Annual Report from the Commission to the Council and to the European Parliament on the borrowing and lending activities of the Community in 1997
Date: 1998-07-03
Institutions: European Commission
Subjects: Community budget, Community loan, EIB loan, EU borrowing, New Community Instrument

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 03.07.1998 
COM(1998) 409 final 

ANNUAL REPORT FROM THE COMMISSION TO THE COUNCIL 
AND TO THE EUROPEAN PARLIAMENT ON THE BORROWING 
AND LENDING ACTIVITIES OF THE COMMUNITY IN 1997 

TABLE OF CONTENTS 

INTRODUCTION 

1. 

BORROWING AND LENDING ACTIVITIES 

1.1 

1.2 

International financial situation 
Ceilings on Community issues 
Borrowing trends 

BORROWING 
1.1.1 
1.1.2 
1.1.3 
LENDING WITHIN THE EUROPEAN UNION 
Investment demand in Europe 
1.2.1 
European Investment Bank (E1B) 
1.2.2 
European Investment Fund (EIF) 
1.2.3 
ECSC 
1.2.4 
New Community Instrument (NCI) 
1.2.5 
Euratom 
1.2.6 
Community medium-term 
1.2.7 

2. 

LENDING IN THIRD COUNTRIES 

financing 

2.1 
2.2 

2.3 

2.4 

2.5 

! 

Balance-of-payments support 
Credit facility for  the CIS 

OVERVIEW 
THE COMMUNITY'S MACROFINANCIAL ACTIVITY 
2.2.1 
2.2.2 
LOANS  COVERED  BY  DECISION  97/256/EC:  Central  and  Eastern  European 
countries,  Mediterranean  countries,  Latin  American  and  Asian  countries,  and  South 
Africa 
2.3.1 
2.3.2 
2.3.3 
2.3.4 
SIGNATARIES TO THE LOMÉ CONVENTION 
2.4.1 
2.4.2 
OTHER COMMUNITY INSTRUMENTS 
2.5.1 
2.5.2 

EIB objectives and priorities 
Lending activity 
Risk sharing 
Cooperation with other institutions 

Euratom 
European Bank for  Reconstruction and Development (EBRD) 

Lending trends for  each major area 
EIB risk-capital operations 

3. 

BUDGETARY IMPACT OF LENDING 

3.1 
3.2 

INTEREST SUBSIDIES 
BUDGET GUARANTEES 
3.2.1 
3.2.2 

Coverage 
Outstanding guarantees at 31 December 1997 

4. 

STATISTICAL ANNEX 

4 

5 

5 
5 
5 
6 
6 
6 
7 
8 
10 
// 
// 
12 

13 

13 
14 
14 
14 

14 
15 
15 
IS 
19 
25 
25 
26 
26 
26 
26 

27 

27 
28 
2S 
29 

31 

i 

LIST OF TABLES 

1-1 Capital borrowed on the international markets 

1-2 Structure of EÏB lending (loan contracts signed) -Geographical distribution 

1-3 EIF activity since its establishment - Breakdown by country 

1-4 ECSC loans in  1997 

1-5 NCI loans as at 31 December  1997 

2-1 Financing outside the Community in  1997 

2-2 Breakdown by country and sector of EIB lending in Central and Eastern Europe 

, 

2-3 Breakdown by country and sector of EIB lending in the Mediterranean countries 

, 

2-4 Breakdown by country and sector of EIB lending in Latin America and Asia 

2-5 Share of PHARE and IFIs in projects financed by EIB in Central and Eastern Europe 

2-6 Share of IFIs in projects financed  by EIB in the Mediterranean countries 

2-7 Mutual interest of projects signed in  1997 in Latin America and Asia 

2-8 EIB loans signed in  1997 in Central and Eastern Europe (CD 97/256/EC) 

2-9  EIB loans signed in  1997 in the Mediterranean countries (CD 97/256/EC) 

2-10  EIB loans signed in  1997 in Latin America and Asia (CD 97/256/EC) 

3-1 Capital outstanding on guaranteed operations (at 31.12.1997) 

4-1 Trend of borrowing and lending in the Community 

4-2 Community borrowings outstanding 

4-3 Community borrowings in  1997,  by currency 

4-4 Lending in the Community  in  1996 and  1997,  by sector and instrument 

4-5 Financing in the Community by the EIB in  1996 and  1997 by economic objective 

4-6 Geographical breakdown of lending (signatures) in the Community in 1996 and  1997 

4-7 Breakdown of NCI loans, by country at 31.12.1997 

4-8 Breakdown of NCI loans, by currency: amounts outstanding as at 31.12.1997 

4-9  Interest subsidies paid out in the Community by the various Community mechanisms  1977-97 

4-10 Financial assistance outside the Community in force or under negotiation at 31.12.1997 

....5 

8 

........9 

,...10 

,A\ 

13 

16 

17 

18 

20 

..21 

22 

...23 

24 

25 

30 

32 

33 

34 

34 

35 

36 

37 

37 

38 

39 

- J-

INTRODUCTION 

The Council  decisions establishing the New Community  Instrument  (NCI)1 and the 
1. 
lending  instruments  for  research  and  Euratom  activities2 provide  for  the  Commission  to 
inform  the  Council  and  Parliament  each  year  of  the  use  made  of  these  instruments.  In 
addition,  Parliament, 
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.  Decisions  83/200/EEC  (NCI III)  and  87/182/EEC  (NCI IV) 
stipulate that information  must be provided on a six-monthly basis on the rate of utilisation 
of the authorised ceilings. 

in 

These activities for  1997, including the second half of the same year for the NCI, are 

described in Chapter  1  of this report. 

Since  1997 the  Commission  has  been  required  pursuant  to  a Council  Decision4  to 
2. 
inform  the  Council  and  Parliament  on  an  annual  and  a  six-monthly  basis  of the  situation 
regarding  EIB loans guaranteed  by the  Community  budget  in  Central  and  Eastern  Europe, 
in  the  Mediterranean  countries,  in  the  Latin  American  and  Asian  countries  and  in  South 
Africa.  With  a view  to  providing  an  overview  of the  EU's  external  activities,  this  report 
also  gives  a brief  summary  of macrofinancial  assistance  given  by  the  Community  to  third 
countries, of the EIB's activities in the ACP states and of the EBRD's activities. 

These activities are described in Chapter 2 of this report. 

3. 
With  a  view  to  complying  with  the  information  and  monitoring  requirements 
imposed  by the Council  and Parliament regarding utilisation  of the Community  budget  for 
the Community's borrowing and lending activities, Chapter 3 of this report provides details 
of  the  budgetary  impact  of  interest  subsidies  paid  and  of  the  outstanding  amount  of 
guarantees granted in connection with the various financial instruments mentioned above. 

' 

2 
3 
4 

Decision 78/870/EEC (OJ L 298, 25.10.1978). 
Decision  81/19/EEC (OJ L37,  10.2.1981). 
Decision  81/1013/EEC (OJ L 367, 23.12.1981). 
Decision 82/169/EEC (OJ L 78, 24.3.1982). 
Decision  83/200/EEC (OJ L 112, 28.4.1983). 
Decision 87/182/EEC (OJ L 71,  14.3.1987). 
Decision 77/270/Euratom  (OJ L 88, 6.4.1977). 
Doc. PE/67134 (OJ C 287, 9.11.1981 ). 
Decision 97/256/EC (OJ L 102,  19.4.1997). 

- 4-

1.  BORROWING AND LENDING ACTIVITIES 

1.1 

BORROWING 

7. 7. J 

International financial situation 

The  volume  of  international  financing  continued  to  increase  substantially  in  1997 
following  the  considerable  expansion  recorded  in  1996 and  notwithstanding  the financial 
crisis  which  developed  in  South-East  Asia  in  July.  This  sustained  activity  is  generally 
attributed  to the  low  level  of  long-term  interest  rates  and  inflation,  a US economy  which 
remained buoyant and the better outlook  for Europe, coupled with positive decisions about 
the  introduction  of  the  euro.  These  factors  favoured  bond  issues,  which  increased  in  the 
OECD  area by  31%  following  a rise  of 56% the previous year.  Eurobonds also remained 
attractive,  expanding  by  40%  in  the  wake  of  growth  in  excess  of  64%  in  1996. 
International  loans  also  increased  in  1997  (up  26%)  after  contracting  in  1996  (see  Table 
1-1). 

The  sounder  economic  environment  and the  low  level  of nominal  long-term  interest  rates 
gave  a  boost  to  fixed-rate  issues  floated  at  attractive  rates  and  to  subscriptions  of  shares 
convertible into bonds. 

1-1  Capital  borrowed  on the international  markets 

1. European Institutions 

1990 

12,5 

1991 

16,9 

1992 

15,7 

1993 

20,1 

1994 

15,2 

1995 

13,2 

1996 

18,0 

^m 
23,7 

(ECU billion) 

of which: 
1.1  ECSC 
1.2  EC(1) 
1.3  Euratom 
1.4  EJB 

2, OECD countries (2) 

(by instrument) 
2.1 Bond issues 
of which: Eurobonds 
2.2 Loans 

3. Bond issues by the 

European Institutions 
as a % of OECD 

1,1 
0,4 
-
11,0 

1,4 
1,7 
-
13,7 

1,5 
1,2 
-
13,0 

0,9 
5,0 
-
14,2 

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

0,4 
0,4 
_ 
12,4 

0,3 
0,1 
--
17,6 

0.5 
0,2 
_ 
23.0 

283,8 

340,1 

353,1 

534,5 

563,0 

643,2 

833,6 

1080,0 

180,5 
141,4 
103,3 

240,2 
200,5 
99,9 

257,1 
212,7 
96,0 

410,8 
337,0 
123,7 

360,3 
309,7 
202,7 

357,3 
283,9 
285,9 

558,2 
464,5 
275,4 

733,3 
648,2 
346,7 

6,9 

7,0 

6,1 

4,9 

4,2 

3,7 

3,2 

3,2 

(1) 
(2) 

NCI + balance of payments. 
Calculations based on yearly average exchange rate of the Ecu. 

Source:  OECD and EU 

7.7.2  Ceilings on Community issues 

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  of,  and  improvements  to, nuclear  power 
stations (current Euratom ceiling of ECU 4 billion) and investment in the Community under 
the  NCI  (current  ceiling  of  ECU 6,8 billion)  and  must,  under  the  ECSC  Treaty,  promote 

- 5-

productive  capacity  or  conversion  projects  in  the  coal  and  steel  industries  and,  where 
appropriate,  loans  for  Member  States  with  balance-of-payments  difficulties  (ceiling  of 
ECU  14 billion).  The  amounts  still  available  for  these  borrowing  authorisations  are 
indicated in the paragraphs corresponding to each instrument. 

On the basis of agreements concluded with non-Community  countries, the  Commission 
is  empowered  to  borrow  in  order  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 has been closely involved in 
the financing  of common policies and priorities, to the point where its borrowings  account 
for most Community issues. 

/. 7.3  Borrowing trends 

Against a background of very dynamic financial  markets, issues by the Community 
institutions  continued  to grow in  1997 by 31,7%, following  an increase of 36,4% in  1996. 
This increase is due to issues made both by the EIB and by the ECSC, bringing total  issues 
to  ECU 23,7  billion.  Overall,  the  share  of  Community  issues  remained  unchanged  in 
relation to that of bonds issued in the OECD area.  Demand for currency  arbitrage declined 
as  monetary  convergence  gathered  pace;  as  a  result,  the  currencies  in  which  borrowings 
were  effected  reflect  more  closely  the  volume  of  loans  contracted  in  the  corresponding 
countries (see breakdown in Table 4-3). 

The  amount  of  borrowings  outstanding  as  at  31 December  1997 was  ECU  120,22  billion, 
10%  up  on  1996.  This  increase  was  due  entirely  to  EIB  activity;  the  other  Community 
instruments  continued  to  follow  the disengagement  guidelines  laid down by the  Council  a 
few years previously. 

1.2  LENDING WITHIN THE EUROPEAN UNION 

1.2.1 

Investment demand in Europe 

After  the  downturn  in  activity  recorded  in  1996, the  efforts  made  to  improve  the 
fundamentals  by all the Member  States began to bear fruit.  The Community's real GDP is 
estimated  to  have  grown by  2,7% in  1997, as against  1,8%  the  previous  year.  Economic 
activity  was  underpinned  by  an  upturn  in  real  investment  of  4,5%, as  opposed  to  3% in 
1996.  The  total  value  of  fixed  investments  at  current  prices  in  the  EU  thus  amounted  to 
some  ECU  1 300 billion.  Total  employment  also began  to  rise  again, with  a  concomitant 
downturn in unemployment (from  10,9% to  10,7% of the labour force). 

The financial  crisis  in Asia, which hit European  exports, has only had  a limited  impact on 
economic activity in the Community.  Concern about European claims on the region, which 
surfaced  when stock  market  prices slumped  by  15% in October/November,  was short-lived 
as prices have since shown an increasing trend. 

1.2.2  European Investment Bank (EIB) 

In  1997, in a macroeconomic  climate  more  favourable  to  growth, the  EIB  granted 
loans in the European Union to the tune of ECU 23 billion,  10% up on  1996.  The  funding 
contributed to investment estimated at 4,7% of gross fixed  capital formation  (GFCF) in the 
Union.  Loans were  signed  in all  fifteen  Member  States of the Union.  Loans in the three 
new Member States once again increased significantly  (15%). 

In  reply  to  the  Amsterdam  European  Council's  resolution  of  June  1997  (cf.  OJC  10, 
15.1.98), the  EIB and  its Management  Committee  drew up the  Amsterdam  special  action 
programme  (ASAP), which  comprises  a series  of  innovations,  in particular  acceptance  of 
risk  by  the  EIB  for  innovative  SMEs  with  high  growth  potential.  The  programme  is 
designed to channel some of the Bank's funding  to investments which are labour-intensive, 
such  as health  projects  or  urban  renewal  schemes,  or  future-oriented,  such  as  educational 
and environmental projects and trans-European networks. It aims to increase the  foreseeable 
volume  of  funding  granted  to  these  sectors  by  some  ECU  10  billion  over  the  period 
1997-2000. 

As at 31 December, contracts totalling ECU 880 million had already  been signed, of which 
730  million  for  projects  in  the  education  and  healthcare  sectors  and  150  million  for  the 
special window for SMEs. 

As  regards  the  Bank's  normal  activities,  assistance  towards  regional  development 
amounted to ECU  14,6 billion, or 67% of financing,  and was heavily  concentrated  in areas 
qualifying  for  support  under  the  Structural  Funds.  The  "cohesion"  countries  (Portugal. 
Spain,  Greece, Ireland)  mobilised  ECU 4 billion.  Since the reform  of the  Funds  in  1989, 
loans  for  regional  development  have  totalled  100 billion,  helping  to  finance  investment 
estimated at some 300 billion. 

Financing  for  communications  infrastructures  increased  by  35%, to  ECU 8,8 billion  as 
against 6,5 billion in  1996.  Financing  for the transport sector totalled  6,9 billion (railways, 
motorways, air transport  and  major  one-off  public  works, in particular  the Grand  Belt  and 
Ôresund fixed links). 

Lending  for  telecommunications  networks, in particular  mobile telephones, remained  high 
(ECU 1,9 billion). 

in 

for 

trans-European  networks 

Financing 
and 
transport,  energy 
In  the  last  five  years,  the  EIB  has  made  a  total  of 
telecommunications  continued. 
ECU 42 billion  available  for  the  establishment  of  trans-European  networks  and  their 
extension  to  neighbouring  countries.  At  the  end  of  1997  lending  to  nine  of  the  fourteen 
priority  trans-European  networks  in  the  transport  sector  amounted  to  6,9  billion.  Signed 
projects  for  six  out  of  ten  priority  trans-European  networks  in  the  energy  sector  totalled 
2 billion. 

transfers 

- 7-

1-2  Structure  of E IB  lending (loan contracts signed) -Geographical  distribution 

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

1994 

ECU million  % 
615 
850 
2408 
535 
3 012 
2477 
291 
3100 
5 
400 
90 
1 110 
60 
15 
2455 
261 

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 

1995 
ECU million  % 
665 
825 

3,1 
3,9 
2 715  12,7 
2,5 
525 
2 818 
13,2 
2 207  10,3 
1,5 
16,0 
0,4 
1,5 
1,1 
5,8 
0,8 
1,3 
2 244  10,5 
2,4 

327 
3435 
79 
319 
242 
1232 
179 
273 

519 

1996 

ECU million  % 
657 
688 
3022 
721 
2553 
2 509 
189 
4121 
0 
766 
490 
1294 
302 
846 
2 386 
402 

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 

1997 
ECU million 
1  140 
737 
3518 
730 
2 716 
2 721 
207 
•  3 517 
96 
398 
555 
1350 
401 
925 
3 765 
184 

% 

4,4 
2,8 
13,4 
2,8 
10,4 
10,4 
0,8 
13,4 
0,4 
1,5 
2,1 
5,2 
1.5 
3,5 
14,4 
0,7 

Community total 

17682 

88,7 

18604  86,9 

20946 

90,1 

22 958 

87,6 

Non-Community total 

2246 

11,3 

2 806  13,1 

2 294 

9,9 

3 244 

12,4 

TOTAL LOANS SIGNED 

19 928  100,0 

21410  100,0 

23240  100,0 

26202 

100,0 

Financing  for environmental  protection  projects  was up by 23% on  1996. These  loans, 
which totalled ECU 7,2 billion, were earmarked primarily for water and waste management 
projects (3,1 billion) and urban renewal schemes (2,4 billion). 

Financing  for energy  objectives  was,  to a very  large  extent  (1,6 billion  out of a total of 
ECU 2,6 billion),  channelled  towards  promoting  efficient  use  of  energy,  both  in the 
transport and distribution of electricity and heat and in the industrial sector. 

The year  1997 was also marked by a pronounced  pick-up in loans for industrial  projects 
and  SMEs  (ECU 4,6 billion), 2,5 billion  of which  went to individual  projects  to boost the 
international  competitiveness of Community  industry.  Global  loans allowed  funding  to be 
provided to about  13 000 SMEs, two thirds of which were  located in assisted  regions (see 
Table 4-5). 

1.2.3  European Investment Fund (EIF) 

A) EIF's private/public partnership activities. 

The EIF is an international institution which operates in a private/public  partnership 
with  three  groups  of  shareholders:  the EIB,  the European  Commission  and 76  financial 
institutions  from  all the Member  States of the  European  Union.  It operates  under  market 
conditions  in cooperation  with  banks  and other  financial  institutions.  It  is not a  credit 
institution  but guarantees  loans  made  among  other  things  as part  of the trans-European 
Networks  (TEN) programme  and for financing  SMEs.  The  TENS  programme  consists of 
infrastructure  projects of European interest in the transport, energy and telecommunications 
sectors.  The EIF may give guarantees to financial  intermediaries to cover loans to SMEs in 
all  sectors  without  restriction.  It has also  been  authorised  to become  involved  in equity 
participations in risk-capital  companies  since  1996.  In 1997, three years after  the EIF was 
set  up, there was a marked  upturn  in the volume  of contracts  signed  (50%)  and the Fund 
acquired its first equity participations. 

B) EIF guarantee activities 

In  1997 the  EIF  gave  guarantees  for  an amount  of ECU 769 million  to  TENs and 
SME  projects,  bringing  the  overall  volume  of  operations  signed  since  it  was  set  up  in 
June  1994 to  2,3 billion.  A  breakdown  of this total  by  country  is  given  in the  following 
table. 

1-3 EIF activity since its establishment - Breakdown by country 

E CU  m illion 

I 

[ 
G u a r a n t e es  p a r t i c i p a t i o ns 

Equi ty 

60 
2 
98 
142 
128 
331 
66 
4 99 
4 
35 
59 
204 
30 
9 
4 00 
2 32 
2  300 

( 1) 

2 

3 

6 

3 
12 

26 

B e l g i um 
D a n m a rk 
G e r m a ny 
G r e e ce 
S p a in 
F r a n ce 
I r e l a nd 
Italy 
L u x e m b u rg 
N e t h e r l a n ds 
A u s t r ia 
P o r t u g al 
F i n l a nd 
S w e d en 
UK 
O u t s i de  EU 

T o t al 

(1)  C o u n t ry  in  w h i ch  the  f u nd  is  b a s e d. 

"Growth and environment " programme 

The  sectoral 
breakdown  of 
contracts  is  as  follows:  24,7% 
for  TENs  transport  projects, 
energy 
for  TENs 
22,3% 
for  TENs 
projects, 
telecommunications 
projects 
(total  for  TENs  projects:  67%) 
and 33% for SMEs. 

20% 

outside 

Although 
the  EIF  operates 
mainly  within 
the  Union, 
the 
operations 
Community  are  not  ruled  out. 
In  1997  two  operations  were 
signed  in  Eastern  Europe:  the 
SPP  gas  pipeline  project 
in 
Slovakia 
a  major 
and 
telecommunications  project  in 
Hungary. 

Since the launch in  1996 at Parliament's  initiative of a pilot project  known as the "Growth 
and environment" programme, the EIF has signed agreements with financial  partners in all 
the Member States. 

Under  this  arrangement,  the  EIF  provides  partial  cover  for  bank  loans  granted  to  SMEs 
investing  in projects  of potential  benefit  to the environment.  The cost  of guaranteeing  the 
loans taken out by the SMEs is borne by the Community  budget.  In  1997 this mechanism 
accounted for about 84% of all guarantees concluded with SMEs. 

C)  Equity participations 

At  the  end  of  1997 the  Fund's  commitments  from  its  own  resources  amounted  to 
ECU 26 million.  The total  amount  of the  individual  funds  in which the EIF has  acquired 
participations was 413 million as at 31 December 1997. 

At the European Summit of Heads of State and Government devoted to employment, which 
was held  in Luxembourg  on 20-21 November  1997, the EIB and EIF signed  an  agreement 

-9 

to  establish  a  European  Technology  Facility  (ETF)  to  fund  SMEs  with  strong  growth 
potential  in the high-tech  sector.  In this connection, the EIF received  a mandate  from  the 
EIB  to  manage  on  its  behalf  an  amount  of  ECU  125 million  drawn  from  its  reserves  in 
order to support  investments in a risk capital pool intended for  SMEs using  state-of-the-art 
technology.  By  the  end  of  1997 an  amount  of  6,49  million  had  been  committed  for  that 
purpose. 

1.2.4  ECSC 

As  part  of  the  arrangements  for  the  ECSC s  borrowing  and  lending  activities 
decided  on by the Commission  in June  1994 (OJ C 175, 28 June 1994) ahead of the expiry 
of  the  ECSC  Treaty  on  23 July 2002,  the  payment  of  new  loans  within  the  Community 
increased  sharply in relation to the previous year (see Table 4-6).  This increase was due to 
the  fact  that  1997,  and  in  particular  the  first  half  of  the  year,  was  the  last  period  during 
which ECSC loans could be concluded, except in certain exceptional cases.  The guidelines 
approved  by  the  Commission  in  1994  concerning  the  arrangements  for  the  ECSC's 
borrowing and lending activities in the run-up to 2002 had the effect  of mobilising potential 
borrowers  and  giving  a  (final)  boost  to  this  activity.  It  is  no  longer  possible  to  obtain 
long-term  loans,  i.e.  loans  falling  due  after  2002,  except  for  certain  large  infrastructure 
projects of Community  interest for which state guarantees  can be obtained. 

1-4 ECSC loans in 1997 

Article  54 

Article  56 

Article  95 

Housing 

Total 

(ECU  thousand) 

Belgium 
Danmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
United  Kingdom 
Non-EU 

-
-

49 508 

-
-
-
-
4 048 
68 682 

-

71 851 
122 442 

-
-

20 078 

-

44 606 

-
2 898 
22 090 

-

33 610 
6 746 
-
3 562 
-

73 211 

-

-
-
-
-
-
-
-
-
-
-
-
-
-
-

369 
3 
8 205 
31 
1 589 
1 894 
19 
1 809 
27 
204 
897 
-
2 863 
-

20 447 
3 
102 318 
31 
4 487 
23 985 
19 
39 467 
75 455 
204 
76 310 
122 442 
76  074 
0 

Total 

316 530 

206  800 

0 

17911 

541 241 

Accordingly,  ECSC  loans  in  1997  were  almost  double  the  figure  for  1996.  Demand  for 
loans  was  particularly  strong  as  regards  the  consumption  of  ECSC  products  (Art. 54), 
especially  in  Portugal,  Austria,  Luxembourg  and  Germany.  Conversion  of  declining 
coal/steel  areas  (Art.  56)  has also  made  rapid  progress,  particularly  in  Belgium,  Germany 
and Austria. 

-10-

1.2.5  New Community Instrument (NCI) 

A)  Overall view 

As regards  the NCI,  no new  lending  operations  have been  undertaken  since  1991. 
Repayments have continued and, in some countries, loans have been repaid virtually in full. 
The degree of utilisation of loan ceilings is given in Table  1-5. 

1-5 NCI loans as at 31 December 1997 

Reconstr. 

Reconstr. 

(ECU million) 

Financial agreements 

NCI I 

ITALY 

GREECE 

NCI II 

NCI III 

NCI IV 

TOTAL 

Global loans (1) 

Productive sector (1) 

Infrastructure 

Energy 

Total contracts signed, net (2) 

EIB loans (own resources) 

5,4 

538,5 

446,7 

990,5 

406,8 

2  138,0 

668,8 

3 213.5 

10,6 

598,7 

80,0 

279.4 

465.3 

300,8 

258.3 

15.9 

1 961.9 

1 005.8 

598,7 

351,6 

80,0 

997,5 

2 861.5 

668,8 

6  197.1 

351.6 

Authorised  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 

138,5 

81,2 

281,3 

(1) 
(2) 

Industry and agriculture. 
Contracts signed less cancellations. 

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, deferring  interest 
payments, etc. 

B) Six-monthly rate of utilisation of the NCI 

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 
utilisation  of the tranches of NCI III and IV.  Given that the ceilings have been  practically 
exhausted  (up  to  96%),  the  six-monthly  development  in  question  does  not  alter  the 
consolidated situation described in Table  1-5. 

However, the amount  outstanding  of loans issued  for  that purpose varies every  six months 
in  the  light  of  debt  repayments  and  the  exchange  rate  of  the  currencies  borrowed.  The 
situation for the six-month period from  1  July to 31 December  1997 is set out in Table 4-8. 

1.2.6  Euratom 

In recent  years no  financing  applications  for  nuclear  projects  within  the  Community  have 
been  made  under  the  remaining  ECU  1,1  billion  Euratom  ceiling.  However,  a  number  of 
projects outside the Community are currently being examined (see point 2.5.1). 

11-

1.2.7  Community medium-term  financing 

No  financing  applications  were  made  last  year  under  the  facility  providing 
medium-term  financial  assistance  for  Member  States'  balances  of  payments.  Taking 
account  of  amounts  disbursed  in  the  past  to  Greece  (1  billion  -  first  tranche  of  the  1991 
ECU 2,2 billion loan) and to Italy, (4 billion - first two tranches of the  1993 ECU 8 billion 
loan)  and  repayments  made  in  1997,  the  total  amount  of  loans  outstanding  under  this 
facility  was  4 billion  at  31 December  1997.  The  available  margin  to  be  financed  by 
Community loans on capital markets therefore amounted to  10 billion. 

12-

2.  LENDING IN THIRD COUNTRIES 

2.1 

OVERVIEW 

Financial  support  to third  countries that have concluded  cooperation  agreements  with 
the Community takes a variety of forms depending on the geographical areas concerned and 
the objectives  pursued.  State-to-State  loans are used when the  Community  wishes to help 
place the macroeconomic  fundamentals  of these countries on a sounder  footing;  individual 
loans are used where the aim is to develop infrastructure  and carry out major  improvement 
projects;  global  loans to local banks are used to develop the productive network  of SMEs 
and  stimulate  the  market  economy. 
In  addition,  the  EIB  has  also  devised  financial 
instruments other than traditional  loans in the African,  Caribbean and Pacific  countries and 
in  the  Mediterranean  countries,  in  particular  equity  participations  in  SMEs  with 
development potential.  These instruments are laid down in Council regulations or decisions 
spelling  out  the  implementing  arrangements  applicable  to  each  geographical  area 
concerned. 

The  mandates  vested  in  the  EIB  as  regards  Central  and  Eastern  European  countries 
(CEECs), Mediterranean  countries, Latin American and Asian countries, and  South  Africa 
were renewed on 14 April  1997 by Decision 97/256/EC, which approved the amounts of the 
new mandates for a three-year period.  The amounts are: ECU 3 520 million for the CEECs, 
2 310 million  for  the  Mediterranean  countries,  900 million  for  Latin  American  and  Asian 
countries and 375 million for South Africa. 

The same decision set up new guarantee arrangements with a view to ensuring that the EIB 
shoulders  a greater  share of the risks associated  with cooperation  with third  countries.  In 
line with the arrangements for operations within the Union, the EIB will henceforth  bear the 
financial and economic risks associated with projects  covered by individual,  non-sovereign 
guarantees, while the Community budget will cover the political risk. 

2-1 Financing outside the Community in 1997 

(ECU  million) 

E  I  B 

Balance-of-
payments 

support 

(1) 

EC  and  EDF 
budget 
resources 

(2) 

Own 
resources 

Total 

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

Total 

-
-
95 
100 
-
-
195 

19 
36 
-
-
-
-
55 

41 
1  086 
1  486 
-
378 
199 
3  190  (3) 

60 
1  122 
1  581 
100 
378 
199 
3 440 

(1) 
(2) 

(3) 

Disbursements. 
Granted  and  administered  by  the  EIB  out  of  the  budgetary  resoun 
or  the  European  Development  Fund  (EDF). 
Loans  signed,  of  which  ECU  2  562,5  million  were  signed  under  C 
Decision  97/256/EC  (cf.  Tables  2-2  to  2-4) 

:es  of  the  EC 

ouncil 

- 13 

2.2 

THE COMMUNITY'S MACROFINANCIAL  ACTIVITY 

2.2.1  Balance-of-payments support 

Macrofinancial  assistance in the form of loans is, by its very nature, exceptional and 
forms part of the efforts  of the international  community to provide, in conjunction  with the 
Bretton  Woods  institutions,  balance-of-payments  support  to  certain  countries  grappling 
with transitional difficulties.  In the case of the Community,  such assistance focuses  on the 
neighbouring  regions, such as Central  and Eastern Europe, the new European  states of the 
former  USSR  and  the  countries  of  the  southern  Mediterranean.  Disbursements  for  this 
purpose  are  contingent  on  the  beneficiary  countries  achieving  predetermined  targets.  In 
these  circumstances,  the  number  of  operations  effected  each  year  is  limited,  and  valid 
comparisons cannot be made for the assistance given from one year to the next. 

In  1997 the  Council  decided  to  provide  macrofinancial  assistance  in  the  form  of  loans  to 
Bulgaria (ECU 250 million) and to the Former Yugoslav Republic of Macedonia (FYROM) 
(40 million).  It also decided  to grant  extraordinary  aid  to Armenia  and  Georgia  for  a total 
amount of  170 million. 

to  ECU  195 million. 
As  regards  disbursements,  aid  paid  out 
Disbursements  corresponding 
to 
loans  approved 
ECU  170 million,  of  which  70 million  was  allocated  to  Romania  and  100 million  to 
Ukraine.  In  addition,  under  new  loans  approved  in  1997,  25 million  was  disbursed  to 
FYROM. 

in  previous  years  amounted 

in  1997  amounted 

to 

2.2.2  Credit facility for  the CIS 

No  new disbursements  were made  in  1997 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).  In  addition,  the  drawdown  period  for  this 
credit  facility  has  now  terminated  and,  accordingly,  no  new  disbursements  will  be  made. 
Most  of  the  disbursements  have  already  been  repaid,  with  the  exception  of  the  late 
payments owed by Armenia,  Georgia and Tadzhikistan  and totalling  234 million  inclusive 
of principal and interest. 

2.3 

LOANS  COVERED  BY  DECISION  97/256/EC:  Central  and  Eastern 
European countries, Mediterranean countries, Latin American  and Asian 
countries, and South Africa 

Section 2.3 constitutes the report to be submitted to the European Parliament and the 
Council  in accordance with Articles 2 and 3 of the above-mentioned  Council Decision, i.e. 
it  comprises  the  six-monthly  report  for  the  second  half  of  1997  and  the  annual  report  for 
1997. 

Additionally, the report also covers the last year of the EIB activities in South Africa  under 
Council Decision 95/207/EC of 1  June  1995 (OJ L 131 of 15 June 1995). 

14-

2.3.1  EIB objectives and priorities 

The Bank assists those Central and Eastern European countries whose long-term 
goal  is to prepare themselves  for  EU membership by helping them to create the  economic 
framework to qualify5,  and also provides assistance to Albania. 

The  EIB  gives  priority  to  upgrading,  modernising  and  developing  the  transport, 
telecommunications  and  energy  sectors,  with  particular  emphasis  on  Trans-European 
Networks  (TENs) on the basis of the road  and rail  corridors  defined  by the  Pan-European 
Conference of Transport Ministers as development priorities for the medium term. 

Environmental  issues  related  to  EIB  projects  are  given  priority  in  the  framework  of  the 
gradual  adaptation  of the  legislation  of the  countries  concerned  with  that  of  the  EU.  The 
Bank  also supports  SMEs and other industrial  initiatives, in particular  when  involving  EU 
partners either directly or through its global loan instrument. 

In  the  Mediterranean  region,  in  addition  to  the  continued  commitment  of  funds  still 
available  under  the  1992-96  bilateral  Financial  Protocols  with  certain  countries  in  the 
region, the Bank's lending  since  1997 has taken place mainly  within  the framework  of the 
Euro-Mediterranean  Partnership,  in support  of the economic  development  of the  countries 
concerned.  Bank  lending  supports  individual  investment  projects  and,  through  the  global 
loan  mechanism,  smaller  projects  and  SMEs,  while  at  the  same  time  strengthening  the 
financial  sector in the various countries. 

Under  the  terms  of  the  Euro-Mediterranean  Partnership,  EIB  own  resources  lending  is 
complemented by interest subsidies (for  loans in the environmental  sector) and risk capital 
from EU budgetary sources, managed by the Bank. 

In  Latin America  and Asia, the Bank finances projects  which  are of  mutual  interest to 
the countries concerned and the European Union -  cofinancing  with EU promoters,  transfer 
of technology, cooperation  in the fields of energy and environmental  protection. Details of 
the mutual interest of the projects concerned are included in Table 2-7. 

In South Africa,  the Bank's  objective  is to assist the transition  to democratic  rule  initiated 
by South Africa  and contribute to the successful  completion of the country's  reconstruction 
and development programme. 

2.3.2  Lending activity 

During  the  reference  period  the  Bank  signed  22  loan  contracts  in  Central  and 
Eastern Europe for an aggregate amount of ECU  1  466 million (not including a final loan 
contract, signed in March  1997 under a previous lending authorisation, for 20 million). 

In addition  to  its activity  pursuant  to the Council  Decision,  the  Bank  has  set  up  a substantial  Pre-
Accession  Facility  for  lending  from  its  own  resources  without  budgetary  guarantee  to  help  those 
countries which have applied for EU membership. 

-15 

Loans in Poland, Hungary, the Czech Republic and the Slovak Republic accounted for more 
than  80% of EIB lending in the region. The Bank also signed loans pursuant to the Council 
Decision in all of the other CEEC, except Albania (see Table 2-2). 

•  Bank  activity  continues  to  support  the  economic  development  of  the  countries 
concerned,  principally  by  financing  strategic  infrastructure.  One-third  of  the  total 
financing,  ECU  502  million,  was  allocated  to  transport  infrastructure  projects, 
including  the  upgrading  of  the  Czech  section  of the  Berlin-Vienna rail  corridor,  TEN 
roads  development  in  the  Slovak  Republic,  the  modernisation  of  the  airports  of  Sofia 
and  Tallinn,  together  with  a  major  emergency  programme  to  repair  flood  damage  to 
railway infrastructure  in Poland. 

•  Loans in support of telecommunications  projects  in five countries accounted  for  ECU 
357 million,  or one-quarter  of overall  activity. The projects  included  mobile  telephone 
(GSM) investments in Lithuania, the Slovak Republic and Slovenia. 

•  Loans in the energy sector totalled  ECU 70 million and were allocated  to power station 
development in Hungary and the rehabilitation of a district heating system  in the city of 
Bucharest. 

•  Support for industry, at ECU  112 million, included global loans for  smaller projects in 

Poland and Estonia and support for a fibreboard plant in Romania. 

•  Support for general infrastructure  accounted for ECU 425 million, including  substantial 
assistance  for  emergency  flood  damage  reconstruction  in  Poland  and  the  Czech 
Republic. 

2-2 Breakdown by country and sector of EIB lending in Central and Eastern Europe 

Country 

No. of 
loans 

Total loan 
signatures 
(ECUm) 

Transport 

Telecoms 

Energy 

Industry 

General 
infrastructure 

Bulgaria 

Czech  Rep. 

Estonia 

Hungary 

Latvia 

Lithuania 

Poland 

Romania 

Slovak Rep. 

Slovenia 

1 

4 

2 

1 

1 

1 

4 

3 

4 

1 

60 

540 

20 

35 

20 

7 

355 

122 

262 

45 

60 

240 

10 

20 

75 

97 

100 

7 

40 

165 

45 

10 

55 

47 

35 

35 

200 

225 

Total 

22 

1466 
(100%) 

502 
(34,2%) 

357 
(24,4%) 

70 
(4,8%) 

112 
(7,6%) 

425 
(29%) 

The  loans  signed  in  the  Mediterranean  region  show  a  good  spread  over  nine 
countries.  During the reference  period, the Bank  signed  loans for  an aggregate  amount of 

16 

ECU 934 million  pursuant  to  the  Council  Decision  in  all  of  the  Mediterranean  countries 
except Malta6, Israel and Syria (see  Table 2-3). 

•  Transport 

infrastructure 

one-third 
(ECU 300 million) of overall lending, including the renewal of Egypt Air's fleet,  marine 
port  infrastructure  in  Jordan,  road  infrastructure  in  Lebanon  and  Tunisia,  and  railway 
infrastructure  in Morocco and Tunisia. 

investments 

accounted 

almost 

for 

•  More  than  28%  of  total  financing  (ECU  265  million)  was  allocated  to  water  and 

sewerage investments in Lebanon, Morocco, Turkey, Tunisia and Cyprus. 

•  A  large  gasline  project  in  Algeria  accounted  for  more  than  23%  of  overall  lending 
which,  together  with  support  for  an  electricity  control  centre  in  Lebanon,  brought 
support 
lending 
(ECU 229 million). 

to  almost  one-quarter  of  overall 

the  energy 

sector 

for 

• 

15%  of  total  financing  (ECU  140  million)  was  allocated  to  individual  industrial 
projects,  involving  some joint  ventures  with  EU  investors  including,  for  example, a 
cement plant in Egypt; to assisting SMEs in Jordan and Turkey  through the global  loan 
mechanism; and to an industrial estate in Gaza-West Bank. 

2-3 Breakdown by country and sector of EIB lending in the Mediterranean countries 

Country 

No. of 
loans 

Total loan 
signatures 
(ECUm) 

Transport 

Energy 

Environment, 
Water and 
Sewerage 

Industry, 
other, 
mixed 

Algeria 

Cyprus 

Egypt 

Jordan 

Lebanon 

Morocco 

Tunisia 

Turkey 

Gaza-West Bank 

Total 

1 

1 

3 

2 

3 

2 

3 

2 

1 

218 

30 

121 

60 

131 

135 

130 

95 

14 

218 

11 

75 

30 

20 

85 

90 

30 

100 

50 

40 

45 

46 

30 

50 

14 

18 

934 
(100%) 

300 
(32,1%) 

229 
(24,5%) 

265 
(28,4%) 

140 
(15%) 

During the  reference  period,  the  Bank  signed  6 loans  in  Latin  America  and  Asia 
for  an  aggregate  amount  of  ECU  214,5  million,  including  two  loans  totalling  52 million 
signed  in  the  framework  of  the  interim  mandate  1996-97  (see  Table  2-4).  Loans  were 
signed  in Indonesia,  the Philippines, Brazil and Peru, together with one project  of regional 
interest (Andean Pact). 

Loans were signed  in Malta within the framework  of the Fourth Financial  Protocol 

17 

Lending  was  in  support  of  economic  infrastructure  (water  supply,  airport  infrastructure, 
communications),  energy, an industrial  project  (cement), together  with support  for  small 
and medium-sized projects through a global loan. 

2-4  Breakdown 

by  country  and  sector  of  LIB  lending  in  Latin  America  and  Asia 

Country 

No. of 
loans 

Total loan 
signatures 
(ECUm) 

Transport 

Telecoms 

Energy 

55 
377 
32,5 

50 

407 

25 

12 

50 

Industry, 
other, 
mixed 

55 

32,5 

40 

Indonesia 

Philippines 

Brazil 

Peru 

Regional 

Total 

1 

2 

1 

1 

1 

6 

214,5 
(100%) 

25 
(11,7%) 

50 
(23,3%) 

12 
(5,6%) 

127,5 
(59,4%) 

Tables 2-8 to 2-10 at the end of section 2.3 give more details of the loan contracts signed in 
the above regions under Council Decision 97/256/EC. 

In  1997, the Bank signed loan contracts in South Africa  for an aggregate amount of 
ECU  199 million, thus attaining the ceiling of 300 million granted  under the first mandate 
(Council  Decision  95/207/EC). Loans  for  a total  amount  of  104 million  were  allocated  to 
water  and  sewerage  investments  and  a  loan  of  45  million  financed  the  cost  of  exploiting 
adjacent  gas deposits and the installation of associated compression facilities of Mossgas. A 
global  loan  of  50  million  was  also  granted  for  the  financing  of  small  or  medium-scale 
investments. 

During  the  reference  period  the  Bank  did  not  sign  any  finance  contracts  in  South  Africa 
pursuant to Council Decision 97/256/EC. 

2.3.3  Risk sharing* 

During  the  reference  period,  risk  sharing  in  respect  of  EIB  lending  pursuant  to 
Council Decision 97/256/EC reached an overall total of ECU 639,5 million9, or 8,8% of the 
overall lending ceiling and 24,5% of lending to date under the new guarantee scheme. 

Including  one  loan  signed  in  the  framework  of  the  interim  mandate  but  covered  by  the  guarantee 
arrangements  laid down  in Council  Decision 97/256/EC. 
Council Decision 97/256/EC of  14 April  1997 invites the Bank "to aim to cover the commercial risk 
on  25%  of  its  lending  under  this  decision  from  non-sovereign  guarantees  to  be  expanded  upon 
whenever possible insofar as the market permits on an individual mandate basis". 
Taking  account  of an amount  of ECU  122 million  of  lending  in Latin  America  and  Asia  under the 
interim  mandate,  which  amount  is  also  covered  by  the  guarantee  arrangements  laid  down  in  the 
Council Decision . 

- 18 

Details per region are as follows: 

-  In Central and Eastern Europe, risk sharing in respect of EIB lending reached an overall 
total of ECU 444 million, or  12,6% of the lending ceiling for those countries and 30,3% 
of lending to date. 

-  In accordance  with the programming  procedures  inherent  in the Euro-Med  Partnership, 
all  but two projects  have been  signed  with governments  or public bodies. It  is thus not 
surprising to note that, during the reference period, risk sharing in respect of EIB lending 
in the Mediterranean countries reached an overall total of ECU 46 million, or 2% of the 
lending ceiling for those countries and 4,9% of lending to date. 

-  As stated in the last report on EIB operations in Latin America and Asia (COM( 1998)1 ), 
the  new  guarantee  system  defined  by  Council  Decision 97/256/EC  applies  also  to  the 
interim mandate for  lending  in this region  in respect of loans approved  by the Bank but 
not  signed by the date of entry  into force  of the Decision. This concerns  loans  totalling 
ECU  122 million.  Of this  total,  loans  amounting  to  52 million  were  signed  during  the 
reference period, of which a loan of  12 million was in respect of a risk sharing  project. 

During the reference  period, risk sharing in respect of EIB lending in Latin America and 
Asia  (taking  account  of  the  amount  of  ECU  12 million  mentioned  above)  reached  an 
overall  total  of ECU  149,5 million,  or  14,6% of the  lending  ceiling  for  those  countries 
and 69,7% of lending to date in the region under the new guarantee scheme. 

The  regional  tables  at  the  end  of  section  2.3  (Tables  2-8  to  2-10)  identify  the  loans  for 
which  lending  is  covered  by  non-sovereign  guarantees  as  stipulated  in  Council  Decision 
97/256/EC. 

2.3.4  Cooperation with other institutions 

The  Bank's  activities  in  the  countries  of  Central  and  Eastern  Europe  are 
conducted  within  the  framework  of  the  EU  programme,  in  particular  by  financing 
investment aimed at integrating the infrastructure  of the countries concerned with that of the 
EU  and  by  assisting  SMEs,  and  also  provide  assistance  to  Albania.  Whenever  possible, 
cofinancing  is established with other institutions, in particular to meet the above objectives. 
The Bank's activities thus form  part of a concerted  approach that  is being  pursued  in close 
cooperation  with  the  Commission  and,  as  appropriate,  with  the  international  financial 
institutions (IFI) working in the region. 

The Bank cooperates  closely  with the PHARE Programme, with which  it has developed  a 
close  and  fruitful  relationship,  much  appreciated  by  the  beneficiary  countries.  This 
relationship is being reinforced  in the context of the onset of the accession process. 

In  addition  to  frequent  PHARE  assistance  during  the  pre-investment  phase  to  ensure  that 
the necessary  studies and  technical  assistance  are  implemented  in support  of  EIB  projects, 
the Bank also cooperates with PHARE in cofinancing  infrastructure  projects, to which up to 
25%  of  PHARE  resources  may  be  allocated.  During  the  reference  period,  the  Bank  and 
PHARE  cofinanced  a  rail  project  in  the  Czech  Republic  and  PHARE  is  considering 

-19 

cofinancing  an  airport  project  in Bulgaria  and  has  reallocated  funds  for  the  flood  damage 
reconstruction programme in Poland. 

Cooperation between the Bank and other international financial  institutions will continue to 
be  close  and  systematic,  as  appropriate,  although  their  lending  activity  in  the  region  is 
declining,  in  line  with  their  graduation  policy  and  market  developments.  During  the 
reference  period, the EBRD has contributed  to a rail project  in the Czech Republic  and an 
airport project  in Estonia, while the World Bank (IBRD) has approved a contribution to the 
flood damage reconstruction programme in Poland. 

The contributions of PHARE and the other IFIs to projects financed by the EIB are shown 
in the table below (figures in ECU million). 

2-5  Share  of  PHARE  and  IFIs  in  projects  financed  by  EIB  in  Central  and  Eastern 
Europe 

Country 

EIB 

PHARE 

EBRD 

IBRD 

TOTAL 

Bulgaria 

Czech Rep 

Estonia 

Poland 

Total 

60 

75 

10 

300 

445 

10-1510 
50 

0 
65'2 

125 -130 

0 
50M 
8,5 

0 

58,5 

0 

0 

0 
18513 

185 

70 -  75 

175 

18,5 

550 

813,5-818,5 

In  the  Mediterranean  region  the  Bank  also  cooperates  with  other  international 
financial institutions  and  investors/donors  whenever  possible.  In  many  of  the  operations 
concluded  in  1997,  the  Bank  either  cofinanced  directly  with  other  multilateral/bilateral 
institutions or international  investors, or played a key role in catalysing additional  financial 
resources.  For example, the global loans in Jordan and the project  in Gaza-West Bank are 
being  implemented  in  tandem  with  conditional  global  loans  from  risk  capital  resources, 
under  the  MEDA Regulation;  the  latter  project  is being  cofinanced  with  the  International 
Finance  Corporation  (IFC).  The  project  in  Cyprus  is  cofinanced  with  the  Social 
Development Fund of the Council of Europe; the project  in the energy sector in Lebanon is 
being  cofinanced  with  the  IBRD  while  the  transport  project  is being  cofinanced  with  the 
Saudi Fund. 

Table  2-6  gives  details  of  cofinancing  in  projects  financed  by  the  EIB  (figures  in  ECU 
million). 

10 

il 

12 

13 

Definitive  amount to be decided by PHARE. 
USD 53,6 million. 
Funds reallocated  from  other PHARE projects. 
A contribution  of USD 200 million to the flood  reconstruction  effort  in Poland. 

20-

2-6 Share of IFIs in projects financed by EIB in the Mediterranean  countries 

Country 

EIB 

IBRD 

IFC 

Other14 

Total 

Cyprus 

Lebanon 

Morocco 

Gaza-West Bank 

Total 

30 

31 

131 

14 

206 

0 

8,2 

5 

0 

13,2 

0 

0 

0 

7,6 

7,6 

40,7 

31,2 

45 

12 

70,7 

70,4 

181 

33,6 

128,9 

355,7 

In  addition, cooperation  has been active with other  institutions  which  contributed  to  other 
investments promoted by the Bank during the same period : 

•  Morocco :  ONCF Modernisation  Project (railway) - with IBRD, BAD15, CFD16 ; 
•  Tunisia 
•  Turkey 
•  Egypt 

:  SNCFT II Project (railway)- with IBRD, CFD ; 
:  ADANA Wastewater Project - with German cooperation ; 
:  ECC Grey Cement Project - with IFC and European (BelgjaivSwiss) cofinanciers  ; 

LECICO Ceramics Project -  cofinanced with Finnish Group ; 
•  Lebanon  :  The Tripoli Wastewater Project  is being cofinanced  also with  IBRD, as part 

of a Sectoral Investment Programme. 

Cooperation with  multilateral  and  bilateral  financial  institutions  in  Latin  America 
and  Asia  continues  to  be  good.  The  airports  project  in  the  Philippines  was  appraised 
jointly  with the Asian Development  Bank, which also contributed to its financing  and  will 
participate  in the monitoring  of  its execution  and  of the  sector's  financial  and  institutional 
development.  The energy project  in the Philippines  was cofinanced  with Kreditanstalt  fîir 
Wiederaufbau  (KFW)  and  Commonwealth  Development  Corporation  (CDC),  among 
others.  The  Bank  is  increasingly  centring  its  operations  on  private  projects  involving 
European companies as partners in joint  ventures or shareholders. As mentioned  in section 
2.3.1,  the  Bank  finances  projects  which  are  of  mutual  interest  to  the  countries  in  Latin 
America and Asia and to the Community (see table below). 

14 

15 

16 

EIB  risk  capital,  states,  public  bodies  or  other  financial  sources,  including  own  funds  of 
borrower/prom oter. 
Banque Africaine  de Développement. 
Caisse Française de Développement. 

-21 

2-7 Mutual interest of projects signed in 1997 in Latin America and Asia 

Country 

Project 

Mutual  interest 

Indonesia 

WATER 
SUPPLY 
JAKARTA 
WEST 

Philippines 

SECOND 
AIRPORTS 

BATANGAS 
POWER  -B 

LAFARGE 
ARCOS 
CEMENT 
TELEFONICA 
DEL  PERU 

Brazil 

Peru 

Regional 

The  borrower  is  a joint  venture  between  French  and  Indonesian  private-sector 
interests.  In  addition,  the  project  involves  the  transfer  of  European  technology 
in  the  field  of  water  supply  operation  and  management  and  substantial 
environmental  benefits. 
The  project  guarantee  will  be  provided  by  a  European-led  syndicate  of 
commercial  banks. 
The  project's  mutual  interest  is  based  on  the  required  development  of  these 
airports, particularly  Puerto  Princesa,  as part  of the  country's  contribution  to  an 
important  regional  development  plan  (the  East  ASEAN  Growth  Area  -
EAGA).  The  project  will  also  effectively 
increase  the  capacity  of  Manila 
International  Airport  for  international  flights. 
Support  to  the  EAGA,  of  which  the  project  is  a  good  example,  is  particularly 
encouraged  in  the  Cooperation  Agreement  between  the  EU  and  the  ASEAN 
countries. 
The  borrower  is  a  100%  subsidiary  of  a  British/Philippine  joint  venture.  In 
addition,  the  gas  field  which  is  likely  to  provide  future  fuel  for  the  plant  is  a 
joint  development  of  Shell  and  Occidental  Petroleum,  while  the  turnkey 
contract  for  the  plant  has been  won  by  a major  European  group. 
In  a  wider  context,  the  project  will  promote  the  aims  of  the  EU-ASEAN 
Cooperation  Agreement,  which  includes  particular  reference  to  cooperation  in 
the  fields  of energy  and  improvement  of the  environment. 
The  borrower  is  a joint  venture  between  French  and  Brazilian  private-sector 
interests.  The  project  will  strengthen  the  promoter's  position  in  a  leading 
emerging  market. 
Development  of  telecommunications  in  Peru  will  bring  important  economic 
benefits.  The  provision  of  sufficient  modern  telecommunications  services  is 
recognised  as a major  element  for  economic  development. 
telecommunications 
The  Peruvian  borrower  is  a  subsidiary  of  a  Spanish 
company.  The 
the 
completion  of  Peru's  telecommunications  development  programme  gives 
additional  benefits,  in  terms  of  transfer  of  technology  to  Peru  and  increased 
activity  for  European  telecoms. 
The  projects  financed  will  be  of  mutual  interest  and  thus  support  closer 
DE  cooperation  between  the  EU  and  the  Andean  Group,  in  private  ventures  in 

involvement  of  an  efficient  European  enterprise 

in 

CORPORACION 
ANDDMA 
FOMENTO 
Global  Loan 

eligible  sectors. 

The  EIB  and  the  Commission  activities  in  South  Africa  complement  each  other. 
For  example,  the  Commission  provides  assistance  for  water  supply  programmes  whereas 
the EIB grants loans for  water and wastewater  treatment  and purification;  the  Commission 
assists  in guarantee  programmes  for  small  and  medium-sized  enterprises  financed  through 
the commercial  sector,  whereas the  EIB  finances  loans through  the commercial  banks and 
SMEs through the Industrial Development  Corporation. 

The  EIB  maintains  close  contact  with  the  World  Bank  and  with  national  organisations 
operating  in  South Africa,  among  others the Société de Promotion  et de Participation  pour 
la Coopération Economique (PROPARCO) in France and the Commonwealth Development 
Corporation in the United Kingdom. 

22-

2-8 EIB loans signed in 1997 in Central and Eastern Europe (CD 97/256/EC) 

COUNTRY 

PROJECT 

DESCRIPTION 

LOAN 
AMOUNT 
(ECUm) 

RISK 
SHARING 

Hungary 

MVMLORINQ POWI3lI5LANT 

Bulgaria 

Czech  Rep. 

Estonia 

Latvia 

Lithuania 

Poland 

Romania 

SOFIA AIRPORT 

Modernisation  and  upgrading  of  Sofia 
Airport 

60 

RAIL  CORRIDOR  BERUN-
VENNA-B 
SPTTE1HXMVIUNICATJON 
n-A 
D5  MOTORWAY  PRAHA-
NURNBERG 
FLOODDAMAGE 
RECONDUCTION 

TALUNNAIRPORT 
UNION  BANK  OF  ESTONIA 
Global I juon 

the 

telecommunications 

Upgrading of the Czech section of the Berlin-
Prague-Vienna railway line 
Modernisation  of 
network 
Construction  of  the  section  Plzen-Rozvadov 
of the D5 Prague-Niirnberg Motorway 
Emergency  programme  for  reconstruction 
and 
infrastructure 
following flood  damage 

restoration  of  basic 

Upgrading of Tallinn  International  Airport 
For 
financing  small  and  medium-scale 
environmental,  energy  saving,  infrastructure, 
industrial  and  tourism  projects,  and  SMF 
projects  in general 

Construction  and  operation  of  a  gasoil-fired 
open-cycle  combustion 
turbine  to  supply 
peak  load  power  and  increase  Hungary's 
secondary reserve capacity 

VENTSP1LSPORT 

Improving 
port 
reconstruction, strengthening of quays 

channel 

access, 

TE1.ECOMMUNICATION n 

Development  of  second  phase  of  mobile 
(GSM) telecommunications network 

7 

VERBNSBANK POLSKA Global 
Loan 

FLOODDAMAGE 
REOONSTRUCnON-A 

FLOODDAMAGE 
RECONSTRUCTION-B 

KATOWICE MUNICIPAL 
lNFRASTRUCrUI<E 

THECOMMUNICATIONS 

BUCHAREST DISTRICT 
HEATING REHABIUTATION 
MTJFFRQDUCTIONPLANT 

restoration  of  basic 

For 
financing  small  and  medium-scale 
environmental,  energy  saving,  infrastructure, 
industrial  and  tourism  projects,  and  SME 
projects in general 
Emergency  programme  for  reconstruction 
and 
infrastructure 
following  flood  damage 
Emergency  programme  for  reconstruction 
and 
infrastructure 
following  Hood damage 
Improvements  to  the  urban 
infrastructure 
(roads,  sewage  and  municipal  landfill)  of 
Katowice 

restoration  of  railway 

the 

and  modernisation 

Expansion 
of 
Romanian telecommunications network 
Rehabilitation  of district heating transmission 
and distribution  facilities 
Construction 
density 
fibreboards  (MDF)  and  special  resins  plant 
facility  in the city of Sebes 

a  medium 

of 

Slovak  Rep. 

EUROPEAN ROADS II 

GIJOBIEL 

TTiLECOMMUNICATIONS II 

EUROPEAN ROADS III 

of 

Construction  of  18  km  of 
trunk  roads 
(D2/D61) from  Bratislava to the Austrian and 
Hungarian border 
Development 
telecommunications network 
Modernisation 
telecommunications network 
Construction  of  a  new  by-pass  extension  of 
the  D61  motorway  around  the  centre  of 
Bratislava 

a  mobile 

Slovakian 

(GSM) 

the 

of 

Slovenia 

Total 

MOBITELGSM 

Construction  of  the  first  GSM  network  in 
Slovenia 

45 

23 

75 

100 

165 

200 

10 
10 

35 

20 

35 

225 

75 

20 

40 

35 

47 

25 

65 

100 

72 

No 

No 

Yes 

No 

No 

No 
Yes 

Yes 

No 

Yes 

Yes 

No 

No 

No 

No 

No 

Yes 

No 

Yes 

Yes 

No 

Yes 

60 

540 

20 

35 

20 

7 

355 

122 

262 

45 

1466 

2-9  EIB loans signed in 1997 in the Mediterranean countries (CD 97/256/EC) 

COUNTRY 

PROJECT 

DESCRIPTION 

LOAN 
AMOUNT 
(ECUm) 

RKK 
SHARING 

Algeria 

Cyprus 

Egypt 

Jordan 

SONATRACH GR2 - B 

Construction  of  a  gas  pipeline  between 
Alrar and Hassi R'Mel 

218 

PAFOS SEWERAGE 

Construction  of  a sewage  collection  and 
treatment  system  and  a  stormwater 
drainage system 

EGYPT AIR 
ECC GREY CEMENT 

LECICO CERAMICS 

a  plant 

Modernisation of the Egyptair  fleet 
Construction  of 
for 
production of grey cement 
Construction  of  a  new  plant 
sanitary  ware 
production 
modernisation  of 
existing 
manufacturing  factory 

an 

of 

the 

for 
and 
tile 

INDUSTRIAL 
DEVELOPMENT 
BANK VI Global Loan 
AQABA PORT 

For  financing  small  and  medium-sized 
enterprises  in  the  productive  sectors  of 
the Jordanian economy 
Construction  of two-berth  industrial jetty 
and  purchase  of  container  handling 
equipment 

30 

75 
30 

16 

30 

30 

218 

30 

121 

60 

131 

100 

Lebanon 

TRIPOLI 
WASTEWATER 

Morocco 

AUTOROUTE 
COTIERE DU NORD 

CENTRE NATIONAL 
DE CONTROLE 
ELECTRIQUE 

ONCF 
MODERNISATION 

ONEP EAU POTABLE 
II 

Tunisia 

SNCFTII 

ASSAINISSEMENT DU 
LAC SUD DE TUNIS 
VOIRIES 
PRIORITAIRES 

ADANA 
WASTEWATER 

TURKEY Global Loan 

Turkey 

Gaza-West 
Bank 

Total 

Upgrading  of  storm  and  wastewater 
drainage,  construction  of  a  sewage 
treatment  plant  for  the  Greater  Tripoli 
area 
the 
Renovation 
Northern  coastal  motorway  between 
Beirut and Tripoli 
Construction  of  the  national  electricity 
control centre in Beirut 

extension  of 

and 

increase 

Rehabilitation  and 
the 
capacity  of  sections  of the  main  axes  of 
the Moroccan railway network 
Drinking  water 
communities in Morocco 

for  urban 

supplies 

in 

Rehabilitation  of  the  Tunis-Sfax-Gabes 
railway line 
Dredging and backfill  of the "Lac Sud de 
Tunis" 
Improvement  of  the  road  networks  of 
Greater Tunis and other major cities 

sewer  network 

and 
Extension  of 
construction  of two wastewater treatment 
plants in Adana (South-East of Turkey) 
For  financing  small  and  medium-scale 
enterprises 

20 

11 

85 

50 

25 

40 

65 

45 

50 

GAZA  INDUSTRIAL 
ESTATE 

Development  of  an  industrial  estate  in 
the Gaza Strip 

14 

-24 

135 

130 

95 

14 

934 

No 

No 

No 
Yes 

Yes 

No 

No 

No 

No 

No 

No 

No 

No 

No 

No 

No 

No 

No 

2-10  EIB loans signed in 1997 in Latin America and Asia (CD 97/256/EC) 

COUNTRY 

PROJECT 

DESCRIPTION 

LOAN 
AMOUNT 
(ECUnt) 

RISK 
SHARING 

Indonesia 

Philippines 

Brazil 

Peru 

Regional 

Total 

WATER SUPPLY 
JAKARTA WEST 

Upgrading  and  extension  of  the  water 
supply 
transmission  and  distribution 
system 

55 

SECOND AIRPORTS 

BATANGAS POWER -
B17 

Upgrading,  improving  and  extension  of 
two  airports  in  the  Southern  part  of  the 
Philippines 
Construction  of  a  combined  cycle  power 
plant 

25 

12 

LAFARGE ARCOS 
CEMENT 

Construction  of  a  cement  plant  in  the 
State of Minas Gerais 

32,5 

TELEFONICA DEL 
PERU 

Modernisation  and  extension  of 
Peruvian telecommunications network 

the 

50 

CORPORACION 
ANDINA DE 
FOMENTO Global 
Loan17 

For  financing  medium-sized  projects  in 
the five  member  countries  of the Andean 
Pact 

40 

Yes 

No 

Yes 

Yes 

Yes 

No 

55 

37 

32,5 

50 

40 

214,5 

2.4 

SIGNATORIES TO THE LOME CONVENTION 

2.4.1  Lending trends for  each major area 

Given  the  economic  situation  of  these  countries,  Community  aid  is  of  crucial 
importance.  In Africa,  for  instance, EDF aid amounts on average to ECU  1 100 million a 
year.  If horizontal  aid  (food  aid, NGOs, rain forests,  democracies, etc.)  is also taken  into 
account, together with humanitarian aid and bilateral aid from the Member States, the  figure 
rises  to  about  USD 7  800 million,  i.e.  between  six  and  seven  times  more  than  the  aid 
provided by the other major  Western powers. 

The  second  protocol  to  Lomé  IV,  signed  in  1995  and  concerning  the  period  1995-99, 
brought  Community  aid  to  ECU 14 625 million,  comprising  11 967 million  in  grants, 
1 000 million  in aid  for  risk-capital  transactions  and  1  658 million  in loans from  the EIB's 
own resources.  Delays in implementing the new protocol meant that it was not possible to 
deploy these resources  fully. 

17 

Signed within the framework  of the interim mandate but covered by the guarantee arrangements laid 
down  in Council Decision 97/256/EC. 

25 

In  the  African,  Caribbean  and  Pacific  countries  and  the  Overseas  Countries  and 
Territories  (OCT),  EIB  activity  in  1997  was  limited  to  committing  the  funds  available 
under the first protocol to Lomé IV, i.e. ECU 60 million, of which  19 million in the form of 
risk capital.  Loans were allocated mainly to the energy sector and to the financing  of SMEs 
via global loans.  Loans to the tune of  18 million went to the productive  sector in  1997, of 
which  16 million  in  the  form  of  global  loans  to  benefit  small  and  medium-sized 
is 
investments. 
ECU 2 072 million, of which ECU 812 million in the form of risk capital. 

loans  signed  under 

the  first  protocol 

total  amount  of 

The 

2.4.2  EIB risk-capital operations 

In  addition  to  its  lending  activities,  the  EIB  identifies  opportunities  for,  and 
monitors,  risk-capital  operations  via  specialist  public  or  private  companies  operating 
locally.  In  1997 most of these operations were carried out in East Africa  (ECU  10 million) 
via accredited  financial  intermediaries;  a few  operations  of this kind were  also effected  in 
the Caribbean (ECU 4 million) and in the Pacific area (ECU 2 million). 

2.5  OTHER COMMUNITY  INSTRUMENTS 

2.5.1  Euratom 

The  Council  decision  of  21 March  1994  made  Euratom  loans  available  to  the 
countries  of Eastern  Europe  and to the  CIS countries  with  a view to  improving  the  safety 
and efficiency  of their nuclear power stations.  The amount  of assistance available  is some 
ECU  1.1 billion, taking into account the current ceiling fixed by the Council. 

Several projects are being appraised in Ukraine, Bulgaria and Russia but, given the political 
and technical complexity  of projects of this type, no decision to provide funds  was taken in 
1997. 

2.5.2  European Bank for Reconstruction and Development (EBRD) 

The Community and the EIB are both shareholders and close partners of the EBRD: 
they each hold 3% of the Bank's capital and work in close cooperation so as to ensure that 
operations are mutually complementary. 

According  to  the  EBRD's  annual  report  for  1997,  the  Board  approved  143  new 
projects  in  the  CEECs  and  the  states  of  the  former  USSR,  for  a  total  amount  of 
ECU 4 016 million  (against  119  projects  for  a  total  amount  of  2 855 million  in  1996). 
Funds actually committed during the year totalled 2 315 million, as against 2 188 million in 
1996.  Equity  holdings  as  a  proportion  of  the  Bank's  entire  activities  amounted  to 
436 million, or about  19% of all new operations. 

-26 

3.  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. 

3.1 

INTEREST SUBSIDIES 

Interest subsidies were granted by the Community in the following fields (see Table 4-9): 

a) 
b) 

c) 

industrial conversion of coal and steel areas (Article 56 of the ECSC Treaty); 
reconstruction  in  the  disaster-hit  areas  of  Italy,  Greece  and  Portugal  (Autonomous 
Region of Madeira); 
the "SME facility" adopted at the Copenhagen Summit. 

No  industrial  loans  at  reduced  rates  for  investment  projects  designed  to  promote 
consumption  of  Community  steel  (Article  54, second  paragraph)  have  been  made  since 
1992.  With  regard  to  conversion  loans  in  coal  and  steel  areas  (Article  56),  interest 
subsidies  amounted  to  only  ECU  1,8 million  in  1997, as against  36,8 million  in  1996 and 
11,5 million in 1995. 

The  Council  Decision  on  reconstruction  following  the  Madeira  cyclone  in  1993 
lays down that  interest  subsidies on EIB loans are to be paid by the Commission  direct  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  in  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  small  and 
medium-sized  enterprises in Europe 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  over a five-year period).  The  Council  Decision  of 
19 April  1994  allowed  the  EIB  to  sign  global  lending  agreements  for  that  purpose  with 
financial  intermediaries  in  all  Member States.  The  allocation  of  loans  ended  on 
15 December  1995, the entire budget of ECU  1  billion having been used up. 

By  the  end  of  1997,  payment  of  interest-rate  subsidies  for  the  envisaged 
ECU  1  billion  loan  commitments  had  been  finalised.  An  amount  of  ECU  93  million  in 
subsidies was disbursed  by that time, with more than 4 300 firms benefiting.  The reported 
total job creation amounted to more than 50 000 jobs (for breakdown by country, see graph 
below). 

27-

Job  creation:  forecasts  and  outturn 

(As at 20.8.1997) 

^  forecast 
m outturn 

14 OOMT 

12 00 

B  DK  D 

EL 

E 

F 

IRL 

I 

L  NL  A 

P 

FIN  S  UK 

Interest  subsidies  are  also provided  in  connection  with  EIB  loans  outside  the  Community 
(see Table 4-10). 

3.2 

BUDGET GUARANTEES 

3.2.1  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  195  million 
"balance-of-payments loan" to FYROM, Romania and Ukraine in 1997. 

EIB loans from  own resources granted to third countries under 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  countries,  Central  and  Eastern  European  countries, 
countries  in  Latin  America  and  Asia  with  which  the  European  Union  has  concluded 
cooperation  agreements,  and  South  Africa.  These  mandates  fall  into  two  distinct  phases 
(referred to below as old mandates and new mandates), depending on the extent of coverage 
provided by the Community budget. 

A) Old mandates: 

a)  EIB  loans  to  Mediterranean  countries:  These  loans  are  covered  by  a  global 
Community  guarantee  in respect of 75% of the amount of loans signed.  At the end of  1997 
outstanding  loans  totalled  ECU 3 248  million, of  which  212 million  was accounted  for  by 
loans  in  Spain,  Greece  and  Portugal  (pre-accession)  and 3 036 million  by  loans  in 
non-member Mediterranean countries. 

b) EIB loans to the CEECs:  Loans signed  are covered  in full  by the  Community 
guarantee.  At  31 December  1996  the  EIB  had  advanced  ECU 4 628 million  to  these 
countries out of a total allocation of ECU 4,7 billion under the CEEC agreements.  The total 
amount of loans outstanding at the end of  1997 was  1  889 million. 

2 8-

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 
guaranteed  in  full  by  the  Community  budget.  The  total  amount  agreed  on  was 
ECU  1  025 million. As at the end of  1997 loans signed stood at 810 million and the amount 
of the guarantee outstanding was 385 million. 

d)  EIB  loans  to  South  Africa:  The  Community  has  provided  its  guarantee  for 
loans  granted  by  the  EIB  in  South  Africa  up to  a maximum  amount  of  ECU 300 million. 
These loans are guaranteed in full  by the Community budget.  As at 31 December  1997 the 
EIB  had  advanced  the  full  amount  of  300 million  and  the  amount  of  the  guarantee 
outstanding was 100 million (see Table 3-1). 

B)  New mandates18: 

On  14 April  1997, the Council, acting on a proposal from  the Commission and  after 
Parliament had given its opinion, decided to renew the Community's  guarantee to the EIB 
in  respect  of  the  loans  granted  to  projects  outside  the  Community.  The  total  ceiling  for 
credits opened is equivalent to ECU 7 105 million. 

The  guarantee  was  limited  to  70% of the  total  amount  of  credits  opened,  plus  all 
related sums19.  In addition, the EIB has been asked to aim to cover the commercial risk on 
25%  of  its  loans  with  non-sovereign  guarantees.  In  that  instance,  the  budget  guarantee 
covers  only  political  risks,  namely  the  risks  associated  with  the  non-transfer  of  foreign 
currencies,  expropriation,  armed  conflict  and  civil  unrest.  The  total  amount  of  credits 
opened as at 31 December  1997 was ECU 2 615 million, but the amount outstanding on the 
same date was only  144 million, of which 114 million was for the Mediterranean countries 
and 30 million for the CEECs. 

3.2.2  Outstanding guarantees at 31 December 1997 

At the end of  1997 outstanding guarantees under the Community  budget, details of 
which are given in Table 3-1,  stood at ECU 12,2 billion, more than 63% of which was  for 
countries outside the Community.  Compared with  1996, total outstanding guarantees were 
up  by  ECU 295  million.  However,  the  proportion  of  commitments  to  non-Community 
countries has increased steadily from 37,5%» in 1992 to 63% at present. 

The annual  risk  covered  by the general  budget, which concerns the repayment  of the debt 
(principal and interest), stood at ECU 3 095 million in  1997, of which  1  666 million related 
to third countries. 

18 

19 

Council  Decision  (97/256/EC)  of  14 April  1997 granting  a Community  guarantee  to the  European 
Investment  Bank  against  losses  under  loans  for  projects  outside  the  Community  (Central  and 
Eastern  European  countries,  Mediterranean  countries,  Latin  American  and  Asian  countries,  and 
South  Africa). 
The  arrangements  governing  the guarantee  are set out  in the contract  of guarantee  signed  between 
the Community and the EIB on 25 and 29 July 1997. 

-29 

At  31 December  1997,  amounts  paid  out  by  the  Community  and  not  yet  repaid  by 
defaulting  debtors  stood  at  ECU 309 million,  of which  75 million  is owed  by  some  of the 
republics of the former  Yugoslavia and 234 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 (EC) No 2728/94 of 31 October  1994, by the Guarantee Fund. 

3-Î  Capital outstanding on guaranteed  operations (at 31.12.1997) 

|" 

Operation 

Member  States 
A.  Medium-term  financial  support 
1.  Greece 
2.  Italy 
B.  Guaranteed  loans 
3.  Euratom  (3) 
4.  NCI 
5.  EIB  Mediterranean  (E,  EL, P) 
Non-Community  countries 
A.  Macrofinancial  assistance 
1.  Hungary 
2.  Former  USSR  (4) 
3. Czech  Republic 
4.  Slovak  Republic 
5.  Bulgaria 
6.  Romania 
7.  Estonia 
8.  Latvia 
9.  Lithuania 
10.Israel (5) 
11 .Algeria 
12.Moldova 
13.Ukraine 
14.Belarus 
15.FYROM 
16.Georgie/Armenia 

B. Guaranteed  loans 
17. Mediterranean 
18.CEECS 
19.Latin America,  Asia 
20.South  Africa 

GRAND  TOTAL 

(ECU  million) 

Authorised 
ceiling 

Amount 
outstanding  at 
31.12.1996(1) 

Amount 
outstanding  at 
31.12.1997(2) 

26 330 
14 000 

4  000 
6  830 
1  500 
24  117 
4 625 
180 
1 250 
250 
125 
650 
580 
40 
80 
100 
160 
600 
60 
285 
55 
40 
170 

19 492 
8 672 
8  220 
1925 
675 

50 447 

5 564 

__  — - ^^ 

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 

500 
3 448 

118 
219 
212 
7 674 
2  121 
100 
216 
123 
62 
260 
580 
15 
40 
75 
-
250 
60 
285 
30 
25 
-

5  553 
3  150 
1 919 
385 
100 

11876 

12 171 

( i)  bxcnange  rate as at 31.12.1996. 
(2)  Exchange  rate as at 31.12.1997. 
(3)  Extension  of  Euratom  loans to certain tr 
(4) The  amount outstanding  of  ECU 216  mi 

lird countries (Co 
llion  corresponds 

uncil Decision  of 
to amounts  in pr 

21.3.1994). 
ncipal  owed 

and not  paid by 31.12.1997. 

(5)  Loan  repaid in full  by 31.12.1997. 

-30 

4.  STATISTICAL ANNEX 

31-

4-1 Trend of borrowing and lending in the Community 

1966  1967  1968  1969  1990  1991  1992  1963  1994  1996  1996  1997 

(ECU million; ECU rate at year-eno) 

I.  Borrowing 

ECSC 

1517  1487 

880 

913  1086  1446  1474 

906 

644 

306 

288  474 

Balance Of paymtntS (1 

862  860 

- 3 50  1696  1206  4989 

246  410 

156  195 

Euratom 

NCI 

4 8 8 8 5 3 93 

4

9

.

541  611  945  522 

76 

49 

- 

- 

70 

66 

.. 

- 

-

Total Commission 

3405  3811  1918  1435  1512  3190  2683  5877  1008 

862  453 

686 

6786  5593  7666  9034  10996  13672  12974  14224  14148 12395  17553  23026 

10194  9404  9584  10469  12508  16862  15657  20101  15156 13257  18006  23695 

BB(2) 

Total EC 

II.  Lending 

ECSC 

1069  969  908  700  993  1382  1486  918  674  403  280  541 

Balance of payments (1 

862  860 

- 

350  1695  1209  4969 

245  410 

155  195 

Euratom 

NCI 

443  314 

49 

393  425 

357 

78 

24 

36 

9 

30 

Total Commission 

2767  2568  1265  778  1367  3116  2704  5917  968  813 

436  736 

BB(3) 

Total EC 

6678  6967  8844  11507 12605  14438  16066  17724  17682  18604  20946  22958 

9445  9535  10109 12285  13972  17554  18770  23641  18650  19417 21381  23694 

Note: 

The cffferenoes between total borrowing and lendngbytteCamissionareclueto 

fa  refinancing purposes and to changes in the balanoe of loans not assigned by the end of the year. 

The differences between borrowing and lending by the BB are clue to the fact that BBIendngcperaticjns are financed both 

from borrowings and from the Bank's own  resources. 

(1)  Mechanism for providing financial support for Member States, financial assistance fa  non-member countries and  food aid 

(2) 

(3) 

fathefomerUSSR 

Total resources raised. 

Loans signed out of own resources, noaccount being taken of the g^ararteesprc>/ided b y te 

a  of operations financed out of NCI  resources. 

- 3 2-

4-2 Community borrowings outstanding. 

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

(ECU million) 

ECSC 

BB(2) 

Euratom 

NCI 

Sub-total 

borrowings 

borrowing 

Balance-of-pay. 

Total 

6178 

16 570 

1272 

1747 

25 767 

6 539 

20749 

1680 

3 269 

32 237 

7119 

25007 

1892 

4432 

38450 

7 034 

26 736 

2 013 

4 960 

40 743 

6761 

30271 

2168 

5 202 

44 402 

591 

4610 

4932 

3236 

1890 

26 358 

36 847 

43 382 

43 979 

46292 

6689 

31957 

2 500 

5 229 

46 375 

2 997 

49 372 

6 825 

36 928 

2164 

5 514 

51431 

2459 

53 890 

6 738 

42 330 

1945 

5122 

56135 

2 075 

58210 

6673 

48459 

1687 

4 542 

61361 

(3) 2 045 

63406 

7139 

58 893 

1563 

3 817 

71412 

3 516 

74 928 

7 327 

67 784 

1338 

3 326 

79775 

7 331 

78 661 

1018 

2 202 

89212 

4026 

5204 

7697 

83 801 

94 416 

100267 

6 548 

83 673 

5 966 

87 079 

4677 

96 649 

3637 

110 394 

779 

720 

572 

118 

1570 

92 570 

1113 

94 878 

8 032 

102 910 

748 

102 646 

0  000 

109 312 

218 

114 367 

5 853 

120220 

1982 

1983 

1984 

1985 

1986 

1987 

1988 

1989 

1990 

1991 

1992 

1993 

1994 

1995 

1996 

1997 

(1) 

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

are denominated in national currency, 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. 

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

exchange-rate adjustments. 

As from 1989 including short term. 

As from 1990 including financial assistance for non-member countries. 

(2) 

(3) 

33-

4-3 Community borrowings in 1997,  by currency 

EIB 

ECSC 

NCI  payments(1) 

Balance of 

Total 
Borrowing 

ECU 
BEF 
DKK 
DEM 
GRD 
ESP 
FRF 
IEP 
ITL 
LUF 
NL6 
ATS 
PTE 
FIM 
SEK 
GBP 
Sub-total 
CHF 
JPY 
USD 
ZAR 
Sub-total 
TOTAL 

1 300 (2) 

134 
3 437 
161 
2 599 
2 590 
58 
5 044 
99 
17 

1 092 
45 
189 
2 875 
19 639 
566 
541 
2211 
68 
3 387 
23 026 

- 
19 

127 

3 
23 

23 
75 

4 
123 

77 
474 

- 

195 

-

.. 

.. 

.. 

.. 

.. 
.. 

- 

195 

.. 

.. 

.

.

.

.

.
.

.

.

474 

- 

195 

1495 
19 
134 
3 564 
161 
2 602 
2 613 
58 
5 067 
174 
17 
4 
1 215 
45 
189 
2 952 
20 308 
566 
541 
2211 
68 
3 387 

23 695 

(1) 
(2) 

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

(ECU million) 

1996 
% 

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 

1997 
% 

6,3 
0,1 
0,6 
15,0 
0,7 
11,0 
11,0 
0,2 
21,4 
0,7 
0,1 
0,0 
5,1 
0,2 
0,8 
12,5 
85,7 
2,4 
2,3 
9,3 
0,3 
14,3 
100.0 

4-4 Lending in the Community in 1996 and 1997,  by sector and instrument 

ECSC 

EIB(1) 

Total 

% of total 

(ECU million) 

Productive sector 
of which: allocations 
from global loans 

1996 

1997 

1996 

1997 

1996 

1997 

1996 

1997 

248 

400 

4 477  5 672 

4 725 

6 072 

23,5 

27,1 

178 

207 

2 630  2 545 

2 808 

2 752 

14,0 

12,3 

Infrastructure 
of which: allocations 
from global loans 

20 

60 

10 388  14 085 

10 408  14 145 

51,8 

63,2 

1 535  2 326 

1 535 

2 326 

7.6 

10,4 

Energy 
of which: allocations 
from global loans 

12 

81 

4 945  2 090 

4 957 

2171 

24,7 

9,7 

279 

206 

279 

206 

1.4 

0,9 

TOTAL 

(1) 

280 

541 

19 810  21 847 

20 090  22 388 

100,0 

100,0 

Financing 

granted (indh 

/idual 

loans and allocations 

from global loans). 

34 

4-5 Financing in the Community by the EIB 

in 1996 and 1997 by 

economic objective 

1.  Regional development 

13 805 

100,0 

14 646 

100,0 

1996 
ECU million 

1997 
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  infrastructures 
Industry, services, agriculture 

236 
397 
2 297 
730 
2 352 
1 615 
108 
2 853 
0 
17 
254 
1288 
10 
317 
1 331 

4 076 
4 640 
1 826 
3 263 

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 

440 
269 
1 852 
752 
1 873 
1692 
72 
2 595 
0 
16 
157 
1 352 
331 
506 
2 741 

996 
6  338 
3 037 
4 273 

3,0 
1.8 
12,6 
5,1 
12,8 
11,6 
0,5 
17,7 
0,0 
0,1 
1.1 
9.2 
2,3 
3,5 
18,7 

6,8 
43,3 
20,7 
29,2 

2. Communications  infrastructure 

6 506 

100,0 

8 758 

100,0 

2.1 Transport 
2.2  Telecommunications 

4 500 
2 006 

69.2 
30,8 

6 879 
1 879 

78,5 
21,5 

3. Environmental protection and improvement 

5 875 

100,0 

7 208 

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 

4 209 
1 666 

71,6 
28,4 

4 826 
2 382 

67,0 
33,0 

4 031 

100,0 

2 597 

100,0 

547 
2011 
1 473 

3 776 

13,6 
49,9 
36,5 

-

Number 

11 034 

558 
482 
1 557 

4 556 

., 
2 486 

21,5 
18,6 
60,0 

-

Number 

12 772 

of which: small and medium-sized  enterprises 

2 594 

N.B.  As some financing serves a number of purpo 

ses, the amounts shown  i 

jnder the different 

headings cannot be aggregated. 

-35 

4-6  Geographical  breakdown  of lending  (signatures)  in the  Community  in  1996  and 
1997 

(ECU milli 

on) 

1997 

Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
United Kingdom 
Art. 18 (1) 
Total 

1996 

Belgium 
Denmark 
Germany 
Greece 
Spain 
France 
Ireland 
Italy 
Luxembourg 
Netherlands 
Austria 
Portugal 
Finland 
Sweden 
United Kingdom 
Art.  18(1) 
Total 

ECSC 

EIB 

Euratom 

NCI 

Balance of 
payments 

Amount 

% 

20 
-
102 
-
5 
24 
-
40 
76 
-
76 
122 
-
-
76 
-
541 

1 140 
737 
3 518 
730 
2 716 
2 721 
207 
3 517 
96 
398 
555 
1 350 
401 
925 
3 765 
184 

22 958 

_ 

_ 

_ 

-

-
-
-
-
-
-
-
-
-
-
-
-
-

-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

1 160 
737 
3 620 
730 
2 721 
2 745 
207 
3 557 
172 
398 
631 
1472 
401 
925 
3 841 
184 

4,9 
3,1 
15,4 
3,1 
11,6 
11,7 
0,9 
15,1 
0,7 
1.7 
2,7 
6,3 
1.7 
3,9 
16,3 
0,8 

23 499 

100,0 

ECSC 

EIB 

Euratom 

NCI 

Balance of 
payments 

Amount 

% 

7 
-
33 
-
33 
13 
-
91 
35 
-
1 
-
-
-
51 
-
263 

658 
688 
3 022 
721 
2 553 
2 509 
189 
4 121 
-
766 
490 
1 294 
302 
847 
2 386 
403 
20 946 

_ 

_ 

_ 

-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

665 
688 
3 054 
721 
2 585 
2 523 
189 
4 212 
35 
766 
491 
1294 
302 
847 
2 437 
403 
21 210 

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 
1.9 
100,0 

(1) 

Community projects that cannot be located in a particular Member State ( 
telecommunication cables and satellites, North Sea Oil). 

eg-

36 

4-7 Breakdown of NCI loans, by country at 31.12.1997 

Country 

BB*gum 

Denmark 

Greece 

Spain 

France 

Ireland 

Italy 

NuthBftaiKfe 

Portugal 

UK 

Total 

NCM 

Nad 

Nam 

Narv 

NCI 

Total 

% 

Fteccnstr. 

(BXIrrOon) 

66,8 

-

-

-

70,0 

239,0 

479,9 

-

100,6 

114,9 

-

125,0 

116,6 

-

303,0 

111,2 

69,2 

938,7 

23,6 

63,2 

-

118,2 

72,3 

68,4 

-

80,0 

-

-

-

-

-

23,6 

533,5 

306,1 

187,4 

1206,0 

424,0 

473,4 

1228,5 

285,7 

598,7 

3066,3 

-

-

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 

2  861,6 

668,8 

678,7 

6  197,1 

100,0 

M B:  Loans signed have been converted into "borrowing equivalents". 

ThelccreinthevariciuscurTierae^ 
working day of the quarter preceding the signing of the contract. 

4-8 Breakdown of NCI loans, by currency: amounts outstanding as at 31.12.1997 

Currency 

(million) 

Equivalent  in 

ECU million (1) 

ECU 

BEF 

DEM 

ESP 

FRF 

ITL 

LUF 

NLG 

GBP 

CAD 

CHF 

JPY 

USD 

Total 

70,0 

-

10,0 

-

-

-

-

176,8 

11,5 

-

75,0 

-

-

70.0 

-

5,1 

-

-

-

-

79,4 

17,2 

-

46,7 

-

-

218,4 

(1)  Exchange  rate a! 

5 at  31.12.1997. 

37-

Interest  subsidies  paid  out  in  the  Community  by  the  various  Community 

4-9 
mechanisms  1977-97 

Non-discounted systems (1) 

Discounted systems (2) 

(ECU million) 

ECSCArt.54 ECSCArt.56 
(convers.) 

(restruct.) 

Employment 
in Portugal 

Disaster 
reconstr. 

Year 

EMS 

ERDF 

SME 
facility 

1977 

1978 

1979 

1980 

1981 

1982 

1983 

1984 

1985 

1986 

1987 

1988 

1989 

1990 

1991 

1992 

1993 

1994 

1995 

1996 

1997 

d) 

(2) 

(3) 

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 

1,8 

_ 

-

-

-

-

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 

12,3 

9,3 

6,1 

- 

4,3  (3) 

4,0 

- 

-

200,0 

197,0 

193,2 

209,8 

200,0 

-

-

-

-

-

-

-

-

-

-

-

. 

. 

12,1 

65,5 

2,8 

25,3 

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. 
As from 1996, including the interest subsidy paid direct by the Commission, to the Autonomous 
Region of Madeira (Council Decision 95/250/EC of 29 June 1995). 

38 

4-10  Financial  assistance  outside  the  Community  in  force  or  under  negotiation  at 
31.12.1997 

Operations  from 
BB  resources 

Operati 
budget 

ons  from 
resources 

Balance of  payments 

assistance (4) 

(ECU million) 

Agreement 

End of 
period 

Celling 
d) 

Second Financial Protocol 
Fourth Lome Convention 
Council Decision 

Council Decision (7) 

Euro-Mediterranean 
partnership (7) 

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

Council Decision (7) 

2000 
2000 

2000 

2000 

2000 
1998 
1998 

2000 

1693 

1658 
35 
375 
3140 
2310 

750 
30 
50 

3520 

Financial protocol 

2000 

150 

Council Decision 
Council Decision (7) 
UBhwIity 

1997 
2000 
2000 

275 
900 
3500 

ACPStates-OCr 
ACP 

OCT 

South Africa 

Mediterranean countries^) 
Algeria, Cyprus, Egypt, 
Israel, Jordan, Lebanon, 
Malta, Morocco, Syria, 
Tunisia, Turkey, Gaza 
and Wast Bank 

Turkey 

Malta 
Cyprus 

CEECs 
Albania 
Bulgaria 
Czech Republic 
Estonia 
Hungary 
Latvia 
Lithuania 
Poland 
Romania 
Slovakia 
Slovenia 

FYROM 

CIS; Mongolia 
Former USSR 
Moldova 
Georgia, Armenia 
Ukraine 
Belarus 
Latin American and 
Asian countries 
Pre-Accession facility (lb) 

Risk capital 
operations 

Non-repayable 
aid 

Ceiling 

(2) 

1030 

1000 
30 

(3) 

12102 

11967(5) 
135(5) 

204 
200(9) 

3460(8) 
3425(10) 

600 
600(11) 

2 
2 

13 
22 

4952(12) 

2005 

650 
250 
40 
180 
80 
100 

580 
125 

40 

1820 
1250(15) 
60 
170 
285 
55 

20(13) 

2224(14) 

2796(14) 

(1) 

Loans attracting interest subsidies from the European Development Fund in the cas 
from the general budget of the European Conrrriunitiesinthecaseofenviraimental 
amounts fa the interest subsidies are charged to non-repayable aid. 

«  of projects in the ACP States and the ( 
projects in certain Mediterranean counb 

XT  and 
ies. The neccessary 

(2)  Granted and managed by the EB. 
(3)  Granted and managed by the Commissioi. 
(4)  Cumulated amounts since 1990.  These operations are granted and managed by th 
(5) 
(6) 

Irduding amounts intended fa  interest subsidies on BB loans. 
The amounts available under the previous financial protocols may be used at the Sc 
earmarked a  residual amounts. 

B Commission. 

•ime time, viiether that involves all of the 

sums 

(7)  Part of the rnultiannual overall mandate approved on 14 April 1997. 
(8)  Main items of the financial association agreed at Cannes (1995). 
(9) 

I n d k ^ i v e a r m j r t c r a r p ^ t o t h e r K x w^ 

(10)  Financial reference period 1996-99: Regulation (EC) No 1488/96 (including amount 

s reserved fa  risk-capital transactions 

and interest subsidies fa  EIB funding of environmental projects. 

(11)  Algeria 
(12) 
Indicative programme 1996-99; main items of the financial allocation agreed at Can 
(13)  Reserved fa  interest subsidies fa  loans granted by the EIB to infrastructure projed 
country is also eligible fa  aid from the financial allocation agreed at Cannes (1995) 

nes(1995). 
s of interest both to the Community and 

FYROM.  This 

(14)  Financial reference period 1996-99. 
(15)  Commercial credits. 
(16)  Fa  applicants fa  EU membership:Hungary, Poland, Slovak Republic, Czech Repii 

blic, Bulgaria, Romania, Estonia, Latvia, 

Lithuania, 

Sovenia and Cyprus. 

-39 

ISSN 0254-1475 

COM(98) 409 final 

DOCUMENTS 

EN 

. 

09  10  01 

Catalogue number  :  CB-C0-98-422-EN-C 

ISBN 92-78-37569-1 

Office  for Official  Publications of the European Communities 

L-2985  Luxembourg 

<H>