Report from the Commission to the budgetary authority on guarantees covered by the general budget - situation at 31 December 2001
Date: 2003-01-21
Institutions: European Commission
Subjects: CIS countries, Central and Eastern European countries, Community loan, Euratom loan, New Community Instrument, budgetary reserve (EU), claim, evaluation method, general budget (EU)

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 21.1.2003
COM(2003) 15 final

REPORT FROM THE COMMISSION

to the budgetary authority on guarantees covered by the general
budget - situation at 31 December 2001

TABLE OF CONTENTS

REPORT FROM THE COMMISSION to the budgetary authority on guarantees
covered by the general budget - situation at 31 December 2001 ............................................... 1

Part One: Events since the report at 30 June 2001, the risk situation and activation of
budget guarantees ....................................................................................................................... 5

1.

1.1.

1.2.

2.

2.1.

2.2.

2.3.

3.

3.1.

3.2.

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

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

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

Events since the report at 30 June 2001....................................................................... 5

Federal Republic of Yugoslavia................................................................................... 5

Community Guarantee to the European Investment Bank for loans for projects
in the Federal Republic of Yugoslavia......................................................................... 5

Community Guarantee to the European Investment Bank for loans for projects
in the Baltic Sea basin of Russia.................................................................................. 6

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

Amount outstanding at 31 December 2001.................................................................. 7

Maximum annual risk borne by the Community budget: operations disbursed
at 31 December 2001 ................................................................................................... 7

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 2001 .................................................................................... 12

Analysis of the Community's theoretical lending and guarantee capacity in
respect of non-member countries ............................................................................... 12

Situation of the Guarantee Fund at 31 December 2001 ............................................. 14

Relative solidity ......................................................................................................... 14

Part Two: Evaluation of Potential Risks: Economic and Financial Situation of
the non-member countries benefiting from the most important loan operations ..................... 16

1.

2.

Introduction................................................................................................................ 16

Accession countries.................................................................................................... 16

2.1.

Bulgaria ...................................................................................................................... 16

2

2.2.

2.3.

3.

3.1.

3.2.

3.3.

4.

4.1.

4.2.

4.3.

4.4.

4.5.

4.6.

5.

Lithuania .................................................................................................................... 17

Romania ..................................................................................................................... 18

Western balkans ......................................................................................................... 18

Bosnia and Herzegovina ............................................................................................ 18

Federal Republic of Yugoslavia................................................................................. 19

Former Yugoslav Republic of Macedonia ................................................................. 20

Newly independent states........................................................................................... 21

Armenia...................................................................................................................... 21

Belarus ....................................................................................................................... 21

Georgia....................................................................................................................... 22

Moldova ..................................................................................................................... 22

Tajikistan.................................................................................................................... 23

Ukraine....................................................................................................................... 23

Other non-member countries...................................................................................... 25

5.1.

Algeria........................................................................................................................ 25

List of abbreviations................................................................................................................. 26

Annex ....................................................................................................................................... 27

1.

Explanatory notes on the situation of risks covered by the community budget......... 27

1.1.

Tables 1 to 3............................................................................................................... 27

1.1.1. Authorised ceiling (Table 1) ...................................................................................... 27

1.1.2. Capital outstanding ( Table 1).................................................................................... 28

1.1.3. Annual risk (Tables 2 and 3)...................................................................................... 28

1.2.

1.3.

1.4.

Loan operations covered by a budget guarantee ........................................................ 28

Expected signature and disbursement of EIB loans................................................... 33

Payment of the budget guarantee ............................................................................... 33

1.4.1

Borrowing/lending operations.................................................................................... 33

1.4.2. Guarantees given to third parties................................................................................ 34

2.

2.1.

2.2.

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)................................................................... 35

Reserve for loan guarantees to non-member countries .............................................. 35

Bases for the calculation of the provisioning of the Guarantee Fund ........................ 35

3

2.3.

2.4.

2.5.

2.6.

3.

Basis for the provisioning of the Fund in the event of a part guarantee .................... 36

Provisioning of the Guarantee Fund .......................................................................... 36

Margin remaining in the guarantee reserve................................................................ 37

Residual lending capacity .......................................................................................... 37

Explanatory notes for country-risk indicators (+ Tables) .......................................... 38

4

Part One:
Events since the report at 30 June 2001, 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.

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 2001

2.1.

Federal Republic of Yugoslavia

On  23  May,  2001,  the  Commission  presented  a  proposal  for  a  Council  Decision  providing
macro-financial assistance to the Federal Republic of Yugoslavia. The amount to be granted is
€ 225 million in the form of a loan with a max imum maturity of fifteen years and € 75 million
in  the  form  of  non-repayable  grants.  On  16  July  2001  the  Council  decided  to  grant  macro-
financial assistance to the Federal Republic of Yugoslavia. The amount to be granted is € 225
million  in  the  form  of  a  loan  and  €  75  million  in  the  form  of  non-repayable  grants.  On
10 December  2001  the  Council  decided  to  amend  this  decision  by  providing  an  additional
amount  of  €  45  million  in  the  form  of  non-repa yable  grants.  The  grant  component  of  this
assistance shall now amount to a maximum of € 120 million.

2.2.

Community Guarantee to the European Investment Bank for loans for projects
in the Federal Republic of Yugoslavia

On  6  November,  2001,  the  Council  decided  to  amend  Decision  2000/24/EC  to  extend  the
Community  guarantee  to  the  European  Investment  Bank  to  cover  loans  for  projects  in  the
Federal Republic of Yugoslavia. The amount of these loans is subject to an overall ceiling of
€ 350 million. The guarantee is limited to 65 % of the overall ceiling of € 350 million decided
on by the Council.

5

2.3.

Community Guarantee to the European Investment Bank for loans for projects
in the Baltic Sea basin of Russia

On  6  June,  2001,  the  Commission  presented  a  proposal  for  a  Council  Decision  granting  a
Community guarantee to the European Investment Bank against losses under a special lending
action  for  selected  environmental  projects  in  the  Baltic  Sea  basin  of  Russia  under  the
Northern  Dimension.  The  overall  ceiling  of  the  credits  opened  shall  be  €  100  million.  The
Community guarantee with respect to credits opened by the EIB under this Decision shall take
the form of an extension of the 65 % global Community guarantee granted to the EIB under
the general external lending mandate. On 6 November, 2001, the Council decided to grant the
European Investment Bank a guarantee for investment projects carried out under this special
lending action in the Baltic Sea basin of  Russia under the Northern  Dimension. The overall
ceiling of the credits opened shall be € 100 million. The EIB shall  benefit from an exceptional
Community  guarantee  of  100  %.  The  guarantee  shall  cover  loans  signed  during  a  period  of
three  years  from  the  date  of  adoption  of  this  Decision.  This  period  shall  be  automatically
extended by six months if, on expiry of those three  years, the loans signed by  the EIB have
not attained the overall ceiling of € 100 million.

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 (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  the  date  of  the  report,  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  8%  is  assumed  for  EIB  loans;  The  average  interest  rate  assumed  for
borrowing  and  lending  operations  is  4.4%.  An  interest  rate  of  4.89%  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 2001.

6

                                                
The overall figures quoted cover risks of different types; loans to one country in the case of
macro-financial 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 2001

The amount outstanding is set out in Table 1.

The total risk at 31 December 2001 came to € 15 443 million, as against € 15 041 million at
30 June 2001, an increase of 2.7 %3.

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

Amount outstanding at 30 June 2001

Loan repayments
Euratom
NIC
Financial assistance
EIB

Loans disbursed
Euratom
Financial assistance
EIB

Exchange  rate  differences  between  the  Euro  and  other
currencies

Amount outstanding at 31 December 2001

€ million

15 041.00

0.00
- 83.50
- 252.00
- 533.00

0.00
225.00
900.00

145.50

15 443.00

The  capital  outstanding  in  respect  of  operations  in  the  Member  States  was  €  52  million  at
31 December 2001, a fall of 59.0 % compared with 30 June 2001.

The  capital  outstanding  from  non-member  countries  at  31  December  2001  was  €  15  391
million, an increase of 3.2 % compared with 30 June 2001.

3.2.

Maximum  annual  risk  borne  by  the  Community  budget:  operations  disbursed
at 31 December 2001

The maximum annual risk is set out in Table 2.

The total risk for the first half of 2002 comes to € 1 602 million.

– 

3

The risk in respect of the Member States comes to € 11 million.

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 risk in respect of non-member countries comes to € 1 591 million.

3.3.

Maximum theoretical annual risk borne by the Community budget

The situation is set out in Table 3.

This risk comes to €1 859 million during 2002. It  will increase from 2003 onwards and reach
€4 675 million in 2010.

– 

– 

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

The  risk  in  respect  of  non-member  countries  amounts  to  €1  843  million  for  2002.
The risk will increase from 2003 onwards to reach €4 675 million by 2010.

8

TABLE 1
CAPITAL OUTSTANDING IN RESPECT OF OPERATIONS DISBURSED
million Euro

Authorised
ceiling

Capital
outstanding at
30.06.01

Capital
outstanding at
31.12.01

Operations

Remainder
to be
disbursed
31.12.01

0

0

0

0
0

0
0

33
52

0
19

0
89

14000

38
127

4000
6830

1500
26330

MEMBER STATES
A.Balance of payments
 1. Italy
B.Others
 2. Euratom (*)
 3. NCI and NCI earthquake
 4. EIB Mediterranean
     Spain, Greece, Portugal
MEMBER STATES - TOTAL
THIRD COUNTRIES
A.Financial assistance
 1. Bulgaria 
 2. Romania
 3. Algeria
 4. FYROM
 5. Bosnia-Herzegovina
 6. Baltic States
 7. Moldova
 8. Ukraine
 9. Belarus
10. Georgia
11. Armenia
12.Tajikistan
13. Albania
14. Euratom (*)
15. FR Yugoslavia
B.Other
16. EIB Mediterranean(**)
17. EIB Central & Eastern Europe
18. EIB Asia, Latin America
19. EIB South Africa
20. EIB The Baltic Sea basin of Russia 
THIRD COUNTRIES - TOTAL
GRAND TOTAL
(*)   The overall ceiling is 4 000 million Euro. By Decision 94/179/Euratom of 21 March 1994 the Council decided to extend Euratom 
        loans to the financing of projects of certain non-member countries.
(**) The amount outstanding has been increased by 12,0 million Euro to take account of the principal due but not paid at 31.12.01

0
100
100
40
0
85
15
92
25
32
0
15
20
0
0

390
225
100
50
20
25
46
326
24
100
23
60
0
40
225

460
225
250
40
20
25
55
343
30
100
23
60
0
40
0

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

16147
17750
4405
1500
100
43417
69747

5629
5608
2013
487
0
15391
15443

5089
5124
1251
595
0
13730
13857

3651
3137
761
257
0
8330
8330

225

ANNEX TO TABLE 1

SITUATION IN RESPECT OF EIB OPERATIONS (31.12.01)

Operations 

Mediterranean: Member States
Non-EU countries, old mandates
     Mediterranean Protocols
     Central & Eastern Europe I and II
     Asia, Latin America I and II
     South Africa
Non-EU countries, decision of 14.4.97
     Mediterranean
     Central & Eastern Europe
     Asia, Latin America
     South Africa
FYROM, decision of 19.5.98
Bosnia, decision of 14.12.98
Turkey, decision of 29.11.99
Non-EU countries, decision of 22.12.99
     Mediterranean
     Central & Eastern Europe
     Asia, Latin America
     South Africa
Croatia, decision of 7.11.2000
Turkey, decision of 4.12.2000
FR Yugoslavia, decision of 6.11.2001
The Baltic Sea basin of Russia,
decision of 6.11.2001
Total

Credit line
authorised

Loans made
available minus
cancellations

Amounts
disbursed

Amounts
outstanding 
at 31.12.01

1500

6362
4700
903
300

2310
3520
1022
375
150
100
600

6425
8680
2480
825
250
450
350

1465

5932
4090
757
285

2250
3414
1022
375
150
100
450

1906
1768
939
202
146
0
66

1753

6156
4264
831
224

1385
2166
816
271
61
4
319

120
358
633
2
0
0
0

33

3758
3163
589
214

1366
2087
791
270
61
4
319

121
358
633
3
0
0
0

100
41402

0
25317

0
19363

0
13770

NB: As the loans are disbursed in national currencies, the loan ceiling may be exceeded when the amount  
disbursed up to the date of the report are converted into Euro.

9

TABLE 2
MAXIMUM ANNUAL RISK BORNE BY THE COMMUNITY BUDGET
(Estimate in million Euro based on all operations disbursed at 31.12.01)

2002

2003

2004

2005

2006

2007

2008

2009

2010

TOTAL

MEMBER STATES
CAPITAL
 A. Balance of payments
   1. Italy
 B. Structural loans
   2. Euratom 
   3. NCI and NCI EQ
   4. EIB Mediterranean
       Spain, Greece, Portugal
Capital - subtotal
INTEREST
 A. Balance of payments
   1. Italy
 B. Structural loans
   2. Euratom 
   3. NCI and NCI EQ
   4. EIB Mediterranean
       Spain, Greece, Portugal
Interest - subtotal
MEMBER STATES - TOTAL
NON-MEMBER COUNTRIES
CAPITAL
 A. Financial assistance
  5. Bulgaria 
  6. Romania
  7. Algeria
  8. FYROM
  9. Bosnia
 10. Lithuania
 11. Moldova
 12. Ukraine
 13. Belarus
 14. Georgia
 15. Armenia
 16. Tajikistan
 17. FR Yugoslavia
 18. Euratom
 B. Guarantees
 19. EIB Mediterranean
 20. EIB Central & Eastern Europe
 21. EIB Asia, Latin America
 22. EIB South Africa
Capital - subtotal
INTEREST
 A. Financial assistance
  5. Bulgaria 
  6. Romania
  7. Algeria
  8. FYROM
  9. Bosnia
 10. Lithuania
 11. Moldova
 12. Ukraine
 13. Belarus
 14. Georgia
 15. Armenia
 16. Tajikistan
 17. FR Yugoslavia
 18. Euratom
 B. Guarantees
 19. EIB Mediterranean
 20. EIB Central & Eastern Europe
 21. EIB Asia, Latin America
 22. EIB South Africa
Interest - subtotal
NON-MEM. COUNTRIES - TOTAL
GRAND TOTAL

0

0
19

23
42

0

0
6

3
9
51

390
225
100
21
2
25
46
326
24
44
11
0
0
54
0
2889
3780
1272
330
9539

76
32
3
16
6
1
4
48
2
36
7
17
72
219

3
3

0
3

7
7

9
9

2

2
4
11

55
100

25
12
37
6

2

1
3
12

40

12
57
6

19

4
23

2

2
25

70

12
57
6

0

0

0

0

0

0
0

63

73

0
0

88
25

0
0

88
25

5

3
55

7
57
6

35

15

0
0

25
25

8

15

22
6

0
0

15
25

8
2

22
6

2

24

28

263
383
95
20
996

308
449
130
21
1023

314
562
152
42
1215

324
498
170
21
1146

340
544
174
22
1210

345
380
195
46
1113

356
334
158
32
1014

334
359
123
98
1038

305
271
75
28
785

14
7
3
2
1
1
2
12
1
4
1
2
8
2

14
6

2
1

1
11
1
4
1
2
8
5

13
6

2
1

1
9
0
4
1
2
8
12

12
3

2
1

0
7
0
4
1
2
8
18

10
3

2
1

0
5

4
1
2
8
28

7
3

2
1

3

4
1
2
8
34

4
2

2
1

1

4
1
2
8
39

1
1

2
1

1

4
1
2
8
41

1
0

1
1

3
1
2
8
40

215
237
59
24
595
1591
1602

200
211
54
20
540
1563
1575

182
187
50
18
495
1710
1735

165
162
46
15
446
1591
1594

148
139
41
14
405
1615
1615

130
111
35
14
354
1467
1467

111
93
31
11
309
1323
1323

93
78
26
9
267
1305
1305

76
64
22
3
221
1006
1006

1320
1282
364
128
3632
13171
13222

10

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

2002

2003

2004

2005

2006

2007

2008

2009

2010

TOTAL

0

0

0

0

0

0

19
33

51

0

7
3

10

61

390
275
100
21
2
25
55
326
24
44
11
0
0
53

4790
5730
2388
856

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

12

12

13

13

2
2
4

2
1
3

19
5

24

2
0
2

MEMBER STATES - TOTAL

16

16

26

NON-MEMBER COUNTRIES

3

3

0
0

4

0

0

0

0

88
25

0

0

88
25

5

3
15

0

0

25
50

8

3
15

22
6

0

0

15
50

8
2

3

22
6

40

63

73

55
100

25
12
37
6

12
57
6

70

12
57
6

3
55

35

7
57
6

2

24

28

354
438
223
62

431
476
267
34

526
604
307
48

627
751
385
101

716
853
359
100

754
951
277
229

754
951
277
229

1222

1341

1615

2011

2165

2363

2344

15090  

13
9

3
1

1
13
0
4
1
2
8
12

12
7

3
1

1
10
0
4
1
2
8
18

10
7

3
1

1
8

4
1
2
8
28

7
6

3
1

1
6

4
1
2
8
34

4
5

3
1

1
5

4
1
2
8
39

1
5

3
1

0
4

4
1
2
8
41

1
3

2
1

0
4

3
1
2
8
40

76
60
3
25
6
1
8
79
2
36
7
17
72
219

302
354
125
26

1042

326
352
168
27

988

14
9
3
2
1
1
2
14
1
4
1
2
8
2

14
9

3
1

2
14
1
4
1
2
8
5

318
255
119
44
801

388
384
124
63
1022

431
536
121
71
1225

471
512
115
89
1254

583
558
167
88
1468

779
701
215
116
1884

926
832
326
138
2295

992
864
242
169
2336

992
864
242
169
2331

5880
5506
1671
947

14615

CAPITAL
 A. Financial assistance
   4. Bulgaria 
   5. Romania
   6. Algeria
   7. FYROM
   8. Bosnia
   9. Lithuania
  10. Moldova
  11. Ukraine
  12. Belarus
  13. Georgia
  14. Armenia
  15. Tajikistan
  16. FR Yugoslavia
  17. Euratom 
 B. Guarantees
  18. EIB Mediterranean
  19. EIB C + E 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. Lithuania
  10. Moldova
  11. Ukraine
  12. Belarus
  13. Georgia
  14. Armenia
  15. Tajikistan
  16. FR Yugoslavia
  17. Euratom 
 B. Guarantees
  18. EIB Mediterranean
  19. EIB C + E Europe
  20. EIB Asia, Latin America
  21. EIB South Africa

Interest - subtotal

THIRD COUNTRIES - TOTAL

1843

2010

2447

2594

3083

3895

4459

4699

4675

29705

GRAND TOTAL

1859

2026

2473

2598

3083

3895

4459

4699

4675

29767

11

4.

ACTIVATION OF BUDGET GUARANTEES

4.1.

Payments from cash resources

The  Commission  draws  on  its  cash  resources,  under  Article  12  of  Council  Regulation
(EC, Euratom) No. 1150/2000 of 22 May 2000, implementing Decision 94/728/EC, 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  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

Total

€uro

Date

Amount (principal + interest)

29.08.2001

29.08.2001

29.08.2001

1.366.351,99

3.546.225,45

15.628,96

4.928.206,40

4.3.

Arrears at 31 December 2001

As of 31 December 2001, all amounts due by the Former Republic of Yugoslavia have been
repaid to the EIB under its guaranteed loans. On 23 October 2001, a transfer to the Guarantee
fund’s EU liaison account was made for an aggregate amount of € 162.345.253,00.

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

12

guarantees for  multiannual operations) is  adopted  are  limited  by  the  amount  entered  for  the
guarantee reserve in the Financial Perspective4.

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.

On  the  basis  of  the  decisions  adopted  by  the  Council  and  decisions  proposed  and  in
preparation (see Table 4), €163.74 million is expected  to be used from the guarantee reserve
in 2002, leaving €49.26 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 2002, the  annual
capacity available for loans is as follows:

– 

– 

€547.33 million for loans with a 100% guarantee under the Community budget, or

€842.05  million  for  loans  with  a  65%  guarantee  (in  accordance  with  Council
Decision 2000/24/EC of 22 December 1999).

At  31  December  2001,  outstanding  lending  and  loan  guarantee  operations  for  non-member
countries plus unpaid interest due totalled €15.391,00 million.

1.  Capital outstanding, borrowing and lending

2.  Capital outstanding, EIB

3.  Capital outstanding, payment defaults

4.  Default interest

Unpaid interest due5

TOTAL

€ million

Situation au 31.12.01

 1 654.00

 13 737.00

 0.00

 0.00

0.00

15 391.00

The ratio between the Fund’s resources and outstanding capital liabilities, within the meaning
of the Regulation establishing the Fund, was 11.39%, 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.

4

5

The figure entered in the 2000-2006 Financial Perspective is € 200 million at 1999 prices.
Unpaid interest due within the meaning of the Regulation establishing the Guarantee Fund.

13

                                                
The  surplus  of  €372,46  million  at  the  end  of  the  financial  year  2001  will  be  repaid  to  the
budget in the second half of 2002.

6.

SITUATION OF THE GUARANTEE FUND AT 31 DECEMBER 2001

At  31  December  2001,  the  Guarantee  Fund  amounted  to  €1  774  million.  The  following
movements were recorded in the second half of 2001:

– 

– 

– 

– 

– 

7.

€9.75 million drawn from the Fund as a result of further defaults;

late repayment by FRY of €162.34 million in arrears;

net revenue of around €74.07 million on inve stments from the Fund’s assets.

a transfer of €207.2 million from the 2001 reserve;

€372.46 million repaid to the budget as Fund surplus at 31 December 2001;

RELATIVE SOLIDITY

The ratio  between  the  amount  in  the  Fund  at  31  December,  2001  (€ 1  774  million)  and  the
maximum annual risk for loans to non-member countries (defined as the total amount falling
due) shown for 2002 in Table 3 (€ 1 843 million) is 96 %.

14

Table 4 - Indicative amounts of loans and loan guarantees to be provisioned under the reserve for guarantees 
(in EUR million)

Year 

9%

2002

2003

2004

Expected Expected Expected Expected Expected Expected
provision.

provision.

provision.

loan
amounts

loan
amounts

loan
amounts

 Amount of the reserve 

Total lending and guarantee capacity

1. GUARANTEES OF EIB LOANS 1

Decided operations
Mediterranean Basin, 1997-2000 general
lending mandate
2000-2007 general lending mandate 3
correction forecasted/realized 

Special Turkey reconstruction facility
correction forecasted/realized

Baltic sea Russia special action
correction forecasted/realized

s/total 2000/2007

2. MACROFINANCIAL ASSISTANCE (LOANS)

s/total 2000/2007

Decided operations
FRY
Proposed operation 4
Ukraine
Suspended operation 5
Albania (estimated carry over 2 )

3. EURATOM LOANS

Provisional estimates  6
Ukraine  

Romania  

Use of the reserve (1+2+3)

Margin within the reserve (after provisioning of above-
indicated loans)

Residual lending and guarantee capacity                100%

65%

min.
max.

213

2367
3641

min.
max.

217

2411
3709

min.
max.

221

2456
3778

2.975,00

174,04

2.875,00

168,19

150,00

8,78

40,00

3,60

35,00

3,15

35,00

2,36

3.075,00

150,00
75,00

25,00

179,89
-19,15
160,74
8,78
4,39

2,25
-9,00
-6,75

18,00

-2,98

-20,00

-2,80

224,00

0,00

154,00

0,00

163,74

49,26

547,33
842,05

*
**

177,64

39,36

437,36
672,82

180,12

40,88

454,22
698,80

1

2

3

4

5

6

*

**

The EC guarantee for EIB loans covers 75 % of the principal for loans provided under the 4th Syrian Protocol (Mediterranean Basin), 70 
% of the principal for loans provided under the 1997-2000 general lending mandate, 100 % of the principal for loans provided under the 
recently adopted Baltic sea Russia special action and 65 % of the principal for loans provided under the other mandates and facilities.

Correction of estimated levels of implementation.

The figures mentioned under the 2000-2007 general lending mandate include the amounts for Croatia and the Federal Republic of 
Yugoslavia and those for the Turkey customs special action.

The Commission proposal provides for new macro-financial assistance to Ukraine for up to EUR 110 million. However, the corresponding 
Council Decision will cancel in parallel undisbursed amounts of EUR 92 million loans under a previous Council Decision (98/592/EC) for 
macro-financial to Ukraine already provisioned for in the Guarantee Fund. The new provisioning required by the new operation should 
therefore be calculated on the net increase (EUR 18 million) of the loan amounts decided in favour of Ukraine.

This operation (Council Decision 99/282/EC) is not programmed any more and is not expected to be implemented.

For Ukraine, under the envisaged EUR 657 million loan for the K2-R4 project, EUR 503 million are already provisioned from previous 
years and EUR 154 million are planned to be provisioned in 2004. For Romania, under the Cernavoda 2 project, provisioning operations 
in  2003 would cover a loan amount of EUR 224 million. Should the Euratom limit being increased prior to the Commission decision for 
Romania, it could be envisaged to increase the total loan amount to EUR 126 million requiring an additional provisioning of EUR 11,34 
million
For macro-financial assistance and Euratom loans.

For guarantees of EIB loans.

15

 
 
 
 
 
 
 
 
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 in Part One provide information on quantitative aspects of the risk borne by
the general budget. However, this data should be accompanied by an  assessment of  the
quality  of  the  risk,  which  depends  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 Part Two presents a table of risk indicators (see
Annexes) for each non-member country that has received EC macro-financial assistance
and  still  has  outstanding  debts  to  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,  which  covered  the  first  six
months of 2001.

The  evaluation  in  this  Part  does  not  deal  with  countries  other  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 2001 growth continued  at  a high  rate,  albeit somewhat slower than  in  the  year 2000
(4.7% over the first three quarters of 2001 against 5.8% in 2000).  Industrial production
grew by 9% in the first 9 months of 2001. While foreign direct investment has been less
abundant  than  in  the  year  2000,  domestic  investment  is  rising,  reflecting  a  growing
business  confidence  as  a  result  of  economic  stability  and  reforms.  Unemployment  has
fallen over the last half a year by approximately half a percentage point, but remains high
at close to 17%.

The  currency  board  arrangement  (EUR  1  =  BGN  1.96)  has  been  maintained  over  the
period and the government plans to preserve the currency board at least until accession to
the European Union. Nevertheless, inflation accelerated at the end of 2000 and in the first
half  of  2001,  reaching  12%  year-on-year  at  one  stage,  but  fell  steadily  to  around  5%
(autumn 2001).

The current account deficit is estimated at 6.5% of GDP in 2001, slightly higher than in
the year 2000. The surplus on the services account continued to grow chiefly because of
tourist revenues, while the trade balance worsened somewhat.

16

Bulgarian public finances remain sound. The general government deficit stood at 1.1% of
GDP in 2000 and for 2001, an election year, final figures are expected to be below 1% of
GDP.  A  deficit  of  0.8%  is  expected  for  2002,  while  public  finances  are  planned  to  be
broadly in balance in  2003. Meanwhile,  public  debt  is  falling  rapidly,  from  well  above
100%  of  GDP  in  1997  to  approximately  69%  (72.2%  in  Q301)  of  GDP  at  the  end  of
2001.

Mid-December 2001, the IMF and the new Bulgarian government came to an agreement
on  a  further  programme.  Although  the  stand-by  agreement  has  been  approved  by  the
board of directors of the IMF in February, rating services upgraded Bulgaria’s sovereign
debt already before (Moody’s Investors Services upgraded Bulgaria’s rating from B2 to
B1 on December 19, 2001; Fitch and Standard & Poor's increased the rating from B+ to
BB- on January 14, 2002).

2.2.

Lithuania

Several  indicators  point  to  an  economic  strengthening  in  Lithuania.  The  previous
estimate of GDP growth for 2000 has been revised upwards by 0.6 percentage points to
3.9%. Growth in 2000 relied very much on a strong export performance, and this trend
has  remained,  despite  the  economic  slowdown  in  many  of  Lithuania’s  trade  partners.
Thanks to this development, Lithuania managed to keep up strong growth in 2001. Based
on preliminary figures, growth is  estimated  at 5.8%. An important change, however,  in
economic performance compared to previous years, is the increase in gross fixed capital
formation in 2001, which is important for potential growth in coming years.

Notwithstanding  strong  growth,  inflation  has  remained  at  a  relatively  low  level.  On
average, consumer prices rose by 1.3% in 2001. Low inflation has been facilitated by the
appreciation  of  the  litas  against  the  Euro.  However,  with  the  litas  pegged  against  the
Euro, as from February 2002, and with domestic demand picking up, inflation is likely to
be somewhat higher in the future.

Although unemployment has decreased somewhat since the peak in early 2001, no clear
downward  trend  is  recognisable.  With  an  unemployment  rate  at  16.5%  in  the  second
quarter of 2001, according to the labour force survey, this remains one of the most severe
problems for the economy. The segmentation of the labour market might hamper further
growth in the coming years.

Strong export  performance,  in  combination  with  relatively  weak  domestic  demand,  has
led  to  a  significant  decline  in  the  current  account  deficit.  For  the  first  three  quarters  of
2001, the current account deficit amounted to 3.3% of GDP, compared to 5.0% one year
earlier. At the same time, foreign direct investment has increased and fully  covered the
current account deficit for the first three quarters of 2001.

Lithuania  has  conducted  a  tight  fiscal  policy  in  order  to  cut  down  the  budget  deficit,
which peaked in 1999 at 7.8% of GDP. In 2000 it came down to 2.8% and the target for
2001,  1.4%  of  GDP,  seems  to  be  attainable  as  both  the  state  budget  and  the  social
insurance  budget  report  better  than  expected  balances.  The  target  for  2002  is  1.5%  of
GDP. In the coming years, the budget deficit might be expected to remain at about that
level, as any further decline is obstructed by expenses related to structural reforms such
as the pension reform, the savings restitution etc.

17

2.3.

Romania

In the second half of 2001, economic performance continued to improve. The authorities
secured renewed IMF support and began tightening an excessively expansionary policy
stance. The  current account deficit widened  but  was  easily  financed  as  all  major  rating
agencies  upgraded  Romania’s  paper.  Despite  the  recent  progress,  macroeconomic
prospects remain uncertain in view of the weakening export performance caused by the
slow down in the world economy and the authorities’ repeated failures to tighten income
policy and financial discipline on a sustained basis.

GDP grew by 5.1% in the first nine months of 2001 driven by rising stock accumulation
and  increasing  household  consumption.  Fiscal  and  income  policies  were  initially
loosened,  contributing  to  the  strengthening  of  the  recovery,  but  were  tightened  in  the
second half of the  year. This allowed the authorities to meet their 3.5% of  GDP deficit
target,  slow  down  the  widening  of  the  current  account  deficit  which  totalled  5.0%  of
GDP by November 2001, and reduce year-on-year inflation some 10 percentage points to
30.3% at end-2001, despite sharp increases in energy tariffs. Prompted by the improving
economic  performance,  all  three  major  rating  agencies  upgraded  Romania’s  debt,
allowing the country to finance itself on the international markets at improved terms. At
30.2%  of  projected  GDP  at  end-October,  external  indebtedness  increased  but  remained
low by international standard.

On  October  31,  2001,  the  IMF  executive  Board  approved  an  18-months  Stand-By
Arrangement for SDR 300 million (USD 383 million), supporting a programme aimed at
achieving  a  gradual  reduction  of  inflation  and  a  moderate  external  adjustment,  whilst
maintaining a sustained pace of economic growth.

In the run up to the IMF agreement, structural reforms were re-launched, most notably in
the  energy  area  where  the  authorities  began  increasing  tariffs  with  the  ultimate  aim  of
achieving cost recovery. The sale of a major loss-maker, steel plant SIDEX, marked an
important success in the authorities’ privatisation programme. However, the overall pace
remained slow  as  the  authorities  missed  the  indicative  privatisation  targets  set  with  the
IMF.  Further  slippage’s  occurred  with  respect  to  improving  energy  utilities’  collection
rates and reducing arrears to the government.

3.

WESTERN BALKANS

3.1.

Bosnia and Herzegovina

In  the  second  half  of  the  year,  the  entities’  new  governments  formed  in  early  2001
regained  momentum  in  their  progress  with  reforms.  Macroeconomic  data  for  2001
indicate  that  GDP  growth  continued  to  decelerate,  and  the  authorities  expect  a  growth
rate of  around 5-6% for the  year 2001  as  a  whole, compared  to  an  initial  8%  estimate.
Unemployment is estimated at about 40% of the labour force, one of the highest rates in
the  Western  Balkans.  Tentative  estimates  for  the  ratio  of  external  financing  to  GDP  in
2001  indicate  a  sharp  reduction  to  23%,  from  the  high  ratio  of  2000  (44%).  Inflation
remained  subdued  (estimated  at  about  4.5%  in  2001)  and  the  exchange  rate  of  the
Konvertible Marka (KM) firmly pegged 1:1 to the Deutsche Mark/Euro, thanks to a strict
adherence to the rules of the currency board. General government expenditure remained
very high and was estimated at about 44% of GDP in 2001. Larger than expected deficits

18

have  forced  the  State  to  take  action  towards  the  end  of  the  year  to  bring  current
expenditure into line with available resources.

The trend of export recovery initiated in 2000 (partly due to a reopening of the Yugoslav
market), combined with a decline of imports (mainly due to reductions in donor finance
for  reconstruction)  continues.  The  current  account  deficit  therefore  declined,  but  only
slightly  (from  22.2%  of  GDP  in  2000  to  20.8%  in  2001,  transfers  excluded).  The
inhospitable business environment explains BiH's weak performance in attracting much-
needed foreign investment, for which it has one of the poorest records among Central and
Eastern European countries (only USD 164 million in 2001).

After the completion in May 2001 of the IMF final reviews of the Stand-By Arrangement
(SBA)  signed  in  May  1998,  negotiations  for  a  new  SBA  have  been  going  on  with  the
BiH authorities. Slow progress of the BiH authorities in specific key actions, as well as
the events of the September 11 have delayed the signature of the new SBA, which should
now be completed in the early months of 2002.

Foreign debt remains at high levels (about 55.7% of GDP in 2001), partly as a result of a
substantial debt burden inherited from the former Yugoslavia. The ratio of debt service to
exports is relatively low, though, reflecting the concessional nature of much of the debt
and favourable debt rescheduling. None of the rating agencies provide risk indicators for
BiH.  EBRD  transition  indicators,  reflecting  progress  in  reforms  in  Central  and  Eastern
European countries, placed BiH towards the low end of the  scale in 2001, even though
some progress was  visible on privatisation of  large-scale  enterprises.  Although  in  2001
BiH remained current on its external debt-service obligations, high levels of its external
debt  and  current  account  deficit,  together  with  the  prospects  of  declining  foreign
assistance, mean that the country risk remains significant. The mechanisms that regulate
the transfers from the Entities to the State for debtservicing need some strengthening.

3.2.

Federal Republic of Yugoslavia

Overall, it appears that one  year after the political changes  occurred  in the  FRY in late
2000,  the  authorities  have  accomplished  substantial  progress  toward  restoring  macro-
economic  stability,  liberalising  the  exchange,  price  and  trade  regime  and  improving
market confidence in the context of IMF-supported programmes. Real GDP in 2001 grew
by some 5.5% (including some 3.5% in Montenegro). Monetary policies remained tight
throughout  2001  and  the  30%  of  real  base  money  was  mainly  due  to  purchases  of  the
National  Bank  of  Yugoslavia  on  the  foreign  exchange  market.  Inflation  came  down
considerably  from  115%  at  end-2000  to  around  40%  at  end-2001  (in  Montenegro  it
reached  25%  after  22%  in  2000),  and  the  consolidated  deficit  (before  grants)  of  the
general  government  had  been  contained  to  2.4%  of  GDP,  compared  to  an  original
programme target of 6.1%.

The balance of payments recorded a widening trade deficit in 2001 which is estimated at
some  $3.000  million.  However,  large  inflows  of  remittances  from  abroad  and  service
receipts  contained  the  current  account  deficit  to  around  $  1.075  million  before  grants.
Preliminary balance of payments projections of the authorities for 2002 point to a current
account  deficit  of  around  $1.500  million  (before  grants),  reflecting  an  increase  in  debt
service  and  in  foreign-financed  project-related  imports.  The  Dinar  remained  stable  at
YuD30 per Deutschmark whereas gross foreign exchange reserves reached some $1.300
million in January 2002 (compared to $605 million in January 2001).

19

Significant  progress  has  been  made  in  the  restructuring  of  FRY’s  outstanding  external
debt of some $12.2 billion at end-2001 or 140% of GDP. On multilateral debt, the FRY
has fully settled arrears towards the IMF and the EIB and has reached a debt restructuring
agreement  with  the  World  Bank.  Also,  the  agreement  between  the  Paris  Club  and  the
FRY authorities must  be  seen  as  an important element in  fostering the sustainability of
the country’s external position. It provides for a phased 66% reduction by 2005 in the net
present  value  of  obligations  towards  Paris  Club  creditors  (some  $4.5  billion)  and  a
rescheduling of the remaining stock over 22 years with a 6 year grace period. The agreed
relief is conditional on FRY’s negotiation and successful implementation of a new three-
year  arrangement  under  the  Extended  Fund  Facility.  The  authorities  hope  to  be  able  to
conclude  bilateral  agreements  with  Paris  Club  creditors  in  early  2002  and  are  actively
seeking a similar agreement with London Club creditors. No political agreement has been
reached between Serbia and Montenegro on the split of outstanding external obligations,
with the exception of debt owed to the EIB and the World Bank. However, both republics
have  debt  service  appropriations  in  their  2002  budgets  which  they  consider  as
conservative.

3.3.

Former Yugoslav Republic of Macedonia

As a result of the security crisis in the first semester, GDP decreased markedly in 2001
by  about  4.6%.  The  public  finances  deficit  2001  is  estimated  by  about  6.7%  of  GDP.
Unemployment with a 29.5% rate at the end of 2001 remained very high and reflects the
low  level  of  production.  In  spite  of  the  crisis,  some  degree  of  macroeconomic  stability
was  maintained.  CPI  inflation  remained  at  around  5.3%  over  the  year  2001,  owing  to
conservative  monetary  policies  based  on  the  exchange  anchor  to  the  Euro  which  have
prevented the country from falling into the spiral of high inflation.

The  crisis  had  disruptive  effects  on  foreign  trade.  In  comparison  with  2000,  the  fall  in
imports (USD -348 million) was stronger than the fall in exports (USD –161 million) and
accordingly the trade deficit narrowed (USD –187  million).  The  current account  deficit
instead increased sharply to a level of 10.6% of GDP. Hard currency reserves remained
significant to the amount of about USD 779 million by the end of the year, or 4.9 months
of  exports,  largely  due  to  important  privatisation  receipts  from  the  sale  of  51%  of  the
telecom operator in January 2001.

In  late  2001,  after  the  previous  IMF  programme  had  gone  off  track  in  spring,  the
authorities  reached  a  new  agreement  with  the  IMF  on  a  6-month  Staff  Monitored
Programme, which lays down a macro-economic framework (which started on 1 January
2002).  The  authorities  have  indicated  that  they  are  aiming  at  the  conclusion  of  a  new
upper credit tranche arrangement with the IMF later in the course of 2002.

By the end of 2001, the FYRoM had an external debt to GDP ratio of 39% and was on
track with its debt servicing obligations. Overall, the country risk was still very high in
the second half of 2001. On the economic side, the Staff Monitored Programme ensures
enhanced  fiscal  discipline  and is  a  first  stage  towards  a  more  ambitious  agreement.  On
the  political  side,  important  progress  was  achieved  such  as  the  Framework  Agreement
signed  on  13  August,  providing  a  basis  for  a  peaceful  settlement,  the  adoption  by  the
parliament  of  amendments  to  the  Constitution  on  16  November,  and  the  Law  on  local
self-government  adopted  in  January  2002.  Recent  information,  however,  shows  the
evidence of continuing ethnic tensions, and the situation remains fragile.

20

4.

NEWLY INDEPENDENT STATES

4.1.

Armenia

The  Armenian  economy  grew  at  a  record  rate  of  about  9  %  in  2001  (up  from  6  %  in
2000). Both exports and domestic spending supported growth. Exports increased by 14 %
while imports remained virtually unchanged from the previous year. On the other hand,
retail sales were up by 13 %. Because Armenia is fairly isolated from world markets, the
current economic slowdown has not affected the country.

During  2001,  budget  revenues  increased  as  tax  collection  improved,  but  the  positive
development was not maintained throughout the year and there were problems in budget
implementation  towards  the  end  of  the  year.  These  revenue  increases  allowed  the
government  to  reduce  pension  arrears  to  some  extent.  No  significant  reduction  in  the
general  government  deficit  has  been  recorded  for  2001,  and  the  deficit  is  estimated  to
have  remained  at  nearly  5  %  of  GDP.  Monetary  policy  was  loosened  gradually  over
2001,  and  consumer  price  inflation  rose  from  0.4  %  in  2000  to  2.9  %  in  2001,  which
remains, however, below the projected 3.5 %. The Armenian  dram was  rather stable in
2001  at  about  560  dram  per  USD.  The  current  account  deficit  (including  transfers)
declined  in  2001  somewhat  to  11  %  of  GDP  (from  14  %  of  GDP  in  2000).  Gross
international  reserves  are  still  comfortable  at  more  than  3  months  of  imports.  External
debt  amounted  to  around  USD  860  million  (about  45  %  of  GDP)  at  the  beginning  of
2001, and there was no substantial change during 2001. At the end of the year, Armenia
negotiated an agreement with Russia on a debt-equity swap for its USD 94 million debt.
This agreement becomes effective in 2002.

4.2.

Belarus

Real  GDP  grew  by  3%  in  the  year  for  the  first  nine  months  of  2001.  Despite  further
growth  in  the  industrial  sector,  Belarus’  industrial  enterprises  show  increasing  signs  of
weakness,  including  rising  stocks  of  inventory  and  declining  profits.  Inflation  is  down
considerably, and the exchange rate is relatively stable.

Long-term  programmes  with  low  credibility  remain  the  principal  element  of  economic
policy.  The  monetary  authorities  have  achieved  considerable  deflation  and  prevented
currency instability, but continue to extend credit to the government, which has allowed
domestic  expenditure  arrears  to  accumulate  in  order  to  contain  its  budget  deficit.
Although the IFIs supported some recent policy steps, they have given no indication that
any sustained lending programmes are imminent.

Exports  have  performed  poorly  since  the  first  quarter  of  2001,  with  foreign  sales  to
Russia down year on year and growing only moderately to non-CIS markets. Belarus is
unlikely  to  witness  a  compensatory  boost  in  its  exports  to  non-traditional  markets:  for
this,  improved  competitiveness,  marketing  and  distribution  of  Belarussian  goods  in
Western  Europe  would  have  to  be  achieved,  and  the  chances  of  the  country  attracting
investment  on  the  scale  needed  to  do  this  are  remote.  Import  suppression  and
programmes of import substitution, which currently permit a positive trade balance, will
not succeed over the long run in stemming the growth of import demand. As a result, the
current-account deficit is likely to widen substantially in the medium term. However, due
to the low levels of foreign debt (under 10% of GDP), the repayment of these liabilities is
not immediately at risk.

21

4.3.

Georgia

Economic growth accelerated in 2001 with a real GDP growth of 4.5 % (1.9 % in 2000).
This resulted mainly from agriculture, which recovered from the previous year’s drought.
Industrial production, on the other hand, declined by one percent.

The general government deficit has been reduced markedly (from –7 % in 1999 to –4 %
in 2000 and –2 % in the first half of 2001). Because of disappointing results in revenue
mobilisation,  fiscal  consolidation  has  been  achieved  through  continued  expenditure
restraint. Consequently, the government was not able to reduce the stock of accumulated
social  expenditure  arrears  as  planned.  Total  revenues  of  the  general  government
increased slightly to about 14.5 % of GDP, which is still one of the lowest ratios in the
region.

The  monetary  authorities  maintained  their  commitment  to  sustain  a  low  inflation
environment. Consumer price inflation was slightly lower than expected at 3.4 % at the
year-end (4.6 % in  end-2000). The  nominal exchange rate of  the lari depreciated  about
7% in 2001, first in the connection of the financial crisis in Turkey and then affected by
the dismissal of the government in November 2001. At the end of the year the lari was at
around  2.15/USD.  The  current  account  deficit  deteriorated  somewhat  further  in  2001
from  the  deficit  of  5,5%  of  GDP  in  2000,  official  transfers  included.  Foreign  direct
investment has declined after  an  increase in 2000 and no immediate turn in the current
negative  trend  is  expected  for  2002,  because  the  overall  investment  climate  remains
unfavourable. Foreign exchange reserves increased slightly but are still at a low level in
terms of imports coverage (at below 1.5 months). Georgia’s external debt stood at close
to  USD  1.7  billion  at  the  end  of  the  year  (about  52  %  of  GDP).  Bilateral  discussions
continued with the creditors  following the Paris Club agreement, which  was  reached in
March 2001. All  bilateral discussions should be concluded in early  2002,  also  with  the
largest non-Paris Club creditor, Turkmenistan.

4.4.

MOLDOVA

Moldova’s real GDP growth is expected to remain moderately strong, around the 4-5%
level recorded in 2001, but it will be constrained by the slow pace of reform and by the
country’s  undiversified  economy.  Relatively  low  inflation  and  moderate  currency
weakening  will  preclude  further  real  appreciation.  The  current-account  deficit  will
remain high at between 5-7% of GDP. Since the fourth quarter of 2001, fiscal policy has
been loosened substantially.

The country's external debt has grown enormously in the past eight years. It now stands
at  USD  1.5  billion,  or  120%  of  GDP.  Only  9%  of  these  credits  were  invested  in  the
economy, the remainder going to cover budgetary and balance of payments deficits.

In 2001, Moldova has paid USD 110 million in external debt service, which equals one-
third  of  budget  revenues.  The  government  will  be  forced  to  seek  further  debt
restructuring, in particular since 2002 marks the peak of liabilities, with USD 200 million
due for repayment. The structure of the debt, 20% each to the IMF, World Bank, Russian
gas monopoly Gazprom and the Paris Club of sovereign creditors, with the remainder to
a number of multilateral and smaller bilateral creditors, precludes the possibility of swift,
large-scale  restructuring.  Payment  has  already  proved  difficult  in  2001.  Moldova

22

struggled to cover a  USD  3.7  million  Eurobond  payment  in  June.  The  parliament  even
obliged  the  central  bank  to  open  a  USD  30  million  credit  line  for  the  repayment  of
external  debt.  This  has  been  reflected  in  increasingly  negative  external  assessments.
Ratings agency Moody's downgraded the country's foreign liabilities rating to Caa1 and
its  bank  deposits  rating  to  Caa2,  while  Fitch  declared  that  the  chances  of  integral
payment of a $ 75 million Eurobond due in June 2002 are minimal.

The Moldovian authorities requested a meeting of its Paris Club creditors in March 2002,
in the hope of securing debt rescheduling. However, this requires a resumption of its IMF
programme, which is subject to renegotiations on the terms and conditions of Moldova’s
debts  to  Gazprom,  and  in  particular  the  withdrawal  of  the  earlier  provided  state
guarantee.

4.5.

Tajikistan

Real  GDP  is  estimated  to  have  grown  with  6  %  in  2001  (8.3  %  in  2000).  Economic
growth  has  gradually  spread  to  several  sectors  of  the  economy  outside  the  dominating
cotton  and  aluminium  sectors  (such  as  food  processing,  forestry  and  construction
materials). Aluminium production  continued  on its  increasing  trend  and  also  the  cotton
harvest was good, but declining world prices in both sectors dampened the results.  The
effects of the severe drought, which affected the region in 2000-2001, are still being felt.
The  grain  harvest  continued  to  suffer  from  the  drought,  which  also  affected  the
hydroelectric plants, necessitating an increase in net electricity imports.

The general government deficit is estimated at about 0,5 % of GDP for 2001 (roughly the
same  as  in  2000).  The  deterioration  in  terms  of  trade,  the  drought  and  the  additional
security  expenditure  (related  to  the  situation  in  neighbouring  Afghanistan)  brought
additional pressures on the budget during the year.

The current account deficit is estimated to have increased to about 7 % of GDP in 2001
(deficit of 6.3 % in 2000). Cross-border trade was affected by increased difficulties at the
borders.  Aluminium  and  cotton  continue  to  provide  up  to  65  %  of  all  export  revenues,
and  the  trade  balance  is  therefore  very  vulnerable  to  fluctuations  in  world  commodity
prices.

Following monetary tightening, the rate of inflation slowed down rapidly during 2001 to
some 10 % in the first nine months of the year (from an average of 33 % in 2000). The
Tajik somoni stabilised during 2001, having depreciated initially after its introduction in
October 2000. Tajikistan's external debt remained roughly constant during 2001 at about
USD 1,3 billion (estimated at 116 % of GDP). The ratio of the net present value of the
external debt to fiscal revenues was at about 400 percent for 2001. The import coverage
of gross international reserves of the National Bank is at below 2 ½ months.

4.6.

Ukraine

Despite  the  slowdown  in  global  growth,  Ukraine’s  real  GDP  grew  by  9%  in  the  first
eleven months of 2001 compared to the same period of 2000. On the supply side, growth
has been fuelled by both industrial and agricultural production, with the latter benefiting
from another exceptional grain harvest. On the demand side, the main driving forces are
consumer  spending  and  investment.  Growth  is,  however,  showing  some  signs  of
deceleration due to weaker demand from Russia and other main trading partners. In 2002,

23

GDP growth is expected to decelerate to around 5%, reflecting the negative effect of an
appreciating real exchange rate on net exports and the low probability that the favourable
weather conditions seen in the last two years will be repeated.

Despite the strengthening of economic activity, inflation has been on a downward trend.
In  November  2001,  year-on-year  consumer price inflation  reached  a  post-independence
low  of  4.5%,  down  from  a  recent  peak  of  32%  in  July  2000.  The  decline  in  inflation
reflects  a  combination  of  factors,  including  a  moderate  nominal  appreciation  of  the
hrvynia, a prudent fiscal policy, the good harvests of 2000 and 2001, and lower oil prices.
However,  the  surge  in  real  wages  and  pensions  and  the  fast  rate  of  expansion  of  the
monetary aggregates is expected to increase inflation again in 2002. In December 2001,
monetary policy was loosened further when the central bank cut its refinancing rate from
15% to 12.5%, the sixth reduction in 2001 (this rate stood at 27% at end-2000).

The deficit of the consolidated government reached 1.5 % of GDP in 2001. The budget
for  2002  foresees  a  deficit  of  1.8  %  of  GDP,  as  requested  by  the  IMF,  but  it  does  not
properly take into account either the need to clear the arrears on VAT refunds or the cost
of  the  parliament’s  decision  to  reintroduced  privileges  for  certain  categories  of  the
population for housing, transportation and communal services.

Progress  with  structural  reforms,  in  particular  the  privatisation  process,  slowed  down
significantly in the second half of 2001. There have been, however, certain encouraging
steps such as the withdrawal of the operating licence from Banka Ukraina (an insolvent
state-owned  bank),  the  adoption  of  a  new  land  code,  and  the  improvement  in  cash
collection rates in the power sector.

With  domestic  demand  keeping  import  growth  strong  and  export  growth  decelerating,
due to weaker foreign demand and the appreciation of the real exchange rate, the surplus
in the current account is narrowing. The surplus is estimated to have shrunk from 4.7% of
GDP in 2000 to about 3% of GDP last year and is projected to fall further to about 1½ %
of  GDP  this  year.  Although  the  current  account  remains  in  surplus,  the  balance  of
payments  is  still  vulnerable.  Access  to  the  international  bond  markets  was  lost  in  the
wake of the Russian crisis of 1998 and FDI inflows have continued to be disappointing.
In this context, official foreign exchange reserves remain low (about USD 2.9 billion, or
7.5  weeks  of  imports,  at  end-June  2001),  although  they  have  shown  an  upward  trend
since  the  spring  of  2000.  The  Paris  Club  agreed  a  rescheduling  of  Ukraine’s  debts  last
July.  The  IMF  reactivated  its  EFF  in  the  autumn  of  2001  but  disagreements  over  the
budget  have  delayed  the  completion  of  the  7th  review  of  the  programme,  which  was
initially scheduled for January 2002. Ukraine’s external debt stock stood at the equivalent
of about 30% of GDP at end-2001.

24

5.

OTHER NON-MEMBER COUNTRIES

5.1.

Algeria

Weak  growth  in  2001  due  to  sluggish  performance  of  the  non-oil  sector  prompted  the
government to implement an Economic Recovery Plan (2001-2004) to stimulate demand
and labour intensive activities, to rehabilitate public infrastructure and to develop human
resources.  The  total  package  represents  broadly  13%  of  GDP  over  4  years  and  will
temporarily  boost  growth.  The  GDP  growth  for  2001  was  around  3%.  Prices  remained
subdued with the CPI average at 3.4% and the fiscal position remained in surplus in 2001
(4% of GDP) due to strong revenues from the oil sector, despite increased expenditures
on the Recovery Plan in the second half of the year.

Fluctuations in oil and gas prices continue to have a major impact on external accounts
given the large size of the hydrocarbon sector (95% of exports, 30% of GDP). External
accounts remained strong in 2001 given an average oil price of USD 24 per barrel despite
oil price weakness after September 11. The current account surplus was 8.6% of GDP in
2001 compared with 17% of GDP in 2000 allowing official foreign exchange reserves to
build to USD 18 billion equivalent to 17 months of imports by the end of the year.

The  debt  to  GDP  ratio  improved  to  40%  at  end  2001  compared  with  48%  in  2000.
However,  the  debt  service  ratio  worsened  to  26%  in  2001  due  to  lower  exports.  The
authorities have stated their intention to follow a prudent debt policy and to lengthen the
maturity structure of the existing debt stock.

The  last  two  months  of  2001  saw  Algeria  adversely  affected  by  natural  disasters
(flooding)  and  increased  civil  disturbances.  In  terms  of  financial  vulnerability  and  risk
developments, the oil market will continue to have the major impact. Since September 11
developments  have  been  unfavourable.  Oil  prices  have  been  on  a  downward  trend  and
have  not  risen  again  as  many  had  expected.  Even  with  agreed  production  cuts,  global
demand  remains  weak  and  the  outlook  for  prices  is  on  the  downside.  This  will  hit  the
fiscal and external positions although the oil stabilisation fund should help to cushion the
impact.  However,  with  a  good  record  of  domestic  policy  management  the  Algerian
economy is now more able to weather external shocks such as lower oil prices.

25

List of abbreviations

Deutsche Mark

European Community

Extended Fund Facility

European Investment Bank

European Union

Euro

Foreign Direct Investment

Gross Domestic Product

International Monetary Fund

Stand-By Arrangement

Dollar of the United States of America

DM

EC

EFF

EIB

EU

EUR

FDI

GDP

IMF

SBA

US$

26

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:

(cid:1)  limitation  of  the  guarantee  given  to  the  EIB  to  75%  of  the  loans  signed  in  the

Mediterranean countries;

(cid:1)  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;

(cid:1)  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;

(cid:1)  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;

(cid:1)  the amounts authorised are not necessarily taken up in full.

27

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.

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)  in  which  case  the  capital  to  be  repaid
corresponds to the amount outstanding;

disbursements,  decisions  still  awaiting  disbursement  and  Commission
proposals still awaiting decisions (Table 3)

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.

1.2.

Loan operations covered by a budget guarantee

Tables 5a, 5b(1), 5b(2) and 6.

28

,

TABLE 5a

Borrowing and lending operations: Member States

Changes in amounts outstanding during six-month period

in million Euro

   COUNTRY

Decision

Date

Loan

Loan

Amount

Amount

Operations in

Amount

of decision term

situation

decided

outstanding

six-month period

outstanding

(years)  - closed (a)

   at 01.07.01

Amounts

Amounts

   at 31.12.01

 - partially disbursed (b)

 - disbursed in full (c)

 - not yet disbursed (d)

disbursed

repaid

ITALY

93/67/CEE

18.01.93

6

6

-

-

(3)

(3)

(c)

(c)

(d)

(d)

(c)

(c)

(c)

    (b)(4)

   (d)(4)

(c)

(c)

(c)

(c)

(c)

(c)

77/270-271/Euratom 29.03.77

80/29/Euratom

20.12.79

82/170/Euratom

15.03.82

85/537/Euratom

05.12.85

90/212/Euratom

23.04.90

78/870/EEC

16.10.78

81/19/EEC(1)

20.01.81

81/1013/EEC(2)

14.12.81

82/169/EEC

15.03.82

83/200/EEC

19.04.83

87/182/EEC

09.03.87

EURATOM

NCI

TOTAL

0,00

0,00

000

8.000,00

2.000,00

2.000,00

2.000,00

2.000,00

4.000,00

40,00

0,00

0,00

40,00

500,00

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

89,10

83,50

18,90

18.830,00

129,10

0,00

83,50

58,90

(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 in 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 countries.

(5) Discrepancy caused by change in the rates of the other currencies against the Euro.

29

Financial assistance to non-member countries
Changes in amounts outstanding during six-month period, broken down by countries and tranche

TABLE 5b (1)

   COUNTRY

Decision

Date

Loan
of decision term

Expiry
date

Loan
situation

Amount
decided outstanding

Amount

Operations in 
six-month period

in million Euro

(years)

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

  at 01.07.01 Amounts
disbursed

Amounts
repaid

Amount
outstanding
  at 31.12.01

    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 I
     1st tranche
     2nd tranche
    FYROM II
     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 27.11.92
94/369/EC 20.06.94

99/732/EC 08.11.99

92/542/EEC 23.11.92

7
7

10
10

10
-
7

7
7

10
-

7
-

7
-

7
7

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

97/471/EC 22.07.97

99/733/EC

15
15

27.09.2012
13.02.2008

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
50,00
10,00
40,00

70,00
40,00

125,00
125,00

40,00
60,00

55,00
70,00

100,00
0,00

0,00
0,00

0,00
0,00

0,00
25,00

25,00
15,00

10,00
0,00

(c)
(c)

(c)
(c)

(c)
(c)
(a)

(c)
(c)

(c)
(d)

(a)
(d)

(a)
(d)

(a)
(b)

(c)
(c)

(c)
(d)

30

70,00

0,00
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

10,00
0,00

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

in million Euro

   COUNTRY

Decision

Date

Loan
of decision term

Expiry
date

Loan
situation

Amount
decided outstanding

Amount

Operations in 
six-month period

(years)

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

  at 01.07.01 Amounts
disbursed

Amounts
repaid

Amount
outstanding
  at 31.12.01

    BOSNIA
     1st tranche
     2nd tranche
    MOLDOVA I
     1st tranche
     2nd tranche
    MOLDOVA II
  UKRAINE I
  UKRAINE II
     1/2 tranche
     1/2 tranche
     2nd tranche
  UKRAINE III
     1st tranche
     2nd tranche
  BELARUS
     1st tranche
     2nd tranche
  ALGERIA I
     1st tranche
     2nd tranche
  ALGERIA II
     1st tranche
     2nd tranche
  GEORGIA
  ARMENIA
  REPS FORMER USSR
  TAJIKISTAN
  FR YUGOSLAVIA

TOTAL

99/325/EC 10.05.99

94/346/EC 13.06.94

96/242/EC 25.03.96
94/940/EC 22.12.94
95/442/EC 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 17.11.97
97/787/EC 17.11.97
91/658/EEC 16.12.91
2000/244/EC 20.03.00
2001/549/EC 16.07.01

15
-

10
10
10
10

10
10
10

10
-

10
-

5
7

7
-
15
15
3
15
15

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
-

15.12.1997
17.08.2001

27.11.2002
-
24.07.2013
30.12.2013
28.09.1997
30.03.2016
17.10.2016

20,00
10,00
10,00
45,00
25,00
20,00
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
1.250,00
75,00
225,00

10,00
10,00

20,00
20,00
15,00
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
60,00
0,00

4.253,00

1.641,00

225,00

225,00

5,00
4,00

17,00

6,00

150,00

10,00
10,00

15,00
16,00
15,00
68,00

50,00
50,00
100,00

58,00
0,00

24,00
0,00

0,00
0,00

100,00
0,00
100,00
23,00
0,00
60,00
225,00

252,00

1.614,00

(c)
(c)

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

(c)
(c)
(c)

(c)
(d)

(c)
(d)

(a)
(c)

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

31

GEOGRAPHICAL AREA

Decision

Date
of decision

Rate
of guarantee

Date of
guarantee
contract

Amount
decided

TABLE 6

LOAN GUARANTEES TO EIB

MED. Financial protocols(1)

MED. Horizontal cooperation

R/1762/92/EEC

8.03.77

29.06.92

75% (2)

30.10.78/10.11.78

75% (2)

09.11.92/18.11.92

TOTAL MED.

C and E Europe I

C and E Europe II

Asia, Latin America I

Asia, Latin America II

Asia, Latin America II

South Africa

New mandates

FYROM
Bosnia

Turkey

90/62/EEC(4)

91/252/EEC(5)

93/696/EC(6)

93/115/EEC

96/723/EC

96/723/EC

95/207/EC

97/256/EC(7)

98/348/EC

98/729/CE

99/786/EC

Mandates 2000-2007

2000/24/EC(8)

The Baltic Sea basin of Russia

2001/777/EC(9)

TOTAL

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

06.11.01

100%

100%

100%

100%

100%

70%

100%

70%

70%

70%

65%

65%

100%

in million Euro

Loans signed

Amount outstanding

at 01.07.01

during
six-month
period

at 01.07.01

at 31.12.01

5629

1768

7397
(3)

912

498

2792

621

153

122

300

7009

150

100

375

3167

0

23597

0

0

0

0

0

0

0

0

0

0

0

0

0

75

1861

0

1936

2429

1625

4054

654

340

2349

529

153

118

285

4118

53

0

165

453

0

2228

1563

3791
(*)

583

324

2256

495

95

135

214

4379

61

4

319

1114

0

13271

13770

6062

1800

7862

1000

700

3000

750

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

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

19460

100

41402

(1) Including EUR 1 500 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 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 and Slovak Republic, Bulgaria, Romania.
(6) Non-member countries: Poland, Hungary, Czech Republic and 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.
(9) A special lending action for selected environmental projects in the Baltic Sea basin of Russia under the Northern Dimension.
(*) The amount outstanding has been increased by 12,0 million euro to take account of the principal due and not paid at 31.12.01.

32

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 2001  a  total  of  € 14  433  million  was  still  to  be  signed  under  the  new
mandate of EIB loans (2000-2007) adopted by the Council on 22 December 1999:

Mediterranean

Central and Eastern Europe

Asia and Latin America

FYROM

Disbursement forecasts

€ million

4 969

7 300

1 541 

623

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 2001, € 3 914 million still had to be disbursed against loans signed at
that date under the new mandate of EIB loans (2000-2007) adopted by the Council on 22
December 1999:

The total breaks down as follows:6

Mediterranean countries

Central and Eastern Europe

Asia and Latin America

South Africa

1.4.

Payment of the budget guarantee

1.4.1

Borrowing/lending operations

€ million

 1 786

 1 622

 306

 200

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).

6

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.

33

                                                
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 (EC, Euratom) 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
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.

34

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
2000-2006,  viz. € 200 million  at  1999  prices.  The  amount  in  the  reserve  was
€ 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:

(cid:1)  Council Decision 94/729/EC of 31 October 1994 on budgetary discipline.

(cid:1)  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.

(cid:1)  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);

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
payments  into  the  Guarantee  Fund,  states  that,  in  the  case  of  borrowing/lending
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.

35

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 2001, the budgetary authority accordingly adopted four transfers:

– 

– 

– 

– 

Transfer  10/2001:  EUR  169  151  000.  This  first  transfer  at  the  beginning  of  the
year  was  for  payments  into  the  Fund  in  respect  of  the  Council  Decisions  of
24 January  1994,  19  May  1998  and  22  December  1999  in  accordance  with  the
arrangements set out in the Annex to the Regulation establishing the Fund.

Transfer 24/2001: EUR 20 250 000. This second transfer was for payments into
the Fund in respect of loan operations adopted by the Council on 16 July 2001

Transfer 49/2001: EUR 8 775 000. This third transfer was for payments into the
Fund in respect of loan operations adopted by the Council on 6 December 2001

Transfer 48/2001: EUR 9 000 000. This fourth transfer was for payments into the
Fund in respect of loan operations adopted by the Council on 6 November 2001.

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.

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.

36

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  to  review  the  rate  of  provisioning.  These  proposals  appear 
the
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.

in 

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.

37

3.

EXPLANATORY NOTES FOR COUNTRY-RISK INDICATORS (+ TABLES)

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= Compensatory and Contingency Financing Facility

EFF=

Extended Financing Facility

SBA =

Stand-By Arrangement

STF=

Systemic Transformation Facility

est.=

Estimates

n.a. =

Not available

prelim.= Preliminary

38

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

Real GDP growth rate
Industrial production 
   Federation
   Republika Srpska
Unemployment (end of period) (5)
   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

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

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 

(%)
(% change)

(% of labour force)

(%  change)

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

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

(m USD)

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

(%)
(%)
(%)

footnotes

1999
10,0

2000
5,0

11,0
2,0
40,0
n.a.
n.a.

-1,0
14,0
1,0
6,3
3,9
2,0

-1,3
-5,1

649,0
-23,2
90,0

456,0
2,2

12,0
6,0
40,1
n.a.
n.a.

2,0
15,0
1,0
3,3
3,9
2,0

-2,8
-3,8

732,0
-22,2
150,0

499,0
2,5

2001
5,5

11,0
-13,0
40,0
n.a.
n.a.

2,3
8,9
1,0
n.a.
n.a.
2,0

n.a.
n.a.

877,0
20,8
164,0

526,0
2,5

3095,0

2584,0

2652,0

62,9
n.a.
n.a.
68,2
319,0
8,0
n.a.
20,0

0,1
0,3
1,6

100,0
n.a.
n.a.
59,4
276,0
12,0
0,0
946,0

0,1
0,4
1,3

173,6
68,3
105,3
55,7
302,4
19,8
0,0
0,0

0,2
0,8
2,4

SBA
(5/98-5/01)
Yes

SBA
(5/98-5/01)
Yes

SBA
(5/98-5/01)
Yes

none
none

none

none
none
09/00
178
(185)

none
none
03/01 09/01
124    161
(185)  (185)

none

none

none

none

none

none

(10)

(1)

(2)

(2)

(3)

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

Data refer to the entire country unless otherwise indicated.
World Bank estimates, adjusted unemployment figures. Official figures are higher as there is a general tendency towards 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.

(10)

39

Country-risk indicators
Country: Bulgaria

(%)
(% change)
(% of labour force)

(% change)
(Leva per USD)
(% of GDP)

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

(m USD)

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

(%)
(%)
(%)

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

General government balance
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 

Footnotes
(1) (2) (3)  See explanatory notes at beginning of tables.

footnotes

1999

2000

2001
estimated

2,4
-5,0
17,0
7,0
1,84

0,2

5740
-5,3
739

3222
6,4

5,8
15,3
16,4
11,4
2,12

-1,1

6981
-5,9
865

3273
5,1

4,7
9,0
16,7
5,2
2,22

-0,9

7524
-6,4
651

3579
4,8

9980

10071

10025

975
495
480
82,3
174,0
17,0
none
none

6,0
6,7
11,7

EFF

1101
546
555
86,5
144,3
15,7
none
none

6,1
6,6
9,5

EFF

1364
870
494
75,9
131,4
19,5
none
none

5,2
5,9
7,9

(06/98-06/01) (06/98-06/01)

yes

B2
B

yes

B2
B+

SBA concluded 
February 2002

B1
BB-

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

84   80
87   89
(180)  (180)
(180)  (185)
03/99  09/99 03/00 09/00

80   79
(136)  (136)
28.6   30.3

76   74
(145)  (145)
32.5   37.1

03/01 09/01
76      74
(185)  (185)
03/01  09/01
74     70
(145)     (145)
35       36.6

(1)

(2)

(2)

(3)

40

1999
-15,7
-22,5
26,5

6,0

…

1676
-7,5
112

289
0,9

n.a.

101,0
17,0
84,0
n.a.
n.a.
n.a.
n.a.
n.a.

2,9
n.a.
17,0

yes

none
none

2000
5,0
10,9
27,3
113,0
30,0

-0,2

1923
-7,6
25

516
1,3

2001
5,5
0,0
27,8
40,0
30,0

-2,4

1998
-10,2
120

1012
2,3

11304

11980

56,0
14,0
42,0
140,0
443,0
n.a.
9667,0
n.a.

2,6
n.a.
13,2

yes

none
none

59,0
11,0
48,0
n.a.
441,0
n.a.
n.a.
yes

2,2
2,1
12,4

SBA
6/01-05/02
yes

none
none

03/99  09/99 03/00 09/00
175   180
(180)  (185)
03/00  09/00 03/01     09/01

03/01 09/01
178   178
(185)  (185)

141   134
(145)  (145)
10.7   12.7

141      131
(145)     (145)
10.7       12.2

171   174
(180)  (180)
03/99  09/99
129   130
(136)  (136)
8.9     8.2

Country-risk indicators
Country: Federal Republic of Yugoslavia

footnotes

(%)
(% change)
(% of labour force)

(%  change)
(YuD per DM)
(% of GDP)

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

(m USD)

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

(%)
(%)
(%)

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

General government balance

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 

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

(1)

(2)

(2)

(3)

41

Country-risk indicators
Country: Former Yugoslav Republic of Macedonia
footnotes

(%)
(% change)
(% of labour force)

(%  change)
(Denar per USD)
(% of GDP)

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

(m USD)

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

(%)
(%)
(%)

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

General government balance
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 

(4)

(5)

(1)

(2)

(2)

(3)

1999
2.7
-2.5
32.4
-0,7
60,3
0,0

1190
-3,3
38

460
3,0

2000
5,1
3,5
32,2
5,8
65,3
2,5

1319
-3,4
175

710
3,8

1490

1490

199,9
119,6
80,3
43,6
109,0
15,2
none
20

1,0
7,0
7,9

EFF/PRGF

160,0
n.a.
n.a.
42,1
125,2
13,4
none
22

0,7
5,6
7,0

ESAF
(04/97-04/00)
no

2001
-4,6
n.a.
29,5
5,3
60,9
-6,7

1158
-10,6
434

779
4,9

1350

264,4
186,9
77,5
39,0
117,0
22,8
none
none

1,1
9,6
11,2
EFF/PRGF until
spring 2001

(12/00-12/03) SMP approval 

no

24.12.2001

none
none

none
none

none
none

03/99  09/99 03/00 09/00
120   100
(180)  (185)

146   160
(180)  (180)

03/01 09/01

104    150
(185)  (185)

none

none

none

none

none

none

Footnotes
(1) (2) (3)  See explanatory notes at beginning of tables
(4)
(5)

The current account deficit may be overestimated due to unreported remittances.
Debt service excluding IMF; it includes an estimate of debt service due to commercial creditors.

42

Country-risk indicators
Country: Lithuania

footnotes

1999

2000

2001

-3,9
-11,2
10,0
0,3
4,0
-7,8

4238
-11,2
478

1242
2,8

3,9
7,0
12,6
1,4
4,0
-2,8

5109
-6,0
375

1359
2,8

5,7
16,8
12,5
2,0
4,0

4845
-3,3
436

1669
3,0

4528,4

4856,6

5209,5

n.a.
n.a.
n.a.
42,5
106,8
20,0
none
none

1,8
4,3
4,6

-

-
-

n.a.
n.a.
n.a.
42,9
95,1
20,9
none
none

1,5
3,5
3,3

43,6
86,0
27,6

1,5
3,4
3,6

SBA

SBA

(3/00-6/01)
yes

(9/01-4/03)

Ba1
BBB-

Ba1
BBB-

Ba1
BBB-
03/99  09/99 03/00 09/00 03/01 09/01
67      66
61   69
63   65
(185)  (185)
(180)  (180)
(180)  (185)
03/01    09/01
03/99  09/99 03/00 09/00
62     60
(145)    (145)
44        45.5

69   66
(136)  (136)
36.1   38.3

66   69
(145)  (145)
40.8   43.7

(%)
(% change)
(% of labour force)

(%  change)
(Litas per USD)
(% of GDP)

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

(m USD)

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

(%)
(%)
(%)

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

General government balance
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 

Footnotes
(1) (2) (3)  See explanatory notes at beginning of tables.

(1)

(2)

(2)

(3)

43

Latest

Jan-Sep
Jan-Nov
Jan-Mar

Jan-Nov

Jan-Oct
Jan-Nov
Jan-Oct

Oct

Oct

Jan-Nov

Oct
Oct
Jan-Oct

1999

-2,3
-2,2
6,8
54,8
18255

-3,8

9854
-4,1
1025

1526
1,6

2000

1,6
8,2
7,1
40,7
25926

-4,0

12133
-3,7
1038

2470
2,1

2001

5,1
8,4
7,7
30,3
31597

-2,8

11157
-5,0
867

3926
2,6

9138

10475

11450

3415
2948
467
26,1
92,7
34,6
none
none

6,2
7,5
6,9

1953
n.a.
n.a.
28,5
86,3
16,1
none
none

7,1
7,4
6,4

2147
n.a.
n.a.
30,2
85,7
17,4
none
none

8,8
8,7
9,0

SBA

SBA

SBA

(8/99-3/00)
no 

(8/99-2/01)
no 

(9/01-3/03)
(6)

B3
B-

B2
B

B3
B
03/99  09/99 03/00 09/00 03/01 09/01
83      82
107   103
89   95
(185)  (185)
(180)  (180)
(180)  (185)
03/01   09/01
03/99  09/99 03/00 09/00
89       85
(145)    (145)
28.3    29.1

92   85
(145)  (145)
27.5   30.3

76   85
(136)  (136)
31.2   28.7

Country-risk indicators
Country: Romania

footnotes

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

General government balance

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 

Footnotes
(1) (2) (3)  See explanatory notes at beginning of tables.
(4)
(5)
(6)

ILO methodology
Figure for 1999 is an estimate
For 2000, only medium and long term debt

(%)
(% change)
(% of labour force)

(%  change)
(Lei per USD)
(% of GDP)

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

(m USD)

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

(%)
(%)
(%)

(4)

(5)

(6)

(6)

(1)

(2)

(2)

(3)

44

1999
3,3
5,2
11,1
2,0
524

-5,2

247
-16,6
123

331
3,7

855

61,3
42,2
19,0
46,3
346,2
24,8
n.a.
n.a.

0,2
2,9
9,9

2000
6,0
6,4
11,7
0,4
552

-4,9

307
-14,5
160

330
3,5

854

65,8
47,3
18,5
44,6
278,2
21,4
n.a.
n.a.

0,2
2,5
6,9

2001
9,5
3,8
11,1
2,9
560

-4,8

339
-11,0
n.a.

330
3,5

850

n.a.
n.a.
n.a.
41,0
250,0
n.a.
n.a.
n.a.

0,1
1,7
4,2

ESAF
(12/98-11/99)
yes

PRGF
(05/01-05/04)
yes

none
none

none
none
03/99  09/99 03/00 09/00 03/01 09/01
144   131
114      116
(180)  (185)

159   134
(180)  (180)

none
none

(185)  (185)

none

none

none

none

none

none

Country-risk indicators
Country: Armenia

footnotes

(%)
(% change)
(% of labour force)

(% change)
(Dram per USD)

(% of GDP)

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

(m USD)

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

(%)
(%)
(%)

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

General government balance

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 

Footnotes
(1) (2) (3)  See explanatory notes at beginning of tables.

(1)

(2)

(2)

(3)

45

1999
3,4
9,7
2,0
251,3
905
-2,2

5949
-1,6
150,0

309,0
0,6

1900

195
n.a.
n.a.
15,5
22,3
2,1
n.a.
none

0,3
1,7
0,5

-

2000
5,9
8,0
2,0
108,0
1180
-0,6

7380
-1,3
89,9

357,0
0,5

1880

182
n.a.
n.a.
12,5
17,2
1,5
n.a.
none

0,3
1,5
0,4

-

2001
3,0

2,0
26,0
1620
-1,8

7800
1,6
84,0

343,0
0,5

1880

182
n.a.
n.a.
9,5
12,4
1,4
n.a.
none

0,2
1,1
0,3

-

none
none

none
none

none
none
03/99  09/99 03/00 09/00 03/01 09/01
131   157
140   129
137   135
(185)  (185)
(180)  (180)
(180)  (185)
03/01   09/01
03/99  09/99 03/00 09/00
130     130
129   129
(145)    (145)
(145)  (145)
14      12.5
12.7   14.4

122   129
(136)  (136)
11.9   13.4

Country-risk indicators
Country: Belarus

footnotes

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

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

(m USD)

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

(%)
(%)
(%)

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

General government balance
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 

Footnotes
(1) (2) (3)  See explanatory notes at beginning of tables.

(1)

(2)

(2)

(3)

46

1999
3,0
4,5
4,8
10,9
1,9

-6,7

477
-8,0
60

132
1,6

2000
1,9
10,8
5,1
4,6
2,0

-4,1

521
-5,4
152

110
1,1

2001
4,5
-1,0
6,4
3,4
2,1

-2,0

n.a.
n.a.
n.a.

160
1,2

1700

1623

1700

99,3
49,2
50,1
60,0
356,4
20,8
n.a.
n.a.

1,1
6,9
24,6

193,8
144,4
49,4
54,0
326,3
37,2
n.a.
n.a.

0,8
5,7
17,7

n.a.
n.a.
n.a.
52,0
n.a.
n.a.
n.a.
Paris Club

0,7
4,8
n.a.

ESAF
(07/98-06/99)
yes

PRGF
(01/01-01/04)
yes

none
none

none
none

none
none
03/99  09/99 03/00 09/00 03/01 09/01
150    148
155   133
141   150
(185)  (185)
(180)  (180)
(180)  (185)
03/01    09/01
03/99  09/99 03/00 09/00
112        123
134   108
(145)      (145)
(145)  (145)
18.2      15.4
11.1   21

126   127
(136)  (136)
10.9   10.8

Country-risk indicators
Country: Georgia

footnotes

(%)
(% change)
(% of labour force)

(%  change)
(Lari per USD)
(% of GDP)

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

(m USD)

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

(%)
(%)
(%)

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

General government balance

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 

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

(1)

(2)

(2)

(3)

47

1999

-3,4
-13,6
2,0
39,3
11,6
-3,2

469
-3,8
30,5

199
3,2

2000

1,9
6,9
2,1
31,3
12,4
-1,0

597
-9,4
127,5

203
3,4

2001

4,8
14,2
1,9
6,5
13,0
-1,8

580
-7,0
127,5

228
3,6

1465

1530

1515

178,0
n.a.
n.a.
126,5
312,4
38,0
none
none

0,6
4,4
13,6

EFF
(05/96-05/99)
no

90,5
n.a.
n.a.
123,0
256,3
15,2
none
none

0,5
3,3
8,5

-

no

110,0
n.a.
n.a.
121,0
261,2
19,0
none
none

0,4
2,7
7,0

PRGF

no

B2
none

Caa1
none

117   127
(180)  (180)

Caa1
none
03/99  09/99 03/00 09/00 03/01 09/01
134   143
142   140
(185)  (185)
(180)  (185)
03/01   09/01
03/00 09/00
116        118
122   125
(145)       (145)
(145)  (145)
17.6       16.2
16   15.8

none

none

Country-risk indicators
Country: Moldova

footnotes

(%)
(% change)
(% of labour force)

(% change)
(Leu per USD)
(% of GDP)

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

(m USD)

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

(%)
(%)
(%)

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

General government balance
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 

Footnotes
(1) (2) (3)  See explanatory notes at beginning of tables.

(1)

(2)

(3)

48

Country-risk indicators
Country: Tajikistan

footnotes

1999

2000

2001

(%)
(% change)
(% of labour force)

(%  change)
(Somoni per USD)
(% of GDP)

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

(m USD)

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

(%)
(%)
(%)

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

General government balance
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 

Footnotes
(1) (2) (3)  See explanatory notes at beginning of tables.

3,7
5,6
3,0
31,3
1,4
-3,1

666
-3,4
21

58
1,7

1214

22,8
15,8
7,0
117,0
182,3
3,4
n.a.
n.a.

0,5
4,8
8,8

8,3
10,3
3,0
60,6
2,2
-0,6

792
-6,4
22

87
2,4

1330

58,7
43,8
14,9
129,0
164,1
7,4
n.a.
n.a.

0,5
3,8
6,4

6,0
15,0
2,6
15,0
2,4
-0,5

660
-7,2
n.a.

96
2,2

1300

n.a.
n.a.
n.a.
116,0
197,0
n.a.
n.a.
n.a.

0,4
3,5
6,9

ESAF
(07/98-06/99)
yes

PRGF
(10/00-09/01)
yes

PRGF
(10/00-09/01)
yes

none
none

none
none

none
none

03/99  09/99 03/00 09/00
172   176
(180)  (185)

139   142
(180)  (180)

none

none

03/00 09/00
128   130
(145)  (145)
12.9   14.2

03/01 09/01

165     152
(185)  (185)
03/01   09/01
134         135
(145)      (145)
12.3         11.9

(1)

(2)

(2)

(3)

49

(5)
(5)

(6)
(6)
(6)

(6)

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

-2,4

16230
2,7
489

1090
0,8

2000

5,8
12,9
5,3
25,8
5,4

-1,5

17712
4,7
587

1150
1,0

2001

7,0
13,0
4,5
6,1
5,3

-1,5

19015
3,0
795

2900
1,9

11879

10368

10733

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

1198
524
674
28,5
56,4
6,3
yes
yes

2,5
2,7
1,5

EFF
(09/98-03/01)
no

EFF
(09/98-03/01)
yes

EFF
(09/98-09/02)
yes

Caa1
none

Caa1
none

Caa1
B

03/99  09/99 03/00 09/00
134   115
(180)  (185)

126   129
(180)  (180)
03/99  09/99 03/00 09/00
113   117
(145)  (145)
18.1   17.7

112   110
(136)  (136)
17.2   18.7

03/01 09/01

122      121
(185)  (185)
03/01    09/01
117        113
(145)      (145)
17.2       17.5

Country-risk indicators
Country: Ukraine

footnotes

1999

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

(%)
(% change)
(% of labour force)

(%  change)
(Hryvnia per USD)
(% of GDP)

(m USD)
(% of GDP)
(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 at beginning of tables.
(4)
(5)
(6)

On a cash basis and showing privatisation revenues as a financing item.
End-October 2001 data.
Debt service after July 2001 Paris Club rescheduling

(1)

(2)

(2)

(3)

50

3.3
4.8
~30
2.6
69.3

-0,4

12300
0.0
460

4400
4.6

2000

2.4
3.1
~30
0.3
75.3

9.9

21650
16.8
420

11900
12.2

2001

3.0
na
~30
3.4
77.1

4.0

18600
8.6
1970

18036
17

28300

25500

22420

4507
n.a.
n.a.
47.9
113.0
20.9
none
none

10,7
4,6
5,4

-

5332
3521
1810
59.1
217.1
39.6
none
none

8,7
3,4
7,8

CCFF
(05/1999)
yes

4900
3100
1800
40.7
123
26
none
none

8,8
4,5
5,4

-

none
none

none
none

none
none
03/99  09/99 03/00 09/00 03/01 09/01
85      92
99   96
113   117
(185)  (185)
(180)  (180)
(180)  (185)
03/01   09/01
03/99  09/99 03/00 09/00
80          83
(145)      (145)
31.6      30.6

93   93
(136)  (136)
25.2   26.5

91   81
(145)  (145)
27.7   33.1

Country-risk indicators
Country: Algeria

footnotes

1999

(%)
(% change)
(% of labour force)

(%  change)
(Dinars per USD)
(% of GDP)

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

(m USD)

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

(%)
(%)
(%)

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

General government balance

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 creditw orthiness

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 at beginning of tables.

(1)

(2)

(2)

(3)

51