV/D 

MEDICCR.  CENTR. - P M I 1 V /E 

INTERBANCA - PMI IV/A 

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 
I N T E R B A N C A - P M I I V /B 
22.07.87 
B H - P GV 
11.12.87 
CENTROBANCA - PMI IV/A 
11.12.87 
CENTROBANCA-PMI IV/B 
05.11.87 
SAN PAOLO Aprindusbia II 
18.12.87 
CREDIOP-PMI1/A 
18.12.87 
CRBDIOP-PMII/B 
18.12.87 
BANCO DINAPOLI - PMI A 
18.12.87 
BANCO DINAPOLI- PMI B 
24.07.87 
B° DESANTANDER - PYMB 
23.07.87 
B° DE BILBAO - PYME 
17.12.87 
EF1BANCA- PMI IV/A 
17.12.87 
EF1BANCA - PMI IV/B 
24.06.88 
EFIBANCA - PMI IV/C 
24.06.88 
BHBANCA-PMUV/D 
17.12.87 
B°DEVIZCAYA-PYMEA 
30.11.88 
B°DEVIZCAYA-PYMEB 
B° ESPANOL DE CREDITO -PYMB A  18.12.87 
B° ESPANOL DE CREDITO-PYME B  18.11.88 
05.02.88 
CREDIT NATIONAL - PMI HI 
INVESTORS IN INDUSTRY - 
28.12.88 
GROUPED LOAN V 
05.10.88 
EFIBANCA-PMI V/A 
05.10.88 
EFIBANCA - PMI V/B 
16.01.89 
EFIBANCA-PMIV/C 
16.01.89 
EHBANCA-PMI V/D 
10.10.88 
MEDICCR. LOMBARDO - PMI A 
10.10.88 
MEDICCR. LOMBARDO - PMI B 
06.02.89 
MEDIOCR LOMBARDO - PMI C 
06.02.89 
MEDICCR LOMBARDO - PMI D 
21.12.88 
BARCLAYS BANKIIGL 
19.12.88 
CENTROBANCA-PMI V/A 
19.12 88 
CENTROBANCA - PMI V/B 
09.12.88 
CRBDIOP-PMIIl/A 
09.12.88 
CREDIOP-PMIIVB 
25.05.89 
BANCO DI SîaLJA - PMI V/A 
25.05.89 
BANCODISICILIA-PMIH/B 
CREDIT INDUSTRIEL ET COMML.  29.11.88 
M - I M WA 
IMI-PMIWB 
IMt-PMIWC" 
IMI-PMÎVI/D 
BARCLAYS BAN3CHI/A 
KREDIETBANKN.V. -GL 
KREDIETBANK.N.V.-GL 
B» ESPANOL DE CREDITO PG PY 

19.12.88 
15.12.88 
05.02.89 
06.02.89 
30.11.89 
20.12.90 
20.12.90 
28.05.91 

31,80 
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 
1334 
4,67 

2,00 

4,60 

M>7 

20,19 

31,64 

4,67 

2,00 

4,55 

1,95 

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

20,00 

20,90 

4,53 

1,94 

4,57 

1.96 

6.79 

2,91 

9,14 

3,92 

45,55 

13,23 

5,67 

4,53 

1,94 

4 , 58 

1,96 

52,32 

9,06 

3,88 

13,72 

5,88 

29,38 

18,04 

5,54 

25,44 

31,80 

31.43 

18,68 

8,01 

37,29 

15.98 

6.19 

5,88 

4,81 

3,27 

18,98 

9.34 

4,00 

9,34 

4,00 

1 3 ^4 

4,67 

2,00 

4,60 

1,97 

4,67 

2,00 

4,55 

1,95 

4,53 

1,94 

4.57 

1,96 

6,79 

2.91 

9,14 

3,92 

13,23 
5,67 
4,53 
1,S>4 
4 38 
1,96 

9,06 
3,88 
13.72 
5,88 

9.91 

20.90 

29,38 

20,19 

31,64 

9.37 

8,60 

12,04 

10,94 

20,00 

5 2 32 

18,04 

5,54 

25,44 

TOTALI 

668,82 

23,58 

«3,23 

118,22 

7232 

285,73 

9,91 

95,83 

H. LOANS  APPROVED, 

AWAITING  SIGNATURE 

BALANCE 

CEILING 

0,00 

81,18 

750,00 

(1) JOi:  271 of I4.03.19S7 ( l am  m i n t ). 

(2)Gsn<isimi»Uirathc»ecicUinrfm<hel»**qtor,a«ycftte 

28 

NCt BORROWING, BY CURRENCY} 

Annex  2 

I A.-Debt outstanding at 31.12.1996 (1 ) 

Currency 

(million) 

Equivalent  in 
ECU million(2) 

ECU 
BEF 
DEM 
ESP 
FRF 
ITL 
LUF 
NLG 
GBP 
CAD 
CHF 
JPY 
USD 
Total 

70.0 

70,0 

304,3 

156,3 

2 100.0 

320.0 

277.5 
11.5 

100.0 

- 

" 

127,0 
15.6 
-
59,1 

-
748.0 

B.- New operations: 01.07.1996 - 31.12.1996 

| 

Date 
of  issue 

Duration 
(years) 

Coupon 

Currency 
(mlffÊon) 

j 

Fresh 
capital (1) 

j 

Re-
financings 

Equivalent  in MECU (3) 

(1) Excluding  ref.nancing operations, designed to reduced the cost of servicing  existing 

debt  initialiy contracted at higher interest rates. 

(2) Exchange  rates as at 31.12.1996. 
(3) Exchange  rates at signature. 

29 

ISSN 0254-1475 

COM(97) 312 final 

DOCUMENTS 

EN 

09  oi 

Catalogue number  : CB-CO-97-299-EN-C 

ISBN 92-78-21542-2 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg 

"2D