Proposal for a Decision of the European Parliament and of the Council granting a Community guarantee to the European Investment Bank against losses under loans and loan guarantees for projects outside the Community (2009/[•]/EC)
Date: 2009-01-14
Institutions: European Commission
Subjects: EIB loan, EU relations, cooperation policy, financial aid, foreign policy

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 14.1.2009 
COM(2008) 910 final 

2008/0268 (COD) 

Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

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

(2009/[•]/EC) 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1. 

110 

CONTEXT OF THE PROPOSAL 

•  Grounds for and objectives of the proposal 

This proposal for a Decision of the European Parliament and of the Council 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  previous  EIB  mandates,  i.e.  the  general  external  lending  mandate 
(Council  Decision  2008/580/EC)  and  the  separate  mandate  for  projects  in  Russia, 
Ukraine, Republic of Moldova and Belarus (Council Decision 2005/48/EC) expired in 
2007. On 19 December 2006, the Council adopted Decision 2006/1016/EC granting a 
Community guarantee to the European Investment Bank against losses under loans and 
loan guarantees for projects outside the Community (OJ L 414, 30.12.2006, p. 95). The 
Decision  was  based  on  Article  181a  of  the  Treaty  establishing  the  European 
Community.  The  European  Parliament  brought  an  action  for  annulment  of  Council 
Decision  2006/1016/EC  before  the  Court  of  Justice  of  the  European  Communities, 
since it was of the opinion that this Decision should have been adopted on the basis of 
Articles  179  and  181a  of  the  EC  Treaty,  instead  of  Article  181a  alone.  The  Court  of 
Justice  rendered  its  judgment  on  6  November  2008  in  case  C-155/07  (Parliament  v 
Council)  giving  justice  to  the  Parliament  and  annulling  Decision  2006/1016/EC  but 
maintaining  its  effects  for  12  months  in  order  for  it  to  be  replaced  by  a  Decision 
adopted  on  the  basis  of  the  dual  legal  basis  (Articles  179  and  181a  together)  in 
accordance with a co-decision procedure.  

The purpose of this proposal is to provide the EIB with a Community guarantee having 
the  same  characteristics  than  the  guarantee  provided  in  the  annulled  Decision,  and  to 
incorporate the guarantee currently in Council Decision 2008/847/EC of 4 November 
2008  on  the  eligibility  of  central  Asian  countries  under  Decision  2006/1016/EC 
granting a Community guarantee to the European Investment Bank against losses under 
loans  and loan guarantees  for projects outside Community (OJ L  301,  12.11.2008, p. 
13).  

120 

•  General context 

The EIB's activities outside the EU have traditionally made up around 10-15 % of its 
total activities (EUR 6.4 billion in 2007, of which EUR 3.7 billion under Community 
its  current  activity  are  pre-accession  and 
guarantee).  The  main  regions  of 
Mediterranean countries, though it also undertakes substantial operations in Asia, Latin 
America  and  South  Africa,  and  is  progressively  expanding  its  operations  in  Russia, 
Eastern  Europe  and  Southern  Caucasus.  EIB  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,  and  are  not  covered  by  the 
proposal. 

The EIB traditionally undertakes operations outside the EU in support of EU external 
relations  policies  based  on  formal  mandates  from  the  EU;  successive  mandates  have 
widened  the  geographical  scope  of  EIB's  activity.  The  financing  operations  provided 
for  in  such  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, 

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from  affecting  the  credit  standing  of  the  Bank,  and  allows  the  EIB  to  maintain 
attractive lending rates outside the EU. 

lending  activities  of 

the  European  Communities 

Most recent figures on EIB operations under Community guarantee can be found in the 
Report  from  the  Commission  to  the  European  Parliament  and  the  Council  on 
in  2007 
borrowing  and 
(COM(2008)590 final) and in the Commission Staff Working Document annexed to it 
(SEC(2008)2504). Another report of relevance is the Report to the budgetary authority 
on  guarantees  covered  by  the  general  budget  -  Situation  at  31  December  2007 
(COM(2008)451  final)  and  the  Commission  Staff  Working  Paper  annexed  to  it 
(SEC(2008)2249). Reference is also made to the Report COM (2006)323 and the two 
Commission  Staff  Working  Papers  (SEC  (2006)790  and  SEC  (2006)789)  that  were 
presented  to  the  European  Parliament  and  the  Council  in  connection  with  the 
Commission proposal (COM (2006)324 final) that lead to the adoption of the annulled 
Decision.  

130 

140 

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. 

•  Existing provisions in the area of the proposal 

The proposed Decision would continue the provision of a Community guarantee to EIB 
external  lending  in  the  place  of  but  completely  in  line  with  the  annulled  Council 
Decision 2006/1016/EC and Council Decision 2008/847/EC. 

•  Consistency with other policies and objectives of the Union 

EIB  external  operations,  and  notably  those  covered  by  the  current  proposal,  will 
complement  the  activities  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 

framework  of 

the 

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Neighbourhood  and  Partnership,  and  Development  Cooperation  and  Economic 
Cooperation strategies. 

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 
Statute 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 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. These procedures are in line 
with those foreseen under the annulled Decision 2006/1016/EC. 

2. 

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

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2249 

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•  Consultation of interested parties 

Consultation methods, main sectors targeted and general profile of respondents 

The EIB has been consulted.  

Summary of responses and how they have been taken into account 

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

•  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. 

Means used to make the expert advice publicly available 

Not applicable. 

•  Impact assessment 

The  third  countries  to  be  covered  by  EIB  operations  under  Community  guarantee 

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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  in  the  framework  of  the  proposal  leading  to  the 
adoption  of  the  annulled  Decision  2006/1016/EC  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. 

Exactly  in  line  with  the  provisions  of  the  annulled  Decision,  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. 

305 

LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

The action will provide a guarantee to the EIB for extra-EU operations, up to certain 
ceilings  established  within  the  proposal  covering  operations  signed  during  the  period 
2007-2013. A mid-term review of the mandate will be carried out in 2010, which will 
allow, where necessary, for a refocusing of the priorities and for a possible release of 
the optional mandate, as set out in the legal basis. 

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•  Legal basis 

The  legislative  proposal  will  be  based  on  Articles  179  and  181a  of  the  Treaty  in 
accordance with the judgment of the Court of Justice. 

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329 

•  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: 

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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 reasons: 

A  Decision  of  the  European  Parliament  and  of  the  Council  is  required  to  establish  a 
guarantee at Community level. 

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 Financial Framework 2007-2013. 

ADDITIONAL INFORMATION 

•  Repeal of existing legislation 

The adoption of the proposal will lead to the repeal of existing legislation. 

•  Review/revision/sunset clause 

The proposal includes a review clause. 

The proposal includes a revision clause. 

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533 

570 

The proposal includes a sunset clause. 

•  Detailed explanation of the proposal 

Article 1 mentions that the Community guarantee will cover EIB Financing Operations 
up  to  a  global  amount  of  EUR  27  800  million,  including  an  optional  mandate  EUR 
2 000 million, over the period 2007-2013. The guarantee shall be restricted to 65% of 
the  aggregate  amounts  of  credits  disbursed  and  guarantees  provided  under  EIB 
Financing  Operations,  less  amounts  reimbursed,  plus  all  related  sums.  The  overall 
ceiling shall be broken down by region with the following binding regional ceilings: 

a) Pre-accession countries: EUR 8 700 million 

b)  Neighbourhood  and  Partnership  countries:  EUR  12  400  million.  This  is  broken 
down  into  two  indicative  sub-ceilings,  i.e.  Mediterranean:  EUR  8  700  million,  and 
Eastern Europe, Southern Caucasus and Russia: EUR 3 700 million. 

c) Asia and Latin America: EUR 3 800 million, broken down into two indicative sub-
ceilings,  i.e.  Latin  America:  EUR  2  800  million  and  Asia  (including  Central  Asia): 
EUR 1 000 million. 

d) Republic of South Africa: EUR 900 million. 

e) Optional Mandate: EUR 2 000 million. 

Article 2 deals with the list of countries concerned by the legal act and their eligibility. 
The  detailed  list  of  countries  concerned  is  provided  in  Annex  1  of  the  proposed 
Decision. 

Article 3 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 Statute of the EIB. 

Article 4 details the modalities of the enhanced cooperation with other IFIs. 

Article 5 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  6  includes  enhanced  reporting  and  accounting  information  requirements  for 
both the EIB and the Commission.  

Article 7 specifies the responsibility of the EIB to pursue possible recovery claims on 
behalf  of  the  Commission  and  makes  reference  to  an  agreement  to  be  concluded 
between  the  Commission  and  the  EIB  laying  down  the  detailed  provisions  and 
procedures. 

Article  8  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  9  mentions  that  the  Commission  will  present  to  the  European  Parliament  and 
the Council a mid-term report on the application of the proposed Decision by 30 June 
2010, accompanied, as appropriate, by a proposal for its amendment, drawing upon an 
external evaluation whose terms of reference are specified in Annex II of the proposed 

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Decision. 

Article 10 provides for the coverage under the proposed Decision of the EIB Financing 
Operations signed under the annulled Decision. In accordance with the judgment of the 
Court  of  Justice,  the  Community  guarantee  shall  remain  in  place  intact  for  them, 
despite the annulment of Council Decision 2006/1016/EC. 

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-13218 

(Explanatory memorandum validated - 13 218 characters - complying with DGT norm.) 

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2008/0268 (COD) 

Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

of [•] 

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

(2009/[•]/EC) 

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

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

Having regard to the proposal from the Commission, 

Acting in accordance with the procedure laid down in Article 251 of the Treaty, 

Whereas: 

(1) 

Since  1963,  the  European  Investment  Bank  (the  ‘EIB’)  has  undertaken  operations 
outside the European Community (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  2008/580/EC  of  23  June  2008  granting  a  Community  guarantee 
against  losses  under  loans  for  projects  outside  the  Community  (South-eastern 
neighbours,  Mediterranean  countries,  Latin  America  and  Asia  and  the  Republic  of 
South  Africa)1  and  by  Decisions  2001/777/EC2  and  2005/48/EC3  for  regionally 
specific lending actions. 

(3)  With  a  view  to  supporting  the  Community’s  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 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. 

(4) 

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 

1 
2 
3 

OJ L 186, 15.7.2008, p. 30 (codified version).  
OJ L 292, 9.11.2001, p. 41. 
OJ L 21, 25.1.2005, p. 11. 

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(5) 

(6) 

(7) 

(8) 

(9) 

Pre-Accession Assistance4 (the ‘IPA’), the European Neighbourhood and Partnership 
Instrument5  (the  ‘ENPI’)  and  the  Development  Cooperation  Instrument6  (the  ‘DCI’), 
where  the  loan  financing  or  guarantee  has  been  granted  according  to  a  signed 
agreement which has neither expired nor been cancelled (‘EIB Financing Operations’). 

The  amounts  covered  by  the  Community  guarantee  under  this  Decision  should 
represent  ceilings  for  financing  by  the  EIB  under  the  Community  guarantee.  They 
should not form targets that the EIB should necessarily meet. 

The  Community’s  external  relations  policies  have  been  revised  and  broadened  in 
recent  years.  This  has  notably  been  the  case  for  the  Pre-Accession  Strategy,  for  the 
European  Neighbourhood  Policy,  for  the  renewed  partnerships  with  Latin  America 
and South-East Asia and for the EU’s Strategic Partnerships with Russia, Central Asia, 
China and India. 

From 2007, the Community’s external relations have also been supported by the new 
financial  instruments,  i.e.  the  IPA,  the  ENPI,  the  DCI  and  by  the  Instrument  for 
Stability7. 

EIB  Financing  Operations  should  be  consistent  with  and  support  the  Community’s 
external policies including specific regional objectives. By ensuring overall coherence 
with  Community  actions,  EIB  financing  should  be  complementary  to  corresponding 
Community  assistance  policies,  programs  and  instruments  in  the  different  regions. 
Moreover, the protection of the environment and energy security of the Member States 
should  form  part  of  the  EIB’s  financing  objectives  in  all  eligible  regions.  EIB 
Financing  Operations  should  take  place  in  countries  complying  with  appropriate 
conditionality  consistent  with  Community  high  level  agreements  on  political  and 
macro-economic aspects. 

The  policy  dialogue  between  the  Commission  and  the  EIB,  as  well  as  strategic 
planning  and  coherence  between  EIB  and  Commission  financing  should  be 
strengthened. The link between EIB activities outside the Community and Community 
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 
Community policy objectives. 

(10)  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  Community. 
The  focus  of  Community  action  in  the  Western  Balkans  should  continue  to  shift 
progressively  from  reconstruction  to  pre-accession  support.  In  this  context,  the  EIB 

4 
5 

6 

7 

Council Regulation (EC) No 1085/2006 of 17 July 2006 (OJ L 210, 31.7.2006, p. 82). 
Regulation (EC) No 1638/2006 of the European Parliament and of the Council of 24 October 2006 (OJ 
L 310, 9.11.2006, p. 1). 
Regulation (EC) No 1905/2006 of the European Parliament and of the Council of 18 December 2006 
(OJ L 378, 27.12.2006, p. 41). 
Regulation (EC) No 1717/2006 of the European Parliament and of the Council of 15 November 2006 
(OJ L 327, 24.11.2006, p. 1). 

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activity  should,  in  addition,  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-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. 

(11)  With  regard  to  countries  covered  by  the  ENPI,  the  EIB  should  continue  and 
consolidate  its  activities  in  the  Mediterranean  region,  enhancing  its  focus  on  private 
sector  development.  In  this  respect,  cooperation  by  partner  countries  to  facilitate 
private  sector  development  and  encourage  structural  reform,  in  particular  financial 
sector  reform,  is  needed,  as  well  as  other  measures  to  facilitate  EIB  activities,  in 
particular to ensure that the EIB can issue bonds in local markets. As regards Eastern 
Europe,  Southern  Caucasus  and  Russia,  the  EIB  should  enhance  its  activities  in  the 
countries concerned in line with appropriate conditionality consistent with Community 
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 
Community 
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  set  out  in  a  tripartite  Memorandum  of 
Understanding between the Commission, the EIB and the EBRD. 

telecommunications 

transport, 

energy, 

and 

in 

(12)  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 EIB should endeavour 
to  progressively  expand  its  activities  across  a  larger  number  of  countries  in  those 
regions,  including  in  the  less  prosperous  countries.  In  support  of  Community 
objectives, EIB financing in the Asian and Latin American countries should focus on 
environmental sustainability (including climate change mitigation) and energy security 
projects, as well as the continued support of EU presence in Asia and Latin America 
through  Foreign  Direct  Investment,  and  the  transfer  of  technology  and  know  how. 
Taking into account cost-efficiency, the EIB should be able to work also directly with 
local companies, in particular in the field of environmental sustainability and energy 
security. The mid-term review will re-examine the objectives of the EIB financing in 
Asia and Latin America. 

(13) 

In  Central  Asia,  the  EIB  should  focus  on  major  energy  supply  and  energy  transport 
projects  which  also  serve  Community  energy  interests  and  are  consistent  with  and 
support the Community policy objectives of diversification of energy sources and the 
Kyoto requirements, and of enhancement of environmental protection. EIB financing 
in Central Asia should be carried out in close cooperation with the EBRD, in particular 
according to the terms set out in a tripartite Memorandum of Understanding between 
the Commission, the EIB and the EBRD. 

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(14)  To  complement  the  EIB  activities  under  the  Cotonou  Agreement  for  the  ACP 
countries,  in  South  Africa  the  EIB  should  focus  on  infrastructure  projects  of  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. 

(15)  With a view to enhancing the coherence of overall Community support in the regions 
concerned, opportunities should be sought to combine EIB financing with Community 
budgetary  resources  as  appropriate,  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  framework,  through  the 
IPA, the ENPI, the Instrument for Stability and, for South Africa, the DCI. 

(16)  The EIB already closely cooperates with IFIs and with European bilateral institutions. 
This  cooperation  is  guided  by  regionally-specific  Memoranda  of  Understanding, 
which  should  be  approved  by  the  governing  bodies  of  the  EIB.  In  its  financing 
operations outside the Community falling within the scope of this Decision, the EIB 
should endeavour to further enhance coordination and cooperation with IFIs and with 
European  bilateral 
including,  where  appropriate, 
cooperation  on  sector  conditionality,  increased  use  of  cofinancing  and  participation 
with  other  IFIs  in  global  initiatives,  such  as  those  promoting  aid  coordination  and 
efficiency. 

institutions  where  relevant, 

(17)  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.  The  report  should,  in 
particular,  include  a  section  on  value-added  in  line  with  Community  policies,  and  a 
section on cooperation with the Commission, other IFIs and bilateral donors, including 
on cofinancing. 

(18)  The  Community  guarantee  established  by  this  Decision  should  cover  EIB  Financing 
Operations  signed  during  a  period  beginning  on  1  February  2007  and  ending  on  31 
December 2013. 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.  This  review  should  in  particular  include  an  external  evaluation  whose 
terms of reference are specified in Annex II. 

(19)  EIB  Financing  Operations  should  continue  to  be  managed  in  accordance  with  the 
EIB’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. 

(20)  The  Guarantee  Fund  for  External  Action  (the  ‘Guarantee  Fund’),  established  by 
Council Regulation (EC, Euratom) No 2728/94 of 31 October 1994, should continue 
to  provide  a  liquidity  cushion  for  the  Community  budget  against  losses  on  EIB 
Financing Operations8. 

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

8 

OJ L 293, 12.11.1994, p. 1.  

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Commission  should  take  account  of  this  plan  in  its  regular  budget  programming 
transmitted to the budgetary authority. 

(22)  By  its  judgment  of  6  November  2008  in  Case  C-155/07  (Parliament  v  Council),  the 
Court  of  Justice  of 
the  European  Communities  annulled  Council  Decision 
2006/1016/EC of 19 December 2006 granting a Community guarantee to the European 
Investment  Bank  against  losses  under  loans  and  loan  guarantees  for  projects  outside 
the  Community9.  Decision  2006/1016/EC  had  been  extended  to  five  central  Asian 
countries (namely Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan) 
by  Council  Decision  2008/847/EC  of  4  November  2008  on  the  eligibility  of  central 
Asian countries under Decision 2006/1016/EC granting a Community guarantee to the 
European Investment Bank against losses under loans and loan guarantees for projects 
outside the Community10.  

(23)  The Court, however, ordered that the effects of Decision 2006/1016/EC be maintained 
for  EIB  financing  arrangements  entered  into  before  the  entry  into  force,  within  a 
period of 12 months from the date of delivery of the said judgment, of a new decision 
adopted on the appropriate legal basis, namely Articles 179 EC and 181a EC together.  

(24)  A  new  Decision  of  the  European  Parliament  and  of  the  Council  should  therefore  be 
adopted in order to provide for a continuous unchanged guarantee of the relevant EIB 
Financing Operations outside the Community,  

HAVE DECIDED AS FOLLOWS: 

Article 1 

Guarantee and ceilings 

The  Community  shall  grant  the  European  Investment  Bank  (the  ‘EIB’)  a  global 
1. 
guarantee (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  loan  financing  or  guarantee  has  been 
granted according to a signed agreement which has neither expired nor been cancelled (‘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 Community. 

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 maximum ceiling of the EIB Financing Operations throughout the period referred 
3. 
to  in  paragraph  6,  less  amounts  cancelled,  shall  not  exceed  EUR  27  800  million.  This 
maximum ceiling shall be broken down into two parts: 

(a) a basic ceiling of a fixed maximum amount of EUR 25 800 million, including its regional 
distribution defined in paragraph 4, to cover the entire period referred to in paragraph 
6; 

(b) an optional mandate of EUR 2 000 million. The activation in whole or in part of 
this  optional  amount  and  its  regional  distribution  will  be  decided  by  the  European 
Parliament  and  the  Council  in  accordance  with  the  procedure  laid  down  in  Article 

9 
10 

OJ L 414, 30.12.2006, p. 95. 
OJ L 301, 12.11.2008, p. 13. 

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251 of the Treaty. The decision will be based on the outcome of the mid-term review 
set out in Article 9. 

The basic ceiling referred to in paragraph 3(a) shall be broken down into the following 

4. 
binding regional ceilings: 

(a)  Pre-Accession countries: EUR 8 700 million; 

(b)  Neighbourhood and Partnership countries: EUR 12 400 million; 

broken down into the following indicative sub-ceilings: 

(i) Mediterranean: EUR 8 700 million; 

(ii) Eastern Europe, Southern Caucasus and Russia: EUR 3 700 million; 

(c)  Asia and Latin America: EUR 3 800 million; 

broken down into the following indicative sub-ceilings: 

(i) Latin America: EUR 2 800 million; 

(ii) Asia (including Central Asia): EUR 1 000 million; 

(d)  Republic of South Africa: EUR 900 million. 

Within the regional ceilings, the governing bodies of the EIB may decide to reallocate 

5. 
an amount of up to 10 % of the regional ceiling between sub-ceilings. 

6. 
The  Community  guarantee  shall  cover  EIB  Financing  Operations  signed  during  the 
period  beginning  on  1  February  2007  and  ending  on  31  December  2013.  EIB  Financing 
Operations  signed  under  Council  Decision  2006/1016/EC  and  under  Council  Decision 
2008/847/EC shall continue to benefit from the Community guarantee under this Decision. 

If, on expiry of the period referred to in paragraph 6, the European Parliament and the 
7. 
Council have not adopted a decision granting a new Community Guarantee to the EIB for its 
Financing Operations outside the Community, that period shall be automatically extended by 
six months. 

Article 2 

Countries covered 

The  list  of  countries  eligible  or  potentially  eligible  for  EIB  financing  under 

1. 
Community guarantee is laid down in Annex I. 

For countries listed in Annex I and marked with ‘*’ and for other countries not listed 
2. 
in Annex I, the eligibility of such country for EIB financing under Community guarantee shall 
be decided by the European Parliament and the Council on a case by case basis in accordance 
with the procedure laid down in Article 251 of the Treaty. 

3. 
The  Community  guarantee  shall  only  cover EIB  Financing  Operations  carried  out  in 
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 European Parliament and the Council may decide to suspend new EIB financing 
under  Community  guarantee  in  that  country  in  accordance  with  the  procedure  laid  down  in 
Article 251 of the Treaty. 

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

Article 3 

Consistency with policies of the Community 

1. 
The  consistency  of  EIB  external  actions  with  the  external  policy  objectives  of  the 
Community shall be strengthened with a view to maximising synergies of EIB financing and 
budgetary resources of the European Union, notably through regular and systematic 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 Community 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  policy  objectives  of 

4. 
the Community shall be monitored in accordance with Article 6. 

Article 4 

Cooperation with other International Financial Institutions 

1. 
EIB  Financing  Operations  shall  increasingly  be  carried  out,  where  appropriate,  in 
cooperation  between  and/or  by  means  of  cofinancing  by  the  EIB  and  other  International 
Financial  Institutions  (the  ‘IFIs’),  or  European  bilateral  institutions,  in  order  to  maximise 
synergies, cooperation and efficiency and 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. 

The cooperation with IFIs and other donors shall be assessed at the mid-term review 

3. 
set out in Article 9. 

Article 5 

Coverage and terms of the Community Guarantee 

For EIB Financing Operations entered into with a State, or guaranteed by a State, and 
1. 
for  other  EIB  Financing  Operations  entered  into  with  regional  or  local  authorities  or 
government-owned  and/or  government-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 EIB, but due to it (the ‘Comprehensive Guarantee’). 

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For the purposes of this Article and Article 6(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 EIB, 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 6 

Reporting and accounting 

1. 
The Commission shall report annually to the European Parliament and the Council on 
the  EIB  Financing  Operations  carried  out  under  this  Decision.  The  report  shall  include  an 
assessment  of  impact  and  effectiveness  of  EIB  Financing  Operations  at  project,  sector, 
country and regional level as well as the contribution of the EIB Financing Operations to the 
fulfilment  of  the  external  policy  objectives  of  the  Community,  taking  into  account  the 
operational  objectives  of  the  EIB.  It  shall  also  include  an  assessment  of  the  extent  of 
cooperation  between  the  EIB  and  the  Commission  and  between  the  EIB  and  other  IFIs  and 
bilateral donors. 

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

For  the  purposes  of  the  Commission’s  accounting  and  reporting  of  the  risks  covered 
4. 
by the Comprehensive Guarantee, the EIB shall provide the Commission with the EIB’s risk 
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 7 

Recovery of payments made by the Commission 

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

The EIB and the Commission shall enter into an agreement laying down the detailed 
2. 
provisions and procedures relating to recovery of claims no later than the date of conclusion 
of the agreement referred to in Article 8. 

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Article 8 

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 9 

Review of the Decision 

1. 
The Commission shall present to the European Parliament and the Council a mid-term 
report on the application of this Decision by 30 June 2010, accompanied, as appropriate, by a 
proposal  for  its  amendment,  drawing  upon  an  external  evaluation  whose  terms  of  reference 
are specified in Annex II of this Decision. 

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

2. 
July 2013. 

Decision 2008/847/EC is repealed. 

Article 10 

Final provisions 

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, [•] 2009. 

For the European Parliament 
The President 
[•] 

For the Council 
The President 
[•]

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ANNEX I 

REGIONS AND COUNTRIES COVERED BY ARTICLES 1 AND 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 (1999). 

B. NEIGHBOURHOOD AND PARTNERSHIP COUNTRIES 

1. Mediterranean 
Algeria,  Egypt,  the  West  Bank  and  the  Gaza  Strip,  Israel,  Jordan,  Lebanon,  Libya (*), 
Morocco, Syria, Tunisia. 

2. Eastern Europe, Southern Caucasus and Russia 
Eastern Europe: Republic of Moldova, Ukraine, Belarus (*) 

Southern Caucasus: Armenia, Azerbaijan, Georgia; 

Russia: Russia. 

C. ASIA AND LATIN AMERICA 

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, Cambodia (*), China (including Hong Kong 
and  Macao  Special  Administrative  Regions),  India,  Indonesia,  Iraq (*),  South  Korea,  Laos, 
Malaysia,  Maldives,  Mongolia,  Nepal,  Pakistan,  the  Philippines,  Singapore,  Sri  Lanka, 
Taiwan (*), Thailand, Vietnam, Yemen. 

Central Asia: 

Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan. 

D. SOUTH AFRICA 

South Africa. 

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ANNEX II 

MID-TERM  REVIEW  AND  TERMS  OF  REFERENCE  FOR  THE  EVALUATION  OF  THE  EIB’S 

EXTERNAL MANDATE 

Mid-term review 

A  substantive  mid-term  review  of  EIB  external  financing  will  be  conducted  by  2010.  This 
review will draw on an independent external evaluation, which will also be transmitted to the 
European Parliament and the Council. The review will provide  the basis for the decision of 
the  European  Parliament  and  the  Council,  as  to  whether  and  to  what  extent  to  release  any 
optional mandate to top up the guarantee foreseen in this Decision, for the period following 
2010,  as  to  whether  to  make  other  amendments  to  the  mandate,  and  as  to  how  to  ensure 
maximum value-added and efficiency in the EIB's operations. The Commission will present 
the mid-term review to the European Parliament and to the Council by 30 June 2010, as the 
basis for any proposal for the amendment of the mandate.  

The framework of the evaluation 

It will include: 

a. 

b. 

an evaluation of the EIB's external financing activities. Parts of the evaluation will be 
conducted  in  cooperation  with  the  EIB's  and  the  Commission's  evaluation 
departments; 

an assessment of the wider impact of the EIB's external lending on interaction with 
other IFIs and other sources of finance. 

The evaluation will be supervised and managed by a steering committee comprising several 
‘wise  persons’  appointed  by  the  EIB  Board  of  Governors,  an  EIB  and  a  Commission 
representative. The steering committee will be chaired by one such ‘wise person’. 

The  steering  committee  will  be  supported  by  the  EIB's  and  the  Commission's  evaluation 
departments and by external experts. These external experts will be selected through a tender 
process managed by the Commission. The steering committee will be consulted on the terms 
of reference and on the criteria for the selection of the external experts. The costs of external 
experts  will  then  be  borne  by  the  Commission  and  will  be  covered  by  the  budget  line 
dedicated to the provisioning of the Guarantee Fund. 

The final evaluation report will be submitted by the steering committee, and will draw clear 
conclusions, based on the information gathered, to inform the decision of the mid-term review 
as to whether to release the optional tranche for the remainder of the mandate and as to the 
regional distribution of any additional financing. 

The scope of the evaluation 

The evaluation will cover the previous mandates (2000-2006) and the first years of the 2007-
2013  mandate,  up  to  the  end  of  2009.  It  will  examine  project  financing  volumes  and 
disbursements  by  country  as  well  as  technical  assistance  and  risk  capital  operations. 
Considering the effects at project, sector, regional and country level, the evaluation will base 
its conclusions on: 

a. 

the in-depth evaluation of the relevance, performance (effectiveness, efficiency and 
sustainability)  of  EIB  operations  against  their  specific  regional  objectives  as 
originally  set  within  the  relevant  Community  external  policies  as  well  as  of  their 

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b. 

value-added  (to  be  conducted  in  association  with  the  EIB's  evaluation  unit  and 
Commission services); 

the  assessment  of  consistency  with  the  relevant  Community  external  policies  and 
strategies and of the additionality and value-added of EIB operations in the first years 
of the 2007-2013 mandate in the framework of the specific regional objectives in the 
2007-2013 mandate and of the corresponding performance indicators to be set by the 
EIB (to be conducted in association with the EIB's evaluation unit and Commission 
services). 

In these assessments, value-added of EIB operations will be measured against three elements: 
support of Community policy objectives, the quality of the projects themselves and alternative 
sources of financing. 

a. 

b. 

c. 

analysis of the financial needs of the beneficiaries, their absorption capacity and the 
availability  of  other  sources  of  private  or  public  financing  for  the  relevant 
investments; 

the  assessment  of  the  cooperation  and  coherence  of  actions  between  EIB  and  the 
Commission; 

the  assessment  of  the  cooperation  and  synergies  between  the  EIB  and  international 
and bilateral finance institutions and agencies. 

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LEGISLATIVE FINANCIAL STATEMENT 

1. 

NAME OF THE PROPOSAL: 

Proposal  for  a  Decision  of  the  European  Parliament  and  the  Council  granting  a 
Community  guarantee  to  the  European  Investment  Bank  against  losses  under  loans 
and loan 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. 

3.1. 

BUDGET LINES 

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  loan  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-
diff11 

NO 

NO 

NO 

4 

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  Council  Regulation  (EC, 
Euratom) N° 2728/94 establishing a Guarantee Fund for external actions12 and based 

11 
12 

Non-differentiated appropriations hereafter referred to as NDA. 
The last amendment of Council Regulation (EC, Euratom) N° 2728/94 was adopted by the Council on 
30 January 2007 (Council Regulation (EC, Euratom) N° 89/2007).  

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on the proposed EIB lending mandate of EUR 27.8 billion between 2007 and 2013, 
of which EUR 2 billion for the optional mandate. 

The  figures  for  the  calculations  of  the  “normal”  provisioning  are  detailed  in  Table 
8.1. 

•  •  For 2007: no provisioning took place. A lumpsum reimbursement of EUR 254 
million from the Guarantee Fund to the General Budget took place following the 
accession  of  Bulgaria  and  Romania,  in  line  with  Council  Regulation  N° 
2273/2004. 

For  2008:  a  surplus  of  EUR  125.75  million  was  transferred  in  2008  as 

• 
“revenues”. 

For 2009: the calculations are based on the target amount as of 31.12.2007 and 
• 
a provisioning amount of EUR 91.60 million was inserted in the PDB 2009 together 
with an  amount  of EUR 0.5  million for the external evaluation under the mid-term 
review of the EIB external mandate. 

• 
For the years 2010-2013, calculations are based on the estimations of volume 
of EIB signatures and disbursements under the new mandate. Estimations have been 
made  based  on  EIB  information  and  are  subject  to  variation  driven  by  project 
progress.  

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  defaults13  and 
adverse assets valuation14, in order to cope with extreme situations as shown in the 
total “Maximum budgetary needs” (see table below).  

EUR Million 

2007  2008 

2009 
(**) 

2010  2011  2012  2013  Total 

Budgetary revenues 

0 

125.8 

0 

0 

0 

0 

0 

125.8 

Budgetary  needs 
provisioning 

for  normal 

Possible 
the 
adjustments 
market  valuation  of  the  assets  of 
the Guarantee Fund (*) 

in 

Potential impact of possible calls  

Maximum budgetary needs (**) 

0 

0 

0 

0 

0 

91.6 

158 

159 

114 

121 

643.6 

0 

0 

0 

0 

36 

42 

48 

53 

179 

0 

100 

100 

100 

100 

400 

91.6 

294 

301 

262 

274  1222.6 

13 

14 

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: 
- 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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* These figures are estimated on the total amount of the Guarantee Fund. 
** In 2009, an additional amount of EUR 0.5 million will be drawn from the Guarantee Fund for the 
external evaluation under the mid-term review. 

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. 

It  should  be  noted  that  the  Guarantee  Fund  also  covers  Macro-financial  Assistance 
and Euratom loans which fall outside the scope of the proposed Decision. Therefore, 
while the above table takes into account existing signed operations under these two 
activities, it does not include possible additional budgetary needs for new operations 
under these activities. 

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EUR million (1 decimal place) 

Expenditure type 

Section 
no. 

2007 

2008 

2009 

2010 

2011 

2012-
13 

Total 

Operational expenditure15 

Commitment Appropriations 
(CA) 

8.1. 

Payment 
(PA) 

Appropriations 

a 

b 

0.0 

0.0 

92.1 

294.0 

301.0 

536.0 

1223.1

0.0 

0.0 

92.1 

294.0 

301.0 

536.0 

1223.1

Administrative expenditure within reference amount16 

Technical & administrative 
assistance (NDA) 

8.2.4. 

c 

- 

- 

- 

- 

- 

- 

- 

TOTAL REFERENCE AMOUNT 

Commitment 
Appropriations 

Payment Appropriations 

a+
c 

b+
c 

0.0 

0.0 

92.1 

294.0 

301.0 

536.0 

1223.1

0.0 

0.0 

92.1 

294.0 

301.0 

536.0 

1223.1

Administrative expenditure not included in reference amount17 

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 

0.9 

0.9 

0.9 

0.9 

0.9 

1.7 

6.2

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 

0.9 

0.9 

93.0 

294.9 

301.9 

537.7 

1229.3

0.9 

0.9 

93.0 

294.9 

301.9 

537.7 

1229.3

15 

16 
17 

Expenditure  that  does  not  fall  under  Chapter  xx  01  of  the  Title  xx  concerned.  The  table  includes  for 
2009 the amount of EUR 0.5 million to be drawn from the Guarantee Fund for the external evaluation 
under the mid-term review. 
Expenditure within article xx 01 04 of Title xx. 
Expenditure within chapter xx 01 other than articles xx 01 04 or xx 01 05. 

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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 
Agreement18  (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, Council Decision 2006/1016/EC was 
annulled  by  the  Court  of  Justice  on  6  November  2008.  The  effects  of  the  annulled 
decision  are  maintained  for  EIB  Financing  Operations  signed  before  the  entry  into 
force, within a period ending on 6 November 2009, of a new decision adopted on the 
appropriate  legal  basis,  namely  Articles  179  EC  and  181a  of  the  EC  Treaty. 
Therefore, there is a need to propose a new Decision if the Community is to continue 
to offer a guarantee for EIB external financing operations in furtherance of EU policy 
objectives. 

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 main benefits of EIB intervention in such 
countries include 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  EIB  to  final 
beneficiaries in the form of competitive interest rates. 

18 

See points 19 and 24 of the Interinstitutional agreement. 

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25 

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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) 

(cid:133) 

directly by the Commission 

indirectly by delegation to: 

(cid:133) 

(cid:133) 

executive Agencies 

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 the EIB is mandated by the 
European  Parliament  and  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. 

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6. 

MONITORING AND EVALUATION 

6.1.  Monitoring system 

EIB Financing Operations under Community guarantee will be managed by the EIB 
in accordance with the EIB's own rules and procedures, including appropriate audit, 
control  and  monitoring  measures.  As  foreseen  in  the  EIB  Statute,  the  Audit 
Committee  of  the  EIB,  which  is  supported  by  external  auditors,  is  responsible  for 
verifying that the operations of the EIB 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 EIB 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  of  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  6  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 
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 

An assessment of the existing Community Guarantee to EIB extra-EU operations can 
be  found  in  the  Report  from  the  Commission  to  the  European  Parliament  and  the 
Council on borrowing and lending activities of the European Communities in 2007 
(COM(2008)590 final) and in the Commission Staff Working Document annexed to 
it  (SEC(2008)2504).  Another  report  of  relevance  is  the  Report  to  the  budgetary 
authority  on  guarantees  covered  by  the  general  budget  –  Situation  at  31  December 
2007 (COM(2008)451 final) and the Commission Staff Working Paper annexed to it 
(SEC(2008)2249). Reference is also made to the Report COM (2006)323 and the two 
Commission  Staff  Working  Papers  (SEC (2006)790 and SEC (2006)789)  that were 
presented  to  the  European  Parliament  and  the  Council  in  connection  with  the 
Commission  proposal  (COM  (2006)324  final)  that  lead  to  the  adoption  of  the 
annulled Decision. 

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

similar experiences in the past) 

The  purpose  of  the  legislative  proposal  is  to  provide  the  EIB  with  a  Community 
guarantee having the same characteristics than the guarantee provided in the annulled 
Decision  2006/1016/EC  and  to  incorporate  the  guarantee  currently  in  Decision 
2008/847/EC. 

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27 

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6.2.3.  Terms and frequency of future evaluation 

A  mid-term  review  of  the  mandate  will  be  carried  out  in  2010,  which  will  allow, 
where  necessary,  for  a  refocusing  of  the  priorities  and  for  a  possible  release  of  the 
optional  mandate,  as  set  out  in  the  proposed  legal  basis.  In  this  framework,  an 
external evaluation will be carried out in 2009. The Commission will prepare a final 
report on the EIB mandate by 31 July 2013 

7. 

ANTI-FRAUD MEASURES 

The EIB has the  main responsibility for the adoption  of  fraud  prevention  measures,  notably 
through  the  application  to  the  financed  operations  of  the  "EIB’s  Policy  on  preventing  and 
deterring  Corruption,  Fraud,  Collusion,  Coercion,  Money  Laundering  and  the  Financing  of 
Terrorism in European Investment Bank activities" as adopted in April 2008. 

The  EIB's  rules  and  procedures  include,  among  the  detailed  arrangements  to  fight  against 
fraud  and  corruption,  the  competence  of  OLAF  to  carry  out  internal  investigations.  In 
particular, in July 2004, the EIB Board of Governors has approved a decision "concerning the 
terms  and  conditions  for  internal  investigations  in  relation  to  the  prevention  of  fraud, 
corruption and any illegal activity detrimental to the Communities' financial interests". 

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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 27,800 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 

1,898 

4,079 

4,278 

4,103 

4,132 

4,747 

4,563 

11,854 

14,240 

16,349 

18,108 

20,000 

22,724 

25,763 

573 

588 

522 

484 

455 

378 

301 

12,427 

14,828 

16,871 

18,592 

20,455 

23,101 

26,064 

Target amount @ 9% 

1,118 

1,335 

1,518 

1,673 

1,841 

2,079 

2,346 

Budgetary revenues 

Normal provisioning needs 

Maximum budgetary needs 
Total = EUR 1223 million 

0 

0 

0 

125.8 

0 

0 

0 

91.6 

91.6 

0 

158 

294 

0 

159 

301 

0 

114 

262 

0 

121 

274 

* It does not include new possible MFA and Euratom loans. 
** In 2009, an additional amount of EUR 0.5 million will be drawn from the Guarantee Fund for the external evaluation under the mid-term review. 

EN 

29 

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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 
staff19 (XX 01 
01) 

A*/AD 

B*, 
C*/AST 

Staff  financed20  by  art. 
XX 01 02 

Other  staff21  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 

(cid:133) 

(cid:133) 

(cid:133) 

(cid:133) 

Posts pre-allocated within the APS/PDB exercise for year 2009 

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 

19 
20 
21 

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 

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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. 

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31 

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

Expenditure on administrative management) 

EUR million (to 3 decimal places) 

Budget line 

(number and heading) 

2007 

2008 

2009 

2010 

2011 

2012-
2013  TOTAL 

Technical 

1 
and 
assistance (including related staff costs) 

administrative 

Executive agencies22 

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 

EUR million (to 3 decimal places) 

Type of human resources 

2007 

2008 

2009 

2010 

2011 

2012-
2013 

Officials  and  temporary  staff 
(XX 01 01) 

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

(specify budget line) 

0.854 

0.854 

0.854 

0.854 

0.854 

1.708 

- 

- 

- 

- 

- 

- 

cost 

Total 
of  Human 
Resources  and  associated 
costs 
in  reference 
amount) 

(NOT 

0.854 

0.854 

0.854 

0.854 

0.854 

1.708 

22 

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

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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 – Committees23  

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 

- 

- 

- 

- 

- 

- 

- 

23 

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

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33 

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