WRITTEN QUESTION E-2972/01 by Samuli Pohjamo (ELDR) to the Commission. EU subsidies to banks in candidate countries to compensate for bad debts.
Date: 2001-10-26
Institutions: European Parliament, Provisional data
Subjects: EU aid, accession to the European Union, aid to undertakings, central bank, claim, credit policy, small and medium-sized enterprises

C 172 E/20

Official Journal of the European Communities

EN

18.7.2002

With regard to the Alqueva multi-purpose project, the dam on the Guadiana river aims to create a
strategic reserve of drinking water for supply to the people of the Alentejo and to ensure energy
production and irrigation in this region. Before the part-financing decision was taken, several studies were
carried out to analyse this project from the economic and environmental points of view. These studies
were carried out either at the request of the Portuguese authorities or at the request of the Commission or
jointly and all agreed on the importance of this project for the development of the Alentejo.

These studies proposed a number of measures to minimise and offset the impact of the project on the
environment. To this end, an environmental management plan was worked out which includes all these
measures as well as those designed to reduce as far as possible the number of trees to be felled in the area
to be flooded. Implementation of this plan, which is now in progress, is monitored by a committee on
which non-governmental environmental organisations are represented.

At the time the part-financing decision was taken, the Commission ensured that this project, and in
particular the measures listed above, complied with Community policy and law on the environment, and it
is continuing to do so throughout the implementation process.

Lastly, the Commission would point out that it is not in a position to comment on the decisions of the
World Bank.

(2002/C 172 E/021)

WRITTEN QUESTION E-2972/01

by Samuli Pohjamo (ELDR) to the Commission

(26 October 2001)

Subject: EU subsidies to banks in candidate countries to compensate for bad debts

Small businesses in the candidate countries have access to the SME Facility. The European Bank for
Reconstruction and Development (EBRD) has selected the banks in the candidate countries which may
support small and medium-sized enterprises under the SME Facility programme. The EBRD funds these
banks to the tune of EUR 125 million.

If the support takes the form of lending at the normal price, which requires the normal guarantees, it will
be of little use. It will not help the firms which need support. Firms which are able to obtain a loan from
banks under normal conditions do not need support. It is important that SMEs in the candidate countries
should be supported, but if normal conditions are applied the take-up of such loans will probably remain
small.

To enable the support to be more effective, it should include interest subsidies and periods of grace (for
normal loans), loans without the requirement for guarantees or for significant loan deposits, and loan
guarantees to other financial institutions.

Is the EU prepared to subsidise the selected banks in the candidate countries in the event of bad debts, and
if so, which banks belong to the system and on what conditions do the banks in the candidate countries
grant loans to businesses?

Answer given by Mr Verheugen on behalf of the Commission

(21 December 2001)

The small and medium-sized enterprise (SME) finance facility programme was launched to provide a
response to the difficulty SMEs in the candidate countries encounter in raising finance. Banks are often
reluctant to lend to them for a number of reasons: the difficulty of assessing the risk, lack of available
collateral, the fact that the costs of administering small loans are proportionally much higher than for
larger loans, and because the banking sector in most candidate countries has suffered very substantial
losses in the past, which has resulted in a more cautious approach to lending.

Under this scheme, the Commission provides support to local banks in the form of grants together with
credit lines from International Financial Intermediaries (IFIs).

18.7.2002

EN

Official Journal of the European Communities

C 172 E/21

The primary objective of the SME finance facility is not to provide interest subsidies, which could distort
the market, but to increase the supply of, and facilitate access to, credit for small companies by inducing
financial
intermediaries in the candidate countries to expand their financing operations for SMEs and
maintain them over the long term. For this reason, the specific loans to SMEs are offered by the local
banks at market conditions.

All local participating banks receive various incentives in order to develop successful, sustainable credit
operations with SMEs clients.
local banks selected by the European Bank for
Reconstruction and Development (EBRD) under the facility receive the incentive of technical assistance
financed from PHARE resources to strengthen their administrative, credit and management capacities so
that they can more effectively address the SME sector’s needs.

In particular, all

As regards subsidising bad debts, one of the incentives the Commission’s support may cover is a partial
guarantee of up to 40 % of the loss incurred on the SME loan portfolio of the local banks participating in
the facility. However, all the incentives that are funded are the result of individual negotiations between the
IFIs who are partners in this programme and the local participating banks.

The objective of the incentives, including the partial guarantee, is to ensure that the necessary conditions
for successfully developing business with SME clients are met. As a result, SMEs in the candidate countries
will enjoy easier access to credit through undistorted, more competitive and efficient financing circuits.

(2002/C 172 E/022)

WRITTEN QUESTION E-2985/01

by Markus Ferber (PPE-DE) to the Commission

(29 October 2001)

Subject: Funding of correspondence courses from PHARE appropriations

In the late 1990s the Commission, acting via the European Training Foundation (ETF) in Turin, used
PHARE appropriations to pay, in two instalments of EUR 20 m, the cost of setting up vocational training
correspondence courses in the applicant countries. According to assessment reports, the majority of the
appropriations were used to purchase PCs, some of which are still being stored, in their original packaging,
in the cellars of the universities which received them.

Can the Commission state how many and which correspondence courses are now running?

How many students have registered for these courses and can be shown to be taking part in them?

How many participants have thus far completed the courses by passing public or university examinations?

How much has a completed training course thus far cost the European taxpayer?

What action, in terms of its operations and staff, does the Commission plan to take in response to this
squandering of appropriations?

What role does the ETF still play in the current pre-accession strategy?

When can the Foundation be closed down?

Answer given by Mr Verheugen on behalf of the Commission

(14 December 2001)

The Commission assumes that the Honourable Member refers to two Multi-country Programmes for
Distance Education in the candidate countries of Central and Eastern Europe and Albania, as well as a
programme extension for Bosnia & Herzegovina and the former Yugoslav Republic of Macedonia. The