Report from the Commission to the European Parliament and the Council on borrowing and lending activities of the European communities in 2007 {SEC(2008)2504}
Date: 2008-09-30
Institutions: European Commission
Subjects: Community loan, EIB loan, EU borrowing, EU financing, activity report

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2007/ECFIN/021 

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 30.9.2008 
COM(2008)590 final 

REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

ON BORROWING AND LENDING ACTIVITIES 
OF THE EUROPEAN COMMUNITIES IN 2007 

{SEC(2008)2504} 

(presented by the Commission) 

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TABLE OF CONTENTS 

1. 

2. 

3. 

3.1. 

3.2. 

3.3. 

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

BORROWING ACTIVITIES ...................................................................................... 3 

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

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

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

EIB Financing Operations under the Lending Mandates............................................. 5 

3.3.1.  Volume of Operations .................................................................................................. 5 

3.3.2.  Progress Made on Risk-Sharing................................................................................... 6 

3.3.3.  Contribution to External Policy Objectives ................................................................. 7 

3.3.4.  Co-operation with the Commission ............................................................................. 8 

3.3.5.  Co-operation with other IFIs........................................................................................ 9 

4. 

4.1. 

4.2. 

BUDGETARY IMPACT OF LENDING .................................................................... 9 

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

Other activities ........................................................................................................... 10 

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INTRODUCTION 

1. 
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  of  these  instruments.  In  order  to  meet  these  information  requirements,  this 
report describes the lending operations for each of the areas concerned. 
In particular, the respective Council decisions1 for lending activities outside the Community 
require  the  Commission  to  inform  the  Council  and  Parliament  on  an  annual  basis  of  the 
situation  regarding  European  Investment  Bank  (EIB)  financing  operations  (loans  and  loan 
guarantees)  guaranteed  by 
the 
Mediterranean, Eastern Europe, Southern Caucasus and Russia, Asia and Latin America and 
the Republic of South Africa. 

the  Pre-Accession  Countries, 

the  Union  budget 

in 

To  complete  the  picture  of  lending  activities,  the  report  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. 

More detailed information on the above activities, including statistical tables, is provided in 
the  attached  Staff  Working  Paper  (hereinafter  referred  to  as  the  “Annex”)2.  References  to 
Tables in this report are to the Annex unless otherwise stated. 

2. 

BORROWING ACTIVITIES  

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 increased  in 2007 by 13.8% to 
EUR  54.7  billion,  against  EUR  48.1  billion  the  previous  year  (see  table  and  graph  in 
Section 1.1  of  the  Annex).  This  substantial  increase  is  mostly  due  to  a  higher  rhythm  of 
disbursements  of  EIB  loans  which  induced  an  increase  in  the  borrowing  programme  during 
the year. The EIB also found market conditions very supportive as, in the wake of the sub-
prime  crisis,  demand  for  first  class  instruments  like  those  offered  by  the  Bank  strongly 
increased. 

Regarding the European Communities, borrowing activities are based on decisions concerning 
loans.  An  amount  of 
Euratom,  macro-financial  assistance  and  balance-of-payments 

1 

2 
3 

Council  Decision  97/256/EC,  as  amended  by  Council  Decisions  98/348/EC  and  98/729/EC,  covering 
the  period  01.02.1997-31.01.2000  (the  "1997-2000  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  01.02.2000-31.01.2007  (the  "2000-2006  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. Council Decision 2005/48/EC established a separate mandate for certain 
types  of  projects  in  Russia  and  Western  NIS  (Ukraine,  Republic  of  Moldova  and  Belarus).  Finally, 
Council  decision  2006/1016/EC  established  a  new  general  mandate  covering  the  period  01.02.2007-
31.12.2013 (the "2007-2013 General Mandate"). 
SEC(2007)[…] 
As the ECSC Treaty expired in 2002, there has been no new borrowing. 

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EUR 39 million was raised for Euratom in 2007 based on a decision approved in 1994. A new 
decision for macro financial assistance of EUR 50 million was adopted on 10 December 2007 
but did not involve any disbursements and corresponding borrowing in 2007. The intention is 
to disburse the loan in two equal tranches starting in 2008. 

Taking  into  account  repayments,  cancellations  and  exchange-rate  fluctuations,  the  total 
amount  of  borrowings  outstanding  at  31 December 2007  was  EUR  255.4  billion,  up  2.8% 
from 2006 (see Table 1.2). 

The share of EUR-denominated and Non-Community currencies in borrowings are provided 
in section 1.3 of the Annex (see Table 1.3). 

3. 

LENDING IN NON-MEMBER STATES 

3.1. 

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. 

Financial  operations  administered  by  the  Commission  under  decisions  of  the  Council 
generally  take  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.  

Loans granted by the EIB from its own resources are either in the form of direct financing for 
individual projects or 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  and  are,  unless 
otherwise specified, the focus of this report. Under the 2007-2013 General Mandate, the EIB 
can  also  provide  loan  guarantees.  A  wider  spectrum  of  financial  instruments  (ranging  from 
equity  to  senior  loans)  is  used  by  the  EIB  when  it  manages  Community  or  Member  States' 
resources (notably in the Mediterranean and ACP countries). 
The Euratom lending instrument4 is available for financing operations in EU Member States 
and certain non-member States (Armenia, Russia and Ukraine). 

The  geographical  regions  in  which  the  Community  conducts  lending  activities  in  2007  are 
listed in Tables 2.1 and 2.2. 

3.2. 

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. MFA focuses on neighbouring regions, such as the 
Western  Balkans  and  the  Caucasus.  Disbursements  are  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  Table 2.2.  A  new  MFA 
decision  was  taken  in  2007  providing  financial  assistance  to  Lebanon  in  the  form  of 

4 

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 billion ECU to 4 billion ECU. 

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EUR 50 million  in  loans  and  up  to  EUR 30 million  in  grants.  Disbursements  should  start  in 
2008. More information is given in the annual Commission Report on the implementation of 
MFA to third countries5. 

3.3. 

EIB Financing Operations under the Lending Mandates 

This  section,  completed  by  the  information  in  the  Annex,  constitutes  the  annual  report  for 
2007 to be submitted to the European Parliament and the Council in accordance with Article 2 
of Council Decision 2000/24/EC and Article 6 of Council Decision 2006/1016/EC. 

During the year 2007, two – partly overlapping – EIB external lending mandates have been in 
force, as the 2000-2006 General Mandate expired on 31 January 2007, but was extended to 31 
July 2007 for those geographical areas where the lending ceiling had not been reached, while 
the 2007-2013 General Mandate entered into force on 1 February 2007. The first loans under 
the new framework were signed in the second half of the year, following the signature of the 
new EIB/Community Guarantee Agreement in August 2007. 

Until  31  July  2007,  lending  continued  under  the  2000-2007  General  Mandate  in  all  regions 
except  the  Mediterranean,  where  the  mandate  sub-ceiling  had  been  reached  at  the  end  of 
2006. A summary of EIB lending activity in the relevant regions since 2000 is presented in 
section 2.3 of the Annex.  

Under both mandates, the Commission is required to inform the European Parliament and the 
Council on an annual basis of the operations carried out under mandate, their contribution to 
the fulfilment of the external policy objectives of the EU, taking into account the operational 
objectives  of  the  EIB,  and  to  submit  an  assessment  of  the  coordination  and  extent  of 
cooperation between the EIB and other International Financing Institutions (IFIs) operating in 
the areas covered by the mandates. Furthermore, under the 2000-2006 General Mandate, the 
Commission  is  required  to  report  on  progress  made  on  risk-sharing  under  Article  1(3)  of 
Council  Decision  2000/24/EC.  Finally,  under  the  2007-2013  General  Mandate,  the 
Commission  is  required  to  assess  the  extent  of  cooperation  between  the  EIB  and  the 
Commission.  

Due to the limited number of operations under the 2007-2013 General Mandate in 2007, the 
assessment  of  the  impact  and  effectiveness  of  EIB  Financing  Operations  as  well  as  their 
contribution  to  the  fulfilment  of  the  external  policy  objectives  of  the  EU,  including  the 
cooperation  with  other  IFIs  and  with  the  Commission,  is  included  in  this  report  and  the 
Annex. However, in the future this assessment will be the subject of a separate report, starting 
next year, when the number of operations is expected to grow substantially. 

Finally,  section  2.19  of  the  Annex includes  sectoral and regional tables of  EIB financing in 
Africa, Caribbean, Pacific and Overseas Countries and Territories (ACP/OCT) in 2007. These 
operations, carried out in the framework of Cotonou Partnership Agreement and the Overseas 
Association  Decision,  do  not  fall  under  the  Community  Guarantee  and  are  therefore  not 
covered  by  this  report.  The  EIB  2007  Annual  Report  on  the  Investment  Facility  under  the 
ACP-EU Cotonou Partnership Agreement is available at www.eib.org. 

3.3.1.  Volume of Operations 

In 2007, the Bank signed loans amounting to EUR 3,723 million, of which EUR 1,825 million 
under  the  2000-2006  General  Mandate  (expired  on  31  July  2007)  and  EUR  1,898  million 
under the 2007-2013 General Mandate. 

5 

Not yet published for 2007. For 2006, see COM/2007/0493 final. 

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Table I below provides an overview of EIB external lending under the Community-supported 
mandates in 2007, split by sectors and geographical region. The individual loans are listed in 
section 2.13 of the Annex, while the aggregate distribution of lending volumes by mandate is 
presented in its section 2.4. 

Table I: Sectoral breakdown of mandate loans signed in 2007 (EUR million) 

 Region 

Grand Total 

Transport 
infrastructure 

Credit lines 

Energy 

Industry  & 
Services 

Telecomm-
unications 

Water, 
sewerage 

Pre-Accession 
Countries 

1,750 

100% 

827 

47% 

420 

24% 

103 

6% 

400 

23% 

Mediterranean 

1,205 

100% 

180 

15% 

625 

52% 

280 

23% 

230 

100% 

230 

100
% 

0 

0% 

0 

0% 

0 

0 

0 

0% 

0 

0% 

0% 

120 

10% 

0% 

0 

0% 

0 

0 

0% 

0% 

Eastern 
Neighbours 

Asia and Latin 
America 

425 

100% 

28 

7% 

South Africa 

113 

100% 

0 

0% 

0 

0 

0% 

0 

0% 

0 

0% 

310 

73% 

87 

20% 

0% 

88 

78% 

25 

22% 

0 

0% 

0 

0% 

Total 

3,723 

100% 

1,265 

34% 

1,045 

28% 

471 

13% 

425 

11% 

310 

8% 

207 

6% 

3.3.2.  Progress Made on Risk-Sharing 

The  2000-2006  General  Mandate  invited  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 mandate basis. This percentage shall be expanded upon whenever possible in so 
far as the market permits". 

As can be seen in Table 2.4, at the overall mandate level risk-sharing loans represented 19% 
of  total  cumulative  signatures  at  expiry  of  the  2000-2006  General  Mandate.  However,  this 
figure covers significant regional differences: 

In  Asia  and  Latin  America  (ALA),  where  the  mandate  specifically  focused  on  supporting 
private  European  initiatives  in  foreign  direct  investment,  transfer  of  technology  and  know-
how, 74% of loan signatures were made under the risk-sharing scheme. In the Mediterranean, 
South-Eastern  Neighbours  and  South  Africa,  projects  financed  under  the  mandate  were 
mainly in the public sector without risk-sharing arrangements. The proportion of risk-sharing 
loans reached 11% of total cumulative signatures in the Mediterranean and in South Africa, 
while the respective proportion in South-Eastern Neighbours was 12%. 

Beyond  risk-sharing  operations  carried  out  under  Community  mandate,  the  EIB  pursued 
operations at its own risk under different facilities with total signatures in 2007 reaching EUR 
1.86 billion, thereby reflecting the EIB's increased propensity to take commercial risk: 

–  Signatures  under  the  replenished  Pre-Accession  Facility  amounted  in  2007  to 
EUR 1.18 billion,  of  which  Turkey  received  70%  and  Croatia  28%.  The 
geographical coverage of lending under the Pre-Accession Facility was extended 
to include the potential candidate countries.  

–  Under  the  Mediterranean  Partnership  Facility  II,  an  EIB  loan  amounting  to 
EUR 185 million  was  signed  to  finance  the  capacity  expansion  of  one  of  the 
priority energy TENs. 

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–  Finally, under the Facility for Energy Sustainability and Security, a highly visible 
EUR 500 million  multi-investment  scheme  was  signed  in  China  to  support 
investment projects in the energy and industrial sectors that will help to prevent or 
reduce greenhouse gases and other polluting emissions. 

3.3.3.  Contribution to External Policy Objectives 

The  general  lending  priority  for  the  EIB  in  regions  outside  the  EU  is  to  support  the 
Community's policy objectives. Specific regional objectives (depicted in Table II below) are 
set out in detail in the preamble to Council Decision 2006/1006/EC, with the protection of the 
environment and energy security as common objectives throughout the different regions. 

Table II: Summary of key lending objectives. 

Lending Objectives 

Asia & 
Latin 
America 

Eastern 
Neighbours 
& Russia 

Medi-
terranean 

Pre-
Accession 
Countries 

South 
Africa 

X 

X 

Energy - Security of Supply 

Environmental  Protection 
Improvement 

and 

Private 
SMEs 

Sector  Development, 

Infrastructure 
including extension of TENs 

Development, 

Pre-Accession support 

Support  of  EU  presence  (FDI, 
transfer  of  technology  and  know-
how) 

X 

X 

X 

X 

X 

X 

X  

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

The energy sector absorbed 13% of lending under mandate in 2007. The EIB financed energy 
investment in Egypt (two gas-fired combined-cycle power generation units), Morocco (hydro-
powered  electricity  projects),  Bosnia-Herzegovina  (rehabilitation  of  hydropower  plants  and 
distribution  facilities)  and  South  Africa  (construction  of  high  voltage  power  transmission 
interconnection).  

In total, EUR 938 million or 25% of EIB financing under mandate contributed to the Bank’s 
overarching  goal  of  promoting  environmentally  sustainable  development  in  partner 
countries. In Pre-Accession countries, projects financed in 2007 under mandate with specific 
environmental  protection  as  the  main  lending  objective  accounted  for  EUR 731 million  or 
42% of total lending in the region. These consisted of public transport projects in Turkey and 
a renewable energy project in Bosnia-Herzegovina. In the Mediterranean, as regards the water 
sector,  EUR 120 million  was  advanced  for  environmental  schemes  in  Israel,  namely  for  the 
improvement of environment and health through provision of safe drinking water. This same 
objective  was  also  targeted  by  a  EUR 60 million  project  in  Asia  for  the  extension  and 
upgrading  of  water  supply  and  distribution  infrastructure  in  Greater  Manila,  and  by  another 
EUR 27 million  project 
improvement  of  sanitation  and 
environmental conditions in Panama City.  

in  Latin  America  for 

the 

Credit  lines  in  support  of  private  sector  development  represented  28%  of  total  lending,  of 
which the main share was granted in the Mediterranean: Jordan, Lebanon, Syria and Tunisia. 

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Credit  lines  supporting  SMEs  represented  more  than  half  of  total  lending  volume  in  the 
Mediterranean in 2007. Pre-Accession countries were the second recipient group, with 40% of 
total  credit  line  volume  benefiting  Bosnia-Herzegovina,  Serbia  and  Turkey.  Industry  and 
services were both represented by one project respectively in South Africa, for the expansion 
of  a  particle  board  and  medium  density  fibreboard  factory,  and  in  Turkey,  for  the 
strengthening  of  the  country’s  science  and  research  capabilities.  This  combined  sector 
represented 11% of total lending. 

Transport  infrastructure,  including  rail,  road,  port  and  urban  transport  infrastructure, 
accounted  for  one  third  of  total  lending  under  mandate  in  2007.  The  majority  (65%)  of  the 
loans  in  the  transport  sector  were  granted  in  the  Pre-Accession  countries,  namely  Turkey, 
Serbia,  Bosnia-Herzegovina  and  Albania.  The  construction  or  upgrading  of  railway 
infrastructure  took  76%  of  this  financing  in  the  Pre-Accession  countries  while  the 
development  of  transport  axes  linking  to  TENs  represented  24%.  The  rehabilitation  of  road 
infrastructure axes connecting to priority TENs were also the targets of the first loans granted 
in the Eastern Neighbourhood countries of Ukraine and The Republic of Moldova. Together 
with  these  two  operations,  the  extension  of  transport  TENs  accounted  for  34%  of  total 
transport  lending.  Two  further  transport  projects  were  financed  under  mandate  in  Morocco 
(construction  of  a  section  of  toll  motorway)  and  Uruguay  (expansion  of  private  container 
the 
terminal  at  port  of  Montevideo).  8%  of 
telecommunications  sector  for  the  financing  of  two  projects  in  Latin  America.  In  Peru,  a 
project covers the purchase and installation of systems for provision of telephony, high-speed 
internet, data transmission, cable and satellite pay-TV and VSAT services. In Brazil, a project 
concerns the installation, commissioning and operation of GSM overlay network in order to 
migrate from CDMA to a GSM network. 

lending  was  absorbed  by 

total 

The  ALA  region  is  the  foremost  recipient  of  EU  foreign  direct  investment  (FDI)  in  the 
emerging countries. Accordingly, within the parameters of the ALA mandates, the bulk of the 
EIB financing activities in ALA so far have supported EU presence through FDI. 

The  EIB  assesses  the  value  added  of  its  operations  on  the  basis  of  a  framework  structured 
along the following three pillars6: 

Pillar 1 - the consistency with and contribution to EU policy objectives; 
Pillar 2 - the quality and soundness of the project; and 
Pillar 3 - the financial and non-financial contribution made by the EIB to the project. 

Each individual financing operation is assessed against this framework, using a set of relevant 
indicators. 84% of EIB operations signed under mandate in 2007 were judged by the EIB to 
be  highly  consistent  with  and  to  make  a  strong  contribution  to  the  mandate  objectives  and 
priorities. This is reflected in the assignment of a “high” rating on Pillar 1. The proportion of 
“high”  ratings  in  Pillar  2  represented  39%  of  projects;  “medium”  was  attributed  to  55%  of 
projects.  Under  Pillar  3,  81%  of  projects  were  assessed  to  benefit  from  “high”  EIB 
contribution, while 16% were rated “medium”. 

3.3.4.  Co-operation with the Commission 

Council  Decision  2006/1016/EC  invites  the  Commission  and  the  EIB  to  strengthen  the 
consistency  of  EIB  actions  with  EU  policies,  mainly  through  a  regular  and  systematic 
dialogue and early consultation on policies, strategies and project pipelines. To this end, the 

6 

See also section 2.6-2.8 of the Annex. 

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EIB and the Commission signed a specific Memorandum of Understanding (MoU) defining 
the terms and conditions of this strengthened cooperation on 26 May 2008.  

With a view to enhancing the coherence of overall EU support in the regions covered by the 
external  lending  mandate,  opportunities  are  sought  to  combine  EIB  financing  with  EU 
budgetary  resources  as  appropriate,  through,  inter  alia,  the  Instrument  for  Pre-Accesssion 
Assistance  (IPA),  the  European  Neighbourhood  and  Partnership  Instrument  and,  for  South 
Africa, the Development and Cooperation Instrument.  

For  the  benefit  of  the  Mediterranean  region,  in  order  to  underpin  the  financial  support 
provided  from  EIB  own  funds,  the  EIB  manages  EU  budgetary  resources  in  three  domains: 
technical  assistance,  risk  capital  and  interest  subsidies  attributed  to  selected  EIB  loans,  as 
detailed in section 2.11 of the Annex. 

In addition, the Commission and the EIB cooperated in establishing the EU’s Neighbourhood 
Investment Facility, which will mobilise additional funding for infrastructure projects mainly 
in  the  energy,  transport  and  environment  sectors  in  the  entire  area  of  the  European 
Neighbourhood Policy by providing grant support for lending operations of the EIB and other 
EU public financial institutions. Close coordination between the Commission and the EIB is 
also taking place in the context of EU financial instruments in support of the Western Balkans 
under the IPA. 

3.3.5.  Co-operation with other IFIs 

During 2007, the EIB actively pursued its policy to enhance the effectiveness of its operations 
by further reinforcing and developing its operational partnerships with other IFIs. 

The  Tripartite  Agreement  between  the  Commission,  the  European  Bank  for  Reconstruction 
and Development (EBRD) and the EIB, signed at the end of 2006, for operational cooperation 
activities  in  Eastern  Europe,  Southern  Caucasus,  Russia  and  Central  Asia,  has  started  to  be 
implemented  in  2007,  with  a  close  dialogue  between  the  three  institutions  and  the 
establishment of a joint pipeline. The EIB and the EBRD are also closely associated in other 
initiatives  and  partnerships  (e.g.  Joint  Assistance  to  Support  Projects  in  European  Regions 
(JASPERS) technical assistance initiative in the framework of EU regional policy). 

Furthermore,  during  2007  the  EIB  entered  into  formal  collaborations  with  other  IFIs  in  the 
environmental  field:  the  Multilateral  Carbon  Credit  Fund  with  the  EBRD,  the  Carbon  Fund 
for Europe set up with the World Bank and the EIB-KfW Carbon Program. Finally during the 
2007  EIB  Forum  in  Ljubljana,  the  Post-2012  Carbon  Credit  Fund  was  launched,  being  the 
direct result of on-going cooperation in the field of climate change between the EIB and three 
leading  European  national  financing  institutions,  namely  Instituto  de  Crédito  Oficial  ,  KfW 
and the Nordic Investment Bank (NIB). 

The  EIB,  EBRD,  CEB,  NIB  and  the  Nordic  Environment  Finance  Corporation  remained 
committed to the terms of the European Principles for the Environment, strongly supported by 
the Commission. 

Other details are provided in section 2.9 of the Annex. 

4. 

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. 

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4.1. 

Budget Guarantees 

On  22 December 2004,  the  Council  decided  to  amend  Decision  2000/24/EC  to  take  into 
account  the  enlargement  of  the  EU  and  the  European  Neighbourhood  Policy  (Council 
Decision 2005/47/EC7). 

The Community guarantee is restricted to 65% of the aggregate amount of the credits opened, 
plus  all  related  sums  (compared  with  70%  under  the  1997-2000  General  Mandate). 
Furthermore, on 22 December 2004, the Council granted a Community guarantee to the EIB 
against  losses  under  loans  for  certain  types  of  projects  in  Russia,  Ukraine,  Republic  of 
Moldova  and  Belarus  (Decision  2005/48/EC8).  The  overall  ceiling  of  the  credits  opened  is 
EUR 500 million and the EIB benefits from an exceptional Community guarantee coverage of 
100%. 

The  guaranteed  lending  period  expired  on  31 January 2007  and  was  automatically  extended 
by six months as the lending ceilings had not been reached by this date. 

During  2007  (the  last  year  of  the  2000-2006  General  Mandate)  the  EIB  signed  loan 
agreements  of  EUR 1 595 million,  bringing 
this  mandate 
(EUR 20 060 million9) to EUR 19 587 million corresponding to 98% of the overall ceiling. 

lending  under 

total 

The  detailed  situation  relating  to  guarantees  is  set  out  in  the  six-monthly  report  by  the 
Commission on guarantees covered by the general budget10. 

loans  and 

loan  guarantees  for  projects  outside 

On 19 December 2006, the Council granted a Community guarantee to the EIB against losses 
under 
the  Community  (Decision 
2006/1016/EC11). 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 EIB financing operations carried out under this mandate in 2007-
2013  is  EUR 27 800 million  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.  An  amount  of 
EUR 1 898 million was signed during 2007 under this new mandate (see section 2.3 and the 
table in section 2.4 of the Annex). 

4.2. 

Other activities 

Interest subsidies were granted under a number of  Community programmes both  inside and 
outside EU. Most of these programmes have been completed and no longer have any impact 
on budgetary expenditure. Table 2.19 lists the programmes which are still under way and the 
amount of interest subsidy paid during the years under review. 

As  further  detailed  in  section  2.11  of  the  Annex,  in  2007  the  EIB  signed  seven  risk  capital 
operations  under  the  MEDA  budget  for  a  total  commitment  of  EUR  46.5 million  and  24 
technical assistance operations with an overall value of EUR 17.5 million. 

7 
8 
9 
10 
11 

OJ L 21, 25.1.2005, p. 9. 
OJ L 21, 25.1.2005, p. 11. 
Cumulative signatures net of cancellations (including TERRA and Turkey Special Action Program). 
COM(2007) 66 and SEC(2007) 241. 
OJ L 414, 30.12.2006, p.95. 

EN 

10 

   EN