Proposal for a Council Decision granting a Community guarantee to the European Investment Bank against losses under loans for projects outside the Community (Central and Eastern Europe and Western Balkans, Mediterranean countries, Latin America and Asia, and the Republic of South Africa)
Date: 1999-04-23
Institutions: European Commission
Subjects: Community budget, Community loan, EIB loan, credit guarantee, financial management

C 145/10

EN

Official Journal of the European Communities

26.5.1999

Proposal for a Council Decision granting a Community guarantee to the European Investment
Bank against losses under loans for projects outside the Community (Central and Eastern Europe
and Western Balkans, Mediterranean countries, Latin America and Asia, and the Republic of South
Africa)

(1999/C 145/07)

COM(1999) 142 final (cid:151) 1999/0080(CNS)

(Submitted by the Commission on 26 April 1999)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 235 thereof,

Having regard to the Commission’s proposal,

Having regard to the opinion of the European Parliament,

(1) Whereas the European Council meeting in Madrid on 15
and 16 December 1995 confirmed the importance of the
European Investment Bank, hereinafter referred to as (cid:145)the
EIB(cid:146), as an instrument of cooperation between the
Community and Latin America and called on the EIB to
intensify its activities in the region; whereas these projects
should be of interest to both the Community and the
countries concerned;

(2) Whereas the European Council meeting in Florence on 21
the Asia-
in

and 22 June 1996 welcomed the results of
Europe
summit, which marked a
relations between the two continents;

turning-point

(3) Whereas the European Council meeting in Amsterdam on
16 and 17 June welcomed the conclusions adopted at the
Second Euro-Mediterranean Conference, which was held
at Valletta, Malta, on 15 and 16 April 1997 and reaffirmed
the principles and objectives agreed at Barcelona in 1995;

(4) Whereas the European Council meeting in Luxembourg
on 12 and 13 December 1997 launched the enlargement
process with the Central and Eastern European countries
and Cyprus;

(5) Whereas the European Council meeting in Cardiff on 15
and 16 June 1998 welcomed the efforts which the
Republic of South Africa was making to modernise its
economy and integrate it into the world trading system;

(6) Whereas

the

current

completing

the EIB is

loan
programmes for Central and Eastern Europe, the Medi-
terranean Region, Asia and Latin America and the
Republic of South Africa pursuant to Council Decision
97/256/EC of 14 April 1997 (1), as well as the lending
that is governed by the Protocol on Financial Cooperation
with the Former Yugoslav Republic of Macedonia (2);

(7) Whereas

the Council has

invited the EIB to start
operations in Bosnia and Herzegovina; whereas these
operations may be continued,
to a positive
report being drawn up as stipulated in Council Decision
98/729/EC of 14 December 1998 (3);

subject

(8) Whereas

the Cooperation Agreements between the
European Community and Nepal, between the European
Community and Lao PDR and between the European
Community and Yemen entered into force on 1 June
1996, 1 December 1997 and on 1 July 1998 respectively;
whereas
the
European Community and South Korea, signed on 28
October 1996, will enter into force during the first half
of 1999; whereas Nepal, Yemen, the People’s Democratic
Republic of Laos and South Korea and should become
beneficiaries of EIB funding under the Bank’s mandate
for Asia and Latin America;

the Cooperation Agreement

between

(9) Whereas it is appropriate to make certain improvements
in the programmes of operations in respect of duration
and country coverage;

(10) Whereas the Council is calling on the Bank to continue its
operations in support of investment projects carried out
in those countries by offering it the guarantee provided
for in this Decision;

(11) Whereas,

in June 1996, the Commission,

in agreement
with the Bank, represented to the Council a proposal
for a new guarantee system for EIB lending to third
countries (4);

(12) Whereas on 2 December 1996 the Council approved
conclusions on new guarantee arrangements
for EIB
lending to third countries, according to which the
approach of a global guarantee, without distinguishing
between regions and projects,
is approved and a risk-
sharing scheme accepted; whereas under the risk-sharing
scheme the EIB should secure adequate non-sovereign
third-party guarantees for commercial
risks, with the
budgetary guarantee in that case covering only political
risks arising from currency non-transfer, expropriation,
war or civil disturbance;

(13) Whereas the guarantee arrangements will not affect the

excellent credit standing of the EIB;

(14) Whereas EIB financing in eligible third countries should
be managed in such a way as to support Community
the
policies
in
Community’s other

coordination with
instruments; whereas,

enhance
financial

and

to

(1) OJ L 102, 19.4.1997, p. 33.
(2) OJ L 155, 19.5.1998, p. 53.

(3) OJ L 346, 22.12.1998, p. 54.
(4) SEC(96) 1131 of 26 June 1996.

26.5.1999

EN

Official Journal of the European Communities

C 145/11

particular, EIB financing in the candidate countries should
reflect
the priorities established in the accession part-
nership between the Community and those countries;

the Bank have not attained the overall amounts referred to
above, each guaranteed lending period shall be automatically
extended once by six months.

(15) Whereas the Bank and the Commission will adopt the

procedures for granting the guarantee;

(16) Whereas, for the purpose of adopting this Decision, the
only powers provided for by the Treaty are those set out
in Article 235,

HAS DECIDED AS FOLLOWS:

Article 1

The Community shall grant

the European Investment
1.
Bank a global guarantee in respect of all payments not
received by it but due in respect of credits opened,
in
accordance with its usual criteria,
investment projects
carried out
in the Central and Eastern European countries
and Western Balkans, in the Mediterranean countries, in the
Latin American and Asian countries, and in the Republic of
South Africa.

for

This guarantee shall be restricted to 60 % of the aggregate
the credits opened, plus all related sums. The
amount of
overall ceiling of
the credits opened shall be equivalent to
EUR 9 475 million, broken down as follows:

(cid:151) Central and Eastern Europe/

Western Balkans:

(cid:151) Mediterranean:

(cid:151) Asia/Latin America:

(cid:151) Republic of South Africa:

EUR 4 725 million,

EUR 3 100 million,

EUR 1 225 million,

EUR 425 million;

and shall cover a period of three and a half years beginning on
31 January 2000 for Central and Eastern Europe and Western
Balkans, Mediterranean, Asian and Latin American countries
and a period beginning on 1 July 2000 and ending on 31
July 2003 for the Republic of South Africa.

to

an

cover

At the end of this period, the guarantee shall be automatically
of
extended
EUR 9 475 million with the same regional distribution until
31 December 2006 unless the Council decides otherwise on
a proposal from the Commission before the beginning of the
second lending period on 31 July 2003.

additional

overall

ceiling

2.

The countries included above are:

(cid:151) Central and Eastern Europe/Western Balkans: Albania,
and Herzegovina, Bulgaria, Czech Republic,
of Macedonia,
Slovak

Bosnia
Estonia,
Former
Hungary, Latvia, Lithuania,
Republic and Slovenia;

Yugoslav Republic

Poland, Romania,

(cid:151) Mediterranean countries: Algeria, Cyprus, Egygt,

Israel,
Jordan, Lebanon, Malta, Morocco, Syria, Tunisia, Turkey,
and Gaza-West Bank;

(cid:151) Latin America: Argentina, Bolivia, Brazil, Chile, Colombia,
Costa Rica, Ecuador, El Salvador, Guatemala, Honduras,
Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and
Venezuela;

(cid:151) Asia: Bangladesh, Brunei, China,

Indonesia, Laos,
Macao, Malaysia, Mongolia, Nepal, Pakistan, Philippines,
Singapore, South Korea, Sri Lanka, Thailand, Vietnam and
Yemen;

India,

(cid:151) Republic of South Africa.

3.
The European Investment Bank is invited to aim to cover
the commercial risk on 30 % of its lending under this decision
from non-sovereign guarantees to be expanded upon whenever
possible insofar as the market permits on an individual regional
mandate basis.

Article 2

The Commission shall inform the European Parliament and the
Council each year of the loan operations and progress made on
risk-sharing under Article 1(3) and shall, at the same time,
submit an assessment of the operation of the scheme and of
institutions operationg in
coordination between the financial
that area. To that end,
to the
transmit
Commission the appropriate information.

the Bank shall

Article 3

The Bank and the Commission shall fix the terms on which the
guarantee is to be given.

Article 4

If, on expiry of two lending periods mentioned respectively in
subparagraphs 2 and 3 of this paragraph, the loans granted by

This Decision shall take effect on the day of its publication in
the Official Journal of the European Communities.