Report from the Commission to the budgetary authority on guarantees covered by the general budget - situation at 31 December 2000
Date: 2001-07-05
Institutions: European Commission
Subjects: Community loan, general budget, insured risk

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 05.07.2001
COM(2001) 374 final

REPORT FROM THE COMMISSION
TO THE BUDGETARY AUTHORITY

on guarantees covered by the general budget
- situation at 31 December 2000

TABLE OF CONTENTS

Commission Report to the budgetary authority on guarantees covered by the general budget -
situation at 31 December 2000 ............................................................................................... 1

Part One: Events since the report at 30 June 2000, the risk situation and activation of budget
guarantees .............................................................................................................................. 5

1.

1.1.

1.2.

2.

2.1.

2.2.

2.3.

Introduction: types of operation ................................................................................ 5

Operations with macroeconomic objectives .............................................................. 5

Operations with microeconomic objectives............................................................... 5

Events since the report at 30 June 2000 .................................................................... 5

Tajikistan ................................................................................................................. 6

Moldova................................................................................................................... 6

Community Guarantee to the European Investment Bank for loans for projects in
Croatia...................................................................................................................... 6

2.4.

EIB-Turkey .............................................................................................................. 6

3.

3.1.

3.2.

Risk situation............................................................................................................ 6

Amount outstanding at 31 December 2000 ............................................................... 7

Maximum annual risk borne by the Community budget: operations disbursed at
31 December 2000 ................................................................................................... 8

3.3.

Maximum theoretical annual risk borne by the Community budget........................... 8

4.

4.1.

4.2.

4.3.

5.

6.

7.

Activation of budget guarantees.............................................................................. 12

Payments from cash resources ................................................................................ 12

Activation of the Guarantee Fund ........................................................................... 12

Arrears at 31 December 2000 ................................................................................. 13

Analysis of the Community's theoretical lending and guarantee capacity in respect of
non-member countries ............................................................................................ 13

Situation of the Guarantee Fund at 31 December 2000 ........................................... 14

Relative solidity...................................................................................................... 15

Part Two: Evaluation of potential risks: Economic and financial situation of the non-member
countries benefiting from the most important loan operations............................................... 18

1.

2.

Introduction............................................................................................................ 18

Candidate countries ................................................................................................ 18

2.1.

Bulgaria.................................................................................................................. 18

2

2.2.

2.3.

3.

3.1.

3.2.

4.

4.1.

4.2.

4.3.

4.4.

4.5.

4.6.

5.

Lithuania ................................................................................................................ 19

Romania ................................................................................................................. 20

Western Balkans..................................................................................................... 21

Bosnia-Herzegovina ............................................................................................... 21

Former Yugoslav Republic of Macedonia............................................................... 22

Newly Independent States ...................................................................................... 22

Armenia ................................................................................................................. 22

Belarus ................................................................................................................... 23

Georgia .................................................................................................................. 24

Moldova................................................................................................................. 24

Tajikistan ............................................................................................................... 25

Ukraine .................................................................................................................. 26

Other non-member countries .................................................................................. 27

5.1.

Algeria ................................................................................................................... 27

Annex .................................................................................................................................. 29

1.

Explanatory notes on the situation of risks covered by the Community budget ....... 29

1.1.

Tables 1 to 3........................................................................................................... 29

1.1.1. Authorised ceiling (Table 1) ................................................................................... 29

1.1.2. Capital outstanding ( Table 1)................................................................................. 29

1.1.3. Annual risk (Tables 2 and 3)................................................................................... 30

1.2.

1.3.

1.4.

Loan operations covered by a budget guarantee...................................................... 31

Expected signature and disbursement of EIB loans ................................................. 36

Payment of the budget guarantee ............................................................................ 37

1.4.1. Borrowing/lending operations................................................................................. 37

1.4.2. Guarantees given to third parties............................................................................. 37

2.

2.1.

2.2.

2.3.

2.4.

Methodological note on the analysis of the Community's estimated lending capacity
in respect of non-member countries over the period 1999-2001 under the Guarantee
Fund mechanism (Table 4) ..................................................................................... 38

Reserve for loan guarantees to non-member countries ............................................ 38

Bases for the calculation of the provisioning of the Guarantee Fund ....................... 38

Basis for the provisioning of the Fund in the event of a part guarantee.................... 39

Provisioning of the Guarantee Fund........................................................................ 40

3

2.5.

2.6.

3.

Margin remaining in the guarantee reserve ............................................................. 40

Residual lending capacity ....................................................................................... 40

Tables: country-risk indicators ............................................................................... 41

4

Part One:
Events since the report at 30 June 2000, the risk situation and
activation of budget guarantees

1.

INTRODUCTION: TYPES OF OPERATION

The risks covered by the Community budget derive from a variety of lending and guarantee
operations which can be divided into two categories: loans with macroeconomic objectives
and loans with microeconomic objectives.

1.1.

Operations with macroeconomic objectives

The first of these are the balance-of-payments loans for Member States or non-member
countries, normally carrying strict economic conditions and undertakings.
€

This category includes the loan of
1 250 million to finance imports of agricultural products
and foodstuffs into the former Soviet Union, since the risk involved in this operation depends
to a large extent on macroeconomic and political developments in the recipient countries.

1.2.

Operations with microeconomic objectives

These are loans to finance projects which are usually repaid over the long term from funds
which these projects are expected to generate; as a rule, they are granted to companies,
financial institutions or non-member countries and, in addition to the Community guarantee,
are covered by the usual guarantees demanded by banks.

This covers Euratom and NCI loans in Member States and the Euratom and EIB loans outside
the Community (Mediterranean countries, central and eastern Europe, countries of Asia and
Latin America, Republic of South Africa).

2.

EVENTS SINCE THE REPORT AT 30 JUNE 2000

The main events in the second half of 2000 were as follows:

2.1.

Tajikistan

On 20 March 2000 the Council decided to amend Decision 97/787/EC providing exceptional
financial assistance for Armenia and Georgia in order to extend it to Tajikistan. The amount
to be granted is

75 million in the form of a loan.

€

2.2.

Moldova

€

On 10 July 2000 the Council decided to grant supplementary macro-financial assistance of up
to

15 million to Moldova in the form of a loan.

5

2.3.

Community Guarantee to the European Investment Bank for loans for projects
in Croatia

On 7 November 2000 the Council decided to amend Decision 2000/24/EC to extend the
Community guarantee to the European Investment Bank to projects in Croatia. The amount of
€
these loans is subject to an overall ceiling of
250 million to be granted for a period of four
years. The guarantee is limited to 65% of the overall ceiling of
250 million decided on by
the Council.

€

2.4.

EIB-Turkey

On 4 December 2000 the Council decided to amend Decision 2000/24/EC so as to establish
an EIB special action programme in support of the consolidation and intensification of the
EC-Turkey customs union. Under this Decision, the Community guarantee for the loans
granted to Turkey is limited to 65% of the overall ceiling of
450 million decided on by the
Council.

€

3.

RISK SITUATION

There are two possible methods for evaluating the risks borne by the Community budget:

–

–

the method, often used by bankers, of the total amount of capital outstanding for the
operations concerned on a given date (the situation described in Table 1 below),

the more budgetary approach of calculating the maximum amount which the
Community could have to pay out in each financial year.

The second approach itself has been applied in two different ways:

–

–

by reference only to actual disbursements at 30 June 2000, assuming that there are no
early repayments (see Table 2 below showing the lower limit of this maximum risk
to the Community budget);

on a more forward-looking basis, by reference to all the operations decided by the
Council or proposed by the Commission in order to estimate the impact on future
budgets, assuming that the Commission's proposals are accepted (see Table 3 below
showing the upper limit of this maximum risk borne by the Community budget).

The latter exercise gives some idea of the future level of risks connected with the proposals
made. However, a number of assumptions have to be made about dates of disbursement and
terms of repayment (details are given in the annex) as well as interest1 and exchange rates2.

The results are shown in Tables 1 to 3, which make separate assessments of the risks relating
to countries inside the Community and countries outside the Community.

1

2

An average interest rate of 10% is assumed for EIB loans. The average interest rate assumed for
borrowing and lending operations is 4.4%. An interest rate of 4.89188% has been applied for the new
operations in Table 3.
The exchange rates used for loans in currencies other than the euro are those of 31 December 2000.

6

The overall figures quoted cover risks of different types; loans to one country in the case of
macrofinancial assistance and loans for projects guaranteed by the borrowers in the case of
NCI and EIB operations, for example.

The following analysis distinguishes between total risk, the risk in respect of Member States
and the risk in respect of non–member countries.

3.1.

Amount outstanding at 31 December 2000

The amount outstanding is set out in Table 1.

The total risk at 31 December 2000 came to
30 June 2000, an increase of 1%3.

€

13 808 million, as against

€

13 783 million at

The following table shows the operations which have had an effect on the amount outstanding
since the last report.

€

million

Amount outstanding at 30 June 2000

Loan repayments

Balance of payments: Italy

Euratom

NCI

Financial assistance

Former Soviet Union

EIB

Loans disbursed

Financial assistance

EIB

Exchange rate differences between the euro and other
currencies

Amount outstanding at 31 December 2000

13 783

- 1 049.0

- 1.3

- 28.6

- 55.0

0.0

- 345.24

+ 60

+ 1 071.25

+ 84.11

13 808
€

133 million at 31

The capital outstanding in respect of operations in the Member States was
December 2000, a fall of 89% compared with 30 June 2000.

This fall is mainly due to the repayment of
Italy.

€

1 049.0 million in balance of payments loans to

The capital outstanding from non-member
€

countries

at 31 December 2000 was

13 675 million, an increase of 8.5% compared with 30 June 2000.

3.2.

Maximum annual risk borne by the Community budget: operations disbursed
at 31 December 2000

The maximum annual risk is set out in Table 2.

3

Part of the change over the past six months is due to exchange rate differences on loans in currencies
other than the euro.

7

–

–

The total risk for the first half of 2001 comes to

€

1 638 million.

The risk in respect of the Member States comes to

€

92 million.

The risk in respect of non-member countries comes to
€

The risk in respect of non-member countries will average
2001-2009.

€

1 546 million.

1 004 million over the period

3.3.

Maximum theoretical annual risk borne by the Community budget

The situation is set out in Table 3.

This risk comes to
€

4 041 million in 2009.

€

1 564 million during 2001. It will increase from 2002 onwards and reach

–

–

The trend in the maximum risk in respect of the Member States is the same as in
Table 2.

The risk in respect of non-member countries amounts to
The risk will increase from 2002 onwards to reach

€

4 041 million by 2009.

€

1 473 million for 2001.

8

TABLE 1
CAPITAL OUTSTANDING IN RESPECT OF OPERATIONS DISBURSED

Operation

(EUR million)

Authorised
ceiling

Capital
outstanding at
30.06.00

Capital
outstanding at
31.12.00

Remainder
to be
disbursed
31.12.00

MEMBER STATES
A. Balance of payments

1. Italy
B. Other

2. Euratom
3. NCI and NCI earthquake
4. EIB Mediterranean

Spain,Greece,Portugal

MEMBER STATES - TOTAL

NON-EU COUNTRIES
A. Financial assistance

1. Bulgaria
2. Romania
3. Algeria
4. Former Yugoslav Republic of Macedonia
5. Bosnia-Herzegovina
6. Baltic States
7. Moldova
8. Ukraine
9. Belarus
10. Georgia
11. Armenia
12. Tajikistan
13. Former Soviet Union(*)
B. Other
14. EIB Mediterranean(**)
15. EIB Central and Eastern Europe
16. EIB Asia, Latin America
17. EIB South Africa

NON-EU COUNTRIES - TOTAL

GRAND TOTAL

14000

4000
6830

1500

26330

750
780
600
90
20
220
75
435
55
142
28
75

15697
17150
4405
1500

42022

68352

1000

1
118

63

1182

400
225
250
40
10
75
60
343
30
100
23

55

4781
4702
1117
391

12602

13784

0

0
90

43

133

460
225
250
40
10
25
55
343
30
100
23

55

5089
5124
1251
596

13675

13808

0

0
0

0

0

0
100
100
50
10
85
15
92
25
32
0
75
0

2630
2202
717
229

6362

6362

(*) The EUR 54.5 million outstanding corresponds to the principal due but not paid at 31.12.00.
(**) The amount outstanding has been increased by EUR 55.2 million to take account of the principal due but not paid at 31.12.00.

SITUATION IN RESPECT OF EIB OPERATIONS AT 31.12.00

ANNEX TO TABLE 1

Loans
authorised

Loans made
available minus
cancellations

Amounts
disbursed

Amounts
outstanding
at 31.12.00

Operations

Mediterranean: Member States
Non-EU countries, old mandates:
Mediterranean Protocols
Central and Eastern Europe I and II
Asia, Latin America I and II
South Africa

Non-EU countries: decision of 14.04.97

Mediterranean
Central and Eastern Europe
Asia, Latin America
South Africa

FYROM: decision of 19.05.98
Bosnia: decision of 14.12.98
Turkey: decision of 29.11.99
Non-EU countries: decision of 22.12.99

Mediterranean
Central and Eastern Europe
Asia, Latin America
South Africa

701
1347
96
397
Total
22719
Note: As loans are disbursed in national currency, the loan ceiling may be exceeded when the amounts disbursed
up to the date of the report are converted into EUR.

6425
8680
2480
825
40252

9

1500

6362
4700
903
300

2310
3520
1022
375
150
100
600

1465

5819
4142
757
300

2310
3423
1022
375
130
60
375

1749

5959
4064
766
271

1021
1788
618
199
45
0
150

8
20
0
126
16784

43

3912
3287
635
271

1019
1772
616
199
45
0
150

8
20
0
126
12103

TABLE 2
MAXIMUM ANNUAL RISK BORNE BY THE COMMUNITY BUDGET
(Estimate in ECU million based on all operations disbursed at 31.12.00)

2001

2002

2003

2004

2005

2006

2007

2008

2009

TOTAL

MEMBER STATES
CAPITAL
A. Balance of payments

1. Italy

B. Structural loans

2. Euratom
3. NCI and NCI earthquake
4.EIB Mediterranean

Spain, Greece, Portugal

Capital - subtotal
INTEREST
A. Balance of payments

1. Italy

B. Structural loans

2. Euratom
3. NCI and NCI earthquake
4. EIB Mediterranean

Spain, Greece, Portugal

Interest - subtotal

MEMBER STATES - TOTAL

NON-EU COUNTRIES
CAPITAL
A. Financial assistance

5. Bulgaria
6. Romania
7. Algeria
8. FYROM
9. Bosnia
10. Baltic States
11. Moldova
12. Ukraine
13. Belarus
14. Georgia
15. Armenia
B. Guarantees
16. EIB Mediterranean
17. EIB Cent. & Eastern Europe
18.EIB Asia, Latin America
19. EIB South Africa

Capital - subtotal

INTEREST
A. Financial assistance

5. Bulgaria
6. Romania
7. Algeria
8. FYROM
9. Bosnia
10. Baltic States
11. Moldova
12. Ukraine
13. Belarus
14. Georgia
15. Armenia
B. Guarantees
16. EIB Mediterranean
17. EIB Cent. & Eastern Europe
18. EIB Asia, Latin America
19. EIB South Africa

Interest - subtotal

71

11

82

7

3

10

92

70

150

9
17
6

301
241
61
26

881

23
11
16
2
1
1
3
17
1
5
1

280
197
68
40

666

55
100

25
12
37
6

352
256
89
24

957

19
11
5
2
1
1
2
16
1
5
1

260
179
55
33

591

12

12

13

13

2

2

4

2

1

3

16

16

40

12
57
6

5

5

2

2

7

70

12
57
6

0

18

3

21

21

63

73

88
25

88
25

5

35

15

7
57
6

405
414
118
20

3
55

419
341
121
21

424
276
164
56

420
235
123
35

947

6
3

2
1

1

5
1

406
356
113
25

403
415
119
55

1015

1137

1090

1033

1068

19
8

2
1

2
14
1
5
1

239
165
51
30

538

17
8

2
1

1
12
1
5
1

216
145
48
28

485

16
5

13
5

2
1

1
9

5
1

194
124
44
22

424

2
1

6

5
1

171
105
40
22

371

10
4

2
1

3

5
1

148
88
36
22

321

125
75
32
17

268

102
63
28
14

222

25
25

8

15

22
6

385
267
61
96

910

2
2

2
1

1

5
1

89

44

133

13

6

19

152

447
200
250
13
0
25
55
345
30
22
6

3514
2801
969
359

9036

125
57
21
18
9
2
9
79
4
45
9

1734
1142
401
229

3884

NON-EU COUNTRIES - TOTAL

1546

1547

1553

1621

1514

1404

1388

1215

1132

12920

GRAND TOTAL

1638

1563

1569

1628

1535

1404

1388

1215

1132

13072

(Eastern Europe )
(Other non-EU countries)

546
1000

549
998

590
962

658
963

624
889

540
864

494
894

441
774

396
737

4839
8082

10

TABLE 3
MAXIMUM THEORETICAL ANNUAL RISK BORNE BY THE COMMUNITY BUDGET
(Estimate in EUR million based on all operations ddisbursed, adopted and proposed by the Commission)

2001

2002

2003

2004

2005

2006

2007

2008

2009

TOTAL

MEMBER STATES
CAPITAL
A. Balance of payments

1. Italy

B. Structural loans

2. Euratom and NCI
3.EIB Spain, Greece, Portugal

Capital - subtotal
INTEREST
A. Balance of payments

1. Italy

B. Structural loans

2. Euratom and NCI
3. EIB Spain,Greece,Portugal

Interest - subtotal

MEMBER STATES - TOTAL
NON-EU COUNTRIES
CAPITAL
A. Financial assistance

4. Bulgaria
5. Romania
6. Algeria
7. FYROM
8. Bosnia
9. Baltic States
10. Moldova
11. Ukraine
12. Belarus
13. Georgia
14. Armenia
15. Albania
16. Tajikistan
17. Euratom C. & Eastern Europe
B. Guarantees
18.EIB Mediterranean
19. EIB Centr. & Eastern Europe
20. EIB Asia, Latin America
21. EIB South Africa

Capital - subtotal
INTEREST
A. Financial assistance

4. Bulgaria
5. Romania
6. Algeria
7. FYROM
8. Bosnia
9. Baltic States
10. Moldova
11. Ukraine
12. Belarus
13. Georgia
14. Armenia
15. Albania
16. Tajikistan
17. Euratom C. & Eastern Europe
B. Guarantees
18. EIB Mediterranean
19. EIB C. & Eastern Europe
20. EIB Asia, Latin America
21. EIB South Africa

Interest - subtotal

NON-EU COUNTRIES - TOTAL

GRAND TOTAL
(Eastern Europe)
(Other non-EU countries)

12
12

2
2
4

16

0
55
100

25
12
37
6

13
13

2
1
3

16

40
0
0

0
12
57
6

18
5
23

2
0
2

25

0
70

12
57
6

3
3

0
0

3

63
0

7
57
6

0

0

0

73
0

6
73
0

71
11
82

7
3
10

92

70

150

0
9
17
6

75

88
50

3
53

88
50

5

3
33

94

177

270

217

153

113

73

25
50

8

3
33

22
6

27

291
299
71
46
1034

329
245
101
53
1057

411
411
112
59
1285

459
599
133
68
1674

527
632
124
74
1707

641
685
189
78
1898

788
814
215
97
2221

801
855
242
87
2237

835
817
234
178
2238

19
13

4
1

2
19
1
5
1
1
3
8

374
369
95
51
966

2251

2267
1043
1208

17
13

4
1

2
16
1
5
1
1
3
13

453
473
129
60
1192

2866

2891
1461
1405

16
9

4
1

1
13

5
1
1
3
10

535
584
164
70
1417

3124

3127
1537
1587

13
9

4
1

1
10

5
1
1
3
7

601
677
193
78
1604

3502

3502
1623
1879

10
9

4
1

1
7

5
1
1
3
5

652
757
214
101
1771

3992

3992
1852
2140

6
6

4
1

4

5
1
1
3
3

2
4

4
1

2

5
1
1
3
2

628
758
211
126
1757

3994

3994
1850
2144

641
766
217
154
1803

4041

4041
1707
2334

23
13
16
3
1
1
3
19
1
5
1
0
1
0

152
141
37
22
439

1473

1564
551
922

19
16
5
4
1
1
3
21
1
5
1
1
3
4

315
292
69
46
807

1864

1880
757
1107

11

89
44
133

13
6
19

152

447
275
250
13
0
25
67
417
30
22
6
0
75
1124

5082
5357
1421
740
15351

125
92
21
35
9
2
13
111
4
45
9
8
24
52

4351
4817
1329
708
11755

27106

27258
12381
14725

4.

ACTIVATION OF BUDGET GUARANTEES

4.1.

Payments from cash resources

The Commission draws on its cash resources under Article 12 of Council Regulation
No 1150/2000 of 22 May 2000 implementing Decision 88/376/EEC, Euratom on the system
of the Communities' own resources in order to avoid delays and resulting costs in servicing its
borrowing operations when a debtor is late in paying.

4.2.

Activation of the Guarantee Fund

Council Regulation (EC, Euratom) No 2728/94 of 31 October 1994 established a Guarantee
Fund for external action. In the event of late payment by a recipient of a loan granted by the
Community, the Guarantee Fund is called on to cover the default within three months of the
date on which is payment is due. If a borrower defaults on an EIB loan guaranteed by the
Community budget, the Community will act within three months of receiving a letter from the
Bank calling for the guarantee to be activated. The Commission will then authorise the Bank
to take the corresponding amounts from the Guarantee Fund.

Default interest for the time between the date on which cash resources are made available and
the date of activation of the Fund is drawn from the Fund and repaid to the cash resources.

In the last six months the Fund has been called on to honour guarantees for the following
debtors:

Non-member country

Former Yugoslavia

Vojvodina

Serbia

Kosovo

Vojvodina

Serbia

Total

Date

Amount (principal + interest)

05.09.00

05.09.00

05.09.00

26.12.00

26.12.00

2 223 189.91

2 832 264.09

15 572.92

997 766.73

5 712 487.22

11 781 280.87

12

4.3.

Arrears at 31 December 20004

Arrears due from non-member countries

Non-member country

Guarantees activated
(2)

Default interest
(3)

Total

Tajikistan

63 181 389. 89

14 870 676. 30

78 052 066. 19

Vojvodina (1)

Serbia (1)

Montenegro (1)

Kosovo (1)

32043629.78

86636697.69

459 653.54

222320.61

Subtotal former Yugoslavia

119 362 301.54

27 105 566.70

146 467 868.24

Total

182 543 691.43

41 976 243.00

224 519 934.33

1) The breakdown of unpaid amounts between the republics of former Yugoslavia is intended
as a guide.

2) The guarantees activated in respect of EIB operations include amounts not paid on time
and the default interest incurred when the Community guarantee enters into force.

interest entered in the accounts between the date on which the guarantee is
3) Default
activated and the date of the report. For the former Yugoslav republics the amount shown is
the overall total.

5.

ANALYSIS OF THE COMMUNITY'S THEORETICAL LENDING AND GUARANTEE
CAPACITY IN RESPECT OF NON-MEMBER COUNTRIES

In practice, the Guarantee Fund and reserve facility limits the Community's lending and
guarantee capacity to non-member countries,
since the appropriations available for
provisioning the Fund whenever a new lending decision (or any annual tranche in the case of
guarantees for multiannual operations) is adopted are limited by the amount entered for the
guarantee reserve in the Financial Perspective5.

At any given time, lending capacity corresponds to the margin remaining in the guarantee
reserve. This margin is equal to the difference between the reserve and the estimated amount
needed to provision the Guarantee Fund for operations which have already been adopted and
which are in preparation.

Table 4 shows an estimate of the Community's lending capacity in respect of non-EU
countries over the period 2001-2004 in line with the Guarantee Fund mechanism. The method
of calculation and references to legal texts are set out in greater detail in the Annex.

4

5

€

1 250 million loan which the Community granted to the former
Arrears due from Tajikistan on the
Soviet Union and its republics and arrears on the EIB loan granted to former Yugoslavia under the
Mediterranean protocols. The figures include defaults covered by the budget.
The figure entered in the 2000-2006 Financial Perspective is

200 million at 1999 prices.

€

13

On the basis of the decisions adopted by the Council and decisions proposed and in
204.75 million is expected to be used from the guarantee reserve
preparation (see Table 4),
during the 2001 financial year, leaving

3.25 million available at the end of the year.

€

€

If account is taken of the effect on the guarantee reserve of the provisioning of the Fund in
respect of loans already decided and loans proposed and in preparation for 2001, the annual
capacity available for loans is as follows:

€

€

–

–

36.1 million for loans with a 100% guarantee under the Community budget, or

55.54 million for loans with a 65% guarantee (in accordance with Council Decision

2000/24/EC of 22 December 1999).

The current estimates in Table 4 for the provisioning of the Fund in 2001 show that the
remaining lending capacity is very limited.

6.

SITUATION OF THE GUARANTEE FUND AT 31 DECEMBER 2000

At 31 December 2000, outstanding lending and loan guarantee operations for non-member
countries plus unpaid interest due totalled

14 068.8 million.

€

1. Capital outstanding, borrowing and lending

2. Capital outstanding, EIB

3. Capital outstanding, payment defaults

4. Default interest

Unpaid interest due6

TOTAL

€

million

Situation au 31.12.00

1561

12 103

189.70

50.5

164.6

14 068.80

The ratio between the Fund’s resources and outstanding capital liabilities within the meaning
of the Regulation establishing the Fund was 10.17%, which is higher than the target figure of
9% set in Regulation No 1149/1999 amending Regulation No 2728/94 establishing the Fund.
The rules state that "at the end of a year ... the surplus shall be paid back to a special heading
in the statement of revenue in the general budget of the European Communities". The surplus
165.36 million at the end of the 2000 financial year will be repaid to the budget in the
of
first half of 2001.

€

The Guarantee Fund could amount to around
€

–

a transfer of

201.6 million from the 2001 reserve;

€

1 606 million at the end of 2001 assuming:

–

–

6

no further defaults requiring activation of the Fund other than call made in April
2001 concerning

4.5 million;

€

late repayment by Tajikistan of

€

78.9 million in arrears;

Unpaid interest due within the meaning of the Regulation establishing the Guarantee Fund.

14

–

7.

net revenue of around

€

55.3 million on investments from the Fund’s assets in 2000.

RELATIVE SOLIDITY

1 432 million) and the
The ratio between the amount in the Fund at 31 December 2000 (
maximum annual risk for loans to non-member countries (defined as the total amount falling
€
1 473 million) is 97%.
due) shown for 2001 in Table 3 (

€

15

THE COMMUNITY'S THEORETICAL ESTIMATED LENDING AND GUARANTEE CAPACITY IN RESPECT OF NON-MEMBER COUNTRIES

OVER THE PERIOD 2000-2004 under the Guarantee Fund mechanism

TABLE 4

Year

Amount of the Reserve

1. EIB loans

Decided operations
Mediterranean Basin, Syria, 4th Financial Protocol
mandate 1997-2000
mandate 2000-2007

Turkey: reconstruction aid
Extension of the general mandate to Croatia
(2000/688/EC)
Extension of the general mandate to Turkey (financial
cooperation for the customs union)
Planned operations
Extensionofthe generalmandatetothe FRof
Yugoslavia
BalticSeaspecialaction

Loan
amounts

2000

Amounts
paid in
203

Loans
amounts

2001

Amounts
paid in
208

75,00
140,00
2.210,09
95,01
124,96

15,00

2.993,00

6,75
8,82
129,29
5,56
7,31

1,01
0,95
167,19
0,00

350,00

20,48

2002

Loans
amounts

Amounts
paid in
212

Loans
amounts

2003

Amounts
paid in
216

2004

Loans
amounts

Amounts
paid in
221

3.111,50

182,02

3.039,50

177,81

3.102,00

181,47

62,50

3,66

62,50

50,00

3,66

2,93

50,00

2,93

70,00
100,00

4,10
5,85

150,00

8,78

130,00

7,61

2. MACROFINANCIAL ASSISTANCE

Approved operations
Albania III, Bosnia II, Bulgaria IV, Romania IV, FYROM
Tajikistan
Moldova III
Planned operations
Balkans (FYR,Bosnia,Croatia)

75,00
15,00

3. EURATOM

Planned operations
Ukraine

RomaniA
Use of the reserve (1+2+3)
Margin within the reserve (after provisioning of
above-indicated loans)

Residual lending capacity for macrofinancial
assistance

Residual lending capacity for EIB loans

6,75
1,35

-0,01

186,30
16,70

185,63

285,59

250,00

22,50

127,00

127,00

201,61
6,39

71,04

109,30

11,43
205,88
6,12

67,96

104,55

154,00

146,00

11,43
203,43
12,57

139,70

214,92

13,86
13,14

211,39
9,61

106,76

164,24

Description of the loans for which the Fund will be provisioned in the period 2000-2004:
1 - EIB
a. Mediterranean:

- approved loans: from 1994 to 1996: EUR 115 million under the Fourth Financial Protocol with Syria (overall 75% guarantee).
from 31.01.97 to 31.01.2000: EUR 2310 million under the renewal of the EIB madate, covered by an overall 70% guarantee.
From 1999 to 2001: EUR 600 million for reconstruction aid to Turkey after the earthquake in that country (overall 65% guarantee)
from 1 February 2000 to 31 January 2007: EUR 6 425 million under the EIB mandate 2000-2007, covered by an overall 65% guarantee.
From 2000 to 2004: EUR 450 million as part of financial cooperation under the customs union with Turkey.

b.Central and Eastern European countries:

- approved loans: from 31.01.97 to 31.01.2000: EUR 3520 million under the renewal of the EIB mandate, covered by

an overall 70% guarantee.
From 1998 to 2000: EUR 150 million in EIB loans to the Former Yugoslav Republique of Macedonia (FYROM), covered by
an overall 70% guarantee.
From 1999 to 2000: EUR 100 million in EIB loans to Bosnia, covered by an overall 70% guarantee.
From 1 February 2000 to 31 January 2007: EUR 8 680 million under the EIB mandate 2000-2007, covered by an overall 65% guarantee.
'From 2000 to 2003: 250 million euros as part of financial cooperation with Croatia.
- loans proposed or in preparation:

From 2001 to 2002: EUR 50 million in EIB loans to Montenegro

c. Latin Americal and Asia:

- approved loans: From 31.01.97 to 31.01.2000: EUR 900 million under the renewal of the EIB mandate, covered by an overall 70% guarantee.

From 1 February 2000 to 31 January 2007: EUR 2 480 million under the EIB mandate 2000-2007, covered by an overall 65% guarantee.

d. South Africa:

- approved loans: From 1.07.97 to 1.07.2000: EUR 375 million under the renewal of the EIB mandate, covered by an overall 70% guarantee.

From 1er juillet 2000 to 31 January 2007: 825 EUR million under the EIB mandate 2000-2007, covered by an overall 65% guarantee.

2 - Euratom

No further provisioning

3 - Macrofinancial assistance

- approved loans 2000: EUR 75 million in loans to Tajikistan; EUR 15 million in loans to Moldova,
- loans proposed or in preparation:

2001: EUR 250 million in loans for the western Balkans, excluding the Former Yugoslav Republics.

16

Part Two :
Evaluation of potential risks : Economic and financial
situation of the non-member countries benefiting from the
most important loan operations

1.

INTRODUCTION

The figures given in the previous part provide information on quantitative aspects of the
risk borne by the general budget. However, these data should be weighted in accordance
with aspects relating to the quality of the risk, which depend on the type of operation and
the standing of the borrower. Recent events which may influence the portfolio country
risk are analysed below.

The country risk evaluation presented in this Part Two provides a set of country risk
indicators, in the form of a full page table per country (see Annexes), for all non-member
countries that have been recipients of EC macro-financial assistance and which still have
outstanding debts toward the EC. To complement this, textual analysis is provided for
those countries where significant new information influencing the risk evaluation has
become available since the previous report covering the first six months of 2000.

The evaluation in this section does not deal with other regions than those mentioned,
mainly because community exposure elsewhere (notably through guarantees of EIB
lending) represents only a small fraction of total exposure and is also well diversified
among countries.

2.

ACCESSION COUNTRIES

2.1.

Bulgaria

In 2000 growth accelerated in Bulgaria from 2.4 % to 5.2 % (2000H1) due to favourable
internal and external developments. Growth is expected to be around this rate in 2001
and 2002 as well. Exports are growing faster than imports so that the trade deficit can be
expected to narrow in the coming years.

While inflation fell as a result of the establishment of the Currency Board in 1997 from
hyperinflation levels to well under 10 % per year, it has recently rebound. Primarily due
to higher fuel prices, consumer price inflation rose to 12 % recently (October 2000).
Unemployment reached a peak in early 2000 (19 %), but has fallen slowly to some 17.8
% in September. Seasonally high employment in agriculture and tourism in combination
with newly created jobs in the service sector contributed to the growth in jobs.

Bulgarian public finances remain sound. In 1999 a one % deficit was realised, but while
for 2000 and 2001 a 1.5 % deficit is foreseen, monthly budget surpluses are generated on
a consolidated basis, chiefly as a result of unexpectedly high indirect tax revenues.

17

2.2.

Lithuania

Since the beginning of the year 2000, the economy is recovering from the impact of the
Russian crisis, which in 1999 had led to a decline in GDP by 4.2%. During the first three
quarters of 2000, real GDP rose by 2.3%. The main driving force for the recovery has
been strong exports, while low growth of disposable income has been dampening
domestic demand. Based on expected solid growth of Lithuania's export markets and
improving domestic demand, GDP growth is seen to accelerate in the near future,
exceeding 3% next year and reaching 4% in 2002.

Consumer price inflation has been particularly low recently, due to weak domestic
demand and the strength of the litas vis-à-vis the euro, which dampens the price rise of
imported commodities. The annual increase of consumer prices declined from 2.4% in
1998 to 0.3% in 1999. During the first eleven months of 2000, the index of consumer
prices rose by 1% compared to the same period a year before. Despite some inflationary
effects of price liberation and increasing world prices for raw materials, inflation is seen
to remain on a relatively low level in the near future.

Unemployment has continued to rise throughout the year, reflecting relatively subdued
growth and economic restructuring. Registered unemployment has increased from 6.4%
in 1998, to 8.4% in 1999 and to 11.7% in the third quarter of 2000. Since the labour
shedding effect of restructuring continues the unemployment rate might remain on a high
level.

In November 1999,

During this year, public finances have improved significantly, after a sharp deterioration
in the aftermath of the Russian crisis, when attempts to cushion the negative external
impact had led to an increase in the general government deficit from 1.8% in 1997 to
the parliament has approved an “anti-crisis”
8.6% in 1999.
programme, which incorporated a significant tightening of the fiscal stance, in order to
correct the fiscal and the external imbalances. The main elements of this programme are
front-loaded expenditures cuts, the postponement of the last tranche of the savings
like stabilising the social security
restitution and medium-term structural measures,
system. In early March 2000, a pre-cautionary IMF stand-by agreement has been signed
in order to avoid potential liquidity constraints. Despite a slower than expected recovery,
the fiscal consolidation is largely on track, which could reduce the deficit to about 3¼%
of GDP this year. The budget proposal for 2001 foresees a further deficit reduction to
1½% of GDP.

Based on stronger export growth and weak domestic demand, the alarmingly high current
accounts deficit has been improving since the beginning of 2000, declining from 11.2%
of GDP at the end of 1999 to 4.3% in mid-2000. Given the expected pick-up in domestic
demand, the external deficit might remain relatively high in the near future.

Foreign direct investment has remained relatively unaffected by the economic slowdown
and has contributed to the financing of the current account deficit.

Structural reforms have been moving forward during the year 2000, although the reform
dynamics have slowed down during the preparations for general elections in the autumn.
The newly elected government has announced to maintain the reform and EU integration
oriented approach of its predecessor.

18

2.3.

Romania

After three years of recession, Romania enjoyed a modest increase in economic activity
during 2000. Preliminary half-year data suggests that the economy grew by 2.1 %.
Industrial production data for October was 8.2 % higher than the same period last year,
confirming the moderate upturn in activity. The external sector is the chief source of the
recovery, as the acceleration of EU growth has increased demand for exports. Both
investment and private consumption growth have also picked up slightly.

The current account narrowed during the first nine months of 2000. The cumulative
deficit fell to USD 682 million compared to USD 781 million for the same period last
year. Export receipts during the first half of this year, in terms of US dollars, recorded
27 % growth and reached its highest level in ten years. Imports have also surged, albeit at
a slightly lower rate than exports, while the services balance has improved slightly.
Nonetheless, a large component of the correction is due to the current transfers surplus,
which increased significantly compared to 1999, and which places a question mark on
the quality of the current account improvement.

Due to the uncertain macroeconomic environment, FDI inflows declined during the first
half of 2000. In the first six months of this year, gross FDI inflows reached about
USD 347 million compared to USD 688 million last year. Nevertheless, concerns about
Romania’s external creditworthiness and its capacity to service its foreign debt
obligations have subsided as the authorities have made full and timely payment of
external obligations.

The current fiscal position is weak. After a limited tightening in 1999, the fiscal stance
was loosened in 2000. Although the upturn in economic activity boosted tax revenues,
excessive increases in public sector wages, higher than expected interest payments, and
growing tax arrears placed severe strains on fiscal policy management. While the
government has introduced various measures designed to increase tax payments and limit
the growth of inter-enterprise arrears, these initiatives have not been met with any
success. The immediate prospects are highly uncertain as the new government is under
growing pressure to increase expenditure in the aftermath of the parliamentary and
presidential elections.

There is little sign that inflation has started a downward path. In September, the year-on-
year inflation rate was 41.3 %. Loose monetary conditions placed significant downward
pressure on the nominal exchange rate. Between January and October the Lei has fallen
by a third against the US dollar and 14 % against the Euro.

On 7 June 2000, the Romanian authorities reached agreement with the International
Monetary Fund on the completion of the first review and on the extension of the stand-by
arrangement. However, by Autumn it was clear that the Romanian government could not
deliver its earlier commitments to reduce arrears in the state-owned enterprises and limit
the growth of public sector wages. In addition, there have also been difficulties in
meeting the IMF’s conditionality on restructuring ailing state-owned banks, which
continued to draw upon public resources to maintain liquidity. As a consequence, it is
unlikely to receive further tranches of the stand-by.

19

3.

WESTERN BALKANS

3.1.

Bosnia and Herzegovina

GDP growth in 1999, adversely affected by the Kosovo crisis, is estimated to have
recorded 9%. For the year 2000, the authorities had originally foreseen GDP growth in
the range of 12-15%. However, the actual outcome is likely to be lower due to the
adverse impact of one of the worst droughts experienced by BiH in recent years. High
economic growth has had little impact on unemployment with an officially estimated
36% of the labour force without employment as of May 2000 according to the World
Bank..

Adherence to the rules of the currency board arrangement (CBA) has contributed to
moderate inflationary pressures. Annual inflation measured in Konvertible Marka (KM),
the currency issued by the currency board since mid-1998, is expected to record 3% for
the year 2000 in both Entities. As of end-2000, the acceptance of the KM, in BiH appears
to be almost universal. The sharp rise in the foreign reserves held by the Central Bank
bear witness to this; at end 1999, they stood at 866 million KM (covering about 2.5
months of imports) compared to 300 million KM in end-1998. On the fiscal side, the
overall fiscal deficits to GDP ratios (before grants) were initially projected at 1.6% and
3.3% for the Federation and the RS, respectively (1.1% and 2.1% after grants). However,
larger than expected deficits as a result of increased spending on wages and pensions and
shortfalls in revenues have forced both Entities to take actions to bring in line current
expenditure with available resources. .

The current account deficit declined significantly in 1999 (to about 21 % of GDP, as
compared to 32% in 1998) as a result of slower-than-planned implementation of
reconstruction projects and a slower growth of private domestic demand. This deficit is
projected to have declined further in 2000 and will remain mainly financed by donor
assistance. Foreign debt remains at high levels (about 70 % of GDP in 1999), which
partly is the result of a substantial debt burden inherited from the former Socialist
Republic of Yugoslavia. Debt service as a percentage of exports of goods and services
however, is relatively low, reflecting the concessional nature of much of the debt as well
as favourable debt rescheduling agreements with the London and Paris Clubs.

In May 1998, the IMF approved the SBA (USD 81 million). In June 1999, the IMF
decided to augment its assistance by USD 23 million as a result of the adverse impact of
the Kosovo crisis. Following some delays in policy implementation, the fourth and the
fifth IMF reviews were completed on December 22, 2000 and the programme was
extended to May 2001. As far as country risk indicators for BiH are concerned, there is
no specific information available as institutions do not provide with any ratings for the
country. The general risk perception of undertaking investment in the country remains
high.

3.2.

Former Yugoslav Republic of Macedonia

The risk to the Community budget stemming from the guarantees for loans to the country
was slightly reduced in the second half of 2000, as the economic situation brightened
while the external balance remained fragile.

20

Economic activity was quite strong in 2000 as real GDP is estimated to have grown by
some 6%. Immediately after the end of the Kosovo crisis demand was driven by exports
to the Kosovo region as well as by the presence of international relief and military
personnel in the country itself. Subsequently, this transformed into a more broadly based
upswing in economic activity, with private consumption contributing significantly in the
run up to the introduction of VAT in April. Thus, at the outset net exports contributed to
the upswing in economic activity, but for the year as a whole the broader based growth
implied that imports grew faster than exports. The current account deficit grew from
some 4.0% of GDP in 1999 to an estimated 6.5% of GDP in 2000, due to a worsening of
the trade balance. Growth is entirely driven by domestic demand, both private
consumption and investment. However, exports may very well be under-recorded, as
suggested by a significant increase in currency reserves due to “errors and omissions”.

In spite of this, official gross reserves have been increasing from 3.0 months of imports
in 1999 to an estimated 3.5 months of imports by 2000, broadly equivalent to the level
recommended by the IMF. The debt service ratio fell slightly from 13.0% of exports in
1999 to some 12.4% of exports in 2000. Further reduction in the debt service ratio is
expected for 2001. On the other hand, the external debt to GDP ratio continued to worsen
as it grew by over two percentage points to 45.7% of GDP. The ratio has grown by over
14 percentage points in just three years.

After prolonged negotiations the authorities reached an agreement on a three-year
financial arrangement with the IMF under the Poverty Reduction and Growth Facility
and the Extended Fund Facility arrangement (some SDR 34.5 million) which was
approved on 29 November. The previous Fund facility (ESAF) covering 1997-2000 had
expired in April 2000 without being formally completed.

Furthermore, the World Bank Board approved a second Financial and Enterprise Sector
Adjustment Loan (FESAL II) on 14 December. The authorities are also negotiating a
Public Sector Adjustment Loan (PSAL) with the World Bank.

After the agreement with the IMF on a new economic programme the Community
macro-financial assistance decided by the Council on 8 November 1999 is now under
implementation. The assistance amounts to up to EUR 80 million, of which up to EUR
50 million in loans and up to EUR 30 million in grants. The EUR 20 million grant
element of the first tranche, which totals EUR 30 million, was released on 29 December,
with the loan part (EUR 10 million) being released in January 2001.

4.

NEWLY INDEPENDENT STATES

4.1.

Armenia

After a stagnation in early 2000, GDP growth accelerated to around 4 % year on year
over the first 10 months of the year, despite the fact that agricultural production was
affected by a severe drought during the summer.

In 2000, budget revenues continued to be below projected levels, resulting in expenditure
cuts and a rapid build up in expenditure arrears (above 5 % of GDP, of which social
arrears). Inflation was halted, with a price decline of about 0.5 % despite a substantial

21

increase in energy prices. The Armenian currency depreciated by about 6 % in nominal
terms against the USD in 2000.

In the first eight months of 2000, the trade turnover increased by 13 % (year on year) to
USD 740 million. However, the trade deficit grew slightly year on year in the first nine
months of the year, despite a substantial acceleration of export growth. The trade and
current account deficits are expected to remain very high (above 20 % of GDP) in the
coming years, as long as the external commercial blockade resulting from the unsettled
Nagorno-Karaback conflict will remain in force.

The total volume of FDI substantially increased for the first half of 2000, reflecting
heavy inflows from established foreign investors and resurgent investment from Russia.
Foreign exchange reserves were still comfortable at more than 3 months of imports.
External debt amounted to around USD 850 million or 47 % of GDP at the end of 1999,
while its servicing was equivalent to 17 % of budget revenue.

The Armenian government's programme is focused on the fight against corruption and
the shadow economy, and the restoration of political and economic stability. The main
question dominating Armenian domestic and foreign policy is the settlement of the
conflict with Azerbaijan over Nagorno-Karabakh. The international negotiations
conducted in the framework of the OSCE/Minsk Group have so far failed to bring a
peace agreement. Armenia's borders with Turkey and Azerbaijan remain closed as a
result of a blockade, and this isolation has been a major impediment
to economic
development and normal political life in Armenia..

4.2.

Belarus

With practically no foreign currency reserves and repeated rejections from the IMF for
balance of payment support due to lack of any progress on economic reform, Belarussian
economic policymakers did alter course somewhat
in 2000. This was also made
necessary by the sharp economic slowdown. Even the reported rate of growth in GDP
and industry (which most Western observers maintain are substantially overstated) has
slowed markedly. GDP was only up 2% year-on year and industrial output 1.5% in the
first half of 2000. Already in the previous years, economic growth had decelerated from
8.3% in 1998 to 3.4% in 1999.

Inflation rates were substantially reduced by restraining soft credits to financially
troubled state-owned enterprises. Monthly rates of inflation have fallen from 14% % at
the beginning of 2000 to just over 3% in the third quarter of the year. The National Bank
of Belarus (NBB) has taken a major step towards rationalising the economy by unifying
the official and market-determined exchange rates. Debt sustainability does not appear a
huge problem. State debt amounts to USD 800 million, half of which is sovereign debt
and the other half guarantees. This does not include energy arrears, which amount to
USD 340 million, USD 250 million of which is gas, the rest being electricity. Cash flows
for debt service risk being insufficient, given the lack of access to foreign financing and
limited NBB reserves and the fact that, simultaneously, the authorities would like to keep
the exchange rate as stable as possible. However, the authorities are making major efforts
with debt restructuring, especially the guaranteed debt from Germany and Austria (some
USD 92 million in total). Debt service in 2001 amounts to USD 107 million for state debt
and USD 211 million for guaranteed debt.

22

4.3.

Georgia

As a result of a severe drought which caused a significant decline in agricultural
production, the economy was expected to grow by only 1.2 % in 2000.

In the first eight months of 2000, state budget revenue was again below target mainly as a
result of weak administration, black economy, corruption and difficulty to collect
revenue,
in a divided country. End-year inflation was
expected to remain below last year's level at around 7 % only. In 2000, the exchange rate
of the Lari was stable at around 2 Lari/USD.

in particular customs duties,

In 2000, Georgia’s current account deficit was expected to remain at the very high level
of 14 % of GDP. Foreign trade was expected to suffer from the severe drought and the
resulting lower agricultural production. However, in 2001, it is expected to recover
thanks to better regional demand, better access to global markets (WTO membership),
stronger consumer demand and investment expenditure.

Foreign exchange reserves were still low at around 1.1 month of imports, but are
expected to increase to 2.2 months of imports by end-2001. External debt at end-1999
amounted to USD 1.85 bn or more than 60 % of GDP (48 % of GDP in 1998). In 2000,
the country reached new rescheduling agreements with major creditors which will make
the debt service burden more sustainable.

The secessions of Abkhazia and South Ossetia have been major challenges to the
government since the country’s independence. These regions remain under the control of
separatist governments. No political solution has so far been found despite efforts of the
International Community. The relationship between the autonomous republic of Ajaria
and the central government has been another major internal problem in Georgia. The
conflict in Chechnya has further strained relation with Russia. Another point of friction is
the new visa regime for Georgians travelling or residing in Russia, a measure that could
affect negatively both trade and the substantial yearly transfers sent home by Georgian
emigrants. In April 1999 Georgia became member of the Council of Europe and in June
2000 it joined the WTO.

4.4.

Moldova

After two years of significant contraction, GDP rose by 1.7% to the first half of 2000.
Adverse weather conditions affecting agricultural output will be compensated by a pick-
up in industry, transport, and construction, thereby taking the 2000 GDP to the previous
year's level. Fiscal policies were substantially tightened (budget deficit fell to 1.5% of
GDP in 2000 from 2.6% of GDP in 1999) and important progress was registered in the
area of structural reform, notably with the wineries,
the energy sector, and land
privatisation.

The inflation rate was halved last year (to just over 20% in the year to December). The
current account deficit, however, increased in 2000, largely due to higher imports. In
spite of the total lack of external financing and the significant external debt servicing
made, gross reserves remained virtually unchanged over the year, covering around 2 ½
months of imports of goods and services. The exchange rate was broadly stable around
12.5 lei/USD.

23

The government signed a new three-year memorandum of understanding in the context
of a PRGF with the IMF on 1 December, one day after parliament granted its final
approval to the 2001 budget. Subsequently, Moldova received, in total, external financing
of roughly USD 42 million in the last week of 2000.

However, the risk of further disruptions in multilateral lending remains extremely high.
Most immediately, the dissolution of parliament on 31 December might prompt the IMF
and other lenders, including the European Community, which negotiated a Memorandum
of Understanding with the Moldovan authorities in late November, to await the outcome
of a pre-term legislative election in late February 2001.

4.5.

Tajikistan

Real GDP grew by 9.6 % (year on year) in the first eight months of the year. Growth was
driven by manufacturing. However, a severe drought resulted in very bad grain harvests
(50 % of their 1999 level) and was expected to reduce GDP growth to 5 % for 2000 as a
whole.

In 2000, fiscal consolidation was achieved through improved revenue collection, with an
over-performance of about 1.7 % of GDP in the first half of the year. Recent increases in
the international oil prices and in food prices, as well as the depreciation of the new
currency, induced a sharp increase in inflation towards the end of the year. The Tajik
currency depreciated by 18 % between end-March and mid-September 2000.
Its
depreciation accelerated towards the end of the year 2000.

The current account deficit in the first half of 2000 (6 % of GDP) was lower than last
year (year on year). However, drought and higher oil prices increased pressures on the
inflows from official and private sources
balance of payments. Moreover, capital
(especially cotton sector financing) were lower than expected causing pressure on gross
foreign exchange reserves (about 1.3 months of imports coverage).

Tajikistan's external debt represented 103 % of GDP at the end of 1999. External debt is
considered as very high when measured by the debt stock and debt service to fiscal
revenue ratios. The debt problem is a key constraint to the poverty reduction and growth
strategy. In the next 4-5 years, the annual net resource transfer abroad (related to debt
payments) will be no less than 5 % of GDP.

The challenge is to continue reinstating a normal political and economic structure. The
President has so far allowed the main opposition party to retain several posts in
government, despite the latter's poor showing in the February election. However, the
August decision to oust out of the army the majority of the opposition soldiers who
joined the regular forces as part of the 1997 peace deal might have fragilised the political
situation. The Talibans have not voiced aggressive intentions towards the region.
However, if the Taliban forces continue to progress further North-East along the Tajik
border, the only escape route for 150,000 refugees will be through Tajikistan.

4.6.

Ukraine

Led by robust export performance, real GDP is estimated to have expanded by 4-5 % in
2000, the first positive yearly rate since independence. Reflecting the sharp depreciation
of the hryvnya in late 1999, higher oil prices, adjustments in administrative prices and

24

relatively fast monetary growth, year-on-year CPI inflation accelerated from 18.4 % in
October 1999 to 28.9 % in November 2000. For 2001, the parliament has adopted a
budget that is balanced based on the government definition but implies an increase in the
deficit to 3 % of GDP (from an estimated 1.5 % of GDP in 2000) once privatisation
revenues are shown as a financing item. The budget hinges on a substantial increase in
privatisation revenues, reflecting the sale of a number of large companies, including
Ukrtelecom, the state-owned telecommunications monopoly, and the power distribution
companies.

Supported by the depreciation of the hryvnya in late 1999 and stronger demand in
Ukraine's main trading partners, exports have been growing strongly since late 1999.
Although import growth has also accelerated reflecting the recovery of domestic demand,
the current account posted a substantial surplus in the first three quarters of 2000. In
2001, however, the current account is projected to deteriorate as the expanding domestic
demand keeps import growth strong while an appreciating real exchange rate and supply
constraints weaken export growth. In April 2000, some USD 2.6 billion of foreign debt,
mostly eurobonds held by private investors but also part of Ukraine's debt to the Russian
gas company Gazprom, were swapped into 7-year bonds denominated in euros or dollars.
Ukraine, which stopped servicing its debts to the Paris Club in January 2000, is also
seeking a rescheduling of such debts. The balance of payments remains vulnerable.
Substantial debt service obligations are projected for 2001 and official foreign exchange
reserves remain low (USD 1.15 billion at end-November 2000, or the equivalent of 3¾
weeks of imports). Reflecting what it perceives as an increased risk of default, Moody's
downgraded in January 2000 Ukraine's from B3 to Caa1 (a default-grade rating).

Progress with structural reform has been mixed but a number of encouraging measures
have been taken since late 1999. In the agricultural sector, the sale of individual plots
from the collective agricultural enterprises has been liberalised. On the privatisation
front, the government has put together an ambitious programme for 2000-02. In the
energy sector, Chernobyl was finally closed down on 15 December 2000, opening the
way to an international financial package aimed at completing with acceptable safety
standards the nuclear power plants of Khmelnitsky and Rovno. In the power sector, there
has been a substantial improvement in cash collection rates and steps have been taken
towards the privatisation of power distribution companies. Progress with gas sector
reform, however, remains elusive. In the financial area, the passing in December 2000 of
a new law on banks and banking activities is a welcomed step but significant weaknesses
remain in some large, state-owned banks.

After more than a year of difficult discussions, complicated by allegations about the
irregular use of IMF funds by the National Bank of Ukraine during 1997-98, the IMF
approved in December 2000 the reactivation of the EFF.
In December 2000, a
Commission staff mission travelled to Kiev to agree on the policy measures related to the
disbursement of the second tranche of the
150 million macro-financial assistance
approved by the EU in October 1998. The Ukrainian authorities have yet to confirm,
however, their agreement with some of the proposed measures.

€

25

5.

OTHER NON-MEMBER COUNTRIES

5.1.

Algeria

Rising oil and gas prices have had a positive impact on the Algerian economy and
country risk as the hydrocarbon sector accounts for more than 90% of Algeria's exports
and approximately 30% of its GDP. Rising revenue from the oil and gas industry will
help to restore a surplus on both the fiscal and current accounts.

Improvements in the current-account balance, estimated at a surplus of USD 6.1 billion
for 2000 will allow Algeria to accumulate foreign exchange reserves, estimated at USD
9.6 billion (9.4 months of imports) at the end of 2000.

Higher than expected oil prices have also had a positive impact on Algerian finances.
Hydrocarbon revenues are projected to have increased by 5% of GDP during 2000, and
the government has targeted a small fiscal surplus (0.3% of GDP). Any revenues in
excess of those budgeted would be channelled into a new stabilisation fund and used to
reconstitute external reserves depleted in 1998-99 and service the stock of public debt.

Real GDP growth is estimated at 4.3% in 2000 (3.3% in 1999) due to a 6.0% growth in
exports (strong demand for oil and other hydrocarbons and higher prices). The annual
inflation rate has been under control and below the official inflation target of 5% over the
last few years. CPI inflation averaged 2.6% for 1999 and was about 4% in 2000.

The stock of medium- and long-term external debt decreased only slowly in 1999 and
lowered debt service costs in USD marginally. However, due to the rebound in oil prices,
total foreign debt fell from 64.9% of GDP in 1998 and 59.1% in 1999 to an estimated
47.9% in 2000. The debt service burden is also getting lower, falling from 44.8% in 1998
to 39.6% in 1999 and is expected to have reached 24% in 2000.

26

CBA

CCFF

DM

EC

EFF

EIB

ESAF

EU

EUR

FESAL

FDI

FYROM

GATT

GDP

IFIs

IMF

SAF

SBA

USD

VAT

WTO

List of abbreviations

Currency Board Arrangement

Compensatory and Contingency Financing Facility

Deutsche Mark

European Community

Extended Fund Facility

European Investment Bank

Enhanced Structural Adjustment Facility

European Union

Euro

Financial and Enterprise Structural Adjustment Loan

Foreign Direct Investment

Former Yugoslav Republic of Macedonia

General Agreement on Tariffs and Trade

Gross Domestic Product

International Financial Institutions

International Monetary Fund

Structural Adjustment Facility

Stand-By Arrangement

United States Dollar

Value Added Tax

World Trade Organisation

27

ANNEX

1.

EXPLANATORY NOTES ON THE SITUATION OF RISKS COVERED BY THE COMMUNITY
BUDGET

1.1.

Tables 1 to 3

The purpose of Tables 1 to 3 is to show the outstanding amount of guarantees and annual
repayments of capital and interest in respect of borrowing and lending operations for which
the risk is covered by the Community budget. The figures show the maximum possible risk
for the Community in respect of these operations and must not be read as meaning that these
amounts will actually be drawn from the budget. In the case of Table 3, in particular, it is not
certain that all the operations described will actually be disbursed.

1.1.1. Authorised ceiling (Table 1)

This is the aggregate of the maximum amounts of capital authorised (ceilings) for each
operation decided by the Council.

In order to relate it to the risk which the budget might have to cover, account should be taken
of the following factors which could affect it:

– Factor increasing the risk: the interest on the loans must be added to the authorised ceiling

– Factors reducing the risk:

• limitation of the guarantee given to the EIB to 75% of the loans signed in the

Mediterranean countries;

• limitation of the guarantee given to the EIB to 70% of the loans signed as part of
lending operations with certain non-member countries authorised by the Council
Decision of 14 April 1997 and a sharing of risk between the Community and the EIB
as the budget guarantee covers only political risks in some cases;

• limitation of the guarantee given to the EIB to 65% of the loans signed as part of
lending operations with certain non-member countries authorised by the Council
Decision of 22 December 1999 and a sharing of risk between the Community and the
EIB as the budget guarantee covers only political risks in some cases;

• operations already repaid, since the amounts concerned, except in the case of balance
of payments support (Member States), are the maximum amount of loans granted and
not outstanding amounts authorised;

• the amounts authorised are not necessarily taken up in full.

1.1.2. Capital outstanding ( Table 1)

This is the amount of capital still to be repaid on a given date in respect of operations
disbursed.

28

Compared with the previous aggregate, the amount outstanding does not include loans which
have not yet been disbursed nor the proportion of disbursed loans which have already been
repaid. It may be described as the amount of loans which exist on a given date.

1.1.3. Annual risk (Tables 2 and 3)

Estimated amount of principal and interest due each financial year.

This amount is calculated for:

a)

b)

disbursements alone (Table 2)
corresponds to the amount outstanding;

in which case the capital

to be repaid

disbursements, decisions
proposals still awaiting decisions (Table 3)

still awaiting disbursement

and Commission

in which case the capital to be repaid corresponds to the ceiling on loans authorised plus,
where applicable, the amounts in respect of operations proposed by the Commission and not
yet decided.

29

1.2.

Loan operations covered by a budget guarantee

30

TABLE 5a

Borrowing and lending operations: Member States

Changes in amounts outstanding during six-month period

COUNTRY

Decision

Date
of decision

Loan term
(years)

ITALY

93/67/EEC

18.01.93

EURATOM

NCI

TOTAL

77/270-271/Euratom
80/29/Euratom
82/170/Euratom
85/537/Euratom
90/212/Euratom

78/870/EEC
81/19/EEC(1)
81/1013/EEC(2)
82/169/EEC
83/200/EEC
87/182/EEC

29.03.77
20.12.79
15.03.82
05.12.85
23.04.90

16.10.78
20.01.81
14.12.81
15.03.82
19.04.83
09.03.87

6
6
-
-

(3)

(3)

Loan situation

- closed (a)
- partially disbursed (b)
- disbursed in full (c)
- not yet disbursed (d)

EURmillion

Amount
decided

Amount
outstanding
at 01.07.00

Operations during the
six-month period

Amounts
disbursed

Amounts
repaid

Amount
outstanding
at 31.12.00

1.000,00

1.000,00

0,00

1,30

1,30

0,00

117,70

28,00

89,70

(c)
(c)
(d)
(d)

(c)
(c)
(c)
(b)(4)
(d)(4)

(c)
(c)
(c)
(c)
(c)
(c)

8.000,00
2.000,00
2.000,00
2.000,00
2.000,00

3.800,00
300,00
500,00
1.000,00
1.000,00
1.000,00

6.830,00
1.000,00
1.000,00
80,00
1.000,00
3.000,00
750,00

18.630,00

1.119,00

0,00

1.029,30

89,70 (5)

(1) Exceptional aid for the reconstruction of areas hit by the earthquake in Italy in 1980.
(2) Exceptional aid for the reconstruction of areas hit by the earthquake in Greece en 1981.
(3) Long-term loans for which the schedule of repayments depend on the dates of disbursement.
(4) By Decision 94/179/Euratom of 21 March 1994 the Council decided to extend Euratom loans to the financing of projects in certain non-member countri es.
(5) Discrepancy caused by change in the rates of the other currencies against the euro.

31

TABLE 5b (1)
Financial assistance to non-member countries
Changes in amounts outstanding during six-month period, broken down by country and tranche

COUNTRY

Decision

Date
of decision

Loan term Expiry data

Loan situation

(years)

- closed (a)
- partially disbursed (b)
- disbursed in full (c)
- not yet disbursed (d)

Amount
decided

Amount
outstanding
at 01.07.00

EURmillion

Operations during the
six-month period

Amounts
disbursed

Amounts
repaid

Amount
outstanding
at 31.12.00

BULGARIA II
1st tranche
2nd tranche
BULGARIA III
1st tranche
2nd tranche
BULGARIA IV
1st tranche
2nd tranche
ROMANIA II
ROMANIA III
1st tranche
2nd tranche
ROMANIA IV
1st tranche
2nd tranche
BALTIC STATES
ESTONIA
1st tranche
2nd tranche
LATVIA
1st tranche
2nd tranche
LITHUANIA
1st tranche
2nd tranche

FYROM

1st tranche
2nd tranche

92/511/EEC

19.10.92

97/472/EC

22.07.97

99/731/EC

08.11.99

92/551/EEC
94/369/EEC

27.11.92
20.06.94

99/732/EC

08.11.99

92/542/EEC

23.11.92

97/471/EC

22.07.97

7
7

10
10

10
-
7

7
7

10
-

7
-

7
-

7
7

15
15

07.12.2001
29.08.2003

10.02.2008
22.12.2008

21.12.2009
-
26.02.2000

20.11.2002
20.11.2004

29.06.2010
-

31.03.2000
-

31.03.2000
-

27.07.2000
16.08.2002

27.09.2012
13.02.2008

(c)
(c)

(c)
(c)

(c)
(d)
(c)

(c)
(c)

(c)
(d)

(c)
(d)

(c)
(d)

(c)
(b)

(c)
(c)

32

110,00
70,00
40,00
250,00
125,00
125,00
100,00
40,00
60,00
80,00
125,00
55,00
70,00
200,00
100,00
100,00
220,00
40,00
20,00
20,00
80,00
40,00
40,00
100,00
50,00
50,00
40,00
25,00
15,00

70,00
40,00

125,00
125,00

40,00
0,00
0,00

55,00
70,00

100,00
0,00

0,00
0,00

0,00
0,00

50,00
25,00

25,00
15,00

60,00

50,00

70,00
40,00

125,00
125,00

40,00
60,00
0,00

55,00
70,00

100,00
0,00

0,00
0,00

0,00
0,00

0,00
25,00

25,00
15,00

TABLE 5b (2)
Financial assistance to non-member countries
Changes in amounts outstanding during six-month period, broken down by country and tranche

COUNTRY

Decision

Date
of decision

Loan term Expiry data

Loan situation

(years)

- closed (a)
- partially disbursed (b)
- disbursed in full (c)
- non encore décaissés (d)

Amount
decided

Amount
outstanding
at 01.07.00

EURmillion

Operations during the
six-month period

Amounts
disbursed

Amounts
repaid

Amount
outstanding
at 31.12.00

BOSNIA
1st tranche
2nd tranche
MOLDOVA I
1st tranche
2nd trance
MOLDOVA II
MOLDOVA III
UKRAINE I
UKRAINE II
1/2 tranche
1/2 tranche
2nd tranche
UKRAINE III
1st tranche
2nd trance
BELARUS
1st tranche
2nd tranche
ALGERIA I
1st tranche
2nd tranche
ALGERIA II
1st tranche
2nd tranche
GEORGIA
ARMENIA
TAJIKISTAN
REP. of former USSR(*

99/325/EC

10.05.99

94/346/EC

13.06.94

96/242/EC
2000/452/EC
94/940/EC
95/442/EC

25.03.96
10.07.00
22.12.94
23.10.95

98/592/EC

15.10.98

95/132/EC

10.04.95

91/510/EEC

23.09.91

94/938/EC

22.12.94

97/787/EC
97/787/EC
2000/244/EC
91/658/EEC

17.11.97
17.11.97
20.03.00
16.12.91

15
-

10
10
10
10
10

10
10
10

10
-

10
-

5
7

7
-
15
15
15
3

22.12.2014
-

07.12.2004
08.08.2005
30.10.2006

28.12.2005

29.08.2006
30.10.2006
30.10.2008

30.07.2009
-

28.12.2005
-

15.12.97
17.08.2001

27.11.2002
-
24.07.2013
30.12.2013

28.09.97

TOTAL
(*) The sum of EUR 54.5 million corresponds to the principal due but not paid at 30.06.00.

(c)
(d)

(c)
(c)
(c)
(d)
(c)

(c)
(c)
(c)

(c)
(d)

(c)
(d)

(a)
(c)

(c)
(d)
(c)
(c)
(d)
-

33

20,00
10,00
10,00
45,00
25,00
20,00
15,00
15,00
85,00
200,00
50,00
50,00
100,00
150,00
58,00
92,00
55,00
30,00
25,00
400,00
250,00
150,00
200,00
100,00
100,00
110,00
28,00
75,00
1.250,00
3.683,00

10,00
0,00

25,00
20,00
15,00
0,00
85,00

50,00
50,00
100,00

58,00
0,00

30,00
0,00

0,00
150,00

100,00
0,00
100,00
23,00
0,00
54,50
1.610,50

5,00

60,00

55,00

10,00
0,00

20,00
20,00
15,00
0,00
85,00

50,00
50,00
100,00

58,00
0,00

30,00
0,00

0,00
150,00

100,00
0,00
100,00
23,00
0,00
54,50
1.615,50

GEOGRAPHICAL AREA

Decision

LOAN GUARANTEES TO THE EIB

Date
of decision

Rate of
guarantee

Date of
guarantee
contract

Amount
decided

Loans signed

Amounts outstanding
at 30.06.00 during the at 30.06.00 at 31.12.00

EURmillion

second half
of the year

MED. Financial protocols(1)

8.03.77

75% (2)

30.10.78/10.11.78

MED. Horizontal cooperatio R/1762/92/EEC

29.06.92

75% (2)

09.11.92/18.11.92

TOTAL MED.

Central & Eastern Europe I 90/62/EEC(4)

91/252/EEC(5)

Central & Eastern Europe II 93/696/EC(6)

Asia, Latin America I

93/115/EEC

Asia, Latin America II

96/723/EC

Asia, Latin America III

96/723/EC

South Africa

New mandates

FYROM

Bosnia

Turkey

95/207/EC

97/256/EC(7)

98/348/EC

98/729/EC

99/786/EC

Mandates 2000-2007

2000/24/EC(8)

12.02.90

14.05.91

13.12.93

15.02.93

12.12.96

12.12.96

01.06.95

14.04.97

19.05.98

14.12.98

29.11.99

22.12.99

100%

100%

100%

100%

100%

70%

100%

70%

70%

70%

65%

65%

6062

1800

7862

1000

700

3000

750

153

122

300

5514

1768

7282
(3)

912

498

2792

621

153

122

300

24.04.90/14.05.90

19.01.93/04.02.93

22.07.94/12.08.94

04.11.93/17.11.93

18.03.97/26.03.97

21.10.97

04.10.95/16.10.95

25.07.97/29.07.97

7105

6898

29.07.98/07.08.98

16.06.99/22.06.99

18.04.00/23.05.00

150

100

600

19.07.00/24.07.00

18410

130

60

225

230

-

-

-

-

-

-

0

0

0

111

0

150

617

2416

1548

3964

705

383

1999

477

147

102

280

2958

38

0

0

0

2290

1570

3860
(*)

659

342

2265

488

147

108

271

3499

45

60

150

154

12.048

TOTAL
(1) including EUR 1500 million for Spain, Greece and Portugal.
(2) General guarantee of 75% for all credits made available under lending operations under a guarantee contract signed between the Community and the

40.252

20.223

11.053

878

EIB on 30.10.78 and 10.11.78. By way of exception, a 100% guarantee applies to the emergency aid granted
to Portugal in accordance with the Council Decision of 7 October 1975.

(3) The Community has guaranteed EUR 5 497 million, of which EUR 141.5 million is covered by a 100% guarantee for Portugal.
(4) Non-member countries: Poland, Hungary.
(5) Non-member countries: Czech Republic, Slovak Republic, Bulgaria and Romania.
(6) Non-member countries: Poland, Hungary, Czech Republic, Slovak Republic, Bulgaria, Romania, Baltic States and Albania.
(7) Non-member countries: Central and Eastern Europe, Mediterranean, Asia and Latin America, South Africa.
(8) Non-member countries: Central and Eastern Europe, Mediterranean, Asia and Latin America, South Africa.
(*) The amount outstanding has been increased by EUR 55.25 million to take account of the principal due but not paid at 31.12.00

34

1.3.

Expected signature and disbursement of EIB loans

The EIB has supplied the figures used for calculation of the assumptions made for
drawing up Table 3 (EIB loans to non-member countries from its own resources).

Expected signatures

At 31 December 2000 a total of

€

379 million was still to be signed:

Mediterranean: former mandates
(4th protocol with Syria)

Mediterranean countries

Central and eastern Europe (1)

Asia and Latin America

South Africa

FYROM

Bosnia

€

€

€

€

€

115 million
€

0 million

75 million

129 million
€

0 million

20 million

40 million

(1) The amount still to be signed for central and eastern Europe under the Decision of
14 April 1997

The foreseeable timetable for loan signatures under the new mandate of EIB loans
(2000-07) adopted by the Council on 22 December 1999 is shown in the financial
statement attached to the Commission proposal.

Disbursement forecasts

As regards disbursement of the loans still awaiting signature, it is assumed that nothing
will be paid in the year of signature, 10% in the second year, 25% a year between the
third and fifth years and 15% in the sixth year.

At 31 December 2000,
that date. The total breaks down as follows:7

7 477 million still had to be disbursed against loans signed at

€

€

€

Mediterranean countries

Central and eastern Europe

Asia and Latin America

South Africa

FYROM

Bosnia

2 865 million

3 383 million
€

887 million

€

€

217 million
€

85 million

40 million

It is assumed that the rate of disbursement for the new mandate (2000-07) will be the
same as that set out above.

7

Based on a working assumption that 25% of the loan will be disbursed every year for four years
and that the average term will be fifteen years with a three-year period of grace.

35

1.4.

Payment of the budget guarantee

1.4.1. Borrowing/lending operations

In this type of operation, the Community borrows on the financial market and on-lends
the proceeds (at the same rate and for the same term) to Member States (balance of
payments), non–member countries (medium-term financial assistance) or firms (NCI,
Euratom).

The loan repayments are scheduled to match the repayments of the borrowings due from
the Community. If the recipient of the loan is late in making a repayment,
the
Commission must draw on its resources to repay the borrowing on the due date.

The funds needed to pay the budget guarantee in the event of late payment by the
recipient of a loan granted by the Community are raised as follows:

a)

b)

c)

d)

the amount required may be taken provisionally from cash resources in
accordance with Article 12 of Council Regulation No 1150/2000 of 22 May
2000 implementing Decision 94/728/EC, Euratom on the system of
the
Communities' own resources. This method is used so that the Community can
immediately repay the borrowing on the date scheduled in the event of late
payment by the recipient of the loan;

if the delay extends to three months after the due date, the Commission draws on
the Guarantee Fund to cover the default. The funds obtained are used to
replenish the Commission's cash resources;

the transfer procedure can be used to provide the budget heading with the
appropriations needed to cover the default; any margin available in the
guarantee reserve is drawn on first. This method is used when there are
insufficient appropriations in the Guarantee Fund and must be authorised in
advance by the budgetary authority;

the re-use of amounts repaid by debtors who have defaulted,
leading to
activation of the Community guarantee, allows payments to be made within a
short period of time always providing, of course, that there are recovered funds
available.

1.4.2. Guarantees given to third parties

The loan guarantee is in respect of loans granted by a financial institution such as the
European Investment Bank (EIB). When the recipient of a guaranteed loan fails to make
a payment on the due date, the EIB asks the Community to pay the amounts owed by the
defaulter in accordance with the contract of guarantee. The guarantee must be paid within
three months of receiving the EIB's request. The EIB administers the loan with all the
care required by banking practice and is obliged to demand the payments due after the
guarantee has been activated.

Since the entry into force of the Regulation establishing a Guarantee Fund for external
action,
the provisions of the Agreement between the Community and the EIB on
management of the Fund state that, after the EIB calls in the guarantee in the event of a

36

default, the Commission must authorise the Bank to withdraw the corresponding amounts
from the Guarantee Fund within three months.

If there are insufficient resources in the Fund, the procedure used for activating the
guarantee is the same as for borrowing/lending operations.

An implementation agreement was concluded between the Community and the EIB on
20 and 22 January 1999 to determine payment and repayment procedures in connection
with Community guarantees to the EIB.

2.

METHODOLOGICAL NOTE ON THE ANALYSIS OF THE COMMUNITY'S
ESTIMATED LENDING CAPACITY IN RESPECT OF NON-MEMBER COUNTRIES
OVER THE PERIOD 1999-2001 UNDER THE GUARANTEE FUND MECHANISM
(TABLE 4)

2.1.

Reserve for loan guarantees to non-member countries

As agreed at the Edinburgh European Council,
the Interinstitutional Agreement of
29 October 1993 on budgetary discipline and improvement of the budgetary procedure
provided for the entry of a reserve for loan guarantees to non-member countries as a
provision in the general budget of the European Communities. This reserve is intended to
cover the requirements of the Guarantee Fund and, where necessary, activated guarantees
exceeding the amount available in the Fund, so that these amounts may be charged to the
budget.

The amount of the guarantee reserve is the same as in the financial perspective for
in the reserve was
2000-2006, viz.
€

200 million at 1999 prices. The amount

€

€

203 million in 2000 and will be

208 million in 2001.

The conditions for the entry, use and financing of the guarantee reserve are laid down in
the following decisions:

• Council Decision 94/729/EC of 31 October 1994 on budgetary discipline.

• Council Regulation (ECSC, EC, Euratom) No 2730/94 of 31 October 1994 amending
the Financial Regulation of 21 December 1977 applicable to the general budget of the
European Communities.

• Council Decision 94/728/EC of 31 October 1994 on the system of the Communities'

own resources.

2.2.

Bases for the calculation of the provisioning of the Guarantee Fund

The bases for the provisioning of the Fund are calculated by applying the appropriate rate
of guarantee (65%, 70%, 75% or 100%):

–

to the loan guarantees authorised by the Council and to the loan guarantees
proposed or being prepared by the Commission on the basis of the estimates of
loan signatures contained in the financial statements (EIB and Euratom loans);

37

–

to the loans (for financial assistance) authorised by the Council and to the loans
proposed or being prepared by the Commission.

The annex to Council Regulation (EC, Euratom) No 2728/94 of 31 October 1994
establishing a Guarantee Fund for external actions, which relates to the arrangements for
in the case of borrowing/lending
payments into the Guarantee Fund, states that,
operations or guarantees to financial bodies under a framework facility spread over a
number of years and with a microeconomic and structural purpose, payments into the
Fund will be made in annual tranches calculated on the basis of the annual amounts
indicated in the financial statement attached to the Commission proposal, adapted where
appropriate in the light of the Council decision.

For other Community borrowing/lending operations, such as loans for the balance of
payments of third countries, whether made in one or more than one tranche, payments
into the Fund are calculated on the basis of the total amount for the operation decided on
by the Council.

The annex to the Regulation establishing the Guarantee Fund states that, as from the
second year (in the case of operations spread over a number of years), the amounts to be
paid into the Fund will be corrected by the difference recorded on 31 December of the
previous year between the estimates that were taken as a basis for the previous payment
and the actual figure for the loans signed during that year. Any difference relating to the
previous year will give rise to a payment in the following year.

The annex states that, when it starts a payment procedure, the Commission will check the
situation with regard to the performance of the operations which were the subject of
previous payments and, where the commitment deadlines originally laid down have not
been met, will propose that this will be taken into account in calculating the first payment
to be made at the start of the following financial year for operations already under way.

In the second half of 2000, the budgetary authority accordingly adopted two transfers:

–

–

transfer 69/2000 so that payments could be made into the Guarantee Fund in
respect of macro-financial assistance for non-member countries (Tajikistan and
Moldova) and in order to pay the annual tranches provided for in the financial
statements for EIB loans for projects carried out in Croatia;

transfer 74/2000 in order to pay the annual tranches provided for in the financial
statements for EIB loans to consolidate and reinforce the EC-Turkey customs
union.

2.3.

Basis for the provisioning of the Fund in the event of a part guarantee

For EIB loans covered by an aggregate 75% guarantee, the Fund is provisioned on the
basis of 75% of the total amount of operations authorised.

The guarantee on the EIB loans authorised by the Council on 14 April 1997,
19 May 1998 and 14 December 1998 is limited to 70% of the total amount of credits
opened. The basis for provisioning is 70% of the annual forecast of signatures.

38

The guarantee on the EIB loans authorised by the Council on 29 November 1999 and
22 December 1999 is limited to 65% of the total amount of credits opened. The basis for
provisioning is 65% of the annual forecast of signatures.

2.4.

Provisioning of the Guarantee Fund

The amounts paid into the Fund are obtained by applying the rate of provisioning (14%)
to the calculation base set out above.

Pursuant to Articles 2 and 4 of the Regulation establishing the Guarantee Fund, the Fund
is endowed by payments from the general budget equivalent to 14% of the capital value
of the operations until it reaches the target amount. As the target amount was reached at
31 December 1997, the Commission, in accordance with the Regulation, submitted
proposals
in the
to review the rate of provisioning. These proposals appear
comprehensive report on the functioning of the Fund which the Commission drew up in
accordance with Article 3 of the Regulation (COM(1998) 168 final of 18 March 1998).
Regulation No 2728/94 establishing a Guarantee Fund for external action has been
amended by Council Regulation (EC, Euratom) No 1149/1999 of 25 May 1999 under
which the provisioning rate for the Fund and the target amount is fixed at 9% from
1 January 2000.

2.5.

Margin remaining in the guarantee reserve

The margin remaining in the guarantee reserve is equivalent to the difference between the
reserve and the heading for the provisioning of the Guarantee Fund.

2.6.

Residual lending capacity

The residual lending capacity is the loan equivalent of the margin left in the reserve,
allowing for the guarantee rates in force.

39

3.

Explanatory notes for country-risk indicators

Explanatory notes for country-risk indicators

Standard footnotes

(1)
(2)

(3)

Includes only EC and EIB loans (outstanding disbursements) to CEEC, NIS and MED
The higher the ranking number, the lower the creditworthiness of the country. No ranking
was published by Euromoney in March 1998.
Countries are rated on a scale of zero to 100; 100 represents the least chance of default. A
given country may improve its rating and still fall in the ranking if the average global rating
for all rated countries improves.

Abbreviations and English words used in tables

S&P

Standard and Poor's

CCFF=
EFF=
SBA =
STF=
PRGF=

Compensatory and Contingency Financing Facility
Extended Financing Facility
Stand-By Arrangement
Systemic Transformation Facility
Poverty Reduction and Growth Facility

est.=
n.a. =
prelim.=

estimates
not available
preliminary

no
none
yes

40

Country-risk indicators
Country: Bosnia & Herzegovina (4)

footnotes

1998

1999

2000

Real GDP growth rate
Industrial production

Federation
Republika Srpska

(%)
(% change)

Unemployment (end of period) (5)

(% of labour force)

Federation
Republika Srpska

Inflation rate (CPI) (Dec/Dec)
Federation (in KM terms)
Republika Srpska (DEM based index) (6)

Exchange rate (end of period)

General government balance

Federation
Republika Srpska

Balance of payments

(% change)

KM per DEM
YUD per DEM (7)
Croatian Kuna per DEM
KM per EUR
(% of Entity GDP)

Exports of goods and services
Current account balance (8)
Net inflow of foreign direct investment
Official reserves, including gold (end of period) (9)

m USD
months' imports of goods and services

(m USD)
(% of GDP)
(m USD)

External debt

Convertible currency external debt

(end of period)

Convertible currency debt service

principal
interest

External debt/GDP
External debt/exports of goods and services
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney

(m USD)

(m USD)
(m USD)
(m USD)
(%)
(%)
(%)
(m USD)
(m USD)

(%)
(%)
(%)

Position in the ranking
(number of countries)
The Institutional Investor
Position in the ranking
(number of countries)
Credit rating

13,0

24,0
22,0

n.a.
47,0

5,0
2,0
1,0
6,4
3,3
1,96

-1,8
-5,1

816
-31,5
100

175
0,7

9,0

n.a.
n.a.

n.a.
n.a.

3,0
5,0
1,0
n.a.
n.a.
1,96

-1,3
-5,1

972
-22,0
90

455
2,0

12,0

n.a.
n.a.

n.a.
n.a.

3,0
3,0
1,0
n.a.
n.a.
1,96

-2,8
-3,8

1000
-20,0
117

488
2,3

2985

3095

2763

44,5
n.a.
n.a.
74,0
352,0
17,0
814
815

-
-
-

62,9
n.a.
n.a.
71,0
319,0
8,0
n.a.
-

0,1
0,3
1,1

100,0
n.a.
n.a.
61,0
276,0
12,0

0,1
0,3
0,9

SBA
(5/98-4/01)
Yes

none
none

none

none

none

SBA

SBA

(5/98-4/01) (5/98-4/01)

Yes

none
none

none

none

none

Yes

none
none

none 178
(180) (185)

none

none

(10)

(1)

(2)

(2)

(3)

Footnotes
(1) (2) (3) See explanatory notes.
(4)
(5)
(6)
(7)
(8)
(9)

(10)

Data refer to the entire country unless otherwise indicated.
World Bank estimates, adjusted unemployment figures. Official figures are somowhat higher as there is a general tendency of over reporting.
Measured in DM using the RS parallel market exchange rate for FRY dinar (YUD)
YUD/DM exchange rate in the parallel market in the Belgrade area, as reported by the National Bank of FRY.
Excluding official transfers.
Foreign assets of the monetary authorities, excluding earmarked funds and blocked accounts; including foreign exchange held by the
payments bureaus.
Paris Club in 1998.

41

Country-risk indicators

Country: Bulgaria

footnotes

1998

1999

2000

Real GDP growth rate
Industrial production
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)
Exchange rate (end of period)

(%)
(% change)
(% of labour force)
(% change)
(Leva per USD)

3,5
-9,4
12,2
1,0
1670

2,5
-5,0
14,7
6,5
1947

5,0
12,0
17,8
11,4
2,08

Q3/Q3

Q3/Q3

09/2000

09/09

General government balance

(% of GDP)

1,1

-0,9

-0,6

Balance of payments

Exports of goods and services
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period)

m USD
months' imports of goods and services

(m USD)
(% of GDP)
(m USD)

External debt

Convertible currency external debt

(end of period)

Convertible currency debt service

principal
interest

External debt/GDP
External debt/exports of goods and services
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

(m USD)

(m USD)
(m USD)
(m USD)
(%)
(%)
(%)
(m USD)
(m USD)

6297
-1,8
364

3056
5,8

10072

1099
626
469
83,7
159,9
19,8
none
none

Indicators of EU exposure

EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

(%)
(%)
(%)

(1)

6,2
6,0
9,5

5740
-5,5
739

3222
6,4

9980

975
495
480
81,3
174,0
17,0
none
none

6,0
6,7
11,7

09/2000

09/2000

09/2000

5010
-3,9
787

5000
8,2

10071

09/2000

09/2000

09/2000

09/2000

738
305
433
78,1
167,0
16,6
none
none

3,9
4,2
8,5

IMF arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney

Position in the ranking
(number of countries)
The Institutional Investor
Position in the ranking
(number of countries)
Credit rating

Footnotes
(1) (2) (3) See explanatory notes.

EFF
(06/98-06/01)
yes

EFF
(06/98-06/01)
yes

EFF
(06/98-06/01)
yes

B2
B
09/98
93
(180)
03/98 09/98
100 92
(136) (136)
22.9 26.3

B2
B
03/99 09/99
87 89
(180) (180)
03/99 09/99
80 79
(136) (136)
28.6 30.3

B2
B+
03/00 09/00
84 80
(180) (185)
03/00 09/00
76 74
(145) (145)
32.5 37.1

(2)

(2)

(3)

42

Country-risk indicators

Country: Former Yugoslav Republic of Macedonia

footnotes

1998

1999

2000

Real GDP growth rate
Industrial production
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)
Exchange rate (end of period)

(%)
(% change)
(% of labour force)
(% change)
(Denar per USD)

2.9
4.5
34.5
-2.4
51.7

2.7
-2.5
32.4
2.6
60.0

6.0
-
32.1
4.9
66.5

General government balance

(% of GDP)

-1.7

0.0

2.2

Balance of payments

Exports of goods and services
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period)

m USD
months' imports of goods and services

(m USD)
(% of GDP)
(m USD)

(4)

External debt

Convertible currency external debt

(end of period)

Convertible currency debt service

principal
interest

External debt/GDP
External debt/exports of goods and services
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

(m USD)

(m USD)
(m USD)
(m USD)
(%)
(%)
(%)
(m USD)
(m USD)

Indicators of EU exposure

EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

(%)
(%)
(%)

IMF arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney

Position in the ranking
(number of countries)
The Institutional Investor
Position in the ranking
(number of countries)
Credit rating

(5)

(1)

(2)

(2)

(3)

Footnotes
(1) (2) (3) See explanatory notes.
(4)

The current account deficit may be overestimated due to unreported remittances.

1292
-9.6
175

334
2.0

1517

130,5
n.a.
n.a.
41.1
117,4
10.1
2.0
0,0

0,6
4,1
4,8

1192
-5.9
27

478
3.0

1409

155,0
n.a.
n.a.
43.3
118,2
13.0
0.0
22

0,7
5,9
7,0

1367
-8.5
104

1092
3.5

1468

169,5
n.a.
n.a.
45.7
107,4
12.4
0.0
20

0,3
2,5
2,7

ESAF
(04/97-04/00)
no

ESAF
(04/97-04/00)
no

EFF/PRGF
(12/00-12/03)
yes

none
none
09/98
143
(180)

none

none

none
none
03/99 09/99
146 160
(180) (180)

none
none
03/00 09/00
120 100
(180) (185)

none

none

none

none

43

Country-risk indicators

Country: Lithuania

footnotes

1998

1999

2000

Real GDP growth rate
Industrial production
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)
Exchange rate (end of period)

(%)
(% change)
(% of labour force)
(% change)
(Litas per USD)

5,1
8,2
6,9
2,4
4,0

-4,2
-9,9
10,0
0,3
4,0

09/00

09/00

2,3
1,3
12,6
1,4
4,0

General government balance

(% of GDP)

-5,8

-8,5

-3,3

est.

Balance of payments

Exports of goods and services
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period)

m USD
months' imports of goods and services

(m USD)
(% of GDP)
(m USD)

External debt

Convertible currency external debt

(end of period)

Convertible currency debt service

principal
interest

External debt/GDP
External debt/exports of goods and services
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

(m USD)

(m USD)
(m USD)
(m USD)
(%)
(%)
(%)
(m USD)
(m USD)

Indicators of EU exposure

EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

(%)
(%)
(%)

IMF arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney

Position in the ranking
(number of countries)
The Institutional Investor
Position in the ranking
(number of countries)
Credit rating

Footnotes
(1) (2) (3) See explanatory notes.

5071
-12,1
921

1460
2,7

1684

n.a.
n.a.
n.a.
15,7
33,2
n.a.
none
none

1,7
9,9
3,3

-
-
-

4238
-11,2
478

1242
2,7

2429

n.a.
n.a.
n.a.
22,8
57,3
n.a.
none
none

1,8
8,1
4,6

-
-
-

09/00

09/00

09/00

11/00

11/00

11/00

3931
-4,0
139

1310

2406

n.a.
n.a.
n.a.
22,0
57,0
n.a.
none
none

0,2
1,0
0,6

SBA
(1/2000-3/2001)
yes

Ba1
BBB+
09/98
62
(180)
03/98 09/98
77 71
(136) (136)
32.9 34.5

Ba1
BBB-
03/99 09/99
63 65
(180) (180)
03/99 09/99
69 66
(136) (136)
36.1 38.3

Ba1
BBB-
03/00 09/00
61 69
(180) (185)
03/00 09/00
66 69
(145) (145)
40.8 43.7

(1)

(2)

(2)

(3)

44

Real GDP growth rate
Industrial production
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)
Exchange rate (end of period)

Country-risk indicators
Country: Romania

footnotes

1998

1999

2000

(%)
(% change)
(% of labour force)
(% change)
(Lei per USD)

-5,4
-16,7
10,3
40,6
10951

-3,2
-8,0
11,5
54,9
18255

2,0
8,2
10,3
41,3
25915

General government balance

(% of GDP)

(4)

-5,0

-3,4

-3,7

09/00

10/00

11/00

11/00

06/00

12742
-3,2
347

2497

9221

10/00

10/00

26,0
72,4
17,8
none
none

1,9
2,3
1,6

9519
-7,2
2040

2299
2,2

9808

3451
2897
554
23,6
103,0
36,3
none
none

7,8
7,8
8,0

9862
-3,8
949

2498
2,6

8589

3415
2948
467
25,2
87,1
34,6
none
none

6,2
8,0
6,9

SBA
(4/97-5/98)
no (6)

SBA
(8/99-3/00)
yes (7)

SBA
(8/99-2/01)
no (7)

B3
B-
09/98
82
(180)

B3
B-

B3
B-

03/99 09/99 03/00 09/00

107 103
89 95
(180) (185)
(180) (180)
03/98 09/98 03/99 09/99 03/00 09/00
76 85
(136) (136)
31.2 28.7

92 85
(145) (145)
27.5 30.3

70 72
(136) (136)
34.5 33.8

(m USD)
(% of GDP)
(m USD)

(m USD)

(m USD)
(m USD)
(m USD)
(%)
(%)
(%)
(m USD)
(m USD)

(%)
(%)
(%)

Balance of payments

Exports of goods and services
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period)

m USD
months' imports of goods and services

External debt

Convertible currency external debt

(end of period)

Convertible currency debt service

principal
interest

External debt/GDP
External debt/exports of goods and services
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney

Position in the ranking
(number of countries)
The Institutional Investor
Position in the ranking
(number of countries)
Credit rating

(1)

(2)

(2)

(3)

Footnotes
(1) (2) (3) See explanatory notes.
(4)
(5)
(6)
(7)

Figure for 1999 is an estimate
Off track in September 1997
Cancelled with only two (out of five) tranches disbursed
Completion of first review and extension of the SBA until 02/2001 approved by the IMF in early June 2000.

45

Country-risk indicators

Country: Armenia

footnotes

1998

1999

2000
(prel.)

4,0

11,1
-0,5
556

-5,5

-5,4

7,2
-2,5
9,3
-1,3
522

-4,7

204
-27,3
197

298
3,6

787

75,9
n.a.
n.a.
43,9
385,8
37,2
n.a.
n.a.

0,3
4,0
15,4

3,3
5,2
11,5
2,0
524

234
-25,0
140

331
3,7

855

61,1
n.a.
n.a.
48,0
365,4
26,1
n.a.
n.a.

0,2
2,9
10,5

260

est.

324
3,5

941

65,8
n.a.
n.a.

361,9
25,3
n.a.
n.a.

0,2
2,3
8,2

-

ESAF
(12/98-11/99)
no

ESAF
(12/98-11/99)
yes

none
none
09/98
137
(180)

none

none

none
none
03/99 09/99
159 134
(180) (180)

none
none
03/00 09/00
144 131
(180) (185)

none

none

none

none

Real GDP growth rate
Industrial production
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)
Exchange rate (end of period)

(%)
(% change)
(% of labour force)
(% change)
(Dram per USD)

General government balance

(% of GDP)

Balance of payments

Exports of goods and services
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period)

m USD
months' imports of goods and services

(m USD)
(% of GDP)
(m USD)

External debt

Convertible currency external debt

(end of period)

Convertible currency debt service

principal
interest

External debt/GDP
External debt/exports of goods and services
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

(m USD)

(m USD)
(m USD)
(m USD)
(%)
(%)
(%)
(m USD)
(m USD)

Indicators of EU exposure

EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

(%)
(%)
(%)

IMF arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney

Position in the ranking
(number of countries)
The Institutional Investor
Position in the ranking
(number of countries)
Credit rating

Footnotes
(1) (2) (3) See explanatory notes.

(1)

(2)

(2)

(3)

46

Country-risk indicators

Country: Belarus

footnotes

1998

1999

Real GDP growth rate
Industrial production
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)
Exchange rate (end of period)

(%)
(% change)
(% of labour force)
(% change)
(Rbs per USD)

8,3
12,0
2,4
181,7
220000

3,4
9,7
2,0
251,3
320000

2000
(4)

1,5
1,0
2,0
36,0

General government balance

(% of GDP)

-1,5

-2,9

-2,9

Balance of payments

Exports of goods and services
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period)

m USD
months' imports of goods and services

(m USD)
(% of GDP)
(m USD)

External debt

Convertible currency external debt

(end of period)

Convertible currency debt service

principal
interest

External debt/GDP
External debt/exports of goods and services
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

(m USD)

(m USD)
(m USD)
(m USD)
(%)
(%)
(%)
(m USD)
(m USD)

Indicators of EU exposure

EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

(%)
(%)
(%)

IMF arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney

Position in the ranking
(number of countries)
The Institutional Investor
Position in the ranking
(number of countries)
Credit rating

Footnotes
(1) (2) (3) See explanatory notes.
(4)

Preliminary data.

7100
-6,1
141,5

230,0
0,2

1854

185
n.a.
n.a.
18,5
26,1
2,6
n.a.
none

0,3
1,8
0,5

5949
-2,7
150,0

102,0
0,2

1900

195
n.a.
n.a.
22,9
31,9
3,3
n.a.
none

0,3
1,7
0,5

7200
-1,0
150,0

115,0
0,2

1900

250
n.a.
n.a.
22,9
26,4
3,5
n.a.
none

0,3
1,5
0,4

-

-

-

none
none
09/98
144
(180)
03/98 09/98
122 121
(136) (136)
12.9 14.6

none
none
03/99 09/99
137 135
(180) (180)
03/99 09/99
122 129
(136) (136)
11.9 13.4

none
none
03/00 09/00
140 129
(180) (185)
03/00 09/00
129 129
(145) (145)
12.7 14.4

(1)

(2)

(2)

(3)

47

Country-risk indicators

Country: Georgia

footnotes

1998

1999

Real GDP growth rate
Industrial production
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)
Exchange rate (end of period)

(%)
(% change)
(% of labour force)
(% change)
(Lari per USD)

2,8
-2,7
4,3
10,6
1,8

3,3
4,4
5,4
10,9
1,9

2000
(prel.)

1,2
6,0
6,0
6,8
2,0

General government balance

(% of GDP)

-6,5

-6,7

-4,6

Balance of payments

Exports of goods and services
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period)
m EUR

months' imports of goods and services

(m USD)
(% of GDP)
(m USD)

External debt

Convertible currency external debt

(end of period)

Convertible currency debt service

principal
interest

External debt/GDP
External debt/exports of goods and services
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

(m USD)

(m USD)
(m USD)
(m USD)
(%)
(%)
(%)
(m USD)
(m USD)

Indicators of EU exposure

EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

(%)
(%)
(%)

IMF arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney

Position in the ranking
(number of countries)
The Institutional Investor
Position in the ranking
(number of countries)
Credit rating

Footnotes
(1) (2) (3) See explanatory notes.

478
-17,3
221

118
1,2

1600

66
n.a.
n.a.
47,9
334,7
13,8
n.a.
n.a.

1,3
7,7
25,8

477
-14,4
62

132
1,6

1700

99
n.a.
n.a.
61,6
356,4
20,8
n.a.
n.a.

1,1
6,9
24,6

ESAF
(07/98-06/99)
yes

ESAF
(07/98-06/99)
yes

520
-13,7
77

110
1,1

1800

109

58,8
346,2
21,0
n.a.
yes

0,8
5,1
17,8

-

none
none
09/98
134
(180)
03/98 09/98
128 128
(136) (136)
10.6 10.9

none
none
03/99 09/99
141 150
(180) (180)
03/99 09/99
126 127
(136) (136)
10.9 10.8

none
none
03/00 09/00
155 133
(180) (185)
03/00 09/00
134 108
(145) (145)
11.1 21.0

(1)

(2)

(2)

(3)

48

Country-risk indicators

Country: Moldova

footnotes

1998

1999

Real GDP growth rate
Industrial production
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)
Exchange rate (end of period)

(%)
(% change)
(% of labour force)
(% change)
(Leu per USD)

-8,6
-11,0
1,9
18,2
8,3

-4,4
-9,9
2,0
43,8
11,6

2000
(4)

0,0
3,0
2,0
21,0
12,5

General government balance

(% of GDP)

-3,4

-2,6

-1,5

Balance of payments

Exports of goods and services
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period)

m USD
months' imports of goods and services

(m USD)
(% of GDP)
(m USD)

External debt

Convertible currency external debt

(end of period)

Convertible currency debt service

principal
interest

External debt/GDP
External debt/exports of goods and services
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

(m USD)

(m USD)
(m USD)
(m USD)
(%)
(%)
(%)
(m USD)
(m USD)

Indicators of EU exposure

EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

(%)
(%)
(%)

IMF arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney

Position in the ranking
(number of countries)
The Institutional Investor
Position in the ranking
(number of countries)
Credit rating

Footnotes
(1) (2) (3) See explanatory notes.
(4)

Preliminary estimate

644
-19,7
81,0

167
1,5

1452

244,0
n.a.
n.a.
86,0
225,5
37,9
none
none

0,7
4,6
10,4

471
-0,5
30,5

202
2,5

1465

178,0
n.a.
n.a.
126,5
311,0
37,8
none
none

0,6
4,4
13,6

EFF
(05/96-05/99)
yes

EFF
(05/96-05/99)
yes

550
-5,0
60,5

230
2,5

1500

240,0
n.a.
n.a.
132,0
272,7
43,6
none
none

0,5
3,4
9,2

-

B2
none
09/98
142
(180)

none

none

B2
none
03/99 09/99
117 127
(180) (180)

none

none

B3
none
03/00 09/00
142 140
(180) (185)
03/00 09/00
122 125
(145) (145)
16.0 15.8

(1)

(2)

(3)

49

Country-risk indicators

Country: Tajikistan

footnotes

1998

1999

Real GDP growth rate
Industrial production
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)
Exchange rate (end of period)

(%)
(% change)
(% of labour force)
(% change)
(Somoni per USD)

5,3
8,2
3,0
2,7
1,0

3,7
5,0
3,1
31,3
1,4

2000
(prel.)

5,0
n.a.
n.a.
61,0
2,2

General government balance

(% of GDP)

-3,8

-3,1

-1,2

Balance of payments

Exports of goods and services
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period)

m USD
months' imports of goods and services

(m USD)
(% of GDP)
(m USD)

External debt

Convertible currency external debt

(end of period)

Convertible currency debt service

principal
interest

External debt/GDP
External debt/exports of goods and services
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

(m USD)

(m USD)
(m USD)
(m USD)
(%)
(%)
(%)
(m USD)
(m USD)

Indicators of EU exposure

EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

(%)
(%)
(%)

IMF arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney

Position in the ranking
(number of countries)
The Institutional Investor
Position in the ranking
(number of countries)
Credit rating

Footnotes
(1) (2) (3) See explanatory notes.
Preliminary estimates.
(4)

586
-9,3
24

65
1,5

1193

66
n.a.
n.a.
93,0
203,6
16,0
n.a.
n.a.

0,6
5,2
10,5

666
-3,4
21

58
1,7

1214

54
n.a.
n.a.
118,0
182,3
13,5
n.a.
n.a.

0,5
4,8
8,8

741
-5,7
30

78
1,9

1179

87
n.a.
n.a.
117,0
159,0
18,9
n.a.
n.a.

0,5
4,3
6,9

ESAF
(07/98-06/99)
yes

ESAF
(07/98-06/99)
yes

PRGF
(10/00-09/01)
yes

none
none

134
(180)

none

none

none
none
03/99 09/99
139 142
(180) (180)

none

none

none
none
03/00 09/00
172 176
(180) (185)
03/00 09/00
128 130
(145) (145)
12.9 14.2

(1)

(2)

(2)

(3)

50

Country-risk indicators
Country: Ukraine

(%)
(% change)
(% of labour force)
(% change)
(Hyrvnia per USD)

(% of GDP)

(m USD)
(% of GDP)
(m USD)

footnotes

1998

1999

2000

-1,7
-1,4
2,9
20,0
3,4

-2,8

17621
-3,1
747

782
0,6

-0,4
4,3
4,6
19,2
5,2

-2,4

16230
2,7
489

1090
0,8

4,5
11,0
n.a.
27,1
5,4

-1,5

17712
4,8
680

1150
0,8

(5)

11700

11879

10368

2449
934
1515
27,4
66,4
13,9
none
yes

3,3
2,7
1,8

1964
860
1104
39,0
73,2
12,1
none
yes

3,3
3,1
2,3

2373
1039
1334
36,2
58,5
13,4
yes
yes

2,9
3,1
1,8

EFF
(07/98-06/01)
no

EFF
(09/98-03/01)
no

EFF
(09/98-03/01)
yes

B3
none
09/98
118
(180)
03/98 09/98
105 108
(136) (136)
20.5 19.8

Caa1
none
03/99 09/99
126 129
(180) (180)
03/99 09/99
112 110
(136) (136)
17.2 18.7

Caa1
none
03/00 09/00
134 115
(180) (185)
03/00 09/00
113 117
(145) (145)
18.1 17.7

(1)

(2)

(2)

(3)

Real GDP growth rate
Industrial production
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)
Exchange rate (end of period)

General government balance (4)

Balance of payments

Exports of goods and services
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period)

m USD
months' imports of goods and services

External debt

Convertible currency external debt

(end of period)

Convertible currency debt service

principal
interest

External debt/GDP
External debt/exports of goods and services
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangements

Type
(Date)
On track

(m USD)

(m USD)
(m USD)
(m USD)
(%)
(%)
(%)
(m USD)
(m USD)

(%)
(%)
(%)

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney

Position in the ranking
(number of countries)
The Institutional Investor
Position in the ranking
(number of countries)
Credit rating

Footnotes
(1) (2) (3) See explanatory notes.
(4)
(5)

On a cash basis and showing privatisation revenues as a financing item.
As of end-November 2000.

51

Country-risk indicators

Country: Algeria

footnotes

1998

1999

Real GDP growth rate
Industrial production
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)
Exchange rate (end of period)

(%)
(% change)
(% of labour force)
(% change)
(Dinars per USD)

5,1
7,2
~30
5,0
60,4

3,3
1,0
~30
2,6
69,3

2000
(4)

4,3
7,0
~30
4,0
71,0

General government balance

(% of GDP)

-3,6

-0,4

0,3

Balance of payments

Exports of goods and services
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period)

m USD
months' imports of goods and services

(m USD)
(% of GDP)
(m USD)

10100
-1,9
500

6800
7,6

12300
0,0
460

4400
4,6

19400
6,1
650

9600
9,4

30665

28300

26800

4525
3143
1993
64,9
303,6
44,8
none
455

7,2
2,3
6,9

4871
n.a.
n.a.
59,1
230,1
39,6
none
none

8,7
3,4
7,8

EFF
(05/95-05/98)
yes

CCFF
(05/1999)
yes

4656
n.a.
n.a.
47,9
138,1
24,0
none
none

2,1
0,9
1,2

-

none
none
09/98
103
(180)

none
none

none
none

03/99 09/99 03/00 09/00

99 96
113 117
(180) (185)
(180) (180)
03/98 09/98 03/99 09/99 03/00 09/00
93 93
(136) (136)
25.2 26.5

97 96
(136) (136)
25.1 25.8

91 81
(145) (145)
27.7 33.1

External debt

Convertible currency external debt

(end of period)

Convertible currency debt service

principal
interest

External debt/GDP
External debt/exports of goods and services
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

(m USD)

(m USD)
(m USD)
(m USD)
(%)
(%)
(%)
(m USD)
(m USD)

Indicators of EU exposure

EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

(%)
(%)
(%)

IMF arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney

Position in the ranking
(number of countries)
The Institutional Investor
Position in the ranking
(number of countries)
Credit rating

Footnotes
(1) (2) (3) See explanatory notes.
(4)

Preliminay estimates.

(1)

(2)

(2)

(3)

52