Report from the Commission to the Council and the European Parliament on the borrowing and lending activities of the European Communities in 2006 {SEC(2007)1079}
Date: 2007-08-30
Institutions: European Commission
Subjects: Community loan, EIB loan, EU borrowing, EU financing, activity report, third country

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 30.8.2007 
COM(2007) 486 final 

REPORT FROM THE COMMISSION 
TO THE COUNCIL AND THE EUROPEAN PARLIAMENT 

ON THE BORROWING AND LENDING ACTIVITIES 
OF THE EUROPEAN COMMUNITIES IN 2006 

{SEC(2007)1079} 

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TABLE OF CONTENTS 

Introduction ................................................................................................................................ 3 

1. 

2. 

2.1. 

2.2. 

2.3. 

BORROWING ACTIVITIES IN 2006........................................................................ 3 

LENDING IN NON-MEMBER STATES................................................................... 4 

Overview ...................................................................................................................... 4 

The Community's Macro-Financial Assistance ........................................................... 4 

EIB Lending in 2006 in the South-Eastern Neighbours, the Mediterranean, Asia & 
Latin America and Republic of South Africa .............................................................. 5 

2.3.1.  EIB Objectives and Priorities....................................................................................... 5 

2.3.2.  Lending Activity .......................................................................................................... 6 

2.3.3.  Guarantee Coverage ..................................................................................................... 6 

2.3.3.1.  Blanket guarantee......................................................................................................... 6 

2.3.3.2.  Risk sharing.................................................................................................................. 7 

2.3.4.  EIB cooperation with the Commission and other institutions ..................................... 9 

2.4. 

Signatories of the Lomé/Cotonou Conventions - Lending Activity .......................... 10 

3. 

3.1. 

3.2. 

3.3. 

BUDGETARY IMPACT OF LENDING .................................................................. 10 

Budget Guarantees ..................................................................................................... 10 

Interest Subsidies ....................................................................................................... 12 

EIB financing from EDF resources............................................................................ 12 

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INTRODUCTION 

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

As for lending activities outside the Community, the respective Council decisions1 require the 
Commission  to  inform  the  Council  and  Parliament  on  an  annual  basis  of  the  situation 
regarding  European  Investment  Bank  (EIB)  loans  guaranteed  by  the  Union  budget  in  the 
South-Eastern  Neighbours (SEN),  in the  Mediterranean countries (MED),  in Asia  and  Latin 
America (ALA) and in the Republic of South Africa (RSA). 

In order to meet these information requirements, this report describes the lending operations 
for each of the areas concerned. To complete the picture of lending activities, it also gives a 
brief  summary  of  the  borrowing  activities  undertaken  in  order  to  finance  the  lending 
activities, of the macro-financial assistance provided by the Community to third countries and 
of  the  interest  subsidies  and  guarantees  associated  with  Community  loans.  In  addition,  it 
provides information on Euratom lending activities. 

The tables to this report are published in a Commission Staff Working Paper. References to 
tables in the text refer to the Staff Working Paper (hereinafter referred to as the “Annex”)2. 

1. 

BORROWING ACTIVITIES IN 2006 

In  order  to  finance  the  lending  activities  decided  by  the  Council,  the  Commission  is 
empowered to borrow, on behalf of the respective Community (EC, Euratom), funds on the 
capital market3. 

Total  borrowing  by  the  European  Communities  and  the  EIB  decreased  in  2006  by  3.8%  to 
EUR  48.1  billion,  against  EUR  50.0  billion  the  previous  year  (see  table  and  graph  in 
Section 1.1 of the Annex). More than 99% of this amount has been borrowed by the EIB. This 
decrease in borrowing activities can be explained by a marginally reduced borrowing activity 
of  EIB  following  a  somewhat  slower  pattern  of  loan  disbursements  and  treasury  liquidity 
considerations  as  well  as  by  the  absence  of  new  Decisions  concerning  Euratom,  macro-
financial assistance and the balance of payments loans.  

1 

2 
3 

Council  Decision  97/256/EC,  as  amended  by  Council  Decisions  98/348/EC  and  98/729/EC,  covering 
the  period  01.02.1997  to  31.01.2000 (hereinafter  the  "First  General  Mandate"),  and  Council  Decision 
2000/24/EC, as amended by Council Decisions 2000/688/EC, 2000/788/EC, 2001/778/EC, 2005/47/EC 
and  2006/174/EC,  covering  the  period  01.02.2000  to  31.01.2007  (hereinafter  the  "Second  General 
Mandate").  Council  Decision  1999/786/EC  (Turkey  Earthquake  Reconstruction  and  Rehabilitation 
Action  (TERRA))  forms  an  extension  of  the  general  mandates.  Furthermore,  Council  Decision 
2001/777/EC established a special lending action for selected environmental projects in the Baltic Sea 
basin  of  Russia  under  the  Northern  Dimension.  Finally,  Council  Decision  2005/48/EC  established  a 
separate  mandate  for  certain  types  of  projects  in  Russia  and  Western  NIS  (Ukraine,  Moldova  and 
Belarus).  
SEC(2007)1079. 
As the ECSC Treaty expired in 2002, there has been no new borrowing on behalf of the ECSC. 

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Taking  into  account  repayments,  cancellations  and  exchange-rate  fluctuations,  the  total 
amount of borrowings outstanding at 31 December 2006 was EUR 248.4 billion, 0.7% down 
on 2005 (see Table 1.2 in the Annex). 

The  breakdown  of  borrowings  by  currency  (see  Table 1.3  in  the  Annex)  stays  at  the  same 
level of 37.9% in the share of EUR-denominated borrowings in 2006 of all issues. Issues in 
other  Community  currencies  decreased  from  23.0%  to  16.6%.  Non-Community  currencies 
took a higher share of borrowing, increasing from 39.5% to 45.4% of the total. Issues in USD 
were up from 27.9% to 30.4%. In 2006, after swaps, 94.5% of the loans were on a variable-
rate as compared to 97.3% in 2005 (figure before swaps: see Table 1.3 in the Annex). 

2. 

LENDING IN NON-MEMBER STATES4 

2.1. 

Overview 

Financial  support  for  non-member  States  that  have  concluded  cooperation  agreements  with 
the Community takes a variety of forms depending on the geographical areas concerned and 
the objectives pursued. It generally takes the form of bilateral loans (macro-financial support 
or  balance-of-payments  support),  where  the  Community  helps  to  re-establish  a  country's 
macro-economic  balance.  The  Commission  administers  these  financial  operations  under 
decisions of the Council. 

In  other  cases  loans  are  granted  by  EIB  on  its  own  resources  either  in  the  form  of  direct 
financing  for  individual  projects  or  of  global  loans  to  banks,  which  then  allocate  funds  to 
smaller-scale  local  projects.  Some  of  these  loans  benefit  from  a  guarantee  of  the  Union 
budget. 

The Euratom lending instrument5 is available for financing operations in Member States and 
certain  non-member  States  (Armenia,  Bulgaria6,  Czech  Republic,  Hungary,  Lithuania, 
Romania7, Russia, Slovakia, Slovenia and Ukraine). 

The geographical regions in which the Community conducts lending activities are listed in the 
Annex (see Table 2.1). 

2.2. 

The Community's Macro-Financial Assistance 

Macro-financial assistance (MFA) in the form of loans is, by its very nature, exceptional and 
forms  part  of  the  efforts  of  the  international  community  to  provide,  in  conjunction  with  the 
Bretton  Woods  institutions,  balance-of-payments  support  to  certain  countries  facing 
transitional  macro-economic  difficulties.  The  Community’s  assistance 
focuses  on 
neighbouring  regions,  such  as  the  Western  Balkans  and  the  Caucasus.  Disbursements  are 

4 

5 

6 
7 

In 2006 there were no lending activities to Member States by the Communities. With the accession of 
Bulgaria and Romania to the Union on 1 January 2007, the guaranteed loans to these countries cease to 
be considered as external actions from that date. 
Council  Decision 77/270/Euratom,  as  amended by  Council  Decision  94/179/Euratom.  The  ceiling  for 
borrowing  to  fund  Euratom  lending  was  originally  fixed  by  Council  Decision  77/271/Euratom. 
Subsequently, the ceiling was raised by various amendments of the latter decision, the latest of which 
(Council Decision 90/212/Euratom) increased it by 1 000 million ECU to 4 000 million ECU. 
Member State as of 1 January 2007. 
Member State as of 1 January 2007. 

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subject to the beneficiary countries meeting objectives for macro-economic stabilisation and 
structural reforms. In these circumstances, the number of operations undertaken each year is 
limited, and it is difficult to make valid comparisons for the assistance given from one year to 
the next. 

Grants and loans disbursed under this instrument are listed in the Annex (see Table 2.2) which 
shows  that  in  2006  an  amount  of  EUR  19  million  has  been  disbursed  under  existing  MFA 
decisions. No new MFA decisions were taken in 2006. Moreover, information is also given in 
the annual Commission Report on the implementation of MFA to third countries. 

2.3. 

EIB Lending in 2006 in the South-Eastern Neighbours, the Mediterranean, Asia 
& Latin America and Republic of South Africa 

This section constitutes the annual report for 2006 to be submitted to the European Parliament 
and the Council in accordance with Article 2 of Council Decision 2000/24/EC. 

2.3.1.  EIB Objectives and Priorities 

2006 was the last full year of operations under the mandates covering EIB financing outside 
the  EU  over  the  period  01.02.2000  to  31.01.20078.  The  Commission  and  the  EIB  have 
throughout the year participated in negotiations, including negotiations in the Council, for the 
renewal of the external mandate for the period 2007-2013, finally concluded and formalised 
by Council Decision 2006/1016/EC on 19 December 20069. 

The general lending priority for EIB in regions outside the EU is to support the Community’s 
policy  objectives.  The  regional  objectives  take  into  account  the  specific  characteristics  and 
priorities of each region. 

In  the  South-Eastern  Neighbours,  the  Bank  was  active  in  2006  in  both  the  Acceding  and 
Candidate States (Bulgaria, Romania, Croatia, Turkey and the former Yugoslav Republic of 
Macedonia)  to  help  these  countries  to  prepare  for  accession,  in  particular  by  financing 
investment  aimed  at  integrating  their  infrastructure  with  that  of  the  EU  and  by  assisting 
SMEs. In the wake of the accession of Bulgaria and Romania, Memoranda of Understanding 
were  signed  as  frameworks  for  the  EIB’s  support  to  both  countries’  respective  investment 
programmes  covering  all  key  economic  sectors.  The  EIB  continued  also  to  support 
investments in the other countries of the Western Balkans (Albania, Bosnia and Herzegovina, 
Montenegro10  and  Serbia)  with  the  aim  of  facilitating  their  ongoing  integration  process  into 
the  EU.  More  generally,  EU  and  EIB  support  aims  to  foster  political  and  economic  reform 
and to encourage social reconciliation in the region. 

The  EIB  gives  priority  to  upgrading,  modernising  and  developing  the  communications  and 
energy sectors, with particular emphasis on Trans-European Networks (TENs) on the basis of 

8 

9 
10 

The EIB’s operations in the African, Caribbean and Pacific regions are not covered in this report as they 
are carried out in the framework of the Cotonou Partnership Agreement signed in 2000 for a 20-year 
period. 
OJ L 414 of 30.12.2006, p. 95. 
Data in this report represent loans signed with Serbia and Montenegro as a State Union, i.e. before the 
entry  into  force  of  new  legal  framework  put  in  place  following  the  independence  of  the  Republic  of 
Montenegro. 

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the road and rail corridors defined by the Pan-European Conference of Transport Ministers as 
development priorities for the medium term. 

Environmental  issues  related  to  EIB  projects,  as  well  as  environmental  projects  per  se,  are 
given  priority  in  the  framework  of  the  gradual  adaptation  of  the  legislation  of  the  countries 
concerned  to  that  of  the  EU.  The  EIB  also  supports  private  sector  development  (SMEs  and 
other  industrial  initiatives),  in  particular  Foreign  Direct  Investment  (FDI),  either  directly  or 
through its global loan instrument, in particular when involving EU partners. 

In the Mediterranean region, the Bank’s lending is carried out under the Facility for Euro-
Mediterranean  Investment  and  Partnership  (FEMIP)  mainly  within  the  framework  of  the 
Euro-Mediterranean  Partnership,  in  support  of  economic  and  social  modernisation  and 
enhanced regional integration. FEMIP focuses its activities on support for the private sector 
and  on  creating  an  investment-friendly  environment,  mainly  by  financing  enabling 
infrastructure  for  economic  development.  Furthermore,  in  line  with  EU  priorities,  FEMIP 
supports  sustainable  energy  development,  competitiveness  and  security  of  supply.  In 
November  2006,  the  Ecofin  Council  decided  to  reinforce  FEMIP  and  marked  two  specific 
priority  areas:  private  sector  development  and  reinforcement  of  partnerships  in  order  to 
increase partner countries’ involvement. 

In  Asia  and  Latin  America,  the  Bank  finances  projects  that  are  of  interest  to  both  the 
Community  and  the  countries  concerned  –  cofinancing  with  EU  promoters,  transfer  of 
technology,  cooperation  in  the  fields  of  energy  and  environmental  protection.  The  EIB  also 
supported reconstruction efforts in the aftermath of the Tsunami disaster of December 2004. 
In  this  context,  the  geographical  scope  of  the  ALA  mandate  was  broadened  to  include  the 
Maldives. 

In  the  Republic  of  South  Africa,  the  Bank  has  been  mandated  to  focus  on  infrastructure 
projects of public interest and private sector support, including SMEs. The Bank’s operations 
have  further  to  be  complementary  to  the  Community  assistance  policies,  programs  and 
instruments  in  South  Africa,  whose  overriding  objective  is  the  reduction  of  poverty  and 
inequality. 

A  summary  of  the  activity  developed  by  the  EIB  in  the  relevant  regions  since  2002  can  be 
found in Table 2.3.1 of the Annex. 

2.3.2.  Lending Activity 

The breakdown by country and by sector can be found in Annex (see Section 2.3.2. a-e). 

2.3.3.  Guarantee Coverage 

2.3.3.1.  Blanket guarantee 

Council Decision 2000/24/EC, as amended, provides Community guarantee coverage of 65% 
to the whole mandate. This means that the Community guarantee is restricted to 65% of the 
overall amount of loans signed, but that within this aggregate ceiling, defaults on individual 
loans are de facto covered up to 100%. 

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2.3.3.2.  Risk sharing 

The Community Guarantee under the general mandates covers all credit risks, unless the risk-
sharing  arrangements  apply,  in  which  case  the  Community  Guarantee  covers  only  specific 
political  risk,  whereas  non-political  risks  are  borne  and  mitigated  by  the  Bank.  Decision 
2000/24/EC,  as  amended,  invites  the  EIB  to  apply  risk-sharing  arrangements  in  30%  of  its 
lending under the Decision (as opposed to 25% under the First General Mandate) 11. 

At  end-2006  the  Bank  had  achieved  a  level  of  18%  of  risk-sharing  as  a  proportion  of 
cumulative  lending  under  mandate  against  the  risk-sharing  objective  of  30%.  It  is  recalled, 
however, that a full analysis of the actual sharing of risk between the Union budget and the 
EIB  should  also  take  account  of  operations  signed  on  EIB  own  resources  without  the 
Community  guarantee  coverage  under  the  Pre-Accession  and  Mediterranean  Partnership 
Facilities  as  well  as  individual  operations  with  the  specific  Article  18  authorisation  of  the 
Bank’s Board of Governors. While these fall beyond the scope of this report, it is noted that 
most  of  the  lending  operations  in  the  new  Member  States  before  accession  were  indeed 
carried  out  under  the  Pre-Accession  facility.  Including  loans  signed  under  these  Pre-
Accession  Facilities  into  the  overall  risk-sharing  proportion  would  increase  this  ratio  from 
18% up to around 50%. 

On  a  regional  basis,  the  risk-sharing  objective  was  met  and  exceeded  in  Asia  and  Latin 
America, where 72% of loans were signed under the risk-sharing regime. This level of risk-
sharing was enabled by the specific nature of the ALA mandate and the strategic objectives 
for EIB lending in that region placing a major focus on support to private European initiatives 
(foreign direct investment, transfer of technology and know-how). 

Both  in  South  Eastern  Europe  and  in  the  Mediterranean,  risk-sharing  operations 
represented 11% of lending under mandate. In accordance with the programming procedures 
of the countries concerned, most projects financed by the EIB under mandate are in the public 
sector and therefore outside the scope of risk-sharing. Moreover, in the Mediterranean region, 
private-sector  promoters  experience  difficulties  to  gain  access  to  external  (including 
European)  banks  willing  to  provide  guarantees  acceptable  to  the  EIB  under  its  current 
guidelines. 

In the Republic of South Africa, 10% of loans were risk-sharing. 

A  summary  of  the  regional  breakdown  of  risk-sharing  under  mandate  can  be  found  in  the 
following table, while tables 2.3.6 to 2.3.9 in Annex identify the individual risk-sharing loans 
signed during 2006. 

11 

Council  Decision  2000/24/EC  invites  the  Bank  “to  aim  to  cover  the  commercial  risk  on  30%  of  its 
lending under this Decision from non-sovereign guarantees as far as possible on an individual regional 
mandate  basis.  This  percentage  shall  be  expanded  upon  whenever  possible  insofar  as  the  market 
permits”. 

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Second  General  Mandate  (Council  Decision  2000/24/EC  covering  the  period  01.02.2000  to 
31.01.2007)  

of 

Mandate 
Ceilings 
Second 
General 
Mandate 

Amount  of 
loans 
signed 
at 
31.12.2006 

No. 
loans 
signed 
with 
sharing 

risk-

EUR million 

Amount 
of  loans 
signed 
with 
risk-
sharing 

Percentage 
of 
risk-
sharing 
achieved 
(relative  to 
mandate 
ceiling) 

Percentage 
of 
risk-
sharing 
achieved 
(relative  to 
loan 
signatures) 

SEN 

9 185 

9 142 

Mediterranean 

6 520 

7 177(12) 

ALA 

RSA 

2 480 

2 425 

825 

837(13) 

TOTAL 

19 010 

19 581(14) 

33 

13 

38 

2 

86 

1 003 

11% 

807 

1 756 

80 

12% 

71% 

10% 

11% 

11% 

72% 

10% 

3 646 

19% 

18% 

Under the First General Mandate, a level of 24% of risk-sharing of total lending was reached 
against a target of 25%.. In terms of lending compared to the regional ceilings, the levels were 
81%  for  ALA,  26%  for  Central  and  Eastern  Europe  Countries  (CEEC)  and  3%  for  the 
Mediterranean. 

First  General  Mandate  (Council  Decision  97/256/EC  covering  the  period  31.01.1997  to 
31.01.2000) 

EUR million 

Mandate 
Ceilings 
First 
General 
Mandate 

Total 
amounts  of 
loans 
signed 
at 
31.12.2006 

of 

No. 
loans 
signed  with 
risk-
sharing 

Amount 
loans 
with 
sharing  

of 
signed 
risk-

Percentage  of 
risk-sharing 
achieved 
(relative 
mandate 
ceiling) 

to 

risk-

Percentage 
of 
sharing 
achieved 
(relative 
loan 
signatures) 

to 

3 520 

2 310 

900

375

3 446 

2 310 

900 

375 

21

5

17

0

896

71

730

0

25% 

3% 

81% 

0% 

26%

3%

81%

0%

CEEC 

Mediterranean 

ALA 

RSA 

12 
13 
14 

Total signatures net of cancellations in Mediterranean: EUR 6 427 million. 
Total signatures net of cancellations in RSA: EUR 764 million. 
Total signatures before deduction of cancellations: EUR 19.58 billion. 
Total signatures net of cancellations: EUR 18.28 billion. 

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fYRoM 

TOTAL 

150

150 

7 255 

7 180 

0

43

0

1 697

0% 

24% 

0%

24%

2.3.4.  EIB cooperation with the Commission and other institutions 

The  Bank  and  the  Commission  cooperate  closely  in  order  to  prepare  and  co-finance  EIB 
projects  with  a  Union  budgetary  contribution.  In  2006,  EIB  lending  continued  to  be 
complemented  with  interest  subsidies  (4  new  environmental  loans  in  the  Mediterranean), 
technical  assistance  (EUR 12.3 million  in  grants  generally  to  finance  feasibility  studies, 
capacity  building,  project  management  or  evaluation)  as  well  as  Structural  and  Cohesion 
Funds (in particular PHARE and ISPA). 

In addition to the traditional forms of collaboration, the EIB was requested by the European 
Commission  to  provide  advisory  services  for  the  implementation  of  its  support  to  the  Risk 
Capital  Facility  in  South  Africa.  EIB’s  role  is  to  advise  the  Commission  in  the  design  and 
establishment of the facility and then to participate in the technical evaluation and approval of 
the  proposals  for  investment,  without  itself  having  any  involvement  in  the  financial 
management of the funds. In the Mediterranean, in addition to providing EIB loans from own 
resources,  FEMIP  also  operates  as  a  provider  of  private  equity  financed  through  the  Union 
budget. 

In  2006,  a  Memorandum  of  Understanding  was  signed  between  the  European  Commission, 
the  European  Bank  for  Reconstruction  and  Development  (EBRD)  and  the  EIB,  to  reinforce 
the  cooperation  of  the  three  institutions  in  Eastern  Europe  and  the  Southern  Caucasus,  in 
Russia and in Central Asia. This enhanced cooperation aims to bring together the expertise, 
capacity and comparative advantages of each participant for the successful implementation of 
the  European  Neighbourhood  Policy,  the  EU-Russia  Strategic  Partnership  and  the  EIB  and 
EBRD mandates, for the benefit of the partner countries involved. 

More  generally,  EIB  and  Union  budget  financing  is  coordinated  with  European  bilateral 
agencies (agreements with the Agence Française de Développement, the KfW Development 
Bank  and  the  European  Development  Finance  Institutions)  and  other  International  Finance 
Institutions  (IFIs)  whenever  possible.  Co-financing  is  actively  pursued  and  has  become  a 
regular feature of EIB-supported projects. Joint action with institutions that are specialised in 
dealing  with  broader  sectoral  and  policy  issues  ensures  in  many  cases  the  effectiveness  of 
sectoral  reforms  and  increases  the  viability  of  investment  projects  that,  once  completed,  are 
likely  to  operate  within  an  improved  regulatory  framework.  In  2006,  80%  of  EIB  lending 
under the SEN mandate was co-financed with multilateral, bilateral and national institutions. 
In  the  Mediterranean,  projects  with  co-financing  represented  60%  of  EIB  lending  in  the 
region.  Co-financing  contributions  to  projects  financed  by  the  EIB  in  South-Eastern  Europe 
and in the Mediterranean are shown in tables 2.3.3 and 2.3.4 in Annex. 

In  Asia  and  Latin  America,  the  Bank  continued  to  finance  projects  that  are  of  interest  to 
both the Community and the country in which the project is implemented. Co-financing with 
IFIs is presented in Table 2.3.5 in the Annex, while the mutual interest of the individual loans 
signed in 2006 is described in Table 2.3.5 (a) in the Annex. 

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2.4. 

Signatories of the Lomé/Cotonou Conventions - Lending Activity 

Total  EIB  lending  in  the  ACP/OCT15  amounted  to  EUR 745 million  in  2006,  of  which 
EUR 167 million  from  the  Bank’s  own  resources  and  EUR 578 million  funded  by  the 
European  Development  Fund  (EDF)16.  While  these  operations  fall  beyond  the  scope  of  this 
report17,  a  summary  of  their  regional  and  sectoral  breakdown  is  presented  in  the  Annex  in 
Table 2.4. 

3. 

BUDGETARY IMPACT OF LENDING 

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

3.1. 

Budget Guarantees 

On  22  December  2004,  the  Council  decided  to  amend  Decision  2000/24/EC  to  take  into 
account  the  enlargement  of  the  European  Union  and  the  European  Neighbourhood  Policy 
(Council Decision 2005/47/EC18). 

The ceilings for each area are as follows (in EUR million): 

South-Eastern Neighbours 

Mediterranean countries 

Latin America and Asia 

Republic of South Africa 

Turkey (Customs Union Special 
Action Programme (SAP)) 

Overall ceiling 

9 185 

6 520 

2 480 

825 

450  

19 460 

The Community guarantee is restricted to 65% of the aggregate amount of the credits opened, 
plus all related sums (compared with 70% under the First General Mandate). Furthermore, on 
22  December  2004,  the  Council  decided  to  grant  a  Community  guarantee  to  the  European 
Investment Bank against losses under loans for certain types of projects in Russia, Ukraine, 
Moldova  and  Belarus  (Council  Decision  2005/48/EC19).  The  overall  ceiling  of  the  credits 
opened is EUR 500 million and the EIB benefits from an exceptional Community guarantee 
coverage of 100%. 

15 
16 

17 

18 
19 

Africa, Caribbean, Pacific / Overseas Countries and Territories. 
The  resources  of  the  Investment  Facility  may  be  used  inter  alia  for  ordinary  loans,  conditional, 
subordinated or participating loans, convertible bonds, guarantees and equity participations. 
EIB  Annual  report  2006  on  Investment  Facility  ACP  EU  Cotonou  Partnership  Agreement 
http://ww.eib.org. 
OJ L 21, 25.1.2005, p. 9 
OJ L 21, 25.1.2005, p. 11. 

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10 

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The guaranteed lending period expires on 31 January 2007 but will be automatically extended 
by six months if the lending ceilings have not been reached by this date. It is expected that the 
Bank will sign contracts for 2 projects totalling  about  EUR  230  million  before  the  mandate 
expires. 

During  2006  (the  seventh  year  of  the  Second  General  Mandate)  the  EIB  signed  loan 
agreements  for  a  total  of  EUR 2 805 million,  bringing  total  lending  under  this  mandate  to 
EUR 18 280 million corresponding to 96% of the ceiling. 

The  detailed  situation  relating  to  guarantees  is  set  out  in  the  six-monthly  report  by  the 
Commission on guarantees covered by the general budget20. 

On  19  December  2006,  the  Council  decided  to  grant  a  Community  guarantee  to  the  EIB 
against losses under loans and loan guarantees for projects outside the Community (Council 
Decision  2006/1016/EC21).  The  Community  guarantee  is  restricted  to  65%  of  the  aggregate 
amount  of  credits  disbursed  and  guarantees  provided,  less  amounts  reimbursed,  plus  all 
related  sums.  The  maximum  ceiling  for  the  EIB  financing  operations  carried  out  under  this 
mandate is EUR 27 800 million through the 2007-2013 period, consisting of a basic ceiling of 
EUR 25 800 million and an optional mandate of EUR 2 000 million the activation of which 
will be decided by the Council based on the outcome of the midterm review in 2010. 

The  different  regional  ceilings  (indicative  sub-ceilings  shown  in  Italics)  are  as  follows  (in 
EUR million): 

Pre-Accession countries 

Neighbourhood and Partnership countries 

Mediterranean

Eastern Europe, Southern Caucasus and Russia

Asia and Latin America 

Latin America

Asia

8 700

3 700

2 800

1 000

Republic of South Africa 

Basic ceiling 

Optional mandate 

20 
21 

COM(2007) 66 and SEC(2007) 241. 
OJ L 414, 30.12.06, p.95. 

8 700 

12 400 

3 800 

900 

25 800 

2 000 

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3.2. 

Interest Subsidies 

Interest subsidies were granted under a number of Community  programmes both inside and 
outside the Union. Most of these programmes have been completed and no longer have any 
impact on budgetary expenditure. In the Annex, Table 2.5 lists the programmes which are still 
under way and the amount of interest subsidy paid during the years under review. 

3.3. 

EIB financing from EDF resources 

Under  the  successive  Lomé  Conventions  and  the  Cotonou  Agreement,  the  EIB  carries  out 
financing operations in the ACP region, which are funded by the EDF budget22. A breakdown 
of the operations is given in the Annex (see section 2.4). 

22 

These operations are outside the scope of this report.  

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