Report from the Commission to the Council and the European Parliament on the borrowing and lending activities of the Community in 1999
Date: 2000-09-06
Institutions: European Commission
Subjects: EIB loan, cooperation agreement, credit guarantee, third country

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 06.09.2000
COM(2000)524 final

REPORT FROM THE COMMISSION TO THE COUNCIL AND
THE EUROPEAN PARLIAMENT

ON THE BORROWING AND LENDING ACTIVITIES OF
THE COMMUNITY IN 1999

REPORT FROM THE COMMISSION TO THE COUNCIL AND
THE EUROPEAN PARLIAMENT

ON THE BORROWING AND LENDING ACTIVITIES OF
THE COMMUNITY IN 1999

TABLE OF CONTENTS

INTRODUCTION ................................................................................................................. 3

1.

BORROWING ACTIVITIES IN 1999......................................................................... 4

1.1. Community issues.................................................................................................. 4

1.2. Borrowing trends ................................................................................................... 4

2.

LENDING IN THIRD COUNTRIES........................................................................... 5

2.1. Overview ............................................................................................................... 5

2.2. The Community’s Macrofinancial assistance.......................................................... 5

2.3. Lending within the Framework of Council Decision 97/256/EC, as amended by
Council Decisions 98/348/EC and 98/729/EC : Central and Eastern Europe, The
Mediterranean Countries, Asian and Latin American Countries, The Republic of South
Africa,
and
Bosnia-Herzegovina..................................................................................................... 6

Former Yugoslav Republic

of Macedonia

(Fyrom)

The

2.3.1.

2.3.2.

2.3.3.

2.3.4.

EIB objectives and priorities......................................................................... 6

Lending activity............................................................................................ 7

Risk sharing................................................................................................ 10

Cooperation with other institutions ............................................................. 11

3.

BUDGETARY IMPACT OF BORROWING AND LENDING ................................. 14

3.1.

Interest subsidies.................................................................................................. 14

3.2. Budget guarantees................................................................................................ 14

4.

STATISTICAL ANNEX ........................................................................................... 15

2

INTRODUCTION

The Council decisions establishing the various Community lending instruments1,2
1.
require the Commission to inform the Council and Parliament each year of the use made of
these instruments.

that

the appropriations allocated by the Council

However, in view of the moratorium on the construction of nuclear power stations within the
to the New Community
EU, the fact
Instrument (NCI) have been used up and the cessation of ECSC loans as the expiry of the
ECSC Treaty in 2002 approaches, the Commission considers that there is no longer any need
to inform the Council and Parliament of Community lending activities under the instruments
applicable within the Community. This report contains only information concerning the
repayment of loans (see the section on borrowings).

As for lending activities outside the Community, a decision adopted in 1997 requires
2.
the Commission to 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.3

In order to meet this requirement, this report describes these operations for each of the areas
concerned. It also gives a brief summary of macrofinancial assistance provided by the
Community to central and eastern European countries.

1

2
3

Decision 78/870/EEC (OJ L 298, 25.10.1978).
Decision 81/19/EEC (OJ L 37, 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).
Decision 97/256/EEC (OJ L 102, 19.4.1997).

3

1.

BORROWING ACTIVITIES IN 1999

1.1.

Community issues

In order to finance the lending activities decided on by the Council, the Commission is
empowered to borrow funds on the capital market. However, given that the NCI ceilings have
been fully used up, and in view of the moratorium on Euratom activities within the EU and
the approaching expiry in 2002 of the ECSC Treaty, no finance was mobilised on the basis of
these instruments in 1999.The only borrowings last year were for macrofinancial assistance
to central and eastern European countries (CEECs),loans to the African, Caribbean and
Pacific (ACP) countries, measures adopted pursuant to the Mediterranean protocols (MEDA),
and EIB activities inside and outside the Union (in particular CEECs, ACP and MEDA),
which account for the bulk of borrowings in terms of volume.

1.2.

Borrowing trends

In view of the above, borrowings by the European institutions fell in 1999 by 6.7%; EIB
borrowings fell by 5.8%. The total amount of issues was thus
28.5 billion, against
€

€

30.5 billion in the previous year (see able 4-1 in the annex).

Taking into account repayments, cancellations and exchange-rate fluctuations,
amount of net borrowings outstanding as at 31 December 1999 was
on 1998 (see Table 4-2 in the annex).

the total
154.7 billion, 18.2% up

€

Following the adoption of the single currency on 1 January 1999, euro borrowings virtually
quadrupled as compared with 1998, to a level slightly below total borrowings in ecus and in
the currencies of Member States participating in monetary union. The share of the currencies
of the "pre-in" countries fell significantly, while borrowings in dollars and Swiss francs
increased appreciably.

There was also a marked increase in variable-rate borrowings, probably because of monetary
uncertainties and expectations of an increase in the ECB's key rates which actually occurred
much later in 2000.

With regard to the NCI, almost all loans have now been repaid; the corresponding situation
for outstanding borrowings is indicated by currency in Table 4-4 in the annex.

4

2.

LENDING IN THIRD COUNTRIES

2.1.

Overview

Lending designed to provide 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 EU 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 particular, the EIB’s operations in the
central and eastern European countries forms part of the pre-accession strategy designed to
assist the integration process. in the Mediterranean countries, the Bank’s lending comes
under the Euro-Mediterranean partnership; in Latin America and Asia, the Bank continues to
finance projects of common interest; in South Africa, lending is designed to underpin the
programme of reconstruction and development of the country;finally, in the ACP countries,
the Bank’s activities are being developed in the context of the Lomé Convention and those
countries’ privileged relations with the Community.

Table 2-1 Financing outside the Community in 1999 - overview

€

(

million)

Balance-of-
payments
support (1)

EC and EDF
budget
resources (2)

EIB

Own resources

TOTAL

-

-

108

-

-

-

145

56

1467

-

-

-

(3)

(4)

196

745

906

60

310

150

108

1668

2367

341

801

2481

60

310

150

4143

ACP-OCT

Mediterranean basin

CEECs

Balkans

Latin America and Asia

South Africa

Total

(1)

(2)

(3)

(4)

Disbursements.

Granted and administered by the EIB out of the budgetary resources of the EC or the
European Development Fund (EDF).

Including loans to Egypt and Turkey under the Fourth Protocol

Under the pre-accession mechanism.

2.2.

The Community’s Macrofinancial assistance

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. The Community’s assistance focuses on neighbouring regions, such
as central and eastern Europe, the new European states of the former USSR and the countries

5

of the southern Mediterranean. Disbursements are themselves linked to the beneficiary
countries’ meeting objectives in terms of macroeconomic stabilisation and structural reforms.
In these circumstances, the number of operations effected each year is limited, and it is
difficult to make valid comparisons for the assistance given from one year to the next.

€

€

€

20 million), Bosnia-Herzegovina (up to

40 million in grants), Bulgaria (up to
€

In 1999 the Council approved macrofinancial assistance in five cases in the form of loans to
Albania (up to
20 million in loans and up to
€
100 million), the Former Yugoslav Republic of
30 million in grants) and Romania (up to
390 million.
€

200 million). The total amount of loans approved by the Council was therefore

50 million in loans and

Macedonia (up to
€

As regards disbursements, aid paid out in 1999 in the form of loans amounted to
The breakdown is as follows:
Council
€

108 million.
58 million to Ukraine under an operation approved by the
40 million to Bulgaria under an operation approved in 1999 and
€
15 million grant) to Bosnia-Herzegovina under an operation

10 million (accompanied by a

in 1998,

€

€

€

€

approved in 1999

2.3.

Lending within the Framework of Council Decision 97/256/EC, as amended by
Council Decisions 98/348/EC and 98/729/EC : Central and Eastern Europe, The
Mediterranean Countries, Asian and Latin American Countries, The Republic
of South Africa, The Former Yugoslav Republic of Macedonia (Fyrom) and
Bosnia-Herzegovina

Section 2.3 constitutes the report to be submitted to the European Parliament and the Council
in accordance with Articles 2 and 3 of Council Decision 97/256/EC, i.e. it comprises the
six-monthly report for the second half of 1999 and the annual report for 1999.

2.3.1.

EIB objectives and priorities

In central and eastern Europe, the Bank assists the countries which have applied for EU
membership, by helping them to create the economic framework necessary for them to join.In
it assists Cyprus and Malta, which are also applicants,4 Albania, FYROM and
adition,
Bosnia-Herzegovina.

The EIB gives priority to upgrading, modernising and developing the communications 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 within the framework of the
gradual adaptation of the legislation of the countries concerned to that of the EU.

The EIB also supports SMEs and other industrial initiatives, in particular when involving EU
partners either directly or through its global loan instrument.

4

In addition to its activities under the Council decisions, the Bank has recently renewed its substantial
Pre-Accession Facility for lending from its own resources without budgetary guarantee, with a view to
helping the countries which have applied for EU membership.

6

In the Mediterranean region, the Bank’s lending in support of the economic development of
the countries concerned takes place mainly within the framework of the Euro-Mediterranean
Partnership.
loan
mechanism, smaller projects and SMEs, while at the same time strengthening the financial
sector in the various countries.

investment projects and,

It supports individual

through the global

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 Asia and Latin America, the Bank finances projects which are of mutual interest to the
countries concerned and the European Union – co-financing 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 the Republic of South Africa, the Bank’s objective is to contribute to the successful
completion of the country’s reconstruction and development programme.

In FYROM, the Bank focuses on transport infrastructure projects.

In Bosnia-Herzegovina, the Bank finances infrastructure projects.

2.3.2.

Lending activity

In 1999, the Bank signed 19 loan contracts in central and eastern Europe and in FYROM
within the framework of the Council decisions (in addition to substantial lending under the
Pre-Accession Facility) for an aggregate amount of
966 million. Loans for projects in
Bulgaria, Romania and the Slovak Republic accounted for 82% of the aggregate amount. The
Bank signed loans pursuant to the Council decisions in 6 countries.

€

• Bank activity continues to support the economic development of the countries concerned,
€
803 million) was
principally by financing strategic infrastructure. Of total financing 83% (
allocated to the communications sector,
including rehabilitation and completion of
motorways in Romania on Pan-European Transport Corridor IV, modernisation of the
railway networks in the Slovak Republic, Bulgaria and Lithuania, acquisition of aircraft by
the Romanian national airline and extension of the GSM network in Lithuania.

• A loan in support of industry and services, allocated to a car production plant in the

€

Slovak Republic, accounted for 4% of total financing (

40 million).

• In the energy sector, a loan of

€

Romania.

4 million was allocated to a district heating network in

• In the water management and miscellaneous sector,

25 million was allocated to
protection works on the Black Sea coast and the banks of the Danube – a project with
substantial environmental benefits.

€

• Finally, global loans totalling
and the Slovak Republic.

€

50 million were allocated in support of SMEs in Bulgaria

7

Table 2-2
Europe in 1999

Breakdown by country and sector of EIB lending in central and eastern

Country

Number
of loans

Total loans
m)
signed (

€

Energy

Communi-
cations

Water
management &
miscellaneous

Industry &
services

Global loans

Bulgaria

FYROM

Latvia

Lithuania

Romania

Slovak
Rep.

3

1

2

4

6

3

128

60

28

84

396

270

20

15.6%

100%

100%

100%

100%

80

62.5%

60

100.0%

8

28.6%

63

75.0%

28

20

21

21.9%

71.4%

25.0%

4

392

100%

1.0%

99.0%

200

40

30

100%

74.1%

14.8%

11.1%

Overall

19

966

4

803

69

40

50

100%

0.4%

83.1%

7.1%

4.1%

5.2%

In the Mediterranean region, the Bank signed 20 loans in 7 countries in 1999 (not including
two loans in Cyprus under the Pre-Accession Facility and 2 loans - 1 in Egypt and 1 in
Tunisia - under the Fourth Financial Protocols with those countries). Loans for projects in
Egypt and Morocco accounted for 59% of the overall amount.
€

• 17% of total financing (

122 million) was allocated to the water management and
miscellaneous sector. Projects financed included the rehabilitation and extension of
wastewater networks, sewerage networks and treatment plants in Morocco, Egypt and
Turkey.

• In the energy sector, which accounted for 0.7% of total financing (

€

5 million), a gas

pipeline in Egypt received assistance.

• Egypt, Jordan, Morocco and Tunisia benefited from loans to the industry and services
€
sector representing 46% of total financing (
330 million). The loans went to an industrial
gases plant and a hydrocracking unit in Egypt, two chemical plants in Morocco, fertiliser
plants in Tunisia and Jordan, and a phosphate mine in Jordan.

• A roads project in Tunisia and a railways project in Morocco were financed under the
heading of communications and accounted for 23% of total financing in the region
€
(

167 million).

• Global loans in Egypt, Lebanon and Turkey accounted for 13% of overall financing

€

(

95 million).

8

Table 2-3
basin in 1999

Breakdown by country and sector of EIB lending in the Mediterranean

Country

Number
of loans

Total loans
signed (
m)

€

Energy

Communic-
ations

Water
management &
miscellaneous

Industry &
services

Global loans

165

5

30

105

25

100%

3.0%

18.2%

63.6%

15.2%

Egypt

Jordan

Lebanon

Morocco

Gaza-West

Bank

Tunisia

Turkey

5

3

1

6

1

2

2

80

30

100%

100%

261

10

95

78

100%

100%

100%

100%

80

100.0%

30

100.0%

117

44.8%

50

52.6%

100

16.9%

38.3%

44

10

100.0%

45

47.4%

38

122

48.7%

40

51.3%

330

95

Overall

20

719

5

167

100%

0.7%

23.2%

17.0%

45.9%

13.2%

The Bank signed 6 loans in 4 countries of Asia and Latin America, together with one loan
for a project of regional interest (hurricane reconstruction) in Central America, for an overall
amount of EUR 310 million.

• A water treatment project in China accounted for 8% of total financing (EUR 25 million).

• In the energy sector, a gas-fired heat and power plant in Thailand and a gas distribution

project in Mexico accounted for 31% of total financing (EUR 97 million).

• A telecommunications project in Brazil accounted for 19% of total financing (EUR 58

million).

• Loans to industry and SMEs in Brazil accounted for 31% of total financing (EUR 96

million).

9

Table 2-4
America in 1999

Breakdown by country and sector of EIB lending in Asia and Latin

Country

Number
of loans

Total loans
m)
signed (

€

Energy Communications

Water
management &
miscellaneous

Industry &
services

Global
loans

Brazil

Thailand

Central

America

Mexico

China

Overall

3

1

1

1

1

7

154

100%

70

70

100% 100.0%

35

100%

27

27

100% 100.0%

25

100%

58

37.7%

37

59

24.0%

38.3%

35

100.0%

25

100.0%

311

97

58

25

37

94

100%

31.2%

18.6%

8.0%

11.9%

30.2%

€

In 1999 the Bank signed 4 loan contracts in the Republic of South Africa for an aggregate
amount of
45 million to a
50 million to a global loan benefiting small and
communications (roads) project and
medium-scale ventures primarily in the water and sewerage sectors.

55 million going to 2 energy projects,

150 million, with

€

€

€

2.3.3.

Risk sharing5

During 1999 the Bank continued to work towards the risk-sharing objective. The cumulative
total for risk-sharing projects since the start of lending activity within the framework of the
Council decisions was
1 484 million on an overall mandate basis at the end of 1999, i.e.
20.5% of the overall lending ceiling and 21.8% of lending to date. Details per region are as
follows :

€

€

• In central and eastern Europe, risk sharing in respect of EIB lending amounted to
819 million, or 23.3% of the lending ceiling for those countries and 24.3% of lending to
date. In central and eastern Europe, all lending under the Bank’s Pre-Accession Facility is
entirely at the Bank’s risk and, therefore, risk sharing by the Bank will, “by definition”, be
more than 50% of overall lending in the region (Pre-Accession Facility lending, to which
will be added risk-sharing projects signed within the framework of the Council decisions).

5

Council Decision 97/256/EC 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”.

10

€

• In the Mediterranean region, risk sharing in respect of EIB lending amounted to
71 million, or 3.1% of the lending ceiling for those countries and 3.1% of lending under
the mandate (the full amount of which has been signed). In accordance with the
programming procedures inherent in the Euro-Mediterranean Partnership, most projects
have been signed with governments or public bodies. It is thus not surprising that the
risk-sharing total for the Mediterranean countries is relatively low.

€

• In Asia and Latin America, risk sharing in respect of EIB lending amounted to
594 million, or 66% of the lending ceiling6 for those countries and 77.8% of lending to
date.

• No risk-sharing loans have been signed in the Republic of South Africa or in FYROM.

• The risk-sharing arrangements do not apply to lending in Bosnia-Herzegovina.

The regional tables at the end of Section 2.3 identify the loans which are risk-sharing loans.

2.3.4. Cooperation with other institutions

the Bank’s activities are
In the countries which are candidates for EU membership,
conducted within the framework of the EU programme to help the candidate countries prepare
for accession, in particular by financing investment aimed at integrating their infrastructure
with that of the EU and by assisting SMEs. Whenever possible, projects are co-financed with
other institutions. The Bank’s activities thus form part of a concerted approach pursued in
close cooperation with the Commission and, where appropriate, with the international
financial institutions (IFIs) working in the countries concerned.

The Bank cooperates closely with the PHARE programme, with which it has developed a
productive relationship, much appreciated by the beneficiary countries. 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 co-financing infrastructure projects.

The contributions of PHARE and the international financial institutions to projects financed
by the EIB in 1999 are shown in the table below. Additional projects were co-financed within
the framework of the Bank’s Pre-Accession Facility, which is outside the scope of this report.

For south-eastern Europe, the Bank has established a special Balkans Task Force to identify
infrastructure projects which should be financed as a priority, in cooperation with other IFIs
and within the framework of the Stability Pact for the region.

6

€

An amount of
is also covered by the guarantee arrangements laid down in the Council decisions.

122 million of lending in Asia and Latin America under the previous interim mandate

11

Table 2-5

Co-financing in central and eastern Europe in 1999

€

(

million)

Country

Project

Cost

EIB

PHARE

Multilateral
institutions

Bilateral
institutions

Lithuania Modernisation of railway
infrastructure

103.1

40.0

19.4

Other

43.7

Rehabilitation and up-grading
of environmental protection
and other municipal
infrastructure

Rehabilitation and comple-
tion of construction of
motorways on Pan-Euro-pean
Transport Corridor IV

Romania

100.0

25.0

40.0

25.0

10.0

420.0

210.0

50.0

160.0

Total

623.1

275.0

40.0

69.4

25.0

213.7

In the Mediterranean region, the Bank’s operations are conducted within the framework of
EU policy and form part of a concerted approach pursued in close cooperation with the
Commission and, where appropriate, with other
including through co-financing
operations. The contributions of these institutions to projects financed by the EIB are shown
in the table below.

IFIs,

Table 2-6

Co-financing in Mediterranean countries in 1999

€

(

million)

Country

Turkey

Project

Cost

EIB

Multilateral
institutions

Bilateral
institutions

Other7

Expansion and rehabilitation of sewerage
network in Tarsus on south coast;
construction of storm-water drainage
network and biological wastewater treat-
ment facility

82.1

38.0

18.4

25.7

Egypt

Construction of air separation plant near
Alexandria for production of industrial
gases

57.1

15.0

3.7

38.4

Morocco Rehabilitation and extension of

46.2

23.0

11.6

11.6

wastewater and stormwater network and
construction of a treatment plant in
Meknès

Rehabilitation and extension of the
wastewater and stormwater network and
construction of a treatment plant in Agadir

51.6

21.0

13.3

17.3

Jordan

Development of Eshidya phos-phate mine
in south-east Jordan

99.1

30.0

28.0

41.1

Rehabilitation of small and medium-scale
transport, water supply, sewerage and
solid waste disposal infrastructure serving
smaller communities

Gaza-

West
Bank

Total

25.0

10.0

7.4

7.6

361.1

137.0

11.1

71.3

141.7

7

Including funds of States, promoters and commercial banks.

12

In Asia and Latin America, the Bank continues to finance projects of mutual interest to the
country concerned and to the EU. The mutual interest of loans signed in 1999 is described in
the table below.

Table 2-7

Mutual interest of projects in Asia and Latin America

Country

Project

Mutual interest

Brazil

Modernisation and
expansion of a mobile
telephone network in
southern state of Rio
Grande do Sul

The project will be implemented by a company owned, managed and operated
by leading European shareholders. These European companies have made
massive strategic long-term investments in Latin America and in Brazil in
particular; the Bank will support them in this new investment in emerging
markets.

Modernisation of tyre
factory

The project will be implemented by a subsidiary of a leading European
company. A European commercial bank is acting as guarantor.

The global loan will be used to finance investment projects of mutual interest.
Both medium-sized and large companies could be the final beneficiaries. The
availability of long-term funds will widen the range of funding, accelerate
project implementation and reduce the financial burden of such investments,
thus supporting the financial viability of the projects and the long-term
development of the Brazilian economy. The global loan will thereby enhance
the Bank’s support for European companies investing in Brazil.

The borrower is a 100% subsidiary of a joint venture involving Tractebel
Belgium. The project will give Tractebel an additional foothold in the region.
It will also lead to a substantial transfer of European expertise, especially in the
management of a combined-cycle power station, as the turnkey contract to
construct the plant has been awarded to a European group. In a wider context,
the project will promote some of the major aims of the EU-ASEAN
Cooperation Agreement, which includes particular reference to cooperation in
the fields of energy and improvement of the environment.

The global loan is a special EIB contribution to the response of the
international community to Hurricane Mitch. In view of the exceptional nature
of the loan, eligibility for allocations is not restricted to firms with a European
interest in the form of joint ventures or European investments, which would
very much narrow the scope and diminish the utility of the operation.

Financing for small
and medium-scale
ventures

Thailand Construction and

operation of natural
gas-fired combined
heat and power plant
in Chonburi industrial
estate, south-east of
Bangkok

Financing for recon-
struction schemes and
expansion of private-
sector ventures in
areas affected by
Hurricane Mitch

Central
America

Mexico

China

Construction and
operation of gas
distribution network
in Mexico City

The project is a joint venture with strong European participation. It also
involves a significant transfer of technology and will open up the Mexican
market to one of the most important European firms in the sector, thus
enhancing the firm’s competitiveness.

Construction of a
drinking water
treatment plant in
Chengdu (Sichuan
Province)

Compagnie Générale des Eaux Sahide, a French company, holds the majority
interest in the borrower. The project will strengthen European competitiveness
in the fast-growing water sector in China, which is opening up to foreign
private investors. It will also involve the transfer to China of European
expertise in water treatment technology and efficient plant operation and
management.

Wherever possible, the Bank cooperates with other IFIs in Asia and Latin America. The table
below gives details of co-financing.

13

Table 2-8

Co-financing in Asia and Latin America in 1999

€
(

million)

Country

Project

Cost

EIB

Multilateral
institutions

Bilateral
institutions

Other8

China

Construction of a drinking water
treatment plant in Chengdu
(Sichuan Province)

92.8

24.8

23.0

45.0

3.

BUDGETARY IMPACT OF BORROWING AND LENDING

The Community’s general budget
accompanied by interest subsidies and/or budget guarantees.

is affected by lending activities where loans are

3.1.

Interest subsidies

Interest subsidies are granted by the Community in the following fields (see Table 4.7):

(a)

(b)

(c)

under the “SME facility”;

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 Copenhagen European Council in 1993 increased by ECU 3 billion the funds available
for the temporary facility agreed in Edinburgh for major infrastructure projects. Of that
amount, ECU 1 billion was earmarked for measures to strengthen the competitiveness of
small and medium-sized enterprises in Europe and was combined with interest subsidies
linked to job creation. The subsidy amounted to ECU 3 000 per additional job created
(equivalent on average to an interest-rate reduction of two percentage points). The allocation
of loans ended on 15 December 1995, the ECU 1 billion limit having been reached.

No ECSC loans have been signed since 1998, and there has therefore been no further
budgetary impact resulting from Article 56 of the Treaty.

The aggregate amount of interest subsidies granted for the reconstruction of disaster-hit areas
2.2 million. This includes payments made directly by the Commission to
in 1999 was EURO
€
the Autonomous Region of Madeira without EIB involvement (

475 500).

€

Interest subsidies are also provided in connection with certain EIB loans outside the
Community. These are included in the budgetary and EDF resources shown in Table 2.1.

3.2.

Budget guarantees

The situation with regard to guarantees is described in the Commission report on the Budget
Guarantee Fund, which is drawn up every six months by DG BUDG.

8

Including funds of States, promoters and commercial banks.

14

4.

STATISTICAL ANNEX

Table 4-1

Trend of borrowing and lending in the Community

€
(

million)

1991

1992

1993

1994

1995

1996

1997

1998

1999

I. Borrowing

ECSC

1 446

1 474

908

Balance-of-payments (1)

1 695

1 209

4 969

Euratom

NCI

-

49

-

-

-

-

644

402

49

70

386

410

-

66

298

155

-

-

474

195

-

-

-

-

403

108

-

-

-

-

Total Commission

3 190

2 683

5 877

1 165

862

453

669

403

108

13 672 12 974 14 224 14 148 12 395 17 553 23 026 30 098 28 355

16 862 15 657 20 101 15 313 13 257 18 006 23 695 30 501 28 463

EIB (2)

Total EC

II. Lending

ECSC

1 382

1 486

918

Balance-of-payments (1)

1 695

1 209

4 969

Euratom

NCI

-

39

-

9

-

30

674

402

49

-

409

410

-

-

280

155

-

-

541

195

-

-

21

403

-

-

-

108

-

-

Total Commission

3 116

2 704

5 917

1.125

813

435

736

424

108

EIB (3)

Total EC

14 438 16 066 17 724 17 682 18 604 20 946 22 958 25 116 27 765

17 554 18 770 23 641 18 807 19 417 21 381 23 694 25 540 27 873

Note:

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

(1)

(2)

(3)

Mechanism for providing financial support for Member States, financial assistance for non-member
countries and other forms of assistance.

Total resources raised.

Loans signed out of own resources, no account being taken of the guarantees provided by the EIB to
promoters of or operations financed out of NCI resources.

15

Table 4-2

Community borrowings outstanding at the end of each period (1)

EIB (2)

ECSC

NCI

Euratom Sub-total

€

(ECU/

million)

Balance of
payments

Total
borrowing

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

(1)

(2)

(3)

16 570

20 749

25 007

26 736

30 271

31 957

36 928

42 330

48 459

58 893

67 784

78 661

83 673

87 079

96 649

110 394

123 767

148 086

6 178

6 539

7 119

7 034

6 761

6 689

6 825

6 738

6 673

7 139

7 327

7 331

6 548

5 966

4 677

3 637

2 806

2 432

1 747

3 269

4 432

4 960

5 202

5 229

5 514

5 122

4 542

3 817

3 326

2 202

1 570

1 113

748

218

168

130

1 272

1 680

1 892

2 013

2 168

2 500

2 164

1 945

1 687

1 563

1 338

1 018

779

720

572

118

28

12

25 767

32 237

38 450

40 743

44 402

46 375

51 431

56 135

591

4 610

4 932

3 236

1 890

2 997

2 459

2 075

61 361

(3)

2 045

71 412

79 775

89 212

92 570

94 878

102 646

114 367

126 769

150 660

3 513

4 035

8.422

8.492

8 032

6 661

5 853

4 166

4 074

26 358

36 847

43 382

43 979

46 292

49 372

53 890

58 210

63 406

74 925

83 810

97 634

101 062

102 910

109 307

120 220

130 935

154 734

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 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.

16

Table 4-3

Community borrowings in 1999, by currency

EIB

Balance of
payments (1)

Total
borrowing

12 422 (2)

108

12 530

-

-

-

-

-

-

-

-

-

-

-

12 422

186

6 974

15

60

7 236

19 658

7 825

622

-

-

85

116

49

8 697

28 355

6 505

21 850

-

-

-

-

-

-

-

-

-

-

-

108

-

-

-

-

-

108

-

-

-

-

-

-

-

-

108

-

-

-

-

-

-

-

-

-

-

-

12 530

186

6 974

15

60

7 236

19 766

7 825

622

-

-

85

116

49

8 697

28 463

6 505

21 850

€

(

million)

1999
%

44.0

-

-

-

-

-

-

-

-

-

-

-

44.0

0.7

24.5

0.1

0.2

25.4

69.4

27.5

2.2

-

-

0.3

0.4

0.2

30.6

100.0

22.9

77.1

1998
%

13.0

-

15.3

3.6

2.8

-

13.8

-

-

-

1.3

0.4

50.2

0.1

26.5

0.8

0.4

27.8

78.0

21.2

0.4

-

0.2

0.1

0.1

0.1

22.0

100.0

53.0

47.0

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

From 1997 to 1998, issued in euros with payment in ecus.

EURO

BEF

DEM

ESP

FRF

IEP

ITL

LUF

NLG

ATS

PTE

FIM

Total EURO

DKK

GBP

GRD

SEK

Total Pre-ins

Total EU

USD

CHF

JPY

NOK

CZK

ZAR

HUF

Subtotal

TOTAL

Fixed-rate

Variable-rate

(1)

(2)

17

Table 4-4
31.12.1999

Breakdown of NCI loans by currency: amounts outstanding as at

Currency

(million)

Equivalent in

€

million (1)

ECU

DEM
NLG
GBP
CHF
Total

70.0

5.0
51.9
11.5
25.0

70.0

2.6
23.6
18.5
15.6
130.3

(1) Exchange rate as at 31.12.1999.

Interest subsidies paid out by the various Community mechanisms

Discounted
systems (1)

Non-discounted systems (2)

within the Community

SME facility

Art. 54 ECSC
(restruct.)

Art. 56 ECSC
(conver.)

Employment in
Portugal

Disaster
reconstr.

€

(ECU/

million)

-

-

-

-

-

-

-

65.5

2.8

25.3

-

-

-

2.4

3.0

2.6

1.3

1.0

-

-

-

-

-

-

-

-

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

-

-

-

-

-

-

-

-

-

-

-

28.6

27.8

26.6

23.1

20.1

17.2

12.3

9.3

6.1

4.3

4.0

2.8

2.2

(3)

Table 4-5
1987-99

Year

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

(1)

(2)

(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).

18

Table 4-6
FYROM

Country

Romania

Loans signed in 1999 by the EIB in Central and Eastern Europe and

Description

Loan
€
(
m)

Risk
sharing

Rehabilitation of district heating network in municipality of
Cluj-Napoca

Rehabilitation and completion of construction of motorways on
Pan-European Transport Corridor IV

Modernisation of tram network in Bucharest

Renewal of rolling stock and infrastructure completion for
Bucharest underground railway system

Modernisation of tram network in Timisoara

Acquisition of ATR-42 aircraft by flagship carrier TAROM and
rehabilitation of airline’s maintenance hangar at Bucharest Otopeni
Airport

Total

Slovak Rep.

Modernisation of railway network and purchase of rolling stock

Construction of a car production plant at Bratislava

Financing for small and medium-scale ventures

Total

Bulgaria

Total

Latvia

Total

Upgrading of the Plovdiv-Dimitrovgrad-Svilengrad rail line

Construction of wastewater treatment plants and sewage collectors
in three towns in lower Maritsa basin

Financing for small and medium-scale ventures

Upgrading of Ventspils port infrastructure

Refurbishment and upgrading of environmental and other
municipal infrastructure

Lithuania

Modernisation of railway infrastructure

Expansion and development of GSM mobile telecommunications
network

Rehabilitation and modernisation of wastewater treatment plant at
Panevezys

Rehabilitation and upgrading of environmental protection and other
municipal infrastructure

Construction of Skopje bypass and upgrading of north-south
highway

Total

FYROM

Total

Grand Total

19

No

No

No

No

No

No

No

Yes

Yes

No

No

Yes

No

No

No

Yes

No

No

No

3.5

210.0

63.0

60.0

19.0

40.0

395.5

200.0

40.0

30.0

270.0

80.0

28.0

20.0

128.0

8.0

20.0

28.0

18.0

45.0

6.0

15.0

84.0

60.0

60.0

965.5

Table 4-7

Loans signed in 1999 in the Mediterranean countries

Country

Morocco

Total

Tunisia

Total
Egypt

Total
Jordan

Total
Lebanon
Total
Turkey

Total
Gaza-West
Bank

Total
Grand Total

Description

Loan
€
m)
(

Risk
sharing

Track realignment and dualling of rail line between Sidi Kacem and
Fez
Acquisition of port equipment and modernisation of infrastructure at
eight major ports
Modernisation and upgrading of breakwaters and jetties in six of
Morocco’s main ports
Rehabilitation and extension of wastewater and stormwater network
and construction of a treatment plant in Meknès
Rehabilitation and extension of
network and construction of a treatment plant in Agadir
Modernisation and environmental upgrading of
sulphuric acid,
phosphoric acid and fertiliser production units at two OCP chemical
plants in Safi and Jorf Lasfar

the wastewater and stormwater

Improvements to urban road networks of Greater Tunis and other
major cities
Landfill site development for disposal of gypsum (waste product from
fertiliser production at Gabès)

Construction of gas pipeline from Suez Canal to Meet Nama (north of
Cairo)
Upgrading and extension of Alexandria’s wastewater collection and
treatment system
Construction of hydrocracking unit and related equipment at Suez

Construction of air separation plant near Alexandria for production of
industrial gases

Financing of environmentally-friendly infrastructure serving hotel and
other tourism projects in South Sinai and Red Sea areas

Development of Eshidya phosphate mine in south-east Jordan
Construction of production plant for chemical fertiliser and animal feed
in Aqaba
Construction of new manufacturing facilities for bromine and bromine
derivatives at Safi, on southern shore of Dead Sea

Financing for industrial modernisation ventures

Expansion and rehabilitation of sewer network in Tarsus on south
coast; construction of stormwater drainage network and biological
wastewater treatment facility

Financing for combined-cycle plants for autoproduction of heat and
power to cover industrial needs (2 global loans)

Rehabilitation of small and medium-scale transport, water supply,
sewerage and solid waste disposal
infrastructure serving smaller
communities

55.0

30.0

32.0

23.0

21.0

100.0

261.0

50.0

45.0

95.0
5.0

30.0

100.0

5.0

25.0

165.0

30.0
30.0

20.0

80.0

30.0
30.0
38.0

20.0
20.0
78.0
10.0

10.0

719.0

20

No

No

No

No

No

No

No

No

No

No

No

Yes

No

No
No

No

No

No

No

No

Risk
sharing

Yes

Yes

Yes

Yes

No

Loan
€
m)
(

57.7

37.0

59.0

153.7

70.0

70.0

35.0

35.0

26.6

24.8

24.8

310.1

Loan
€
(
m)

40.0

14.6

Yes

Risk
sharing

No

No

No

No

Table 4-8

Loans signed in 1999 in Asia and Latin America

Country

Description

Brazil

Modernisation and expansion of a mobile telephone network in
southern state of Rio Grande do Sul

Modernisation of tyre factory

Financing for small and medium-scale ventures

Construction and operation of natural gas-fired combined heat and
power plant in Chonburi industrial estate, south-east of Bangkok

Financing for reconstruction schemes and expansion of private-sector
ventures in areas affected by Hurricane Mitch, in industrial, service,
energy, telecommunications and environmental sectors

Total

Thailand

Total

Regional
Central
America

Total

Mexico

Total

China

Total

Grand Total

Construction and operation of gas distribution network in Mexico City 26.6

Yes

Construction of a drinking water treatment plant in Chengdu (Sichuan
Province)

Table 4-9

Loans signed in 1999 in the Republic of South Africa

Country

Description

South
Africa

Expansion of Mossel Bay gas field

Interconnection between electricity transmission grids of South
Africa, Swaziland and Mozambique and power supply to Mozal
aluminium smelter in Mozambique

Modernisation and upgrading of toll road between Gauteng and
Kwazulu-Natal

45.0

Financing for small and medium-scale ventures, primarily in the
water and sewerage sectors

50.0

Total

149.6

21