REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on guarantees covered by the general budget Situation at 31 December 2009
Date: 2010-10-20
Institutions: European Commission
Subjects: Community loan, EU Member State, budgetary reserve (EU), general budget (EU), investment protection, report, third country

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EUROPEAN COMMISSION 

Brussels, 20.10.2010 
COM(2010) 580 final 

REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

on guarantees covered by the general budget 
Situation at 31 December 2009 

SEC(2010) 1218 

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REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

on guarantees covered by the general budget 
Situation at 31 December 2009 

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TABLE OF CONTENTS 

Introduction .................................................................................................................. 4 

Types of operations covered by the EU budget ........................................................... 4 

Events since the last report at 30 June 2009 ................................................................ 5 

Balance of payments support to non-euro Member States........................................... 5 

Macro-financial assistance ........................................................................................... 6 

Euratom ........................................................................................................................ 6 

EU budget guarantee for EIB external financing......................................................... 6 

European Financial Stabilisation Mechanism.............................................................. 6 

Data on risks covered by the Budget ........................................................................... 7 

Definition of risk .......................................................................................................... 7 

Risk linked to Member States ...................................................................................... 8 

Risk linked to third countries ....................................................................................... 9 

Global risk covered by the Budget............................................................................. 10 

Evolution of risk......................................................................................................... 10 

Defaults, activation of Budget guarantees and arrears............................................... 12 

Payments from cash resources ................................................................................... 12 

Payments from the Budget ......................................................................................... 12 

Activation of the Guarantee Fund for external actions .............................................. 12 

Guarantee Fund for external actions .......................................................................... 12 

Recoveries .................................................................................................................. 12 

Assets ......................................................................................................................... 12 

Target amount ............................................................................................................ 12 

Evaluation of risks: Economic and financial situation of third countries with the 
largest exposure.......................................................................................................... 13 

Objectives................................................................................................................... 13 

Risk assessment methods ........................................................................................... 13 

1. 

2. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

5. 

5.1. 

5.2. 

5.3. 

6. 

6.1. 

6.2. 

6.3. 

7. 

7.1. 

7.2. 

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1. 

INTRODUCTION 

The objectives of this report are to monitor the credit risks exposure borne by the budget of 
the  European  Union  resulting  from  the  guarantees  given  and  the  lending  operations 
implemented directly by the European Union or indirectly through the EIB external mandates. 

This  report  is  submitted  pursuant  to  Article  130  of  the  Financial  Regulation  which  requires 
the  Commission  to  report  to  the  European  Parliament  and  to  the  Council  twice  a  year  on 
budgetary  guarantees  and  the  corresponding  risks1.  It  is  completed  by  a  Commission  Staff 
Working Document with a set of detailed tables and explanatory notes (the "SWD"). 

2. 

TYPES OF OPERATIONS COVERED BY THE EU BUDGET 

The risks covered by the budget of the European Union (the "Budget") derive from a variety 
of lending and guarantee operations which can be divided into two categories: 

–  loans granted by the European Union with macroeconomic objectives, i.e. macro-financial 
assistance2  ("MFA")  loans  to  third  countries  and  in  conjunction  with  the  Bretton  Woods 
institutions,  balance-of-payments  ("BoP")  loans  granting  support  to  non-euro  Member 
States experiencing balance-of-payments difficulties3; and 

–  loans  with  microeconomic  objectives,  i.e.  Euratom  loans  and  most  importantly  European 
Investment  Bank  ("EIB")  financing  of  operations  that  are  covered  by  EU  guarantees4  in 
non-Member States ("EIB external financing")5 . 

The  EIB  external  financing,  the  Euratom  loans  and  the  MFA  loans  have  since  1994  been 
covered  by  the  Guarantee  Fund  for  external  actions  ("the  Fund"),6  while  BoP  loans  are 
directly  covered  by  the  budget.  The  Fund  covers  defaults  on  loans  and  loan  guarantees 
granted to non-Member States or for projects in non-Member States. It was established: 

–  to provide a 'liquidity cushion' in order to avoid calling on the Budget every time a default 

or late payment on a guaranteed loan arises; and 

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COM(2010)188  and  SEC(2010)479  make  up  the  previous  report  on  the  guarantees  covered  by  the 
Budget at 30 June 2009. 
MFA  may  also  take  the  form  of  grants  to  third  countries.  For  more  information  on  MFA,  see 
Commission report COM(2009)514 and SEC(2009)1279. 
A  similar  mechanism  that  covers  all  euro  area  Member  States  has  been  set  up  on  11  May  2010,  the 
European  financial  stabilisation  mechanism  (EFSM,  not  yet  activated).  Council  Regulation  (EU)  No 
407/2010  of  11  May  2010  establishing  a  European  financial  stabilisation  mechanism  (OJ  L  118, 
12.5.2010, p.1). 
Most  recently  established  for  the  period  1  February  2007—31  October  2011  by  Decision  No 
633/2009/EC of the European Parliament and of the Council of 13 July 2009 (OJ L 190, 22.7.2009, p. 
1) (the "External Mandate Decision"), replacing Council Decision 2006/1016/EC of 19 December 2006. 
The figures concerning the EIB mandates are displayed in Table A1 and references to legal bases are 
listed in Table A4 of the SWD. 
Council  Regulation  (EC,  Euratom)  No  480/2009  of  25 May 2009  establishing  a  Guarantee  Fund  for 
external actions (codified version), the "Guarantee Fund Regulation" (OJ L 145, 10.6.2009, p.10). 

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–  to create an instrument of budgetary discipline by laying down a financial framework for 
the  development  of  EU  policy  on  guarantees  for  Commission  and  EIB  loans  to  non-
member countries7. 

Following an amendment8 of the Guarantee Fund Regulation in 2004, the Fund's coverage is 
withdrawn if third countries become Member States and the risk is transferred from the Fund 
to  be  directly  born  by  the  Budget.  The  Fund  is  provisioned  from  the  Budget  and  has  to  be 
maintained at a certain percentage of the outstanding amount of the loans and loan guarantees 
covered by the Fund. This percentage, known as the target rate, is currently 9%. If there are 
insufficient resources in the Fund, recourse will be made to the Budget. 

In 2007, an amendment9 of the Council Regulation set up a new provisioning mechanism. It 
functions through annual transfers from the Budget and involves a smoothing mechanism to 
limit the impact of calls on the Fund (see also Section 5.3 below).  

In the context of the mid–term review of the EIB external mandate10, an external evaluation 
was performed during the second semester 2009 in order to assess the functioning of the Fund 
and its parameters, including the target rate. The evaluation report11 confirmed that the new 
provisioning mechanism fulfilled its objectives and the appropriateness of the current levels 
of the main parameters of the Fund, notably the target rate. 

3. 

EVENTS SINCE THE LAST REPORT AT 30 JUNE 2009 

3.1. 

Balance of payments support to non-euro Member States 

During  the  second  semester  2009,  the  BoP  financial  support  was  again  active  in  terms  of 
disbursements.  Three  additional  operations  took  place  in  July  for  a  total  amount  of 
EUR 4.2 billion.  The  third  tranche  of  EUR 1.5 billion  granted  to  Hungary  was  disbursed  on 
6 July 2009.  In  addition,  the  first  tranche  of  EUR  1.5 billion  granted  to  Romania  and  the 
second tranche of EUR 1.2 billion granted to Latvia were disbursed on 27 July 2009. All these 
loans have been financed “back-to-back” via the issuance of EU benchmark bonds. 
In 2009, a total amount of EUR 7.2 billion was disbursed under the BoP financial programme 
enabling  the  EU  to  restore  the  confidence  in  the  financial  situation  of  the  three  non-euro 
Member  States  (Hungary,  Latvia  and  Romania)  which  had  been  affected  by  the  financial 
crisis. On average 63% of the loan operations decided12 have already been implemented. The 
remaining balance is expected to be disbursed both in 201013 and 2011. 

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Although external risks are covered in fine by the guarantee of the EU budget, the Guarantee Fund acts 
as  an  instrument  to  protect  the  EU  budget  against  the  risk  of  payment  defaults.  For  a  comprehensive 
report  on  the  functioning  of  the  Fund,  see  COM(2006)695  and  the  accompanying  Staff  Working 
Document (SEC(2006)1460). 
Council Regulation (EC, Euratom) No 2273/2004 (OJ L 396, 31.12.2004, p. 28). 
Council Regulation (EC, Euratom) No 89/2007 of 30 January 2007 (OJ L 22, 31.1.2007, p.1). 
Report from the Commission to the European Parliament and the Council on the mid-term review of the 
external  mandate  of  the  EIB  (COM(2010)173)  and  the  accompanying  Staff  Working  Document 
(SEC(2010)442). 
http://ec.europa.eu/economy_finance/evaluation/completed/index_en.htm#external 
See table A3a in the SWD. 
During the first semester, a total amount of EUR 1.5 billion was disbursed of which EUR 500 million 
was granted to Latvia and EUR 1 billion to Romania. 

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3.2.  Macro-financial assistance 

During the second semester, the Council decided on 30 November 2009 new MFA operations 
for Armenia14, Bosnia & Herzegovina15, and Serbia16 in the form of loans combined with a 
grant  financial  assistance  to  Armenia.  Part  of  the  loans  and  grant  tranches  are  likely  to  be 
disbursed during the second semester 2010. 

Euratom 

3.3. 
The  third  tranche  of  USD 10.335 million for  a  Euratom  loan  in  Ukraine17  was  disbursed  on 
15 October 2009.  The  loan  has  been  financed  “back-to-back”  via  a  private  placement 
borrowing operation. 

3.4. 

EU budget guarantee for EIB external financing 

Under  the  2007-2013  external  mandate  the  activity  was  strong  during  the  second  semester 
2009 regarding both the volume of signatures and the amount of loans disbursed. Between the 
30  June  2009  and  31  December  2009,  EUR 3  317  million  were  signed  (+39%).  An 
acceleration of the rhythm of the loan disbursements could also be observed with an amount 
of EUR 1 855 million disbursed during the same period. At the end of 2009, the total amount 
of loans disbursed under the present mandate equals to EUR 3 044 million. 

3.5. 

European Financial Stabilisation Mechanism 

In the wake of the crisis in Greece, the Council and the Member States have decided in May 
2010 a package of measures to preserve financial stability in Europe, including the adoption 
of a European Financial Stabilisation Mechanism (EFSM)18.  

This  mechanism  is  based  on  Treaty  Art.  122  (2)19.  Its  activation  is  subject  to  strong 
conditionality, in the context of a joint EU/IMF support, and will be on terms and conditions 
similar to the IMF (the risk of operations under the EFSM will be covered by the EU budget). 

The  other  measures  are  provided  directly  by  participating  Member  States  and  do  not  imply 
any risk to the EU budget: 

-  the  financial  support  to  Greece  consisting  of  pooled  bilateral  loans  provided  by  euro  area 
Member States for a total amount of EUR 80 billion. EUR 30 billion are provided by the IMF 
in the context of a joint EU/IMF support amounting to EUR 110 billion in total. 

- the European Financial Stabilisation Facility (EFSF) was set up with a capacity of EUR 440 
billion. It is guaranteed on a pro rata basis by participating Member States. 

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Council Decision 2009/890/EC of 30.11.2009 (OJ L320, 5.12.2009,p. 3-5) 
Council Decision 2009/891/EC of 30.11.2009 (OJ L320, 5.12.2009,p. 6-8) 
Council Decision 2009/892/EC of 30.11.2009 (OJ L320, 5.12.2009,p. 9-11) 
Council Decision 94/179/Euratom of 21.3.1994 (OJ L84, 29.3.1994, p. 41–43) 
Council Regulation (EU) No 407/2010 of 11 May 2010 establishing a European financial stabilisation 
mechanism (OJ L 118, 12.5.2010, p.1). 
Art.  122(2)  of  the  Treaty  foresees  financial  support  for  Member  States  in  difficulties  caused  by 
exceptional circumstances beyond Member States' control. 

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4. 

DATA ON RISKS COVERED BY THE BUDGET 

4.1. 

Definition of risk 

The risk borne by the Budget derives from the outstanding amount of capital and interest in 
respect of guaranteed operations. 

Defaulting  operations  will  be  covered  by  the  Fund  when  they  are  linked  to  third  countries 
(55% of the total outstanding amount guaranteed as of 31 December 2009) and directly by the 
Budget  where  Member  States  are  involved  (BoP  loans  and  loans  to  or  for  the  benefit  of 
projects  in  Member  States  account  for  the  remaining  45%  of  the  total  outstanding  amount 
guaranteed by the Budget). The large proportion of guaranteed loans linked to Member States 
is the result of the enlargement rounds20 and the activation of the EU medium-term financial 
assistance facility for non-euro Member States (the BoP facility). 

For  the  purpose  of  this  report,  two  methods  are  used  for  evaluating  the  risks  borne  by  the 
Budget (either directly or indirectly via the Fund): 

–  The  method  of  calculating  the  total  amount  of  capital  outstanding  for  the  operations 
concerned  on  a  given  date  including  accrued  interest.  This  methodology  allows 
determining the total amount of risk supported by the Budget on a given date for all future 
payment  obligations  independent  of  when  in  the  future  these  payments  are  due  and 
whether they are covered by the Fund or not (see table 1 below).  

–  The budgetary approach defined as "the annual risk borne by the Budget" is based on the 
calculation of the maximum amount of annual due payments which the EU would have to 
pay  out  in  a  financial  year  assuming  that  all  payments  of  the  guaranteed  loans  are  in 
default21.  The  annual  risk  borne  by  the  budget  is  joined  in  the  table  A2  of  the  Staff 
Working Document. 

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21 

According to Article 1, third paragraph, of the Guarantee Fund Regulation, once a country becomes a 
Member State, the risk on the loans is transferred from the Fund to the Budget. 
For the purpose of this calculation, it is assumed that defaulting loans are not accelerated, i.e. only due 
payments are taken into account (see also Section 1 of the SWD). 

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Table 1: Total outstanding amounts covered as of 31 December 2009 in EUR million 

Outstanding 
Capital 

Accrued Interest 

Total 

% 

Member States* 

MFA 

Euratom 

BoP 

EIB 

90 

427 

9 200 

3 533 

Sub-total Member States 

13 250 

Third Countries** 

MFA 

Euratom 

EIB 

Sub-total third countries 

Total 

495 

54 

15 691 

16 239 

29 489 

0 

3 

104 

36 

143 

2 

0 

119 

122 

265 

90 

430 

9 304 

3 570 

13 393 

497 

54 

15 810 

16 361 

<1% 

2% 

31% 

12% 

45% 

2% 

<1% 

53% 

55% 

29 754 

100% 

*  This risk is directly covered by the Budget. This also includes MFA, Euratom and EIB loans granted prior to EU 

accession. 

** This risk is covered by the Fund. 

Tables  A1,  A2,  A3  and  A4  of  the  SWD  provide  more  detailed  information  on  these 
outstanding amounts, in particular in terms of ceiling, disbursed amounts or guarantee rates. 

The  total  outstanding  amount  of  capital  and  interest  covered  by  the  budget  increased  by 
EUR 6 077 million to EUR 29 754 million compared with the situation at 30 June 2009. This 
increase  is  mainly  explained  by  the  amount  of  EUR  4.2  billion  disbursed  under  the  BoP 
facility and also to the increase in the rhythm of EIB disbursements (EUR 1.8 billion during 
the second semester 2009). 

4.2. 

Risk linked to Member States 

Current risks on Member States result from loans granted prior to accession and the activation 
of the BoP facility. 

At the beginning of 2010, the Budget will bear a maximum risk linked to Member States of 
EUR 890.1 million (representing the amounts due in 2010 and assuming that defaulting loans 

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are  not  accelerated).  Table 2  shows  that  Romania  and  Hungary  are  ranked  first  and  second 
among Member States in terms of their outstanding amount. 

Table  2:  Ranking  of  the  Member  States  according  to  the  exposure  with  regard  to  the 
maximum risk borne by the budget at the beginning of 2010 (EUR million) 

Ranking 

Country 

Maximum risk (M 
EUR, rounded) 

% of the total 
maximum risk 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

Romania 

Hungary 

Bulgaria 

Czech Republic 

Poland 

Slovak Republic 

Latvia 

Slovenia 

Cyprus 

Lithuania 

Estonia 

Malta 

Total 

279.6 

196.3 

88.0 

82.0 

80.5 

65.6 

60.2 

20.8 

9.7 

5.7 

1.0 

0.7 

31.4% 

22.1% 

9.9% 

9.2% 

9.0% 

7.4% 

6.8% 

2.3% 

1.1% 

0.6% 

0.1% 

0.1% 

890.1 

100.0% 

The  risk  on  Member  States  concerns  EIB,  MFA  and  Euratom  loans  granted  before  the 
accession to the EU and the loans granted under the BoP facility. 

4.3. 

Risk linked to third countries 

At the beginning of 2010, the Fund will bear a maximum annual risk related to third countries 
of  EUR 1 234 million  (representing  the  amounts  due  in  2010  and  assuming  that  defaulting 
loans are not accelerated). The top ten countries according to their total outstanding are listed 
below. They account for 64% of the risk borne by the Fund. The economic situation of these 
countries is analysed and commented in the SWD. 

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Table 3: Ranking of the 10 most important third countries according to the exposure with 
regard 
the  beginning  of  2010
(EUR million) 

the  maximum  risk  borne  by 

the  Fund  at 

to 

Ranking 

Country 

Maximum risk (M 
EUR, rounded) 

% of the total 
maximum risk 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

Turkey 

Egypt 

Morocco 

Tunisia 

South Africa 

Lebanon 

Brazil 

Serbia 

Syria 

Jordan 

343.9 

202.8 

152.2 

149.1 

89.3 

70.6 

63.1 

61.5 

56.9 

44.2 

21.8% 

12.9% 

9.7% 

9.5% 

5.7% 

4.5% 

4.0% 

3.9% 

3.6% 

2.8% 

Total of the 10 

1 233.6 

78.3% 

The Fund covers the guaranteed loans of 44 countries with maturities extending up to 2039. 
Details by country are provided in Table A2 of the SWD. 

4.4. 

Global risk covered by the Budget 

In  total,  for  2010  the  Budget  will  cover  an  amount  of  EUR 2 465  million  representing  the 
amounts due during this period, of which 36% are due by Member States (see Table A2 in the 
SWD). 

4.5. 

Evolution of risk 

•  Balance of payments facility 

During the second semester 2009, the global economy began to stabilise following a period of 
significant declines. Financial conditions in the financial markets have continued to improve. 
However  the  intensity  of  the  international  crisis  continued  to  impact  all  the  Member  States 
and in particular Member States which have not yet adopted the euro. The activation of the 
EU medium-term financial assistance facility (BoP) facility) in December 2008 helped some 
of  these  countries  to  restore  investor  confidence.  The  overall  ceiling  of  the  facility  was 

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extended  in  December  200822  and  in  May  200923  to  EUR  50  billion  in  order  for  the  EU  to 
continue to be able to react quickly to potential further demands for BoP assistance.  

•  European Financial Stabilisation Mechanism (EFSM) 

•  Financial  assistance  under  the  EFSM  may  take  the  form  of  a  loan  or  of  a  credit  line 
guaranteed by the EU budget. The Ecofin Council conclusions restrict the overall ceiling of 
the  mechanism  to  EUR  60  billion24,  but  the  legal  limit  is  provided  in  Article  2.2  of  the 
Council Regulation, which limits the outstanding amount to the margin available under the 
own resources ceiling25. The mechanism has not yet been activated. 

•  Macro-financial assistance loans 

MFA loans to third countries have been subject to individual decisions by the Council26 and 
since the entry into force of the Lisbon Treaty by the European Parliament and the Council.  

•  Euratom loans 

The Euratom lending to Member States or in certain eligible non-member countries (Russian 
Federation,  Armenia,  Ukraine)  has  a  ceiling  of  EUR 4 billion  of  which  around  85%  have 
already been used. The remaining margin is about EUR 600 million. 

The  disbursement  of  the  third  (and  last)  tranche  under  the  loan  agreement  for  the  K2R4 
project (USD 10.3 million) in Ukraine took place on 12 October 2009. 

•  EIB loans 

The previous EIB general mandate covering the period 2000-2007 expired on  31 July 2007. 
At this date, contracts corresponding to a total 98% of the overall ceiling under this mandate 
(EUR 20 060 million – see Table A5 of the SWD) had been signed. At 31 December 2009, a 
total amount of EUR 3 988 million remained to be disbursed under this mandate but may still 
be disbursed under EU guarantee within 10 years from the end of the mandate, at which time 
the EU guarantee lapses for any undisbursed amounts. 

Following the Commission proposal to amend the legal basis of the EIB external mandate for 
the  remainder  of  the  current  Financial  Perspective  2007-201327,  the  Parliament  and  the 
Council  must  adopt  the  relevant  decision  before  31  October  2011.  The  EU  guarantee  is 
restricted to 65% of the aggregate amount of credits disbursed and guarantees provided under 
EIB  Financing  Operations,  less  amounts  reimbursed  and  plus  all  related  sums,  with  a 

22 

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25 

26 

27 

Council Regulation (EC) No 1360/2008 of 2 December 2008 amending Regulation (EC) No 332/2002 
establishing  a  facility  providing  medium-term  financial  assistance  to  Member  States'  balances  of 
payments (OJ L352, 31.12.2008, p. 11-11). 
Council  Regulation  (EC)  No  431/2009  of  18  May  2009  amending  Regulation  (EC)  No  332/2002 
establishing  a  facility  providing  medium-term  financial  assistance  to  Member  States'  balances  of 
payments (OJ L128, 27.5.2009, p.1-2). 
release 
Cf. 
(http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/114324.pdf) 
Council Regulation (EU) No 407/2010 of 11 May 2010 establishing a European financial stabilisation 
mechanism (OJ L 118, 12.5.2010, p.1). 
After entry into force of the Lisbon Treaty, the co-decision procedure will be the ordinary legislative 
procedure.  
COM(2010)174 of 21 April 2010.  

extraordinary  Ecofin  Council  meeting 

9/10  May 

Press 

2010 

on 

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maximum ceiling of EUR 27 800 million28. A total amount of EUR 11 928 million had been 
signed  at  31  December  2009  under  this  mandate,  of  which  EUR 8  884  million  remained 
undisbursed at that date (see Table A6 of the SWD). 

5. 

DEFAULTS, ACTIVATION OF BUDGET GUARANTEES AND ARREARS 

5.1. 

Payments from cash resources 

The Commission draws on its cash resources in order to avoid delays and resulting costs in 
servicing its borrowing operations when a debtor is late in paying the EU29. 

5.2. 

Payments from the Budget 

No  appropriation  was  requested  under  Budget  Article  01 04 01  (p.m.  line),  "European 
Community guarantees for lending operations", as no default was recorded in the second half 
of 2009. 

5.3. 

Activation of the Guarantee Fund for external actions 

In  the  event  of  late  payment  by  the  beneficiary  of  a  loan  to  third  countries  granted  or 
guaranteed by the EU, the Fund is called on to cover the default within three months of the 
date on which payment is due30. 

During the second half of 2009, the Fund was not called. 

6. 

GUARANTEE FUND FOR EXTERNAL ACTIONS 

6.1. 

Recoveries 

As of 31 December 2009, the Fund had no arrears to recover. 

6.2. 

Assets 

At 31 December 2009, the net assets31 of the Fund amounted to EUR 1 333 590 221. 

6.3. 

Target amount 

The Fund has to reach an appropriate level (target amount) set at 9% of the total outstanding 
capital  liabilities  arising  from  each  operation,  plus  accrued  interest.  The  ratio  between  the 
liabilities32 
Fund's 

EUR 1 333 590 221 

outstanding 

resources 

capital 

and 

28 

29 

30 
31 
32 

Broken down into a basic ceiling of a fixed maximum amount of EUR 25 800 million and an optional 
mandate of EUR 2 000 million. The activation of the optional mandate may be decided by the European 
Parliament and the Council in the context of the mid-term review. 
See  Article  12  of  Council  Regulation  (EC, Euratom)  No  1150/2000  of  22  May  2000  implementing 
Decision 94/728/EC, Euratom, on the system of the European Communities own resources (OJ L 130, 
31.5.2000, 1-12). 
For more details, see Section 1.4.3 of the SWD. 
Total assets of the Fund minus accrued payables (EIB fees and audit fees). 
Including accrued interests. 

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EUR 16 360 727 665 within the meaning of the Fund Regulation has slightly decreased from 
8.39% at 30 June 2009 to 8.15% at 31 December 2009. 

At  year-end  2009,  the  Fund  resources  were  lower  than  the  target  amount.  According  to  the 
provisioning rules of the Guarantee Fund Regulation, a provisioning of EUR 138 880 000 was 
inserted in the Preliminary Draft Budget of 2011. This amount will be paid from the Budget to 
the Fund in early January 2011. 

7. 

EVALUATION  OF  RISKS:  ECONOMIC  AND  FINANCIAL  SITUATION  OF  THIRD 
COUNTRIES WITH THE LARGEST EXPOSURE 

7.1. 

Objectives 

The  previous  sections  of  this  report  provide  information  on  quantitative  aspects  of  the  risk 
borne  by  the  Budget,  relating  to  third  countries.  However,  the  quality  of  the  risks  which 
depend  on  the  type  of  operation  and  the  standing  of  the  borrowers  (see  Section 4.3  above) 
should also be assessed. 

7.2. 

Risk assessment methods 

The risk assessment presented in the SWD is based on the information on the economic and 
financial situation, ratings and other known facts of the countries having received guaranteed 
loans. This assessment does not include estimations of expected losses and recoveries which 
are inevitably highly uncertain. 

Country  risk  indicators  included  in  the  tables  in  the  SWD  indicate  the  evolution  of  risk  of 
defaults. This analysis is provided in the section 2 of the SWD for the countries having the 
highest  credit  risk  and  exposure  to  the  Budget  in  2009  and  the  countries  having  a  direct 
exposure with the Budget (MFA and Euratom loans). 

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