REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on guarantees covered by the general budget Situation at 30 June 2010
Date: 2011-03-29
Institutions: European Commission
Subjects: Community loan, EU Member State, budgetary reserve (EU), general budget (EU), investment protection, report, third country

EN 

EN 

   EN 

 
EUROPEAN COMMISSION 

Brussels, 29.3.2011 
COM(2011) 150 final 

REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

on guarantees covered by the general budget 
Situation at 30 June 2010 

SEC(2011) 371 final 

EN 

   EN 

 
 
  
 
 
 
 
REPORT FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

on guarantees covered by the general budget 
Situation at 30 June 2010 

EN 

2 

   EN 

 
 
 
TABLE OF CONTENTS 

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

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

Events since the last report at 31 December 2009 ....................................................... 5 

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

Macro-financial assistance ........................................................................................... 5 

Euratom ........................................................................................................................ 5 

EU budget guarantee for EIB external financing......................................................... 5 

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

Data on risks covered by the Budget............................................................................ 6 

Definition of risk .......................................................................................................... 6 

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

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

Global risk covered by the Budget............................................................................... 9 

Evolution of risk........................................................................................................... 9 

Defaults, activation of Budget guarantees and arrears............................................... 11 

Payments from cash resources ................................................................................... 11 

Payments from the Budget ......................................................................................... 11 

Activation of the Guarantee Fund for external actions .............................................. 11 

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.......................................................................................................... 12 

Objectives................................................................................................................... 12 

Risk assessment methods ........................................................................................... 12 

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. 

EN 

3 

   EN 

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-payments3  ("BoP")  loans  granting  support  to  non-euro  Member 
States  experiencing  balance-of-payments  difficulties,  loans  granting  support  to  euro 
Member States under the European financial stabilisation mechanism (EFSM)4; and 

–  loans  with  microeconomic  objectives,  i.e.  Euratom  loans  and  most  importantly  European 
Investment  Bank  ("EIB")  financing  of  operations  that  are  covered  by  EU  guarantees5  in 
non-Member States ("EIB external financing")6 . 

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"),7 while BoP and EFSM 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 

1 

2 

3 

4 

5 

6 

7 

COM(2010)580  and  SEC(2010)1218  make  up  the  previous  report  on  the  guarantees  covered  by  the 
Budget at 31 December 2009. 
MFA  may  also  take  the  form  of  grants  to  third  countries.  For  more  information  on  MFA,  see 
Commission report COM(2010)513 and SEC(2010)1117. 
Council Regulation (EC) N° 332/2002 of 18 February establishing a facility providing  merdium-term 
financial assistance for Member States' balances of payments (OJ L 53, 23.2.2002, p.1). 
A similar mechanism to BoP that covers all euro area Member States has been set up on 11 May 2010 
on the basis of Council Regulation (EU) No 407/2010 of 11 May 2010 (OJ L 118, 12.5.2010, p.1). The 
EFSM had not yet been activated at 30 June 2010.  
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). 

EN 

4 

   EN 

                                                 
–  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 countries8. 

Following an amendment9 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 borne 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 had to the Budget. 

In 2007, an amendment10 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).  

3. 

EVENTS SINCE THE LAST REPORT AT 31 DECEMBER 2009 

3.1. 

Balance of payments support to non-euro Member States 

During  the  first  semester  2010,  two  operations  took  place  for  a  total  amount  of 
EUR 1.5 billion.  The  third  tranche  of  EUR 0.5 billion  of  the  loan  granted  to  Latvia  and  the 
second  tranche  of  EUR  1 billion  of  the  loan  granted  to  Romania  were  both  disbursed  on 
11 March 2010. Both loans have been financed “back-to-back” via the issue of EU benchmark 
bonds and contributed to improve the confidence in the financial situation of these two non-
euro  Member  States.  On  average  73%  of  the  loan  operations  decided11  have  already  been 
implemented.  

3.2.  Macro-financial assistance 

During  the  first  semester  2010,  no  loan  disbursement  took  place  and  no  new  disbursements 
are expected to be implemented during the second semester.  
Regarding  the  Council  Decisions  of  30  November  2009  granting  new  MFA  operations  for 
Armenia12, Bosnia & Herzegovina13 and Serbia14 in the form of loans combined with a grant 
financial assistance to Armenia, the first disbursements are foreseen in 2011.  

3.3. 

Euratom 

No loan disbursement took place during the reported period. 

3.4. 

EU budget guarantee for EIB external financing 

Under the 2007-2013 external mandate, the loan signature and disbursement rhythm slowed 
down in comparison with 2009 and amounted to respectively EUR 1,197 million signed and 

8 

9 
10 
11 
12 
13 
14 

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). 
See table A3a in the SWD. 
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) 

EN 

5 

   EN 

                                                 
EUR  1,443  million  disbursed.  The  cumulative  amount  of  loans  disbursed  under  the  2007-
2013 external mandate equalled to EUR 4,366 million at 30 June 2010. 

3.5. 

European Financial Stabilisation Mechanism 

Following the financial crisis in Greece, the Council and the Member States decided in May 
2010 on a package of measures to preserve financial stability in Europe. 

On 5 May 2010, the European Financial Stability Facility (EFSF) was set up with a capacity 
of EUR 440 billion. It is guaranteed on a pro rata basis by participating Member States and 
can support euro-area and non euro-area EU Member States. This mechanism does not imply 
any risk to the EU budget. 

On 11 May 2010, the European Financial Stabilisation Mechanism (EFSM)15 was set up. This 
mechanism is based on Treaty Art. 122 (2)16. 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).  

For  Greece,  the  financial  support  is  provided  directly  by  participating  Member  States  and 
does not imply any risk to the EU budget.  

The mechanism consists 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. 

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  30 June 2010)  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 rounds17 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): 

15 

16 

17 

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. 
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. 

EN 

6 

   EN 

                                                 
–  Calculating the total amount of capital outstanding for the operations concerned on a given 
date including accrued interest. This methodology makes it possible to determine the total 
amount of risk supported by the Budget on a given date for all future payment obligations 
independently 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 
default18. The annual risk borne by the budget is given in table A2  of the  Staff Working 
Document. 

Table 1: Total outstanding amounts covered as of 30 June 2010 in EUR million 

Outstanding 
Capital 

Accrued Interest 

Total 

% 

Member States* 

MFA 

Euratom 

BoP 

EIB 

65 

422 

10,700 

3,363 

Sub-total Member States 

14,550 

Third Countries** 

MFA 

Euratom 

EIB 

Sub-total third countries 

Total 

492 

55 

17,468 

18,014 

32,563 

0 

2 

142 

31 

175 

2 

0 

140 

142 

317 

65 

424 

10,842 

3,394 

14,725 

494 

55 

17,608 

18,157 

<1% 

1% 

33% 

10% 

45% 

2% 

<1% 

54% 

55% 

32,882 

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. 

18 

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). 

EN 

7 

   EN 

 
 
 
 
 
 
 
 
                                                 
The  total  outstanding  amount  of  capital  and  interest  covered  by  the  budget  increased  by 
EUR 3,126 million to EUR 32,882 million compared with the situation at 31 December 2009. 
This increase is mainly explained by the amount of EUR 1.5 billion disbursed under the BoP 
facility  and  also  by  the  increase  of  EIB  disbursements  in  third  countries  (EUR  1.9  billion 
during the first semester 2010). 

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. 

During  the  second  semester  2010,  the  Budget  will  bear  a  maximum  direct  risk  linked  to 
Member  States  of  EUR 450.5 million  (representing  the  amounts  due  during  the  second 
semester  2010  and  assuming  that  defaulting  loans  are  not  accelerated).  Table 2  shows  that 
Hungary  and  Romania  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 30 June 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 

Hungary 

Romania 

Bulgaria 

Poland 

Czech Republic 

Slovak Republic 

Slovenia 

Cyprus 

Latvia 

Lithuania 

Estonia 

Malta 

Total 

146.7 

121.1 

51.6 

42.1 

40.8 

27.3 

8.5 

5.1 

3.7 

2.8 

0.5 

0.3 

32.6% 

26.9% 

11.5% 

9.3% 

9.1% 

6.1% 

1.9% 

1.1% 

0.8% 

0.6% 

0.1% 

0.1% 

450.5 

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. 

EN 

8 

   EN 

 
4.3. 

Risk linked to third countries 

At  the  beginning  of  the  second  semester  2010,  the  Fund  will  bear  a  maximum  annual  risk 
related  to  third  countries  of  EUR 918 million  (representing  the  amounts  due  in  the  second 
semester 2010 and assuming that defaulting loans are not accelerated). The top ten countries 
according to their total outstanding are listed below. They account for 77% of the risk borne 
by  the  Fund.  The  economic  situation  of  these  countries  is  analysed  and  commented  in  the 
SWD. 

Table 3: Ranking of the 10 most important third countries according to the exposure with 
regard  to  the  maximum  risk  borne  by  the  Fund  during  the  second  semester  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 

Turkey 

Egypt 

Tunisia 

Morocco 

South Africa 

Lebanon 

Serbia 

Syria 

Brazil 

Mexico 

199.0 

98.3 

81.1 

81.1 

70.6 

55.5 

35.4 

30.1 

26.6 

25.3 

21.7% 

10.7% 

8.8% 

8.8% 

7.7% 

6.0% 

3.9% 

3.3% 

2.9% 

2.8% 

Total of the 10 

703.2 

76.6% 

The Fund covers the guaranteed loans of 44 countries with maturities extending up to 2040. 
Details by country are provided in Table A2 of the SWD. 

4.4. 

Global risk covered by the Budget 

For the second semester 2010 the Budget will cover (directly and via the Fund) an amount of 
EUR 1,368  million  representing  the  amounts  due  during  this  period,  of  which  33%  are  due 
from Member States (see Table A2 in the SWD). 

4.5. 

Evolution of risk 

•  Balance of payments facility 

During  the  first  semester  2010,  the  global  economy  began  to  stabilise  slowly  following  a 
period of significant declines. However the sovereign debt crisis continued to impact all the 

EN 

9 

   EN 

 
Member  States.  The  activation  of  the  EU  medium-term  financial  assistance  facility  (BoP) 
facility)  in  December  2008  helped  some  non-euro  area  countries  to  restore  investor 
confidence.  The  BoP  facility  with  its  overall  ceiling  of  EUR  50  billion  has  a  remaining 
capacity of EUR 35.4 billion EUR to provide further BoP assistance if required.  

•  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  billion19,  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 ceiling20. At 30 June 2010, the EFSM was not activated. 

During the second semester 2010 the sovereign debt crisis continued to threaten the Euro area 
countries. In response to the Irish authorities' request on 21 November 2010, a three year joint 
EU / IMF financial support will be provided. The total programme for Ireland will amount to 
EUR  85  billion.  EUR  17.5  billion  will  be  financed  by  an  Irish  contribution  through  the 
Treasury cash buffer and investments of the National Pension Reserve Fund. The remainder 
of the overall package will be shared equally amongst: 

–  The European Financial Stabilisation Mechanism (EFSM) up to EUR 22.5 billion which is 

covered by the EU Budget; 

–  The  European  Financial  Stability  Facility  (EFSF)  for  an  mount  of  EUR  17.7  billion  (not 

covered by the budget guarantee); 

–  Bilateral  loans  from  United  Kingdom  (EUR  3.8  billion),  Sweden  (EUR  0.6  billion)  and 

Denmark (EUR 0.4 billion). and 

–  The International Monetary Fund (IMF) for an amount of EUR 22.5 billion. 

•  Macro-financial assistance loans 

MFA loans to third countries have been subject to individual decisions by the Council21 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%  has 
already been used. The remaining margin is about EUR 600 million and could be disbursed to 
new projects in the Member States and Ukraine.  

•  EIB loans 

19 

20 

21 

EN 

on 

Press 

release 

extroardinary  Ecofin  Council  meeting 

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.  

9/10  May 

2010 

10 

   EN 

                                                 
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 30 June 2010, a total 
amount of EUR 3 517 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  2007-201322,  the  Parliament  and  the 
Council  are  expected  to  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 maximum ceiling of EUR 27,800 million23. A total amount of EUR 13,124 million had 
been  signed  at  30  June  2010  under  this  mandate,  of  which  EUR 8,930  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 EU24. 

5.2. 

Payments from the Budget 

As no default was recorded in the first half of 2010, no appropriation was requested under 
Budget Article 01 04 01 (p.m. line) "European Union guarantees for Union and Euratom 
borrowing operations and for EIB lending operations".. 

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 due25. 

The Fund was not called on during the first half of 2010. 

22 
23 

24 

25 

COM(2010)174 of 21 April 2010.  
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  2007/436/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. 

EN 

11 

   EN 

                                                 
6. 

GUARANTEE FUND FOR EXTERNAL ACTIONS 

6.1. 

Recoveries 

As of 30 June 2010, the Fund had no arrears to recover. 

6.2. 

Assets 

At 30 June 2010, the net assets26 of the Fund amounted to EUR 1 490 459 064 . 

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 
liabilities27 
Fund's 
EUR 18 156 522 331 within the meaning of the Fund Regulation has slightly increased from 
8.15% at 31 December 2009 to 8.21% at 30 June 2010. 

EUR 1 490 459 064 

outstanding 

resources 

capital 

and 

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 adopted Budget of 2011. This amount will be paid from the Budget to the Fund 
in February 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  (MFA  and  Euratom  loans  included)  for  the 
second semester 2010.. 

26 
27 

Total assets of the Fund minus accrued payables (EIB fees and audit fees). 
Including accrued interests. 

EN 

12 

   EN