Report from the Commission to the Council and the European Parliament on the borrowing and lending activities of the Community in 2000
Date: 2001-07-26
Institutions: European Commission
Subjects: Community loan, EIB loan, EU Member State, EU borrowing, financial cooperation, third country

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 26.7.2001
COM(2001) 435 final

REPORT FROM THE COMMISSION TO THE COUNCIL
AND THE EUROPEAN PARLIAMENT

ON THE BORROWING AND LENDING ACTIVITIES OF THE COMMUNITY IN
2000

REPORT FROM THE COMMISSION TO THE COUNCIL
AND THE EUROPEAN PARLIAMENT

ON THE BORROWING AND LENDING ACTIVITIES OF THE COMMUNITY IN
2000

TABLE OF CONTENTS

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

1.

1.1.

1.2.

2.

2.1.

2.2.

2.3.

BORROWING ACTIVITIES IN 2000 ..................................................................... 4

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

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

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

Overview.................................................................................................................. 5

The Community's macrofinancial assistance ............................................................. 5

EIB lending under Council Decisions 97/256/EC and 2000/24/EC (and related
amendments) ............................................................................................................ 7

2.3.1.

EIB objectives and priorities..................................................................................... 7

2.3.2.

Lending in 2000 ....................................................................................................... 9

2.3.3. Risk sharing............................................................................................................ 14

2.3.4. Cooperation with other institutions ......................................................................... 17

2.4.

Signatories to the Lomé Convention ....................................................................... 21

2.4.1.

Lending activity...................................................................................................... 21

3.

3.1.

3.2.

3.3.

4.

BUDGETARY IMPACT OF LENDING................................................................ 22

Budget guarantees .................................................................................................. 22

Interest subsidies .................................................................................................... 23

Risk capital............................................................................................................. 23

STATISTICAL ANNEX ........................................................................................ 24

2

INTRODUCTION

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

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

2.
As for lending activities outside the Community, the decisions adopted in 1997 and
20001 require the Commission to inform the Council and Parliament on an annual basis of the
situation regarding EIB loans guaranteed by the Community budget in central and eastern
Europe, in the Mediterranean countries, in the Latin American and Asian countries and in
South Africa. The same requirements were extended in 1998 to the situation regarding EIB
98/348/EC),
loans
Bosnia-Herzegovina (Decision 98/729/EC) and Croatia (Decision 2000/688/EC).

the Former Yugoslav Republic

of Macedonia

(Decision

to

In order to meet these requirements, this report describes operations for each of the areas
concerned. In order to give an overview of lending activities, it also includes a brief summary
of Community macrofinancial assistance to central and eastern European countries and of
interest subsidies and guarantees linked to Community loans.

1

Decision 97/256/EC for the first global mandate and Decision 2000/24/EC for the second.

3

1.

BORROWING ACTIVITIES IN 2000

1.1.

Community issues

In order to finance the lending activities decided on by the Council, the Commission is
empowered to borrow funds on the capital market. However, given that the NCI ceilings have
been fully used up and in view of the suspension of Euratom activities within the EU and the
approaching expiry in 2002 of the ECSC Treaty, no finance was mobilised on the basis of
these instruments in 2000. The only borrowings last year were for macrofinancial assistance
to central and eastern European countries (CEECs), loans to the African, Caribbean and
Pacific (ACP) countries, measures adopted pursuant to the Mediterranean protocols (MEDA)
and EIB activities inside the Union and outside it in the above regions.

1.2.

Borrowing trends

Despite the above circumstances, borrowings by the European institutions showed a slight
increase (2.6%) in 2000 to EUR 29.2 billion, as against EUR 28.5 billion the previous year
(see Table 4-1 in the annex).

the total
Taking into account repayments, cancellations and exchange-rate fluctuations,
amount of net borrowings outstanding as at 31 December 2000 was EUR 163.6 billion, 7% up
on 1999 (see Table 4-2 in the annex).

Following the introduction of the single currency on 1 January 1999, issues in euros remained
predominant in 2000 (accounting for just under 43% of all issues), while issues in other
Community currencies rose from 25% to 39% of issues. The total amount of such issues thus
grew rapidly at the expense of non-Community currencies, which fell from 30% to 18% of the
total. Issues in US dollars fell by 50%.

Economic and financial uncertainties meant that borrowers showed an even greater preference
for variable-rate loans than in the previous year. These rose from 77% of issues in 1999 to
82% last year.

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

4

2.

LENDING IN THIRD COUNTRIES

2.1.

Overview

pursued.

Financial support to third countries that have concluded cooperation agreements with the
Community takes a variety of forms depending on the geographical areas concerned and the
objectives
or
involves
balance-of-payments support) in cases where the Union helps to restore the macroeconomic
equilibria in a particular country. In other cases, it may involve ordinary loans in the form of
either direct financing for individual projects or global loans for banking institutions, which
allocate them to smaller local projects.

(macrofinancial

generally

bilateral

loans

It

In the first case, the Commission administers the financing in accordance with the Council
directives. In the second case, it is essentially the EIB that administers the loans on its usual
terms, very often with a guarantee from the Commission budget. The geographical areas in
which the Community provides such assistance are shown in Table 2-1.

Table 2-1

Financing outside the Community in 2000 - summary

(in EUR million)

E I B (2)

Own
resources

TOTAL

Macro-
financial
assistance
(1)
160
-
-
-
-
160

Budgetary
and EDF
resources (3)
-
-
-
-
215 (4)
215

CEECs
Mediterranean basin
Latin America and Asia
Republic of South Africa
ACP-OCT
Total
(1) Disbursements.
Signatures.
(2)
Signed and administered by the EIB out of the budgetary resources of the EC or the European
(3)
Development Fund (EDF).

1 644
1 193
532
140
401
3 910

1 484
1 193
532
140
186
3 535

(4) Of which EUR 8 million from the EDF-Sysmin budget.

2.2.

The Community's macrofinancial assistance

Macrofinancial assistance in the form of loans is, by its very nature, exceptional and forms
part of the efforts of the international community to provide, in conjunction with the Bretton
Woods institutions, balance-of-payments support
to certain countries grappling with
transitional difficulties. The Community's assistance focuses on neighbouring regions, such as
central and eastern Europe, the western Balkans, the new European states of the former USSR
and the countries of the southern Mediterranean. Disbursements are themselves linked to the
beneficiary countries' meeting objectives in terms of macroeconomic stabilisation and
structural reforms. In these circumstances, the number of operations effected each year is
limited, and it is difficult to make valid comparisons for the assistance given from one year to
the next. However, as the applicant countries make considerable progress in terms of
macroeconomic adjustment, macrofinancial assistance will prove to be less necessary. The
Balkans
amount of
macrofinancial assistance which includes a large "grant" element.

from the Community a significant

region currently receives

5

Table 2-2
countries - period from 1996 to 2000 (EUR million)

Disbursements of loans under macrofinancial assistance arrangements for third

1996

1997

1998

1999

2000

Total

Total by region and country

"Enlargement" countries
of which:
Bulgaria
Romania

Other CEECs - western Balkans
of which: (1)
Bosnia-Herzegovina (2)
FYROM (3)

NIS
of which:
Armenia (4)
Georgia (4)
Moldova
Ukraine

Grand Total

40

40

115

15
100

155

70

70

25

25

100

100

195

250

250

15

15

138

28
110

403

40

40

10

10

58

58

108

160

60
100

560

390
170

50

10
40

411

28
110
15
258

160

1021

(1) An outright grant of EUR 20 million was disbursed to Albania in 1996. Disbursements

of EUR 35 million and EUR 7 million respectively in the form of outright grants were made to Kosovo and Montenegro

in 2000.

(2) The loan was accompanied by grants totalling EUR 15 million.

(3) EUR 20 million in outright grants was disbursed in 2000 under a new operation.

(4) Exceptional financial assistance - these loans to Armenia and Georgia

were supplemented by grants of EUR 8 million and EUR 10 million respectively in 1998 and

by outright grants of EUR 4 million and EUR 9 million respectively in 1999.

In 2000 the Council decided on two macrofinancial assistance operations: one in the form
of loans to Moldova (maximum of EUR 15 million) and the other consisting of both loans and
grants to Tajikistan (maximum of EUR 75 million in loans and EUR 35 million in grants).
Two budget-support operations in the form of outright grants were also approved in 2000: one
for Kosovo (maximum of EUR 35 million) and the other for Montenegro (maximum of EUR
20 million).

As regards disbursements, assistance in the form of loans amounted to EUR 160 million in
2000, broken down as follows: EUR 100 million for Romania and EUR 60 million for
Bulgaria, under operations approved by the Council in November 1999. Assistance totalling
EUR 62 million was also paid out in 2000 in the form of outright grants, of which EUR
20 million went
to FYROM (Council Decision of November 1999), EUR 35 million to
Kosovo (Council Decision of February 2000) and EUR 7 million to Montenegro (Council
Decision of May 2000).

6

2.3.

EIB lending under Council Decisions 97/256/EC and 2000/24/EC (and related
amendments2)

This section constitutes the report to be submitted to the European Parliament and the Council
in accordance with Articles 2 and 3 of Council Decision 97/256/EC and Article 2 of Council
Decision 2000/24/EC, i.e. it comprises the six-monthly report for the second half of 2000 and
the annual report for 2000 in respect of lending under both decisions. The countries and areas
covered are: central and eastern Europe, the Mediterranean, Latin America and Asia, the
Republic of South Africa, FYROM, Bosnia-Herzegovina, Croatia and Turkey.

2.3.1.

EIB objectives and priorities

In central and eastern Europe, the Bank is lending in the countries that have applied for EU
membership and helping them to create the economic framework that will enable them to join
(the Bank also assists Cyprus, Malta and Turkey, which are applicant countries outside that
region).3 In addition, the Bank provides lending in Albania, FYROM, Bosnia-Herzegovina
and (since 2000) Croatia.

The EIB gives priority to upgrading, modernising and developing the communications and
energy sectors, with particular emphasis on Trans-European Networks (TENs) in the form of
the road and rail corridors defined by the Pan-European Conference of Transport Ministers as
development priorities for the medium term. Environmental issues related to EIB projects are
given priority in the framework of the gradual adaptation of the legislation of the countries
concerned to that of the EU. The EIB also supports SMEs and other industrial initiatives, in
particular when involving EU partners either directly or through its global loan instrument.

the Euro-Mediterranean Partnership,

In the Mediterranean region, the Bank’s lending under mandate takes place mainly within
the economic
the framework of
development of the countries concerned. EIB lending supports individual investment projects
and, through the global loan mechanism, smaller projects and SMEs, while at the same time
strengthening the financial sector in the various countries. The Bank also lends under the
TERRA Programme (Turkey Earthquake Reconstruction and Rehabilitation Action).

in support of

Under the terms of the Euro-Mediterranean Partnership, EIB own resources lending is
complemented by interest subsidies (for loans in the environmental sector) and risk capital
from EU budgetary sources managed by the Bank. In addition to its lending under mandate
and at the request of the Council, the Bank, subject to authorisation from its Board of
Governors, is about to launch a programme of lending from its own resources, without
budgetary guarantee, under its forthcoming Mediterranean Partnership Facility.

In Asia and Latin America, the Bank finances projects that are of mutual interest to the
countries concerned and the European Union (co-financing with EU promoters, transfer of
technology, cooperation in the fields of energy and environmental protection). Details of the
mutual interest of the projects concerned are included in Table 2-11.

In the Republic of South Africa, the Bank’s objective is to contribute to the successful
completion of the country’s reconstruction and development programme.

2

3

See Decisions 98/348/EC, 98/729/EC, 99/786/EC and 2000/688/EC.
In addition to its activities under mandate in the framework of the Council Decisions, the Bank has renewed its substantial
Pre-Accession Facility for lending from its own resources without budgetary guarantee in order to help the countries that have
applied for EU membership.

7

In this connection, the summary of EIB activities since 1996 is as follows.

Table 2-3

Signatures on own resources in non-EU countries

(excluding any signatures from pre-accession facilities)

1996

1997

1998

1999

1st half 2000

2nd half 2000

Total
1996-2000

0

77

0

0

0

60

0

0

160

45

225

0

77

1 106

3 523

1 347

1 347

0

0

60

0

0

698

120

375

30

130

120

562

2 330

858

611

600

CEECs (1994-96)

1 086

20

0

0

CEECs (1997-2000)

CEECs (2000-07)

Slovenia (Protocol 1)

FYROM

Bosnia-Herzegovina

0

0

30

0

0

MED (non Protocol
1992-96)

562

MED (Partnership
1997-2000)

MED (Partnership
2000-07)

0

0

1 466

997

906

0

0

0

0

0

0

0

0

70

0

0

60

0

0

0

934

677

719

0

0

MED (Protocols 3 and
4)

115

152

153

Turkey Terra

0

0

0

0

26

0

8

ALA (1993-96)

ALA (1996-97)

ALA (1997-2000)

ALA (2000-07)

RSA (1995-97)

RSA (1997-2000)

RSA (2000-07)

45

0

0

0

56

0

0

10

205

163

0

199

0

0

ACP (1990-95)

296

37

ACP (1996-2000)

OCT (1990-95)

OCT (1996-2000)

0

0

0

0

4

0

0

70

0

0

292

310

0

0

0

0

135

150

0

44

245

0

0

0

0

183

0

14

0

0

136

70

0

90

0

0

39

0

2

0

0

136

397

0

90

50

0

179

0

7

55

275

1 037

467

255

465

50

377

646

4

23

0

TOTAL

2 190

3 190

2 683

2 368

904

3 536

14 871

2.3.2.

Lending in 2000

In 2000 the Bank signed 20 loan contracts totalling EUR 1 484 million in central and
eastern Europe within the framework of the Council Decisions. Loans for projects in
Bulgaria, Romania and the Slovak Republic accounted for 85% of the total. The Bank signed
loans in 7 countries.

• Bank activity continues to support the economic development of the countries concerned,
principally by financing strategic infrastructure. Of total financing of EUR 766 million,
52% was allocated to the communications sector,
two
motorway sections in Bulgaria on Pan-European Transport Corridor VII, construction of a
combined road-rail bridge on Pan-European Transport Corridor IV between Bulgaria and
Romania, modernisation of
and
Bosnia-Herzegovina, modernisation of port infrastructure in Lithuania, and extension and
modernisation of the fixed telecommunications networks in the Slovak Republic and
Slovenia.

road and railway networks

including construction of

in Romania

the

9

• A loan in support of industry and services for a car production plant in the Slovak

Republic accounted for 11% of total financing (EUR 160 million).

• In the energy sector, 11% of total financing (EUR 156 million) was allocated to electricity
supply equipment and other facilities in Romania and to rehabilitation of electricity
networks in Bosnia-Herzegovina.

• In the water management and miscellaneous sector, EUR 360 million (25%) were
allocated to reconstruction and prevention measures following flood damage in Romania
as well as to rehabilitation of urban infrastructure, while EUR 12 million went towards a
waste incineration project in the Slovak Republic

• Finally, global loans totalling EUR 30 million (2%) were allocated in support of SMEs in

Bulgaria and the Slovak Republic.

10

Table 2-4
in 2000

Country

Albania

Bosnia-
Herzegovina

Bulgaria

Lithuania

Romania

Slovak Rep.

Slovenia

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

Number
of loans

Total loan
signatures
(EUR m)

Energy Communications

Water
management and
miscellaneous

Industry and
services

Global loans

1

2

3

1

8

4

1

34

100%

120

60

34

60

100%

100%

50%

50%

160

100%

10

100%

150

10

94%

100%

10

6%

853

96

397

360

100%

11%

47%

42%

242

100%

65

100%

50

65

12

160

20

21%

5%

66%

8%

100%

Overall

20

1 484

156

766

372

160

30

100%

11%

52%

25%

11%

2%

In the Mediterranean region, the Bank signed 19 loans in 8 countries in 2000. One loan in
Algeria absorbed some small amounts remaining under the Third and Fourth Financial
Protocols with that country, while a first loan was granted under the Third Financial Protocol
with Syria.

Loans for projects in Turkey accounted for some 48% of overall lending, while Algeria and
Tunisia accounted for a further 24%.

• Some 38% of total financing (EUR 455 million) was allocated to the water management
and miscellaneous sector. Projects financed included the rehabilitation and reconstruction
of earthquake-damaged urban infrastructure in Turkey as well as agricultural drainage and
regional waste management development in Egypt and Tunisia respectively.

• Road projects in Algeria and Morocco and rail projects in Tunisia were financed under the
heading of communications and accounted for 21% of total financing in the region (EUR
248 million).

11

• Jordan, Morocco and Turkey benefited from loans to the industry and services sector
representing 13% of total financing (EUR 160 million). The loans went to a phosphate
mine and manufacturing facilities for bromine and bromine derivatives in Jordan,
development of a gold mine in Morocco and investment in pollution abatement measures
in Turkey.

• In the energy sector, EUR 120 million (10% of total financing) went towards upgrading

the power transmission and supply networks in Syria and Tunisia.

• Global loans in Egypt, Gaza/West Bank, Tunisia and Turkey accounted for 18% of overall

financing (EUR 210 million*).

Table 2-5
countries in 2000

Breakdown by country and sector of EIB lending in the Mediterranean

Country

Number
of loans

Total loan
signatures
(EUR m)

Energy Communications

Water
management and
miscellaneous

Industry and
services

Global loans

Turkey

Tunisia

Algeria

Morocco

Egypt

Syria

Jordan

Gaza-West
Bank

5

5

1

2

2

1

2

1

575

100%

380

70

125*

65%

12%

22%

150

45

55

25

25

100%

30%

37%

17%

17%

140

100%

83

100%

100

100%

75

75

100%

100

60

10

100%

100%

140

53

100%

64%

30

36%

50

50

50%

50%

60

100%

10

100%

Overall

19

1 193

120

248

455

160

210

100%

10%

21%

38%

13%

18%

*Of which EUR 75m under TERRA for industrial rehabilitation in the earthquake area.

The Bank signed 11 loans for an overall amount of EUR 532 million in 6 countries in Asia
and Latin America.

12

• Loans in favour of the industry and services sector in Argentina, Bangladesh and Brazil

accounted for 27% of total financing (EUR 144 million).

• In the energy sector, gas pipeline and power station projects in Argentina, Mexico and

Indonesia accounted for 43% of total financing (EUR 227 million).

• Communications projects,

including telecommunications in Brazil and an air traffic

control complex in Thailand, accounted for EUR 139 million (26%).

• EUR 20 million was allocated to a water supply and treatment project in Argentina

(4%).

Table 2-6
American countries in 2000

Breakdown by country and sector of EIB lending in the Asian and Latin

Country

Number
of loans

Total loan
signatures
(EUR m)

Energy Communications

Water
management and
miscellaneous

Industry and
services

Global loans

Brazil

Argentina

Indonesia

Mexico

Bangladesh

Thailand

3

4

1

1

1

1

205

100%

113.5

55%

91.5

45%

147

109.5

20.4

17.1

100%

74%

70

70

100%

100%

47.7

47.7

100%

100%

36.2

100%

26.4

100%

26.4

100%

14%

12%

36.2

100%

Overall

11

532.3

179.5

139.9

20.4

192.5

0

100%

34%

26%

4%

36%

0%

In 2000 the Bank signed 4 loan contracts totalling EUR 140 million in the Republic of South
Africa, with EUR 50 million (36%) going to a telecommunications project, EUR 25 million
(18%) to an industrial project and EUR 65 million (46%) to global loans benefiting small and
medium-scale ventures.

13

2.3.3.

Risk sharing4

The Council Decisions provide coverage under the Community guarantee for 65% of the
overall amount of loans signed. Under the risk-sharing arrangements, EIB loans with
non-sovereign project guarantees are covered only for political risk by the Community
guarantee, whereas loans with sovereign project guarantees are covered for all risks by it. The
Bank would call the Community guarantee for an individual loan only if the project guarantee
for that loan failed to reimburse the Bank, either for political reasons in the case of a
non-sovereign project guarantee or for any reason in the case of a sovereign project guarantee.
Such a call would be for the full loan amount outstanding.

Guarantee and nature of risks covered by the

Community for EIB loans
outside the EU

100
90
80
70
60
50
40
30
20
10
0

EC guarantee
EIB signatures
Sovereign
guarantee

First
Mandate

Second
Mandate

N.B.: Non-sovereign risks are covered only for
political events

During 2000 the Bank continued to work towards the risk-sharing objective. As the amount
signed under the new mandates5 is inevitably rather small, the percentages for risk sharing
under the mandates up to 31 January 2000 and those in force since that date are given
separately.

First mandates
31 January 2000)

(Council Decisions

covering the period from 31 January 1997 to

The cumulative total for risk-sharing loans since the start of lending under the Council
Decisions relating to the period up to 31 January 2000 was EUR 1 697 million at the end of
2000, i.e. 23% of the overall lending ceiling and 24% of lending to date. The details for each
region are as follows:

4

5

Council Decision 97/256/EC invites the Bank “to aim to cover the commercial risk on 25% of its lending under this decision from
non-sovereign guarantees to be expanded upon whenever possible insofar as the market permits on an individual mandate basis”.
Council Decision 2000/24/EC, with the risk-sharing target increased to 30%.

14

• In central and eastern Europe, risk sharing in respect of EIB lending amounted to
EUR 896 million (25.4% of the lending ceiling for those countries and 26% of lending to
date). With reference to central and eastern Europe, it should be noted that all lending
under the Bank’s Pre-Accession Facility is entirely at the Bank’s risk.

• In the Mediterranean region, the full amount of the first mandate had already been signed
at the end of 1999). Risk sharing in respect of EIB lending remained, therefore, unchanged
at EUR 71 million (3.1 % of lending under the first mandate).

• In Asia and Latin America,

risk sharing in respect of EIB lending totalled
EUR 730 million, or 81% of the lending ceiling6 for those countries (the full amount of
which has been signed).

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

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

Second mandates (Council Decisions covering the period from 1 February 2000 to
31 January 2007)

risk-sharing projects under
The cumulative total
1 February 2000 was EUR 560 million at the end of 2000, i.e. 22% of lending to date.

the Council Decisions as from

for

• In central and eastern Europe,

risk sharing in respect of EIB lending totalled

EUR 230 million, i.e. 17% of lending to date.

• In the Mediterranean region, one project representing 4% of the amounts signed has been
signed under the risk-sharing arrangement. As already explained, it has to be remembered
that, in accordance with the programming procedures inherent in the Euro-Mediterranean
Partnership, projects are often signed with governments or public bodies. It is thus
expected that the risk-sharing total for the Mediterranean countries will remain relatively
low.

• In Asia and Latin America, risk sharing in respect of EIB lending amounted to

EUR 300 million, or 76% of lending to date.

Risk sharing at 31 December 2000 is shown below for each mandate.

6

An amount of EUR 122 million of lending in Asia and Latin America under the previous interim mandate is also covered by the
guarantee arrangements laid down in the Council Decisions.

15

Table 2-7

Risk sharing at 31.12.2000 – First mandate (EUR million)

Mandate
ceilings

Total amounts
of loans signed
at 31.12.2000

No of loans
signed with risk
sharing

Amount of loans
signed with risk
sharing

Percentage of risk sharing
achieved to date

(1)

(2)

(3)

(4)

(5) = (4) / (2)

CEECs

Mediterranean

3 520

2 310

3 445.5

2 310

ALA

RSA

FYROM

Total

900

375

150

900

374.6

130

7 255

7 160

21

5

17

0

0

43

896

71

730

0

0

26.0 %

3.1 %

81.1 %

-

-

1 697

23.7 %

Table 2-8

Risk sharing at 31.12.2000 – Second mandate (EUR million)

Mandate
ceilings

Total amounts
of loans signed
at 31.12.2000

No of loans
signed with
risk sharing

Amount of loans
signed with risk
sharing

Percentage of risk
sharing achieved
to date

(1)

(2)

(3)

CEECs

8 930

1 347

Mediterranean

6 425

701

397

50

2 480

825

ALA

RSA

Total

18 660

2 495

11

3

1

7

0

(4)

230

30

300

0

560

(5) = (4) / (2)

17.1 %

4.3 %

75.6 %

-

22.4 %

The regional tables at the end of section 4 (Tables 4-5 to 4-8) identify the loans which are
risk-sharing loans.

16

2.3.4. Cooperation with other institutions

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

The Bank cooperates closely with the PHARE/ISPA programme, with which it has developed
a productive relationship, much appreciated by the beneficiary countries. In addition to
frequent PHARE assistance during the pre-investment phase to ensure that the necessary
studies and technical assistance are implemented in support of EIB projects,
the Bank
cooperates with PHARE in co-financing infrastructure projects.

The contributions of PHARE/ISPA and the IFIs to projects financed by the EIB in 2000 are
shown in the table below. Additional projects were co-financed within the framework of the
Bank’s Pre-Accession Facility, which is outside the scope of this report.

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

Table 2-9

Co-financing in central and eastern Europe and the Balkans in 2000

Country

Project

Cost

EIB

PHARE/
ISPA*

Multilateral
institutions

Bilateral
institutions

7

Other

Albania

Rehabilitation and upgrading of
about 86km of roads

Bosnia-
Herzegovina

Romania

Electric power reconstruction

Improvement of power
transmission system

Romania

Road rehabilitation IV

Total

71

223

200

491

985

34

60

96

245

435

8

21

72*

101

20

62

70

54

124

82

9

31

29

174

243

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

7

Including funds of States, promoters and commercial banks.

17

Table 2-10

Co-financing in the Mediterranean countries in 2000

Country

Project

Cost

EIB

Multilateral
institutions

Bilateral
institutions

Other4

Egypt

Rehabilitation and extension of
drainage networks in Nile valley and delta

agricultural

land

284

Morocco

Construction and upgrading of rural roads

Morocco

Development of a gold mine in the Western Atlas

Jordan

Eshidiya Phosphate Mines B

Jordan

Jordan Bromine Company B

Tunisia

Dualling of rail line and modernisation of rail network

Tunisia

Development of
management

regional

systems for

solid waste

Tunisia

Extension of the light metro network in Tunis

118

71

116

85

81

59

67

50

53

30

30

30

25

25

30

Turkey

Turkey

Rehabilitation
earthquake-damaged urban infrastructure

and

reconstruction

Rehabilitation
earthquake-damaged industrial installations

reconstruction

and

of

of

493

150

493

150

52

21

79

79

42

24

20

15

18

9

13

140

41

21

71

37

35

25

24

264

264

Syria

Electricity transmission

Total

279

2 146

75

648

75

129

231

216

1 051

In Asia and Latin America, the Bank continues to finance projects that are of mutual interest
to the country concerned and to the EU. The mutual interest of the loans signed in 2000 is
described in the table below.

18

Table 2-11 Mutual interest of projects in the countries of Asia and Latin America

Country

Project

Mutual interest

Brazil

Modernisation and
extension of mobile
telephony network in six
north-eastern States

A company owned, managed and operated by a leading European shareholder, Telecom Italia,
will implement the project. TI has made massive strategic long-term investments in Latin
the project has a significant
America in general and in Brazil in particular. In addition,
developmental potential in an underdeveloped region that has historically been overlooked by
commercial lenders.

Argentina

Modernisation and
extension of mobile
telephony network in
States of Bahia and
Sergipe in north-eastern
Brazil

Modernisation of two
plants for manufacturing
new range of compact
passenger cars in State of
São Paulo

Expansion and conversion
of gas-fired power station
into combined-cycle plant
in Tucumán, northern
Argentina

Construction of gasline;
part-replacement and
extension of distribution
network in Buenos Aires
Province

Extension of water supply
and sewerage networks of
Posadas and Garupá, in
Misiones Province, eastern
Argentina

Construction of
glass-container production
line in Mendoza

The project is implemented by a company owned, managed and operated by leading European
in
shareholders with a strategic long-term commitment
particular. As with the project mentioned above, this project allows the Bank to support an
underdeveloped region that has historically been overlooked by commercial lenders.

to Latin America and to Brazil

The project will be implemented by the subsidiary of a leading European company, the
Volkswagen group, which has established a prominent position in Latin America in general and
in Brazil in particular. The project will result in transfers of technology from Europe. In
addition, it will help safeguard jobs and improve the quality of the Brazilian vehicle fleet in
terms of emissions and safety, and contribute to the modernisation of local manufacturing
industries.

Apart from the involvement of a European shareholder (REPSOL), the project will result in the
transfer of technology, thus enabling more efficient use of local energy resources. Commercial
banks participate as co-financiers under a COFACE facility and by providing their guarantee.

There are two European partners (British Gas and REPSOL). The project also involves the
transfer of technology and will have beneficial effects on the environment. Commercial banks
could potentially participate by providing their guarantee.

There will be a European shareholder (Dragados group) and the project will involve the transfer
of technology and beneficial effects on the environment. Commercial banks participate by
providing their guarantee.

Apart from the fact that there is a European shareholder (the Saint-Gobain group), the project
will contribute to increasing the competitiveness of the Argentine viticulture by improving the
quality and reducing the cost of packaging. The environment will benefit through the increased
use of recycled glass.

Mexico

Construction and operation
of a natural gas supply
network in Mexico City

This is a joint venture with a strong European participation (Gaz de France). It will also entail
an important transfer of technology and will open up the Mexican market to the presence of one
of the most important European firms of the sector. The natural gas will replace LPG as well as
fuel oil and gasoil in the local energy markets, thus helping to reduce polluting emissions in
densely populated areas.

Indonesia

Extension of Sumatra’s gas
transmission network,
including a pipeline to
export gas to Singapore

Bangladesh

Construction of a cement
plant near Chhatak in
north-eastern Bangladesh

Thailand

Construction of an air
traffic control complex at
the new Bangkok
international airport

The project will have a positive impact on the environment both in Indonesia and Singapore. In
addition, it will stimulate regional development between Indonesia and Singapore, two member
states of ASEAN.

The Lafarge group has the controlling interest in the joint venture undertaking the project. It
will also act as the industrial operator of the facility. The project would be the first major
integrated cement plant in Bangladesh, helping Lafarge to establish a stronghold in a rapidly
growing market. Bangladesh would benefit from the project as a result of (i) the transfer of
European expertise in cement technology, operation and management, and (ii) foreign exchange
savings by reducing the volume of imported cement.

The project is of mutual interest due to its enhancement of communications between Thailand
and the EU. The project also stimulates regional development and integration.

19

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

Table 2-12

Co-financing in Asia and Latin America in 2000

Country

Project

Cost

EIB

Multilateral
institutions

Bilateral
institutions

8

Other

Argentina

Expansion and conversion of gas-fired power station
into a combined-cycle plant in Tucuman

Argentina

Extension of water supply and sewerage networks

Bangladesh

Construction of a cement plant near Chatak

Brazil

Modernisation of two car-manufacturing plants

Indonesia

Extension of Sumatra’s gas transmission network

205

71

221

1676

750

58

20

36

92

70

Total

2 923

276

23

92

217

332

64

39

117

220

83

28

54

1 467

463

2 095

In RSA, there were several cases of cooperation with IFIs. For the “extension of phosphoric
and sulphuric acid production facilities at Richard’s Bay Project”, there is EUR 20 million
bilateral cooperation in addition to the Bank’s loan of EUR 30 million towards a project cost
of EUR 206.5 million. There is also cooperation with bilateral institutions in the context of
loans via intermediaries to support small and medium-sized enterprises.

8

Including funds of States, promoters and commercial banks.

20

2.4.

Signatories to the Lomé Convention

2.4.1.

Lending activity

Total EIB lending in the ACP/OCT amounted to EUR 401 million, of which EUR 186 million
from the Bank’s own resources, EUR 207 million from risk capital and EUR 8 million from
EDF Sysmin. The regional and sectoral breakdown of this lending is as follows:

Table 2-13

Breakdown by region and sector of EIB lending in 2000 in the ACP/OCT

Total

Own
resources *

Risk
capital

Energy

Communi-
Cations

Water
management
and
miscellaneous

Industry
and
services

Global loans

ACP/OCT

ACP group

OCT group

Africa

Southern

West

Central and
Equatorial

Regional
projects

Caribbean

Pacific

OCT

401

50

5

264

101

82

56

25

77

3

2

186

215**

50

5

94

53

30

11

0

35

0

2

0

00

170

48**

52

45

25

42

3

0

21

0

0

10

10

0

0

0

9

0

2

93

0

0

58

27

20

11

0

35

0

0

0

0

0

0

0

0

0

0

0

0

0

109**

178

0

0

101

44**

30

27

0

8

0

0

50

5

95

20

32

18

25

25

3

0

* This entire amount is subsidised, except for two projects totalling EUR 12.5 million.

** Includes EUR 8 million allocated from the resources of FED Sysmin.

21

3.

BUDGETARY IMPACT OF LENDING

Lending activities have an impact on the Community budget when they are accompanied by
Community guarantees, interest subsidies or special conditions comparable to risk-bearing
operations for the lender.

3.1.

Budget guarantees

On 22 December 1999 the Council decided on a general renewal of the Community guarantee
for EIB loans outside the EU for a period of seven years (Council Decision 2000/24/EC; OJ
L 9 of 13 January 2000). The new ceilings for each area are as follows:

*

*

*

*

Central and Eastern Europe: EUR 8 680 million

Mediterranean countries: EUR 6 425 million

Latin America and Asia: EUR 2 480 million

Republic of South Africa: EUR 823 million.

The overall ceiling for the guarantee is therefore EUR 18 410 million and the Commission
budget covers 65% of that amount (compared with 70% under the previous mandate). The
new decision calls on the EIB to seek other sources of (commercial) guarantee from its
financial intermediaries where possible and sets a target rate of 30% of the ceiling (as
opposed to 25% under the previous mandate).

This guarantee programme will expire on 31 January 2007; it may automatically be extended
by six months if the loan ceiling has not been reached.

On 7 November 2000 the Council decided to extend this scheme to EIB loans concluded in
Croatia by including this country in the group of central and eastern European countries
(Council Decision 2000/688/EC; OJ L 285 of 10 November 2000). As a result, the ceiling
guaranteed for this group was increased to EUR 8 930 million (up by EUR 250 million) and
the overall ceiling to 18 660 million.

As explained in section 2.3.3, the EIB's previous mandate is almost complete and risk sharing
between sovereign and non-sovereign guarantees was effected according to the commitments
agreed (24%), proportionally reducing the budgetary reserve for the coverage of such risks.
For the second mandate, the first year of application saw the signature of loans corresponding
to 13.5% of the ceiling, with risk sharing already equivalent to 21% of the loans signed.

The detailed situation relating to guarantees is set out in the six-monthly report by the
Commission on guarantees covered by the general budget.

22

3.2.

Interest subsidies

Interest subsidies were granted under several Community programmes both inside and outside
the Union. An overall evaluation report was drawn up by the Commission at the Council's
request (see COM (2000) 524 of 6 September 2000). Most of these programmes have been
completed and no longer affect budgetary expenditure. The table below lists the programmes
that are still open and the amount paid in interest subsidies during the year under review.

Table 3-1 Interest subsidies paid out by the various Community mechanisms 1995-2000

ECU/EUR million

Year

1995

1996

1997

1998

1999

2000

within the Community

Outside the Community

Disaster reconstr.

Trans-European
networks (TENs)

EDF

MEDA

FYROM

6.1

4.3

4.0

2.8

2.2

1.7

25

18

37

20

71

54

28.1

28.6

56.9

24.5

27.1

18.7

15.2

22.4

48.2

30.3

29.2

17.4

-

-

-

2.7

4.0

1.1

3.3.

Risk capital

Under the agreements with the Mediterranean countries and the signatories to the Lomé
Convention,
the EIB concludes concessionary loans with special conditions relating to
duration or debt consolidation that make them comparable to capital investments. Operations
in the Mediterranean are financed by the general budget and those in the ACP countries by the
EDF budget. The operations are set out in detail in Table 2-13.

23

4.

STATISTICAL ANNEX

Table 4-1 Trend of borrowing and lending in the Community

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

EUR million

I. Borrowing

ECSC

Balance of payments
(1)

Euratom

NCI

1 446

1 474

908

644

386

298

474

-

-

-

1 695

1 209

4 969

245

410

155

195

403

108

160

-

49

-

-

-

-

49

70

-

66

-

-

-

-

-

-

-

-

-

-

Total Commission

3 190

2 683

5 877

1 008

862

453

669

403

108

160

EIB (2)

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

28 355

29 038

Total Community

16 862 15 657 20 101 15 156 13 257 18 006 23 695 30 501

28 463

29 198

II. Lending

ECSC

Balance of payments
(1)

Euratom

NCI

1 382

1 486

918

674

409

280

541

21

-

-

1 695

1 209

4 969

245

410

155

195

403

108

160

-

39

-

9

-

30

49

-

-

-

-

-

-

-

-

-

-

-

-

-

Total Commission

3 116

2 704

5 917

968

813

435

736

424

108

160

EIB (3)

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

27 765

30 644

Total Community

17 554 18 770 23 641 18 650 19 417 21 381 23 694 25 540

27 873

30 804

Note:

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

(1)

(2)

(3)

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

Total resources raised.

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

24

Table 4-2

Community borrowing outstanding

Net outstanding at the end of each period (1)

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

(1)

EIB (2)

ECSC

NCI

16 570

20 749

25 007

26 736

30 271

31 957

36 928

42 330

48 459

58 893

67 784

78 661

83 673

87 079

96 649

110 394

123 767

146 223

159 860

6 178

6 539

7 119

7 034

6 761

6 689

6 825

6 738

6 673

7 139

7 327

7 331

6 548

5 966

4 677

3 637

2 806

2 432

2 039

1 747

3 269

4 432

4 960

5 202

5 229

5 514

5 122

4 542

3 817

3 326

2 202

1 570

1 113

748

218

168

130

90

Euratom Subtotal Balance of
payments
591

25 767

1 272

(EUR million)

Total
borrowing
26 358

1 680

1 892

2 013

2 168

2 500

2 164

1 945

1 687

1 563

1 338

1 018

779

720

572

118

28

12

-

32 237

38 450

40 743

44 402

46 375

51 431

56 135

4 610

4 932

3 236

1 890

2 997

2 459

2 075

61 361

(3) 2 045

71 412

79 775

89 212

92 570

94 878

102 646

114 367

126 769

148 797

161 989

3 516

4 026

5 204

7 697

8 032

6 666

5 853

4 166

4 074

1 566

36 847

43 382

43 979

46 292

49 372

53 890

58 210

63 406

74 928

83 801

94 416

100 267

102 910

109 312

120 220

130 935

152 871

163 555

The conversion rates used were those obtaining on 31 December of each year. As the
majority of borrowings are denominated in national currency, the difference between two
year-ends reflects, on the one hand, changes in the valuation of existing stock and, on the
other, the net volume of borrowings during the year.
Original amount of borrowings, plus or minus repayments of the principal, cancellations,
annulments and exchange-rate adjustments.

(2) As from 1989, including short term.
(3) As from 1990, including financial assistance for non-member countries.

25

Table 4-3

Community borrowings in 2000, by currency

EIB

Balance of
payments (1)

Total
borrowings

EURO

DKK

GBP

GRD

SEK

Total Pre-ins

Total EU

USD

CHF

JPY

NOK

CZK

ZAR

PLN

Subtotal

TOTAL

Fixed-rate

Variable-rate

(1)

(2)

160

-

-

-

-

-

160

-

-

-

-

-

-

-

-

160

12 3

108

11 1

185

11 3

23 7

3 8

641

363

78

139

110

52

5 2

29 0

5 0

24 0

12 526

108

11 105

-

185

11 398

23 824

3 891

641

363

78

139

110

52

5 274

29 198

5 192

24 006

(EUR million)

1999

2000

%

44.0

0.7

24.5

0.1

0.2

25.4

69.4

27.5

2.2

-

-

0.3

0.4

0.2

30.6

100.0

22.9

77.1

%

42.9

0.4

38.0

-

0.6

39.0

81.6

13.3

2.2

1.2

0.3

0.5

0.4

0.1

18.1

100.0

17.8

82.2

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

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

26

Table 4-4
31.12.2000

Breakdown of NCI borrowings by currency: amounts outstanding as at

Currency

(million)

Equivalent in
EUR million (1)

ECU
DEM
GBP
Total

70.0
2.5
11.5

70.0
1.3
18.4
89.7

(1) Exchange rate as at 31.12.2000.

Table 4-5

EIB loans signed in central and eastern Europe and the Balkans in 2000

Country

Description

Loan
(EUR million)

Risk
sharing

Romania

Upgrading of power transmission network

Upgrading of waste collection, processing and disposal facilities and of
electricity supply equipment at Port of Constanta

Rehabilitation and upgrading of around 650 km of roads

Modernisation of 60 trains within Bucharest’s metro system, and safety
improvements to partially constructed tunnel

Modernisation of tram network in Bucharest

96.0

15.0

245.0

115.0

7.0

Modernisation of
maintenance equipment

ticketing and seat-reservation system and of

railway

15.0

Rehabilitation and modernisation of urban infrastructure in Bucharest

Reconstruction of basic infrastructure damaged by heavy floods and
implementation of watercourse management and flood prevention schemes

Refurbishment of municipal waste incineration plant in Bratislava

Construction of motor vehicle production plant in Bratislava

Modernisation of telecommunications network

Global loan for financing of small and medium-scale ventures

110.0

250.0

853.0

12.0

160.0

50.0

20.0

242.0

Total

Slovak Rep.

Total

No

No

No

No

No

No

No

No

Yes

Yes

Yes

Yes

27

Bulgaria

Construction of two motorway sections on Pan-European Corridor VII
between Sofia and Black Sea

100.0

Construction of combined (road and rail) bridge on Pan-European Corridor IV
between Vidin (Bulgaria) and Calafat (Romania)

Global loan for financing of small and medium-scale ventures

Total

Bosnia-Herzegovina

Rehabilitation of electricity transmission and supply networks

Rehabilitation of national road network

Total

Slovenia

Total

Lithuania

Total

Albania

Total

Grand total

Extension and modernisation of fixed telecommunications network

Renovation and modernisation of port infrastructure at Klaipeda

Rehabilitation and upgrading of around 86 km of roads on Albania's main
north-south corridor

50.0

10.0

160.0

60.0

60.0

120.0

65.0

65.0

10.0

10.0

34.0

34.0

1 484.0

No

No

No

No

No

Yes

No

No

Table 4-6

EIB loans signed in the Mediterranean countries in 2000

Country

Description

Loan
(EUR million)

Risk
sharing

Tunisia

Upgrading of power transmission and supply network

Extension of the light metro network in Tunis

Dualling of Tunis-Sousse rail line and modernisation of rail network in Sousse region

Development of regional systems for solid waste management

Global loan for financing of small and medium-scale ventures

No

No

No

No

No

45.0

30.0

25.0

25.0

25.0

150.0

Completion of three sections of east-west motorway, south-west and south-east of
Algiers - Banque Algérienne de Développement

140.0

No

140.0

28

Total

Algeria

Total

Morocco

Construction and improvement of rural roads in northern provinces

Development of a gold mine in Akka, southern Morocco

Total

Egypt

Total

Syria

Total

Jordan

Total

Turkey

Total

Gaza-West
Bank

Total

Grand total

No

Yes

No

No

No

No

No

No

No

No

No

No

No

53.0

30.0

83.0

50.0

50.0

100.0

75.0

75.0

30.0

30.0

60.0

80.0

Rehabilitation and extension of agricultural land drainage networks in Nile valley and
delta

Global loan for financing of small and medium-scale ventures

Upgrading of high-voltage power conversion and transmission facilities

Construction of manufacturing facilities for bromine and bromine derivatives at Safi,
on southern shore of Dead Sea

Development of Eshidiya phosphate mine in south-eastern Jordan

Extension and modernisation of sewerage network in Bursa, west of Ankara - Bursa su
ve Kanalizasyon Isletmesi Buski

Rehabilitation and reconstruction of earthquake-damaged urban infrastructure

300.0

Rehabilitation and reconstruction of earthquake-damaged industrial installations

Industrial pollution abatement schemes, mainly involving upgrading of wastewater
treatment plants and reduction of atmospheric pollution

Global loan for financing of small and medium-scale ventures

Global loan for financing of small and medium-scale ventures

75.0

70.0

50.0

575.0

10.0

10.0

1 193

29

Table 4-7

EIB loans signed in Asia and Latin America in 2000

Country

Description

Brazil

Modernisation and extension of mobile telephony network in six north-eastern
States

Modernisation and extension of mobile telephony network in States of Bahia
and Sergipe in north-eastern Brazil

Loan
(EUR million)

Risk
sharing

58.5

40.0

15.0

Yes

Yes

Modernisation of two plants for manufacturing new range of compact
passenger cars, in State of São Paulo

91.5

Yes

Total

Argentina

Total

Mexico

Total

Indonesia

Total

Bangladesh

Total

Thailand

Total

Grand total

Expansion and conversion of gas-fired power station into combined-cycle
plant in Tucumán, northern Argentina

Construction of gasline; part-replacement and extension of distribution
network in Buenos Aires Province

Extension of water supply and sewerage networks of Posadas and Garupá, in
Misiones Province, eastern Argentina

Construction of glass-container production line in Mendoza

Construction and operation of gas supply network in Mexico City

Extension of Sumatra’s gas transmission network, including project to export
gas to Singapore

Construction of cement works near Chhatak in north-eastern Bangladesh

Construction of air traffic control complex at second Bangkok international
airport

Yes

Yes

Yes

Yes

Yes

No

Yes

No

205.0

57.8

51.7

20.4

17.1

147.0

47.7

47.7

70.0

70.0

36.2

36.2

26.4

26.4

532.3

30

Table 4-8

EIB loans signed in the Republic of South Africa in 2000

Country

Description

Loan
(EUR million)

Risk
sharing

RSA

.

Total

Extension of national telecommunications network

Telkom SA Ltd

Extension of phosphoric and sulphuric acid production facilities at Richard’s
Bay - Impofin (Pty) Ltd/Indian Ocean Fertilizer (Pty) Ltd

Global loan for financing of small and medium-scale infrastructure

Part-financing of loans from European institutions (ECFIs) to private-sector
companies in South Africa

No

No

No

No

50.0

25.0

50.0

15.0

140

31