Proposal for a Council Decision granting a Community guarantee to the European Investment Bank against losses under loans and guarantees for projects outside the Community
Date: 2006-06-22
Institutions: European Commission
Subjects: EIB loan, EU financial instrument, European Investment Bank, credit guarantee, financial loss, investment abroad

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 22.06.2006 
COM(2006) 324 final 

2006/0107 (CNS) 

Proposal for a 

COUNCIL DECISION 

granting a Community guarantee to the European Investment Bank against losses under 
loans and guarantees for projects outside the Community  

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1)  CONTEXT OF THE PROPOSAL 

110 

•  Grounds for and objectives of the proposal 

This proposal for a Council Decision deals with the renewal of the Community budget 
guarantee  to  the  European  Investment  Bank  (EIB)  for  financing  operations  from  its 
own  resources  in  various  non-member  countries.  The  current  EIB  mandates,  i.e.  the 
general external lending mandate (Council Decision 2000/24/EC, as amended) and the 
separate  mandate  for  projects  in  Russia,  Ukraine,  Moldova  and  Belarus  (Council 
Decision  2005/48/EC)  will  expire  at  end  January  2007,  with  a  possible  6-month 
extension, in case the loans granted by the EIB have not attained the overall amounts 
set out in the relevant Council Decisions. 

The legislation on the EIB general external lending mandate requires the Commission 
to report on its application by 31 July 2006. The report accompanying the legislative 
proposal (COM (2006) 323), hereinafter referred to as 'Report', summarizes the results 
of  the  activities  carried  out  by  the  EIB  under  the  current  mandates  and  sets  out  the 
orientations  of  future  EIB  activities.  Two  Staff  Working  Papers,  one  reviewing 
regional outlook (SEC (2006) 790) and the other providing a detailed assessment of the 
existing mandate (SEC (2006) 789) are annexed to the Report. 

120 

•  General context 

The EIB's activities outside the EU have traditionally made up around 10% of its total 
activities  (EUR  5.1  billion  in  2005,  of  which  EUR  3.7  billion  under  Community 
guarantee).  The  main  regions  of 
its  current  activity  are  pre-accession  and 
Mediterranean countries, though it also undertakes substantial operations in Asia, Latin 
America and South Africa, and is progressively expanding its operations in Russia and 
Ukraine.  Activities  in  ACP  countries  are  carried  out  under  the  Cotonou  Agreement 
with  European  Development  Fund  resources  or  with  EIB  resources  with  a  guarantee 
from Member States. 

The EIB traditionally undertakes operations outside the EU in support of EU external 
relations  policies  based  on  formal  mandates  from  the  Council;  successive  Council 
mandates  have  widened  the  geographical  scope  of  EIB's  activity.  The  financing 
operations  provided  for  in  such  Council  Decisions  are  recognised  by  non-EU  partner 
countries  as  visible  support  from  the  EU.  Furthermore,  the  Community  guarantee 
prevents such operations, which often bear a significantly higher level of risk than the 
EIB's  operations  within  the  EU,  from  affecting  the  credit  standing  of  the  Bank,  and 
allows the EIB to maintain attractive lending rates outside the EU. 

Table 1 of the Report shows that loan signatures as at 31 December 2005 (i.e. around 
85%  of  the  duration  of  the  lending  mandates)  represent  87%  of  the  overall  lending 
ceiling of EUR 20,660 million, but that there are significant differences by region. The 
EIB expects to sign the balance of the amounts available under the different regional 
ceilings  in  2006,  except  under  the  Russia,  Ukraine,  Moldova  and  Belarus  mandate, 
where first operations are expected to be signed in 2006 and the remainder in the first 
half of 2007. 

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EIB's  operations  in  third  countries  represent  a  crucial  complement  to  limited  EU 
budget funds to increase the effectiveness and the visibility of the EU's external action. 
While  the  Community  budgetary  external  assistance  is  focused  on  lower  income 
countries and support to the social sectors, EIB operations are of particular relevance in 
middle-income countries and in infrastructure, financial and commercial sectors. 

Considering  that  the  EIB  has  originally  been  set  up  and  structured  financially  to 
operate within the EU, the mandates under Community guarantee cover represent the 
key tools which allow the EIB to carry out operations outside the EU, by providing the 
necessary political and financial backing by the Community for countries and projects 
which would not normally fit within the EIB's standard guidelines and criteria. 

130 

•  Existing provisions in the area of the proposal 

As  noted  above,  there  are  currently  two  Council  Decisions  in  force  (2000/24/EC,  as 
amended,  and  2005/48/EC)  which  provide  a  Community  guarantee  to  the  EIB  for 
extra-EU  operations.  The  existing  mandates  under  Community  guarantee  expire  in 
January  2007  and  this  proposal  would  put  in  place  a  Community  guarantee  for  the 
period 2007-2013. 

The proposed Decision would continue the provision of a Community guarantee to EIB 
external lending, whilst making some modifications, as follows: 

* A single legal basis will cover all different regions as well as the Reserve Mandate 
mentioned below. The blanket guarantee coverage of 65% will be applied to the whole 
mandate. 

* Introduction of a new geographical breakdown of the ceilings to reflect the existing 
proposals for new EU external relations policies and instruments. 

* A clearer definition of the EU policy objectives in each region to be sought by EIB 
operations under the mandate. 

* Introduction of a Reserve Mandate, not allocated to any single region, for activation 
in  cases  of  natural  disasters,  post-conflict  reconstruction  or  developments  in 
strategically important countries. 

*  Clarification  of  the  nature  of  the  Community  guarantee  so  as  covering  risks  of  a 
political or sovereign nature. The guarantee coverage would be extended to both types 
of financing operations mentioned in the EIB Statute, i.e. loans and guarantees (under 
the current mandates only loans are covered) 

* Reinforcement of the requirements relating to the linkage of EIB external activities 
with EU policies, through strengthened cooperation between the Commission and the 
EIB and enhanced reporting. 

* In line with the practice established under the existing mandate for Russia, Ukraine, 
Moldova and Belarus, selected individual countries shall become eligible as and when 
they fulfil appropriate conditionality consistent with EU high level agreements with the 
country  in  question  on  political  and  macro-economic  aspects,  as  determined  by  the 
Commission in consultation with the EIB. EIB operations will take place following the 

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signature and ratification of the necessary Framework Agreement between EIB and the 
country concerned. 

140 

•  Consistency with other policies and objectives of the Union 

As highlighted in the Report, EIB external operations, and notably those covered by the 
current  proposal,  will  complement  the  activities  to  be  carried  out  under  the  external 
assistance  instruments,  i.e.  Pre-Accession,  European  Neighbourhood  and  Partnership, 
Development  Cooperation  and  Economic  Cooperation  as  well  as  the  Instrument  for 
Stability. 

EIB  operations  will  fully  support  EU  external  action,  as  determined  in  the  various 
policy papers mentioned in the proposed legal act or as eventually laid out in future EU 
policy  documents.  The  linkage  of  EIB  external  activity  with  EU  policies  will  be 
strengthened  via  reinforced  cooperation  between  the  Commission  and  the  EIB.  This 
will begin with an enhanced association in the planning process, notably in the context 
of action plans or pre-accession documents and country or regional strategy papers, and 
during  upstream 
implementation  of  projects.  Strengthening 
cooperation in this fashion will help ensure that the policy driven character of the new 
EC instruments is likewise reflected in the implementation of the mandate. 

identification  and 

The extent of this cooperation will progress on a regionally differentiated basis, taking 
into  consideration  the  EIB's  importance  in  the  region  but  also  the  scope  for  linkage 
the  Pre-Accession,  European 
with  EU  policies,  within 
Neighbourhood  and  Partnership,  and  Development  Cooperation  and  Economic 
Cooperation strategies. 

framework  of 

the 

Furthermore,  the  Commission  envisages  early  consultation  by  the  EIB  on  individual 
projects.  An  EIB  Financing  Operation  will  not  be  included  under  the  cover  of  the 
Community  guarantee  in  case  the  Commission  delivers  a  negative  opinion  on  such 
operation  within  the  framework  of  the  procedure  provided  for  in  Article  21  of  the 
Statutes of the EIB. 

The  EIB  would  endeavour  to  further  enhance  co-ordination  and  co-operation  with 
International  Financial  Institutions,  such  as  the  EBRD  or  the  World  Bank,  and  with 
European  bilateral  institutions,  where  relevant,  on  the  basis  of  Memoranda  of 
Understanding covering the different regions under the mandate. 

In  the  framework  of  the  new  mandate,  enhanced  reporting  procedures  will  be  put  in 
place to ensure that consistency with the external policies and objectives of the Union, 
as well as cooperation with other IFIs, are adequately monitored. 

2)  CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

•  Consultation of interested parties 

211 

Consultation methods, main sectors targeted and general profile of respondents 

A  joint  working  party,  including  representatives  from  the  relevant  services  of  the 
Commission and the EIB, worked on the preparation of the current proposal and on the 
accompanying Report. 

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The  Commission  and  the  EIB  provided  the  EFC  with  a  progress  report  and 
supplementary information providing the main orientations of the current proposal. The 
EFC, which includes senior officials expert in the economic and financial field from all 
Member States, discussed this matter during two successive meetings in February and 
March 2006. As a result, the EFC produced a report providing the initial views of the 
Member States on the main orientations put forward by the Commission and the EIB.  

212 

Summary of responses and how they have been taken into account 

The EIB's views are fully reflected in the current proposal. 

The  above-mentioned  EFC  report  requests  the  Commission  to  provide  additional 
information regarding a comprehensive evaluation of the existing mandates and a fuller 
description  of  EIB  external  activity  in  the  global  picture  of  the  EU's  external 
instruments, comprising a needs assessment of the recipient countries, the role of other 
IFIs and the EIB comparative advantage. The additional information requirements are 
addressed in the Report and the annexed Staff Working Papers. 

The EFC report also includes general recommendations, including a) the need to ensure 
good  co-operation  between  the  EIB  and  other  donors  or  lenders  such  as  IFIs  (in 
particular the EBRD) and other bilateral agencies; b) the need to clarify the nature of 
the risks covered by the Community guarantee; c) the need to make concrete proposals 
for  a  more  coherent  deployment  of  EIB  operations  and  Community  grants  and  to 
clarify the necessary working arrangements; d) the involvement of the Council in the 
governance of the Reserve Mandate; e) the need for a mid-term review to be based on 
an independent evaluation. The above recommendations were taken into account in the 
proposed  legal  act.  Point  c)  above  can  only  be  addressed  in  the  framework  of  the 
appropriate legal bases. 

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•  Collection and use of expertise 

Scientific/expertise domains concerned 

Financial and economic expertise. 

Methodology used 

Not applicable. 

Main organisations/experts consulted 

EIB. 

Summary of advice received and used 

The  views  of  the  EIB  are  reflected  in  the  current  proposal  and  in  the  accompanying 
Report. 

Means used to make the expert advice publicly available 

Not applicable. 

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230 

•  Impact assessment 

The  third  countries  to  be  covered  by  EIB  operations  under  Community  guarantee 
generally  have  a  greater  risk  profile  than  EU  countries,  mainly  because  of  macro-
economic, financial and/or political instability, as reflected in the external credit ratings 
of  such  countries.  The  EIB  operates  on  sound  banking  principles  and  its  Statute  is 
restrictive  in  terms  of  the  risks  it  can  take.  Therefore,  without  a  guarantee  from  the 
Community covering political and sovereign risks, the EIB could normally assume the 
relevant risks only in investment grade countries. 

A  Community  guarantee  for  extra-EU  projects  provides  the  EIB  with  the  security 
required  to  allow  it  to  finance  projects  contributing  to  Community  external  relations 
policies without affecting the EIB's AAA credit rating. 

An alternative option examined was not to provide a Community guarantee. However 
this would have led to a non-entry in - or a withdrawal of the EIB from a number of 
countries  and  a  significant  increase  in  funding  costs  for  projects  located  in  other 
countries. This was deemed not to be politically desirable, considering the need to have 
balanced  EU  intervention  across  the  various  countries  in  the  different  regions. 
Furthermore,  the  increase  of  financing  costs  for  project  promoters  in  acceptable 
countries  would  have  rendered  EIB  operations  less  attractive,  thus  diminishing  the 
EIB's leverage to impose EU policy conditions (e.g. procurement, environment, etc.). 
The same reasoning would also apply if the Community were to charge the guarantee 
to the EIB, as this would also ultimately increase the cost for promoters. 

The current proposal strikes a proportionate balance between the need to leave the EIB 
operational  freedom  to  pursue  financing  activities  according  to  its  own  modalities, 
whilst  supporting  EU  external  relation  policies,  and  to  ensure  that  the  Community's 
guarantee  is  limited,  both  in  terms  of  exposure  to  risk  and  the  nature  of  the  projects 
which  it  will  cover.  Furthermore,  the  involvement  of  the  Commission  as  responsible 
for  the  Community  guarantee  ensures  a  strong  political  backing  to  the  financing 
provided  by  the  EIB.  A  major  effect  of  such  backing  is  to  significantly  increase  the 
probability of recovery of defaulted amounts thanks to the joint pressure exercised by 
the EIB and the Commission on defaulting borrowers. This is witnessed by the fact that 
the  only  cases  where  the  EIB  called  on  the  guarantee  in  the  past  (ex-Yugoslavia  and 
Argentina) have been eventually paid back. 

3)  LEGAL ELEMENTS OF THE PROPOSAL 

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•  Summary of the proposed action 

The Commission proposes a single legal basis covering the different regions under the 
mandate.  The  period  covered  by  the  future  mandate  will  coincide  with  the  next 
Financial  Framework  2007-2013.  The  action  will  provide  a  guarantee  to  the  EIB  for 
extra-EU operations, up to certain ceilings established within the proposal. A mid-term 
review of the mandate will be carried out in 2010, which will allow, where necessary, 
for a refocusing of the priorities set out in the legal basis. 

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310 

•  Legal basis 

The  legislative  proposal  will  be  based  on Article  181a  which  provides  for  economic, 
financial  and  technical  cooperation  with  third  countries.  This  legal  basis  was  already 
used  for  the  revision  of  the  general  lending  mandate  (Council  Decision  2005/47/EC) 
and  for  the  new  Russia,  Ukraine,  Moldova  and  Belarus  mandate  (Council  Decision 
2005/48/EC). 

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•  Subsidiarity principle 

The proposal falls under the exclusive competence of the Community. The subsidiarity 
principle therefore does not apply. 

•  Proportionality principle 

The proposal complies with the proportionality principle for the following reasons: 

EIB  financing  operations  shall  continue  to  be  managed  in  accordance  with  the  EIB's 
own rules and procedures. 

The  Community  guarantee  has  proved  to  be  an  efficient  and  inexpensive  means  of 
covering  the  political  and  sovereign  risks  relating  to  EIB  external  operations.  Since 
1994,  a  Community  Guarantee  Fund  for  External  Action  is  in  place  to  provide  a 
liquidity cushion for the Community budget against defaults on guaranteed operations. 
The  renewal  of  a  Community  guarantee  will  allow  the  existing  efficient  and 
economically sound practice to continue. 

The Commission and the EIB will sign an agreement on the provisions and procedures 
for  granting  the  Community  guarantee.  In  order  to  streamline  the  preparation  and 
appraisal of projects, the EIB will further enhance coordination and cooperation with 
other IFIs and with European bilateral institutions where relevant. 

•  Choice of instruments 

Proposed instruments: other. 

Other means would not be adequate for the following reason: 

A Council Decision is required to establish a guarantee at Community level. 

4)  BUDGETARY IMPLICATION 

The  financial  statement  included  in  the  legislative  proposal  summarises  the  relevant 
budgetary implications. These implications stem from the need to set aside provisions 
for  the  Community  guarantee  in  the  Guarantee  Fund  for  External  Action  over  the 
period of the next Financial Framework 2007-2013. 

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5)  ADDITIONAL INFORMATION 

•  Review/revision/sunset clause 

The proposal includes a review clause. 

The proposal includes a revision clause. 

The proposal includes a sunset clause. 

•  Detailed explanation of the proposal 

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532 

533 

570 

Article 1 mentions that the Community guarantee will cover EIB financing operations 
up to a global amount of EUR 33 billion, including a reserve of EUR 1.5 billion, over 
the  period  2007-2013.  The  guarantee  shall  be  restricted  to  65%  of  the  aggregate 
amount  of  the  financing  operations  plus  related  sums.  The  overall  ceiling  shall  be 
broken down by region with the following binding regional ceilings: 

A) Pre-accession countries: EUR 9 billion 

B)  Neighbourhood  and  Partnership  countries:  EUR  15  billion.  This  is  broken  down 
into  two  indicative  sub-ceilings,  i.e.  Mediterranean  countries:  EUR  10  billion,  and 
Eastern Europe, Southern Caucasus and Russia: EUR 5 billion. 

C) Development and Economic Cooperation countries: EUR 7.5 billion, broken down 
into  three  indicative  sub-ceilings,  i.e.  Latin  America:  EUR  4  billion,  Asia:  EUR  2 
billion, and Republic of South Africa: EUR 1.5 billion. 

D) Reserve Mandate: EUR 1.5 billion. 

Article 2 deals with the list of countries concerned by the legal act and their eligibility. 

Article 3 specifies that the Reserve Mandate is not allocated to any single region and 
will  be  activated  in  cases  of  natural  disasters,  post-conflict  reconstruction  or 
developments  in  strategically  important  countries.  The  activation  will  be  decided 
jointly  by  the  Commission  and  the  EIB,  following  consultation  with  the  EFC.  The 
European Parliament will be informed about the activation of the Reserve Mandate. 

Article 4 details the requirements relating to the linkage of EIB external activities with 
EU policies, through reinforced cooperation between the Commission and the EIB and 
enhanced  reporting.  Furthermore,  an  EIB  Financing  Operation  will  not  be  included 
under  the  cover  of  the  Community  guarantee  in  case  the  Commission  delivers  a 
negative opinion on such operation within the framework of the procedure provided for 
in Article 21 of the Statutes of the EIB. 

Article 5 details the modalities of the enhanced cooperation with other IFIs. 

Article 6 clarifies the nature of the Community guarantee which will cover risks of a 
political or sovereign nature for financing operations entered into by the EIB. 

Article  7  includes  enhanced  reporting  and  accounting  information  requirements  for 

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both the EIB and the Commission.  

Article 8 specifies the responsibility of the EIB to pursue possible recovery claims on 
behalf of the Commission. 

Article  9  mentions  that  the  detailed  provisions  and  procedures  relating  to  the 
Community  guarantee  shall  be  laid  down  in  a  guarantee  agreement  between  the 
Commission and the EIB. 

Article  10  mentions  that  a  mid-term  review  of  the  mandate  would  be  carried  out  in 
2010 by the Commission on the basis, inter alia, of an activity report from the EIB as 
well as an evaluation prepared by the EIB's independent evaluation department. 

The  'Recitals'  section  includes,  amongst  other  things,  the  political  background  to  the 
proposal and the detailed scope of EIB operations in the different regions. 

E-12466 

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2006/0107 (CNS) 

Proposal for a 

COUNCIL DECISION 

granting a Community guarantee to the European Investment Bank against losses under 
loans and guarantees for projects outside the Community  

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
181a thereof, 

Having regard to the proposal from the Commission1, 

Having regard to the opinion of the European Parliament2, 

Whereas: 

(1) 

Since 1963, the European Investment Bank (hereinafter referred to as the “EIB”) has 
undertaken operations outside the Community in support of the Community's external 
policies, 

(2)  Most of those operations have been carried out upon request by the Council and have 
benefited  from  a  Community  budgetary  guarantee  administered  by  the  Commission. 
Most recently, the Community guarantee was established for the period 2000-2007 by 
Council Decision 2000/24/EC of 22 December 1999 granting a Community guarantee 
against  losses  under  loans  for  projects  outside  the  Community  (Central  and  Eastern 
Europe, Mediterranean countries, Latin America and Asia and the Republic of South 
Africa)3  and  by  Council  Decisions  2001/777/EC4  and  2005/48/EC5  for  regionally 
specific lending actions, 

(3)  With  a  view  to  supporting  EU  external  action  without  affecting  the  EIB’s  credit 
standing, the EIB should be offered a Community budgetary guarantee for operations 
carried  out  outside  the  Community.  The  EIB  should  be  encouraged  to  increase  its 
operations  outside  the  Community  without  recourse  to  the  Community  guarantee, 
particularly in the pre-accession countries and the Mediterranean countries as well as 
in investment grade countries in other regions, while the nature of the coverage of the 
Community guarantee should be clarified as covering risks of a political or sovereign 
nature, 

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4 
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OJ C , , p.  
OJ C , , p.  
OJ L 9, 13.1.2000, p.024, Decision as last amended by Decision 2006/174/EC (OJ L 62, 3.3.2006, p.26) 
OJ L 292, 9.11.2001, p.41 
OJ L 21, 25.1.2005, p.11 

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(4) 

(5) 

(6) 

(7) 

(8) 

The  Community  guarantee  should  cover  losses  under  loans  and  loan  guarantees  for 
EIB eligible investment projects carried out in countries covered by the Instrument for 
Pre-Accession Assistance6 (hereinafter the “IPA”), the European Neighbourhood and 
Partnership  Instrument7  (hereinafter  the  “ENPI”)  and  the  Development  Cooperation 
and  Economic  Cooperation  Instrument8  (hereinafter  the  “DCECI”),  where  the  said 
loan financing or guarantee has been granted according to a signed agreement which 
has  neither  expired  nor  been  cancelled  (hereinafter  referred  to  as  “EIB  Financing 
Operations”), 

The EU’s external relations policies have been revised and broadened in recent years. 
This  has  notably  been  the  case  for  the  Pre-Accession  Strategy  as  set  out  in  the 
Commission's  2005  Enlargement  Strategy  Paper9,  for  the  European  Neighbourhood 
Policy,  as  set  out  in  the  Commission’s  Strategy  Paper  of  12  May  200410,  for  the 
renewed  partnerships  with  Latin  America11  and  South-East  Asia12  and  for  the  EU's 
Strategic Partnership with Russia, China and India, 

From  2007,  the  EU’s  external  relations  will  also  be  supported  by  the  new  financial 
instruments, i.e. the IPA, the ENPI, the DCECI and by the Instrument for Stability13, 

EIB Financing Operations should be consistent with and support EU external policies 
including specific regional objectives. EIB Financing Operations should take place in 
countries  complying  with  appropriate  conditionality  consistent  with  EU  high  level 
agreements on political and macro-economic aspects, 

The  link  between  EIB  activities  outside  the  Community  and  EU  policies  should  be 
strengthened  via  enhanced  cooperation  between  the  EIB  and  the  Commission  at 
central as well as at field level. Such strengthened coordination should include, inter 
alia, early mutual consultation with respect to policy matters, preparation of papers of 
mutual  significance  and  project  pipelines.  Of  particular  importance  will  be  early 
consultation on strategic programming documents prepared by the Commission or by 
the EIB, to maximise synergies between EIB and Commission activities and measure 
progress towards the fulfilment of relevant EU policy objectives, 

(9)  With regard to pre-accession countries, EIB financing in those countries should reflect 
the  priorities  established  in  the  Accession  and  European  Partnerships,  in  the 
Stabilisation and Association agreements and in negotiations with the EU. The focus 
of  EU  action  in  the  Western  Balkans  should  continue  to  shift  progressively  from 
reconstruction  to  pre-accession  support.  In  this  context,  the  EIB  activity  should  also 
seek to encourage the institution building aspect, where relevant, in cooperation with 
other International Financial Institutions (“IFIs”) active in the region. Over the period 
2007-2013,  financing  to  candidate  countries  (Croatia,  Turkey  and  the  Former 
Yugoslav  Republic  of  Macedonia)  should  increasingly  take  place  under  the  Pre-

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13 

COM(2004) 627 final. 
COM(2004) 628 final. 
COM(2004) 629 final. 
COM(2005) 561 final. 
COM(2004) 373 final. 
COM(2005) 636 final. 
COM(2003) 399 final. 
COM(2004) 630 final. 

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Accession Facility made available by the EIB, which should be extended over time to 
cover  the  potential  candidate  countries  in  the  Western  Balkans  in  line  with  the 
progress of their accession process, 

(10)  With  regard  to  countries  covered  by  the  ENPI,  the  EIB  should  continue  and 
consolidate  its  activities  in  the  Mediterranean  region  with  its  focus  on  private  sector 
development.  As  regards  Eastern  Europe,  Southern  Caucasus  and  Russia,  the  EIB 
should enhance its activities in Russia and Ukraine and prepare to enter other countries 
in the region as soon as they fulfil appropriate conditionality consistent with EU high 
level  agreements  with  the  country  in  question  on  political  and  macro-economic 
aspects. In this region, the EIB should finance projects of significant interest to the EU 
in  transport,  energy,  telecommunications  and  environmental  infrastructure.  Priority 
should be given to projects on extended major Trans European Network axes, projects 
with  cross-border  implications  for  one  or  more  Member  States  and  major  projects 
favouring  regional  integration  through  increased  connectivity.  In  the  environmental 
sector,  the  EIB  should  in  Russia  give  particular  priority  to  projects  within  the 
framework  of  the  Northern  Dimension  Environmental  Partnership.  In  the  energy 
sector,  strategic  energy  supply  and  energy  transport  projects  are  of  particular 
importance.  EIB  Financing  Operations  in  this  region  should  be  carried  out  in  close 
cooperation  with  the  European  Bank  for  Reconstruction  and  Development  (“the 
EBRD”), in particular according to the terms to be set out in a tripartite Memorandum 
of Understanding between the Commission, the EIB and the EBRD, 

(11)  With regard to countries covered by the DCECI, EIB financing in the Asian and Latin 
American countries will be progressively aligned with the EU cooperation strategy in 
those regions and be complementary to instruments financed by Community budgetary 
resources. The concept of “mutual interest”, so far limited in practice to the financing 
of  projects  involving  EU  companies,  will  be  broadened  to  take  into  account  the 
promotion of environmental sustainability and regional integration (such as transport, 
telecom and energy projects favouring interconnectivity). The EIB should endeavour 
to  progressively  expand  its  activities  across  a  larger  number  of  countries  in  those 
regions,  including  in  the  less  prosperous  countries.  In  Central  Asia,  the  EIB  should 
focus  on  major  energy  supply  and  energy  transport  projects  with  cross-border 
implications. EIB financing in Central Asia should be carried out in close cooperation 
with  the  EBRD,  in  particular  according  to  the  terms  to  be  set  out  in  a  tripartite 
Memorandum of Understanding between the Commission, the EIB and the EBRD. To 
enhance  visibility  of  EU  intervention  in  Latin  America,  a  specific  amount  should  be 
identified for a Latin America facility,  

(12)  To  complement  the  EIB  activities  under  the  Cotonou  Agreement  for  the  ACP 
countries,  a  separate  facility  for  South  Africa  should  be  renewed,  focusing  on 
infrastructure  projects  of  a  public  interest  (including  municipal  infrastructure,  power 
and water supply) and private sector support, including SMEs. The implementation of 
the  provisions  on  economic  cooperation  under  the  EU-South  Africa  Trade  and 
Development  Cooperation  Agreement  will  further  promote  EIB  activities  in  this 
region,  

(13) 

It is important to combine EIB financing with EU budgetary resources in the form of 
grant support, risk capital and interest rate subsidies alongside technical assistance for 
project  preparation,  implementation  or  enhancement  of  the  legal  and  regulatory 

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framework,  through  the  IPA,  the  ENPI,  the  Instrument  for  Stability  and,  for  South 
Africa, the DCECI. 

(14) 

In  the  past,  there  have  been  cases  of  natural  disasters  or  post-conflict  reconstruction 
where  the  EIB  has  been  called  upon  to  play  a  significant  and  unforeseen  role.  To 
ensure that such developments do not put a burden on the regional ceilings set out in 
this  Decision,  a  “Reserve  Mandate”  should  be  established.  The  Reserve  mandate 
should not be specifically attributed to any single region, but should be available for 
use  –  where  appropriate  in  combination  with  EU  budgetary  resources  –  in  cases  of 
natural  disasters,  post-conflict  reconstruction  or  developments  in  strategically 
important  countries.  In  order  to  enable  the  EIB  to  take  urgent  action  to  help  re-
establish  or  safeguard  normal  conditions,  measures  for  the  activation  of  the  Reserve 
Mandate should be adopted by use of the advisory procedure provided for in Article 3 
of Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the 
exercise of implementing powers conferred on the Commission14, 

(15)  The EIB already closely cooperates with IFIs and with European bilateral institutions. 
This cooperation is guided by regionally-specific Memoranda of Understanding. In its 
Financing Operations outside the EU falling within the scope of this Decision, the EIB 
should endeavour to further enhance coordination and cooperation with IFIs and with 
European bilateral institutions where relevant, 

(16)  Reporting  by  the EIB  and  the  Commission  on  EIB  Financing  Operations  should  be 
strengthened. On the basis of the information received from the EIB, the Commission 
should report, on an annual basis, to the European Parliament and the Council on the 
EIB Financing Operations carried out under this Decision,  

(17)  The  Community  guarantee  established  by  this  Decision  should  cover  EIB  Financing 
Operations signed during a seven-year period beginning on 1 January 2007. In order to 
be able to take stock of the developments during the first half of that period, the EIB 
and the Commission should prepare a mid-term review of the Decision, 

(18)  EIB  Financing  Operations  should  continue  to  be  managed  in  accordance  with  the 
Bank’s own rules and procedures, including appropriate control measures, as well as 
with the relevant rules and procedures concerning the Court of Auditors and OLAF, 

(19) 

 The  Guarantee  Fund  for  External  Action  (hereinafter  referred  to  as  the  “Guarantee 
Fund”), established by Council Regulation (EC, Euratom) No 2728/94 of 31 October 
199415,  should  continue  to  provide  a  liquidity  cushion  for  the  Community  budget 
against losses on EIB Financing Operations. In April 2005 the Commission presented 
a  proposal  to  the  Council  with  a  view  to  changing  the  provisioning  system  for  the 
Guarantee  Fund  so  as  to  ensure  a  more  transparent  and  efficient  system16.  [to  be 
updated in the event of adoption by the Council], 

14 
15 

16 

OJ L 184, 17.7.1999, p. 23. 
OJ L 293, 12.11.1994, p.1, Regulation as last amended by Regulation (EC, Euratom) No 2273/2004 (OJ 
L 396, 31.12.2004, p. 28). 
COM(2005) 130 final. 

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(20) 

 The  EIB  should  prepare,  in  consultation  with  the  Commission,  an  indicative  multi-
annual programming of the volume of signatures of EIB Financing Operations so as to 
ensure an appropriate budgetary planning for the provisioning of the Guarantee Fund. 

HAS DECIDED AS FOLLOWS: 

Article 1 

Guarantee and Ceilings 

1. 
The Community shall grant the European Investment Bank (hereinafter referred to as 
"the  EIB")  a  global  guarantee  (hereinafter  referred  to  as  the  “Community  guarantee”)  in 
respect  of  payments  not  received  by  the  EIB  but  due  to  it,  in  respect  of  loans  and  loan 
guarantees  for  EIB  eligible  investment  projects  carried  out  in  countries  covered  by  this 
Decision, where the said loan financing or guarantee has been granted according to a signed 
agreement  which  has  neither  expired  nor  been  cancelled  (hereinafter  referred  to  as  "EIB 
Financing  Operations")  and  has  been  granted  in  accordance  with  the  EIB’s  own  rules  and 
procedures and in support of the relevant external policy objectives of the European Union. 

The  Community  guarantee  shall  be  restricted  to  65%  of  the  aggregate  amount  of 
2. 
credits  disbursed  and  guarantees  provided  under  EIB  Financing  Operations,  less  amounts 
reimbursed, plus all related sums.  

The overall ceiling of the EIB Financing Operations, less amounts cancelled, shall be 
3. 
equivalent  to  EUR  33  000  million.  It  shall  be  broken  down  by  region  with  the  following 
binding regional ceilings: 

(a) 

Pre-Accession countries: 

EUR 9 000 million  

(b) 

Neighbourhood and Partnership countries: 

EUR 15 000 million,  
broken down into the following indicative sub-ceilings: 

(i)  Mediterranean countries:  

EUR 10 000 million 

(ii)  Eastern Europe, Southern Caucasus and Russia:  

EUR 5 000 million 

(c) 

Development and Economic Cooperation countries: 

EUR 7 500 million,  
broken down into the following indicative sub-ceilings: 

(i)  Latin America: 

EUR 4 000 million 

(ii)  Asia: 

EUR 2 000 million 

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(iii)  Republic of South Africa: 

EUR 1 500 million 

(d) 

Reserve Mandate: 

EUR 1 500 million. 

The  Community  guarantee  shall  cover  EIB  Financing  Operations  signed  during  the 

4. 
period of seven years beginning on 1 January 2007 and ending on 31 December 2013. 

5. 
If,  on  expiry  of  the  period  referred  to  in  paragraph  4,  the  EIB  Financing  Operations 
have  not  attained  the  overall  amounts  referred  to  in  paragraph  3,  that  period  shall  be 
automatically extended by six months. 

Article 2 

Countries covered 

The  countries  covered  by  Article  1  and  their  attribution  to  regions  are  set  out  in  the 

1. 
Annex. 

2. 
Individual countries shall become eligible under the regional ceilings and sub-ceilings 
as and when they fulfil appropriate conditionality consistent with EU high level agreements 
with  the  country  in  question  on  political  and  macro-economic  aspects.  The  Commission,  in 
consultation  with  the  EIB,  shall  determine  when  an  individual  country  has  fulfilled  the 
appropriate conditionality and shall notify the EIB thereof.  

The  Community  guarantee  shall only cover EIB Financing Operations carried out in 
3. 
countries  having  concluded  a  framework  agreement  with  the  EIB  establishing  the  legal 
conditions under which such EIB Financing Operations are to be carried out. 

In the event of serious concerns over the political or economic situation in a specific 
4. 
country,  the  Commission  and  the  EIB  may  decide  to  suspend  EIB  Financing  Operations  in 
such country. 

The  Community  guarantee  shall  not  cover  EIB  Financing  Operations  in  a  specific 
5. 
country, when the agreement concerning such EIB Financing Operations has been signed after 
that country’s accession to the EU. 

Article 3 

Reserve Mandate 

1. 
A  Reserve  Mandate  shall  be  established  to  be  used  in  cases  where  EIB  Financing 
Operations can assist in the financing of reconstruction of infrastructure as well as business 
and social sector premises and equipment damaged or destroyed by natural disasters or post 
conflict  reconstruction  or  to  be  deployed  in  the  case  of  developments  in  strategically 
important countries. 

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15 

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2. 
The Commission and the EIB shall decide jointly on the use of the Reserve Mandate. 
The Commission and the EIB shall be assisted by the Economic and Financial Committee set 
up by Article 114(2) of the Treaty. 

The advisory procedure laid down in Article 3 of Decision 1999/468/EC shall apply, 

3. 
in compliance with Article 7(3) thereof.  

Article 4 

Consistency with policies of the European Union 

The  consistency  of  EIB  external  actions  with  the  external  policies  and  objectives  of 
1. 
the  European  Union  shall  be  strengthened  with  a  view  to  maximising  synergies  of  EIB 
lending and budgetary resources of the European Union, notably through regular dialogue and 
early consultation on: 

strategic  documents  prepared  by  the  Commission,  such  as  country  and  regional 

(a) 
strategy papers, action plans and pre-accession documents; 

(b) 

the EIB's strategic planning documents and project pipelines; 

(c) 

other policy and operational aspects.  

The  cooperation  shall  be  carried  out  on  a  regionally  differentiated  basis,  taking  into 

2. 
consideration the EIB's role as well as the policies of the European Union in each region. 

An EIB Financing Operation will not be included under the cover of the Community 
3. 
guarantee  in  case  the  Commission  delivers  a  negative  opinion  on  such  operation  within  the 
framework of the procedure provided for in Article 21 of the Statutes of the EIB. 

The consistency of EIB Financing Operations with the external policies and objectives 

4. 
of the European Union shall be monitored in accordance with Article 7.  

Article 5 

Cooperation with other International Financial Institutions 

EIB  Financing  Operations  shall  be  carried  out,  where  appropriate,  in  cooperation 
1. 
between  and/or  by  means  of  co-financing  by  the  EIB  and  other  International  Financial 
Institutions (IFIs), or European bilateral institutions, in order to ensure reasonable sharing of 
risks and coherent project and sector conditionality.  

2. 
This cooperation shall be facilitated by coordination, carried out notably in the context 
of Memoranda of Understanding, where appropriate, between the Commission, the EIB and 
the main IFIs and European bilateral institutions operating in the different regions.  

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Article 6 

Coverage and terms of the Community Guarantee 

1. 
For EIB Financing Operations entered into with a State, or guaranteed by a State, and 
for  other  EIB  Financing  Operations  entered  into  with  regional  or  local  authorities  or 
government-owned and/or -controlled public enterprises or institutions, where such other EIB 
Financing Operations have an appropriate EIB credit risk assessment taking into account the 
credit  risk  situation  of  the  country  concerned,  the  Community  guarantee  shall  cover  all 
payments  not  received  by  the  Bank  but  due  to  it  (hereinafter  the  “Comprehensive 
Guarantee”). 

For the purposes of Article 6 and Article 7 (4), the notion of State includes the West Bank and 
Gaza  Strip,  as  represented  by  the  Palestinian  Authority,  and  Kosovo,  as  represented  by  the 
UN Interim Administration Mission. 

2. 
For  EIB  Financing  Operations  other  than  those  indicated  in  paragraph  1,  the 
Community guarantee shall cover all payments not received by the Bank but due to it where 
the non-receipt has been caused by the realisation of one of the following political risks (the 
“Political Risk Guarantee”): 

(a) 

non-transfer of currency; 

(b) 

expropriation; 

(c) 

war or civil disturbance; 

(d) 

denial of justice upon breach of contract. 

Article 7 

Reporting and accounting 

The Commission shall report annually to the European Parliament and the Council on 
1. 
the  EIB  Financing  Operations  carried  out  under  this  Decision.  The  report  shall  include  an 
assessment  of  the  contribution  of  the  EIB  Financing  Operations  to  the  fulfilment  of  the 
external  policy  objectives  of  the  European  Union,  taking  into  account  the  operational 
objectives of the EIB. 

2. 
For  the  purposes  of  paragraph  1,  the  EIB  shall  provide  the  Commission  with  yearly 
reports of EIB Financing Operations carried out under this Decision and of the fulfilment of 
the external policy objectives of the European Union, including cooperation with other IFIs. 

3. 
The EIB shall provide the Commission with statistical, financial and accounting data 
on each of the EIB Financing Operations as necessary to fulfil its reporting duties or requests 
by the European Court of Auditors as well as with an auditor’s certificate on the outstanding 
amounts of the EIB Financing Operations. 

4. 
For the purposes  of the Commission’s accounting and  reporting  of the risks covered 
by the Comprehensive Guarantee, the EIB shall provide the Commission with the EIB's risk 

EN 

17 

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assessment and grading information concerning EIB Financing Operations with borrowers or 
guaranteed obligors other than States. 

The EIB shall provide the information referred to in paragraphs 2, 3 and 4 at its own 

5. 
expense.  

Article 8 

Recovery of payments made by the Commission 

1. If the Commission makes any payment under the Community guarantee, the EIB shall, in 
the  name  and  on  behalf  of  the  Commission,  pursue  the  recovery  of  claims  for  the  amounts 
paid.  

2.  The  EIB  and  the  Commission  shall  enter  into  an  agreement  laying  down  the  detailed 
provisions and procedures relating to recovery of claims no later than the date of conclusion 
of the agreement referred to in Article 9 below. 

Article 9 

Guarantee agreement 

The EIB and the Commission shall enter into a guarantee agreement laying down the detailed 
provisions and procedures relating to the Community guarantee. 

Article 10 

Review of the Decision 

Drawing  inter  alia  upon  an  activity  report  from  the  EIB  as  well  as  an  evaluation 
1. 
provided by the independent evaluation department of the EIB, the Commission shall present 
to  the  Council  and  the  European  Parliament  a  midterm  report  on  the  application  of  this 
Decision  by  30  June  2010  at  the  latest,  accompanied,  as  appropriate,  by  a  proposal  for  its 
amendment, in particular with regard to the ceilings set out in Article 1. 

The Commission shall present a final report on the application of this Decision by 31 

2. 
July 2013 at the latest. 

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18 

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Article 11 

Application 

This  Decision  shall  take  effect  on  the  third  day  following  its  publication  in  the  Official 
Journal of the European Union. 

Done at Brussels,  

For the Council 
The President 

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19 

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ANNEX 

Regions and countries covered by Article 1 

for countries marked with (*) the Commission must still approve eligibility under Article 
2(2). 

A. 

PRE-ACCESSION COUNTRIES 

(1)  Candidate countries 

Croatia, Turkey, the Former Yugoslav Republic of Macedonia. 

(2)  Potential candidate countries 

Albania,  Bosnia  and  Herzegovina,  Montenegro,  Serbia,  Kosovo  under  United 

Nations Security Council Resolution 1244. 

B.  NEIGHBOURHOOD AND PARTNERSHIP COUNTRIES 

(1)  Mediterranean countries 

Algeria,  Egypt,  West  Bank  and  Gaza  Strip,  Israel,  Jordan,  Lebanon,  Libya*, 

Morocco, Syria, Tunisia. 

(2)  Eastern Europe, Southern Caucasus and Russia 

Eastern Europe: Belarus*, Moldova [*], Ukraine; 

Southern Caucasus: Armenia*, Azerbaijan*, Georgia*; 

Russia: Russia. 

C.  DEVELOPMENT AND ECONOMIC COOPERATION COUNTRIES 

(1)  Latin America 

Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, 
Guatemala,  Honduras,  Mexico,  Nicaragua,  Panama,  Paraguay,  Peru, 
Uruguay, Venezuela. 

(2)  Asia 

Asia (without Central Asia): 

Afghanistan*,  Bangladesh,  Bhutan,  Brunei,  Burma/Myanmar*,  Cambodia, 
China,  Hong  Kong,  India,  Indonesia,  Iran*,  Iraq*,  Republic  of  Korea 
(South Korea), Lao PDR (Laos), Macao, Malaysia, Maldives, Mongolia, 
Nepal,  Pakistan,  Philippines,  Singapore,  Sri Lanka,  Chinese  Taipei, 
Thailand, Vietnam, Yemen*. 

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20 

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Central Asia: 

Kazakhstan*, Kyrgyz Republic*, Tajikistan*, Turkmenistan*, Uzbekistan*. 

(3)  South Africa 

Republic of South Africa. 

D.  RESERVE 

Potentially eligible countries for the Reserve Mandate are those listed in this Annex. 

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LEGISLATIVE FINANCIAL STATEMENT 

1. 

NAME OF THE PROPOSAL: 

Proposal  for  a  Council  decision  granting  a  Community  guarantee  to  the  European 
Investment  Bank  against  losses  under  loans  and  guarantees  for  projects  outside  the 
Community. 

2. 

ABM / ABB FRAMEWORK 

Policy Area(s) concerned and associated Activity/Activities: 

Policy area : Economic and Financial Affairs 

ABB activity : Financial Operations and Instruments 

3. 

BUDGET LINES 

3.1. 

Budget  lines  (operational  lines  and  related  technical  and  administrative 
assistance lines (ex- B..A lines)) including headings: 

01 04 01 14 

Payments to the Guarantee Fund in respect of new operations 

3.2. 

Duration of the action and of the financial impact: 

EIB  loans  and  guarantees  under  Community  guarantee  cover  ("EIB  Financing 
Operations") can be signed by the EIB from 2007 to 2013. The total duration of the 
action and of its financial impact will be determined, however, by the maturity of the 
signed EIB Financing Operations. 

3.3. 

Budgetary characteristics: 

Budget line 

Type of 
expenditure 

New 

EFTA 
contribution 

Contributions 
from applicant 
countries 

Heading in 
Financial 
Framework 

01 04 01 14  Com

p 

Non-
diff17 

NO 

NO 

NO 

4 

17 

Non-differentiated appropriations hereafter referred to as NDA. 

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22 

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4. 

SUMMARY OF RESOURCES 

4.1. 

Financial Resources 

4.1.1. 

Summary of commitment appropriations (CA) and payment appropriations (PA) 

The  following  table  summarizes  the  estimated  budgetary  resources  needed  for 
funding the Guarantee Fund, calculated in line with the new provisioning mechanism 
proposed by the Commission (COM (2005) 130 of 5 April 2005) and based on the 
proposed  EIB  lending  mandate  of  EUR  33  billion  and  a  combined  level  of  other 
guaranteed  loans  (Macro-Financial  Assistance  and  Euratom)  of  EUR  4.5  billion 
between  2007  and  2013.  The  estimates  are  based  on  reasonable  indicative 
assumptions  (level  of  signatures  of  EIB  Financing  Operations  increasing  by  10%  a 
year,  profile  of  disbursements  and  repayments  in  line  with  current  patterns)  and 
assume that the accession of Bulgaria and Romania would take place in 2007. 

The  figures  for  the  calculations  of  the  “normal”  provisioning  are  detailed  in  Table 
8.1.  It  is  assumed  that  the  new  provisioning  mechanism  will  enter  into  force  on 
01/01/2007. 

• 
For  2007:  no  provisioning  shall  take  place  (switching  year).  However,  it 
should be noted that an estimated lumpsum reimbursement of EUR 254 million from 
the Guarantee Fund to the General Budget should take place following the accession 
of  Bulgaria  and  Romania,  in  line  with  Council  regulation  N°  2273/2204  of  22 
December 2004. This exceptional operation will be performed through an Amending 
Budget, thus reimbursing Member States in 2007. 

For  2008:  the  calculations  for  PDB  will  be  based  on  the  target  amount  as  of 
• 
31.12.2006. Estimates show that a surplus of EUR 157 million will appear and will 
be  budgeted  in  2008  as  “revenues”.  This  amount  stems  from  the  “ex-ante” 
provisioning of the current system, still in force in 2006, which will create an “over-
provisioning” as of  31.12.2006 as regards the target amount. According to the new 
provisioning, that amount shall be budgeted as “revenues” in the 2008 budget.  

For 2009: the calculations will be based on the target amount as of 31.12.2007. 

• 
Estimates show a surplus of EUR 2 million. 

For  the  years  2010-2013,  calculations  show  a  growing  provisioning  need,  in 

• 
line with the growing outstanding loans amount due to the new mandate. 

The envelope of EUR 1.4 billion has been set aside in the financial programming of 
Heading  4  with  a  flat  profile  of  EUR  200  million  per  year.  Although  the  total 
programmed  amount  of  EUR  1.4  billion  shall  be  maintained  as  the  "maximum 
budgetary  needs",  the  profile  might  be  adjusted  during  the  programming  period  to 
take  into  account  negative  developments  such  as  accumulation  of  defaults18  and 
adverse assets valuation19, in order to cope with extreme situations as shown in the 

18 

19 

EUR  100  million/year  stem  from  the  activation  of  the  guarantee  in  case  of  major  defaults  (see 
"smoothing mechanism" in COM(2005) 130 of 5.4.2005). 
In order to evaluate implications for the provisioning of possible fluctuations in the asset valuation of 
the Guarantee Fund, the following assumptions have been made: 

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23 

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total  “Maximum  budgetary  needs”  (see  table  below).  On  the  other  hand,  in  the 
beginning  of  the  period,  practically  no  financial  resources  will  be  necessary  due  to 
the shift to the new provisioning system. 

EUR Million 

2007  2008  2009 

2010  2011  2012  2013  Total 

Budgetary revenues 

0 

157 

2 

0 

0 

0 

0 

159 

Budgetary 
provisioning 

needs 

for 

normal 

Possible  adjustments  in  the  market 
valuation  of 
the 
Guarantee Fund 

the  assets  of 

Potential impact of possible calls  

Maximum budgetary needs 

0 

0 

0 

0 

0 

0 

0 

0 

0 

129 

153 

160 

165 

607 

37 

42 

49 

56 

64 

248 

100 

100 

100 

100 

100 

500 

135 

271 

302 

316 

329  1353 

The following budgetary table takes into account the estimated maximum budgetary 
resources  needed  to  provision  the  Guarantee  Fund.  It  should  be  stressed,  however, 
that  the  amounts  indicated  will  not  necessarily  correspond  to  the  amounts  to  be 
budgeted  each  year:  the  exact  budgetary  amounts  (classified  as  Compulsory 
Expenditure) in year n+1 will be determined based on the figures at 31st December of 
year  n-1  based  on  the  outstanding  amount  of  the  loans  covered  by  the  Guarantee 
Fund, the corresponding target amount (i.e. 9% of the outstanding loans), the defaults 
which have occurred during the year, and the valuation of the assets of the Fund. The 
'maximum budgetary needs' must thus be considered as a worst case scenario which 
could exceptionally take place in given years. 

- a portfolio duration of 3.3 years; 
- 1% increase in interest rates per year; 
- A Guarantee Fund assets' evolution resulting from the estimated 'normal provisioning';   
There are no implications for 2007 and 2008 due to the transition period. 

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EUR million (1 decimal place) 

Expenditure type 

Section 
no. 

2007  2008  2009  2010  2011  2012-
13 

Total 

Operational expenditure20 

Commitment Appropriations 
(CA) 

8.1. 

Payment 
(PA) 

Appropriations 

a 

b 

0.0 

0.0 

135.0 

271.0 

302.0 

645.0 

1353.0

0.0 

0.0 

135.0 

271.0 

302.0 

645.0 

1353.0

Administrative expenditure within reference amount21 

Technical & administrative 
assistance (NDA) 

8.2.4. 

c 

- 

- 

- 

- 

- 

- 

- 

TOTAL REFERENCE AMOUNT 

Commitment 
Appropriations 

Payment Appropriations 

a+
c 

b+
c 

0.0 

0.0 

135.0 

271.0 

302.0 

645.0 

1353.0

0.0 

0.0 

135.0 

271.0 

302.0 

645.0 

1353.0

Administrative expenditure not included in reference amount22 

Human 
associated 
(NDA) 

resources 

and 
expenditure 

Administrative  costs,  other 
than  human  resources  and 
not 
associated 
included 
reference 
in 
amount (NDA) 

costs, 

8.2.5. 

d 

0.8 

0.8 

0.8 

0.8 

0.8 

1.5 

5.3

8.2.6. 

e 

- 

- 

- 

- 

- 

- 

- 

Total indicative financial cost of intervention 

TOTAL CA including cost 
of Human Resources 

TOTAL  PA  including  cost 
of Human Resources 

a+
c+
d+
e 

b+
c+
d+
e 

0.8 

0.8 

135.8 

271.8 

302.8 

646.5 

1358.3

0.8 

0.8 

135.8 

271.8 

302.8 

646.5 

1358.3

20 
21 
22 

Expenditure that does not fall under Chapter xx 01 of the Title xx concerned. 
Expenditure within article xx 01 04 of Title xx. 
Expenditure within chapter xx 01 other than articles xx 01 04 or xx 01 05. 

EN 

25 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Co-financing details 

No co-financing is foreseen. 

4.1.2.  Compatibility with Financial Programming 

⌧  Proposal is compatible with existing financial programming. 

(cid:133) 

(cid:133) 

Proposal  will  entail  reprogramming  of  the  relevant  heading  in  the  Financial 
Framework. 

Proposal  may  require  application  of  the  provisions  of  the  Interinstitutional 
Agreement23  (i.e.  flexibility 
the  Financial 
Framework). 

instrument  or  revision  of 

4.1.3.  Financial impact on Revenue 

⌧  Proposal has no financial implications on revenue 

(cid:133) 

Proposal has financial impact – the effect on revenue is as follows: 

4.2. 

Human Resources FTE (including officials, temporary and external staff) – see 
detail under point 8.2.1. 

Annual requirements 

Total  number  of  human 
resources 

2007 

2008 

2009 

2010 

2011 

2012-
2013 

7

7

7

7 

7 

14

5. 

CHARACTERISTICS AND OBJECTIVES 

5.1. 

Need to be met in the short or long term 

As  detailed  in  the  Explanatory  Memorandum,  the  existing  EIB  general  lending 
mandate will expire at the end of January 2007, with a possible 6 month extension, in 
the case that loans granted by the EIB have not attained the overall amounts set out 
in the Council Decision. The separate EIB mandate for projects in Russia, Ukraine, 
Moldova  and  Belarus  will  expire  on  the  same  date.  There  is  a  need  for  these 
mandates to be renewed if the Community is to continue to offer a guarantee for EIB 
external financing operations in furtherance of EU policy objectives. 

The new mandate will build upon the existing one, broadening the geographical and 
sectoral focus of EIB operations in line with the new political priorities of the EU. 

23 

See points 19 and 24 of the Interinstitutional agreement. 

EN 

26 

   EN 

 
                                                 
5.2. 

Value-added  of  Community  involvement  and  coherence  of  the  proposal  with 
other financial instruments and possible synergy 

EIB  Financing  Operations  outside  the  EU  represent  a  highly  visible  and  effective 
tool  in  support  of  EU's  external  action.  The  report  accompanying  the  legislative 
proposal details the main benefits of EIB intervention in such countries, such as the 
passing on to project promoters of expertise and the application of EU environmental 
and procurement standards to the projects financed. In addition to the above benefits, 
the  EIB  passes  on  in  full  the  financial  advantages  resulting  from  the  Community 
guarantee  and  the  attractive  funding  costs  of  the  Bank  to  final  beneficiaries  in  the 
form of competitive interest rates. 

The mandate under Community guarantee cover provides for the necessary political 
and financial backing by the Community for countries and projects which would not 
normally fit within EIB's standard guidelines and criteria. 

EIB Financing Operations will complement the activities carried out under the new 
external assistance instruments. In order to further increase support for EU external 
policies in each specific region, the linkage between EIB priorities and EU policies 
will  be  strengthened.  This  will  be  achieved  through  a  stronger  framework  for 
dialogue and cooperation between the EIB and the Commission in the definition of 
regional policies, country strategies, and at a project level. EIB Financing Operations 
may  be  usefully  combined  with  EU  budget  resources  in  the  form  of  grant  support, 
risk  capital  and  interest  rate  subsidies  alongside  technical  assistance  for  project 
preparation  and  implementation  or  enhancement  of  the  legal  and  regulatory 
framework. 

5.3. 

Objectives, expected results and related indicators of the proposal in the context 
of the ABM framework 

The  main  objective  of  the  proposal  is  to  further  the  contribution  of  the  EIB  to  the 
fulfilment of EU policy objectives, through the financing of investment projects. The 
objectives  to  be  sought  by  EIB  Financing  Operations  under  the  mandate  will  vary 
across the different regions and are detailed in the proposed legal act. Encouraging 
cooperation with other International Financial Institutions (IFIs) is also an important 
objective of the proposed Decision.  

The  attainment  of  objectives  will  primarily  be  measured  by  the  volume  of  EIB 
Financing  Operations  by  regions  and  by  sector,  as  well  as  by  the  volume  of  EIB 
Financing Operations co-financed with other IFIs and/or Commission programmes. 

5.4.  Method of Implementation (indicative) 

(cid:133)  Centralised Management 

(cid:133) 

directly by the Commission 

(cid:133) 

indirectly by delegation to: 

(cid:133) 

executive Agencies 

EN 

27 

   EN 

 
(cid:133) 

bodies set up by the Communities as referred to in art. 185 of the 
Financial Regulation 

(cid:133) 

national public-sector bodies/bodies with public-service mission 

(cid:133) 

Shared or decentralised management 

(cid:133)  with Member states 

(cid:133)  with Third countries 

⌧ 

Joint management with international organisations (please specify) 

Relevant comments: 

In  line  with  existing  provisions,  the  proposal  foresees  that  EIB  is  mandated  by  the 
Council  to  finance  investment  projects  in  accordance  with  its  own  rules  and 
procedures. The Commission is responsible for managing the Community guarantee. 
The EIB and the Commission shall enter into an agreement laying down the detailed 
provisions and procedures relating to the implementation of this Decision. 

6. 

MONITORING AND EVALUATION 

6.1.  Monitoring system 

EIB Financing Operations under Community guarantee will be managed by the EIB 
in accordance with the Bank's own rules and procedures, including appropriate audit, 
control  and  monitoring  measures.  As  foreseen  in  the  EIB  statute,  the  Audit 
Committee  of  the  Bank,  which  is  supported  by  external  auditors,  is  responsible  for 
verifying that the operations of the Bank have been conducted and its books kept in a 
proper manner. The EIB accounts are approved annually by its Board of Governors. 

Furthermore, the EIB Board of Directors, where the Commission is represented by a 
Director  and  an  alternate  Director,  approves  each  EIB  Financing  Operation  and 
monitors  that  the  Bank  is  managed  in  accordance  with  its  Statute  and  with  the 
general directives laid down by the Board of Governors. 

The existing tripartite agreement between the Commission, the Court of Auditors and 
the  EIB,  renewed  most  recently  in  October  2003  details  the  rules  under  which  the 
Court  of  Auditors  is  to  carry  out  its  audits  on  the  EIB  Financing  Operations  under 
Community guarantee. 

As  per  Article  7  of  the  proposal,  the  Commission  shall  report  to  the  European 
Parliament  and  the  Council  each  year  on  the  EIB  Financing  Operations  carried  out 
under  this  Decision,  drawing  upon  yearly  reports  prepared  by  the  EIB,  providing 
information  on  financing  granted  in  the  different  regions  or  sectors  and  on 
cooperation with other IFIs. 

Furthermore,  the  EIB  shall  provide  the  Commission  with  statistical,  financial  and 
accounting  data  on  each  of  the  EIB  Financing  Operations  as  necessary  to  fulfil  its 

EN 

28 

   EN 

 
reporting duties or requests by the European Court of Auditors as well as an auditor’s 
certificate on the outstanding amounts of the EIB Financing Operations. 

6.2. 

Evaluation 

6.2.1.  Ex-ante evaluation 

The legislative proposal is accompanied by a Commission report including a detailed 
assessment  of  the  existing  Community  Guarantee  to  EIB  extra-EU  operations.  The 
report  also  contains  in  a  separate  annex  an  analysis  of  future  needs  in  the  various 
regions  covered  by  the  mandate,  including  their  absorption  capacity,  and  outlines 
how the proposed mandate responds to anticipated need. 

6.2.2.  Measures taken following an intermediate/ex-post evaluation (lessons  learned from 

similar experiences in the past) 

Experience from the operation of the current Community Guarantee has led to some 
proposed modifications to its modalities, notably in terms of geographical coverage, 
definition of the scope of the EIB mandate in the different regions, the addition of a 
Reserve Mandate, a strengthening of the linkage between the EIB activities and the 
EU external priorities and a consequent reinforcement of the cooperation between the 
Commission and the EIB, as well as a clarification of risks covered by the Guarantee. 
The  proposed  mandate  will  also  cover  guarantees  of  the  EIB,  extending  beyond 
coverage for loans only under the previous mandates. 

6.2.3.  Terms and frequency of future evaluation 

The proposal provides for the preparation of a mid term review on the EIB mandate 
by 30 June 2010, which would allow, if necessary, for a refocusing of the priorities 
set out in the legal basis. It would be prepared by the Commission based inter alia on 
an activity report from the EIB as well as an evaluation provided by the independent 
evaluation department of the EIB. 

The Commission will prepare a final report on the EIB mandate by 31 July 2013 

7. 

ANTI-FRAUD MEASURES 

The  Bank's  rules  and  procedures  include  detailed  arrangements  to  fight  against  fraud  and 
corruption. In particular, in July 2004, the EIB Board of Governors has approved a decision 
relating to procedures for cooperation with OLAF and consequently has adapted its internal 
procedures. 

EN 

29 

   EN 

 
8. 
8.1. 

DETAILS OF RESOURCES 
Objectives of the proposal in terms of their financial cost 

(Headings of 
Objectives, 
actions and 
outputs should be 
provided) 

Type of output 

2007 

2008 

2009 

2010 

2011 

2012 

2013 

EIB 
Financing 

Total 
cost 

No. 
outputs 

Total 
cost 

No. 
outputs 

Total 
cost 

No. 
outputs 

Total 
cost 

No. 
outputs 

Total 
cost 

No. 
outputs 

Total 
cost 

No. 
outputs 

Total 
cost 

(EUR million) 

Indicative volume of signed EIB 
Financing Operations (new mandate) 
Total = EUR 33,000 million 

Outstanding amount based on 
estimated disbursements and 
amortizations of EIB operations (Old 
and new mandates) 

Outstanding amount based on 
estimated disbursements and 
amortizations of other operations 
(MFA+ Euratom) 

Total outstanding amount based on 
estimated disbursements and 
amortizations 

3,478 

3,826 

4,209 

4,629 

5,093 

5,602 

6,162 

10,4851 

12,175 

14,342 

16,696 

19.175 

21,736 

24,433 

1,1502 

1,358 

1,310 

1,227 

1,141 

1004 

841 

11,6353 

13,533 

15,653 

17,923 

20,316 

22,740 

25,274 

Target amount @ 9% 

1,047 

1,218 

1,409 

1,613 

1,828 

2,047 

2,275 

Budgetary revenues 

Normal provisioning needs 

Maximum budgetary needs 
Total = EUR 1353 million 

0 

0 

0 

1

2

3

 Including estimated impact of enlargement (1,995) 
 Including estimated impact of enlargement (830) 
 Including estimated impact of enlargement (2825) 

EN 

157 

0 

0 

30 

2 

0 

135 

0 

129 

271 

0 

153 

302 

0 

160 

316 

0 

165 

329 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8.2.  Administrative Expenditure 

8.2.1.  Number and type of human resources 

Types of post 

Staff to be assigned to management of the action using existing and/or 
additional resources (number of posts/FTEs) 

2007 

2008 

2009 

2010 

2011 

2012-13 

4 

3 

4 

3 

4 

3 

4 

3 

4 

3 

8 

6 

Officials or 
temporary 
staff24 (XX 01 
01) 

A*/AD 

B*, 
C*/AST 

Staff  financed25  by  art. 
XX 01 02 

Other  staff26  financed by 
art. XX 01 04/05 

TOTAL 

7 

7 

7 

7 

7 

14 

8.2.2.  Description of tasks deriving from the action 

The  main  tasks  arising  from  the  management  of  the  Community  guarantee  are  the 
following: 

- Preparation of legislative proposals and guarantee agreements; 

- Management of the approval procedure; 

- Administration of the annual budgetary procedure; 

- Annual reporting to the Council and Parliament; 

- Handling of calls; 

- Monitoring of the management of the Guarantee Fund; 

- Accounting; 

- Relations with the Court of Auditors, Parliament and Council. 

8.2.3. 

Sources of human resources (statutory) 

⌧  Posts currently allocated to the management of the programme to be replaced 

or extended 

⌧  Posts pre-allocated within the APS/PDB exercise for year 2007 

24 
25 
26 

Cost of which is NOT covered by the reference amount. 
Cost of which is NOT covered by the reference amount. 
Cost of which is included within the reference amount. 

EN 

31 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
(cid:133) 

(cid:133) 

(cid:133) 

Posts to be requested in the next APS/PDB procedure 

Posts  to  be  redeployed  using  existing  resources  within  the  managing  service 
(internal redeployment) 

Posts required for year n although not foreseen in the APS/PDB exercise of the 
year in question 

The  needs  for  human  and  administrative  resources  shall  be  covered  within  the 
allocation granted to the managing service in the framework of the annual allocation 
procedure. 

EN 

32 

   EN 

 
8.2.4.  Other  Administrative  expenditure  included  in  reference  amount  (XX  01  04/05  – 

Expenditure on administrative management) 

Budget line 

(number and heading) 

EUR million (to 3 decimal places) 

2007 

2008 

2009 

2010 

2011 

2012-
2013  TOTAL 

Technical 

and 
1 
assistance (including related staff costs) 

administrative 

Executive agencies27 

Other 

technical 

and 

administrative 

assistance 

- intra muros  

- extra muros 

Total  Technical  and  administrative 
assistance 

- 

- 

- 

- 

- 

- 

- 

8.2.5.  Financial cost of human resources and associated costs not included in the reference 

amount 

Type of human resources 

2007 

2008 

2009 

2010 

2011 

2012-
2013 

EUR million (to 3 decimal places) 

Officials  and  temporary  staff 
(XX 01 01) 

Staff  financed  by  Art  XX  01 
02  (auxiliary,  END,  contract 
staff, etc.) 

(specify budget line) 

0.756 

0.756 

0.756 

0.756 

0.756 

1.512 

- 

- 

- 

- 

- 

- 

cost 

Total 
of  Human 
Resources  and  associated 
costs 
in  reference 
amount) 

(NOT 

0.756 

0.756 

0.756 

0.756 

0.756 

1.512 

27 

Reference should be made to the specific legislative financial statement for the Executive Agency(ies) 
concerned. 

EN 

33 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
8.2.6. Other administrative expenditure not included in reference amount 

EUR million (to 3 decimal places)

2007 

2008 

2009 

2010 

2011 

2012-
2013 

TOTAL 

XX 01 02 11 01 – Missions 

XX 01 02 11 02 – Meetings & Conferences 

XX 01 02 11 03 – Committees28  

XX 01 02 11 04 – Studies & consultations 

XX 01 02 11 05 - Information systems 

2 

Total 

Other  Management 

Expenditure (XX 01 02 11) 

3  Other 

expenditure 

administrative 
including reference to budget line) 

nature 

of 

an 
(specify 

expenditure, 
than  human  resources  and 
in 

Total  Administrative 
other 
associated  costs  (NOT 
reference amount) 

included 

- 

- 

- 

- 

- 

- 

- 

28 

Specify the type of committee and the group to which it belongs. 

EN 

34 

   EN