COMMISSION STAFF WORKING DOCUMENT Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on guarantees covered by the general budget situation at 30 June 2011
Date: 2012-02-20
Institutions: European Commission
Subjects: EIB loan, EU Member State, budgetary reserve (EU), general budget (EU), implementation of the budget, investment protection, third country

EUROPEAN COMMISSION 

Brussels, 20.2.2012  
SWD(2012) 15 final 

COMMISSION STAFF WORKING DOCUMENT 
Accompanying the document 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

on guarantees covered by the general budget  
situation at 30 June 2011  

{COM(2012) 66 final} 

 
 
 
 
  
 
TABLE OF CONTENTS 

Introduction ..................................................................................................................1 
1. 
Situation of risks covered by the Budget......................................................................1 
2. 
Overview of capital loan operations covered by the EU guarantee .............................1 
2.1. 
Risk factors ...................................................................................................................1 
2.2. 
Cumulative and annual Budget guarantee exposures ...................................................1 
2.3. 
Loan operations covered by the Budget guarantee.......................................................1 
2.4. 
2.5. 
Evolution of risk ...........................................................................................................1 
2.5.1.  Situation of loans to Member States.............................................................................1 
2.5.2.  Situation of loans to third countries..............................................................................1 
2.6. 
Payment under the Budget guarantees .........................................................................1 
2.6.1.  Borrowing/lending operations ......................................................................................1 
2.6.2.  Guarantees given to third parties ..................................................................................1 
2.6.3.  Default interest penalties for late payment ...................................................................1 
Country-risk evaluation ................................................................................................1 
3. 
3.1. 
Candidate countries ......................................................................................................1 
3.1.1.  FYROM ........................................................................................................................1 
3.1.2.  Montenegro...................................................................................................................1 
3.1.3.  Turkey...........................................................................................................................1 
3.2. 
Potential candidate countries ........................................................................................1 
3.2.1.  Albania .........................................................................................................................1 
3.2.2.  Bosnia and Herzegovina,..............................................................................................1 
3.2.3.  Serbia ............................................................................................................................1 
Mediterranean partners .................................................................................................1 
3.3. 
3.3.1.  Egypt.............................................................................................................................1 
3.3.2.  Lebanon ........................................................................................................................1 
3.3.3.  Morocco........................................................................................................................1 
3.3.4.  Syria..............................................................................................................................1 
3.3.5.  Tunisia ..........................................................................................................................1 
Eastern Partnerships .....................................................................................................1 
3.4. 
3.4.1.  Georgia .........................................................................................................................1 
3.4.2.  Ukraine .........................................................................................................................1 
B.R.I.C.S.......................................................................................................................1 
3.5. 
3.5.1.  Brazil ............................................................................................................................1 
3.5.2.  South Africa..................................................................................................................1 
Other .............................................................................................................................1 
3.6. 
3.6.1.  Tajikistan ......................................................................................................................1 

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This document is a European Commission staff working document for information purposes. It does 
not  represent  an  official  position  of  the  Commission  on  this  issue,  nor  does  it  anticipate  such  a 
position. 

COMMISSION STAFF WORKING DOCUMENT 
Accompanying the document 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE 
COUNCIL 

on guarantees covered by the general budget  
situation at 30 June 2011  

1. 

INTRODUCTION 

This working document is published in parallel with the report from the Commission to the European 
Parliament  and  the  Council  on  guarantees  covered  by  the  budget  at  30  June  2011.  It  provides 
information  on  quantitative  aspects  of  the  risk  borne  by the Budget, relating  to third  countries and 
Member States. An overview of the outstanding amount of loans covered by the budget under each 
programme is presented in section 2. The third countries representing important risks to the Budget 
during the second semester 2011, and either categorised as “severely indebted” according to criteria 
set  by  the  World  Bank  or  facing  significant  imbalances  in  their  external  or  debt  situation,  are 
included  in  the  country  risk  evaluation  in  section  3.  The  evaluation  comprises  short  analyses  and 
tables of risk indicators. The evaluated countries are grouped in 6 sub-sections: candidate countries 
(3.1),  potential  candidate  countries  (3.2)  Mediterranean  partners  (3.3),  Eastern  partnerships  (3.4), 
BRICS countries (3.5) and other countries (3.6). 

2. 

SITUATION OF RISKS COVERED BY THE BUDGET 

2.1. 

Overview of capital loan operations covered by the EU guarantee 

Table A1 shows the outstanding amount of capital in respect of borrowing and lending operations for 
which the risk is covered by the Budget. The figures show the maximum possible risk for the EU in 
respect  of  these  operations  and  must  not  be  read  as  meaning  that  these  amounts  will  actually  be 
drawn from the Fund or the Budget. 

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TABLE A1: CAPITAL OUTSTANDING IN RESPECT OF OPERATIONS DISBURSED at 30.06.2011 (in EUR million)

Authorised
ceiling (a)

Capital
outstanding at
31.12.2010 (b)

Capital
outstanding at
30.06.2011 (b)

Remainder
to be disbursed
at 30.06.2011  (c) 

Operations

MEMBER STATES
EIB (Member States)
MFA to Bulgaria and Romania
Euratom to Bulgaria and Romania

BoP1
Hungary
Latvia
Romania

EFSM
Ireland
Portugal

MEMBER STATES - TOTAL
THIRD COUNTRIES
A. Macro-Financial Assistance
Albania
Bosnia-Herzegovina
FYROM
Georgia
Lebanon
Serbia and Montenegro4
Serbia 
Montenegro
Tajikistan

Sub total MFA
B. EURATOM2
C. Other
EIB Pre-Accession countries
EIB Neighbourhood and Partnership countries
EIB Asia and Latin America
EIB South Africa

3,240
38
417

5,500
2,900
3,650

15,744

9
38
69
14
25
280

28

463
49

8,173
7,204
2,524
845

3,061
38
410

5,500
2,900
5,000

11,400
6,500

34,808

9
38
66
14
25

273
7
28

460
45

8,632
7,163
2,455
940

6,500
3,100
5,000

22,500
26,000

63,100

9
40
90
142
50
280

75

686

28,755
28,342
8,205
2,400

501

200
0

11,100
19,500

31,301

25

25
9

4,864
6,505
1,195
268

13,333
12,866
44,167

Sub total EIB3
THIRD COUNTRIES - TOTAL
GRAND TOTAL
(1) By Decision 431/2008/EC of 18 May 2009 the Council decided to increase the ceiling from EUR 25 000 million to EUR 50 000 million.
(2) The overall ceiling is EUR 4 000 million for loans to Member States and to certain non-member States. 

67,702
68,388
131,488

21,987
19,259
35,002

22,251
19,695
54,503

(3) The subtotal EIB includes the EIB loans to Member States.
(4) The loans have been re-assigned respectively to each country at 01.01.2011

• 

(a) 

Explanatory notes to table (A1) 

Authorised ceiling (Table A1) 

This  is  the  aggregate  of  the  maximum  amounts  of  capital  authorised  (ceilings)  for  each  operation 
decided by the Council or by the European Parliament and the Council. 

(b) 

Capital outstanding (Table A1) 

This is the amount of capital still to be repaid on a given date in respect of operations disbursed. 

(c) 

Remainder to be disbursed (Table A1) 

Amount of loans signed not yet disbursed at the reporting date. 

• 

EIB financing operations 

In  the  past,  EIB  financing  operations  represented  the  largest  category  of  the  total  loan  operations 
covered  by  the  Budget.  At  the  date  of  this  report,  it  still  amounts  to  41%.  However,  the 

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implementation  of  the  EFSM  gradually  increases  the  portion  of  the  risk  borne  by  the  Budget  that 
relates to the Member States. 

The following table provides further details on the breakdown of EIB financing operations. 

ANNEX TO TABLE A1: SITUATION IN RESPECT OF EIB OPERATIONS at 30.06.2011 (in EUR million)

Operations 

Mandate 2007/2013:
Pre-Accession countries
Neighbourhood and Partnership countries:

Mediterranean
Eastern Europe, Southern Coucasus and Russia

Asia and Latin America:

Asia
Latin America

South Africa

Previous General Mandate 2000/20073:
Pre-Accession countries
Neighbourhood and Partnership countries
Asia and Latin America
South Africa
Member States (following the accession) 2

sub-total 65 %1

Financial agreements (70% Guarantee rate)
Pre-Accession countries
Neighbourhood and Partnership countries
Asia and Latin America:
South Africa
Member States (following the accession) 2

sub-total 70 %1

Financial agreements (75% Guarantee rate)
Pre-Accession countries
Neighbourhood and Partnership countries
Member States (following the accession) 2

sub-total 75 %1

Financial agreements (100% Guarantee rate)
Pre-Accession countries
Neighbourhood and Partnership countries
Asia and Latin America
South Africa
Member States (following the accession) 2

sub-total 100 %1
Total  

Authorised
ceiling (a)

Loans made
available minus
cancellations

Amounts
disbursed

Amounts
outstanding 
at 30.06.2011 (b)

25,800
8,700
12,400
8,700
3,700
3,800
1,000
2,800
900

20,060
10,235
6,520
2,480
825

45,860
7,477
3,770
2,310
1,022
375

7,477
7,712
1,350
6,362

7,712
6,653
4,700
750
903
300

6,653
67,702

17,691
6,888
7,598
6,115
1,483
2,633
786
1,847
571

19,194
7,335
6,192
2,105
817
2,744
36,884
6,512
477
1,617
809
375
3,235
6,512
7,062
713
4,492
1,857
7,062
5,320
29
315
710
285
3,982
5,320
55,779

7,180
3,428
1,983
1,771
211
1,431
318
1,113
339

15,774
5,889
5,192
1,713
703
2,277
22,954
6,045
449
1,504
660
269
3,163
6,045
7,200
719
4,522
1,959
7,200
5,355
29
285
716
203
4,122
5,355
41,554

7,029
3,416
1,852
1,755
96
1,424
318
1,107
337

11,774
4,905
4,062
830
535
1,441
18,802
2,105
250
489
110
66
1,190
2,105
594
58
491
45
594
750
3
269
90
2
385
750
22,251

(1) Percentage figures relate to the Guarantee rate.
(2) Loans to Member States were drawn from 'Pre-Accession countries' or from 'Neighbourhood and Partnership countries' ceilings.

(3) Including Turkey Terra and Special Action Turkey.

2.2. 

Risk factors 

Factor increasing the risk: 

•  the interest on the loans must be added to the authorised ceiling. 

Factors reducing the risk: 

– 

limitation of the guarantee given to the EIB1: 

75%  of  the  total  amounts  of  loans  signed  in  the  Mediterranean  countries  based  on  the 
Mediterranean protocols of 1977 and Council Regulations 1762/92/EEC and 1763/92/EEC. 

1 

Within each portfolio individual EIB loans are, de facto, guaranteed at 100% until the global ceiling is reached. 

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70%  of  the  total  amounts  of  loans  signed  as  part  of  lending  operations  with  certain 
non-Member States authorised by Council Decisions 96/723/EC, 97/256/EC, 98/348/EC and 
98/729/EC  and  a  sharing  of  risk  between  the  EU  and  the  EIB  as  the  Budget  guarantee 
covers only political risks in some cases; 

65%  of  the  total  amounts  of  loans  signed  as  part  of  financing  operations  with  certain 
non-Member  States  authorised  by  Council  Decisions  99/786/EC,  2000/24/EC,  Decision 
633/2009/EC  and  by  Decision  1080/2011/EU  of  the  European  Parliament  and  of  the 
Council, and a sharing of risk between the EU and the EIB as the Budget guarantee covers 
only  political  risks  in  some  cases,  as  regards  the  two  first-mentioned  decisions,  and  only 
risks of a political or sovereign nature in the case of the last decision; 

– 

– 

operations already repaid,  

the ceilings are not necessarily taken up in full. 

Another factor to be considered is that some loans are disbursed in currencies other than the EUR. 
Due to exchange rate fluctuations, the ceiling may be exceeded when the amounts disbursed up to the 
date of the report are converted into EUR. 

2.3. 

Cumulative and annual Budget guarantee exposures 

With the cash flow approach based on the existing loans disbursed it is possible to calculate the total 
capital  exposure  of  the  budget  and  the  total  capital  and  interest  payments  due  to  be  received  each 
year.  The  following  table  A2  includes  the  estimated  amount  of  principal  and  interest  due  each 
financial  year  by  each  country  according  to  disbursements  made  until  30  June  20112.

2 

For the purpose of this calculation, it is assumed that defaulting loans are not accelerated, i.e. only due payments 
are taken into account. 

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Table A2: Total Annual Risk borne by the Budget in EUR million based on the amounts (capital and 
interest) due under all operations (MFA, BoP, Euratom, EFSM and EIB) disbursed at 30.06.2011. 

Ranking

Country

2011

2012

2013

2014

2015

2016

2017

2018-2041

Grand Total

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

51

52

53

54

55

56

57

58

59

60

Hungary

Turkey

Romania

Ireland

Egypt

Morocco

Tunisia

Serbia

Lebanon

South Africa

Poland

Syria

Bulgaria

Czech Republic

Bosnia and Herzegovina

Slovak Republic

Brazil

Croatia

Jordan

The former Yugoslav Republic of Macedonia

Georgia

Argentina

Peru

Latvia

Vietnam

Albania

Colombia

Israel

Montenegro

Indonesia

the Philippines

Pakistan

Slovenia

Ukraine

Cyprus

Sri Lanka

India

China

Paraguay

Russia

Panama

Maldives

Lithuania

Bangladesh

Thailand

Mexico

Ecuador

Costa Rica

Uruguay

The West Bank and the Gaza Strip

Laos

El Salvador

Malaysia

Estonia

Republic of Moldova

Malta

Tajikistan

Algeria

Portugal

Armenia

Grand Total

MS

% of MS in the total

2,145.6

220.7

197.0

111.7

91.7

87.8

86.6

75.8

54.0

47.9

40.1

39.3

37.5

36.7

27.0

26.7

23.2

22.6

22.2

20.6

14.0

12.8

9.3

9.1

8.4

8.4

8.3

7.4

6.9

6.8

6.2

6.0

5.9

5.6

4.6

4.1

3.7

3.6

3.6

3.3

3.1

2.7

2.7

2.3

2.2

2.1

2.1

1.8

1.6

1.3

1.2

1.0

0.9

0.5

0.3

0.3

0.2

0.1

0.0

3,579.2

2,618.4

73%

141.7

420.7

386.6

345.0

194.5

176.9

179.7

147.2

77.5

106.3

77.8

76.7

90.6

71.2

73.3

51.0

44.2

45.8

44.4

47.7

0.0

19.6

18.0

96.6

15.9

17.8

20.4

14.3

10.5

11.5

12.8

11.8

11.4

7.1

7.6

7.7

8.2

6.7

6.9

8.6

6.0

5.1

5.3

4.6

6.1

3.7

3.9

3.5

3.4

2.5

2.4

0.9

1.8

0.5

0.6

0.7

132.9

429.5

382.8

340.5

190.2

180.1

190.1

154.2

80.3

82.6

71.9

75.0

77.5

68.7

46.9

37.2

71.6

45.9

37.7

46.1

0.0

43.7

17.9

96.5

17.2

15.9

23.1

14.5

13.9

11.5

13.4

9.0

9.4

6.9

5.0

10.4

21.8

6.8

13.8

8.5

6.0

5.1

5.1

4.6

8.3

6.1

3.9

3.5

4.0

2.5

2.4

1.4

0.9

0.0

0.7

0.3

12.4

0.0

193.3

1.0

3,370.0

1,479.3

44%

12.2

0.0

191.9

1.0

3,361.2

1,419.7

42%

2,128.4

480.0

362.9

340.5

174.3

181.6

187.8

167.8

88.5

85.2

53.3

74.4

77.9

56.4

46.3

25.8

98.7

42.5

34.0

48.5

0.8

35.2

14.5

63.0

555.9

1,861.6

5,340.5

173.9

284.5

185.3

220.4

63.9

91.3

43.3

78.5

74.2

45.7

88.3

15.1

1,558.8

519.7

291.5

215.5

174.1

160.6

184.4

169.6

56.6

95.3

29.4

77.5

71.6

43.7

42.1

14.7

217.4

198.8

40.5

26.8

42.1

1.7

34.0

14.5

38.9

25.0

29.6

2.0

29.0

12.0

26.6

16.5

20.3

23.1

11.1

18.1

7.5

12.5

4.3

2.1

17.8

0.0

13.6

32.2

4.5

10.4

12.6

6.3

5.1

4.6

0.0

0.0

5.9

3.9

0.0

3.7

2.4

2.5

2.3

0.0

0.0

2.2

0.0

0.0

4,941.9

1.0

9,255.1

7,200.3

78%

1,096.4

1,265.0

19.7

19.8

23.1

14.8

16.4

11.5

14.8

6.2

7.4

6.8

3.2

13.5

27.9

7.1

13.8

8.1

6.0

5.1

5.0

0.0

2.0

6.1

3.9

0.0

4.5

2.5

2.4

1.2

0.0

0.0

0.9

0.0

4.0

0.0

191.9

1.0

6,352.5

4,349.1

68%

15.9

20.8

23.1

12.8

18.1

11.5

13.6

6.2

4.4

11.3

0.0

15.2

32.2

8.8

13.8

11.5

6.1

5.1

4.8

0.0

0.0

6.0

3.9

0.0

3.7

2.5

2.5

1.7

0.0

0.0

1.7

0.0

0.0

191.9

1.0

11,277.6

8,909.4

79%

2.1

903.0

1,432.1

215.5

165.9

158.2

174.2

157.9

46.3

88.7

21.6

55.6

66.3

25.9

49.4

14.2

58.7

38.0

24.1

21.1

2.0

27.8

12.0

25.8

14.0

21.4

23.1

10.3

17.3

7.5

7.9

3.5

0.0

18.9

0.0

13.0

27.2

4.7

6.9

10.9

6.4

3.5

4.4

0.0

0.0

5.9

3.9

0.0

1.9

2.3

2.5

1.9

0.0

0.0

2.4

0.0

0.0

61.3

1.0

4,070.6

1,869.3

46%

0.0

4,288.3

3,272.0

6,930.5

808.5

1,254.9

1,131.9

725.3

117.3

639.3

91.3

276.0

214.9

60.4

253.7

87.2

73.8

230.0

148.4

49.1

27.3

52.0

5.5

786.4

71.4

130.3

23.5

135.3

91.9

12.8

15.7

5.2

0.0

160.7

0.0

44.1

37.8

47.4

0.0

66.5

112.2

8.4

8.8

0.0

0.0

6,172.4

7,817.8

8,186.6

13,839.6

1,973.1

2,484.8

2,320.1

1,818.2

584.5

1,236.6

428.6

753.1

710.5

408.7

627.1

271.9

786.3

504.2

362.6

304.8

48.0

254.1

103.7

3,402.4

179.0

254.6

167.7

220.5

193.1

80.7

96.9

52.2

40.7

235.1

20.5

121.4

190.9

89.8

69.3

130.0

152.0

40.4

40.8

11.6

18.5

87.9

123.7

5.9

0.0

0.0

2.0

54.9

22.5

0.0

0.0

15.7

0.0

0.0

31.6

8.8

22.8

18.0

70.9

32.8

3.5

1.0

24.4

1.4

28.8

0.1

1,995.0

7,767.0

34.6

40.4

24,714.3

13,446.5

54%

65,980.5

41,292.0

63%

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2.4. 

Loan operations covered by the Budget guarantee  

The Budget covers two types of lending operations. These are: 

(a) 

Lending operations to Member States. These relate to BoP, EFSM, and to lending granted 
to certain Member States prior to their EU accession under the MFA, Euratom, (table A3a) 
and EIB guaranteed lending operations (table A4). 

TABLE A3a
BoP, EFSM, Euratom and MFA lending operations to Member States  (EUR million)

Period 31.12.2010 to 30.06.2011

Instrument

Decision

Date of
decision

Loan
term
(years)

Availability
period

(for Request for Funds)

Guarantee Maturity

Rate

Date

Loan
situation

Amount
decided

 - closed (a)
 - partially disbursed (b)
 - disbursed in full (c)
 - not yet disbursed (d)

Outstanding
amount
at 31.12.2010

Operations carried out druing 
the 1st semester 2011 

Amounts
disbursed

Amounts
repaid

Outstanding
amount
at 30.06.2011

2009/431/EC (1)

8/05/2009

100%

50,000.0

BOP

Total

Hungary

2009/102/EC

1st tranche
2nd tranche
3 rd tranche

Latvia

2009/290/EC

1st tranche
2nd tranche
3rd tranche
4th tranche

Romania

2009/459/EC

closed **

12/01/2012

closed

4/11/2008
9/12/2008
26/03/2009
6/07/2009

20/01/2009
25/02/2009
27/07/2009
17/02/2010
16/07/2010

6/05/2009
27/07/2009
17/02/2010
22/09/2010
24/03/2011
22/06/2011

3
5.6
6.8

5.1
5.5
9.2
15

5.5
9.2
7
6.93
7.3

1st tranche
2nd tranche
3rd tranche
4th tranche
5th tranche

Precautionary EU medium-
term financial assistance for 
Romania

EFSM

Total

Ireland

1st instalment - tranche 1
1st instalment - tranche 2
2nd instalment - tranche 1

Portugal
1st instalment - tranche 1
1st instalment - tranche 2

EURATOM

Bulgaria
     1st tranche
     2nd tranche
     3rd tranche
     4th tranche
     5th tranche
     6th tranche
     7th tranche
     8th tranche

Romania
     1st tranche
     2nd tranche
     3rd tranche

MFA*

BULGARIA IV*
     1st tranche
     2nd tranche

2011/288/EU

12/05/2011

31/03/2013

2010/407/EU

11/05/2010

100%

2011/77/EU 

2011/344/EU

7/12/2010

12/01/2011
24/03/2011
31/05/2011

30/05/2011
31/05/2011
1/06/2011

4, 9
7
10

10
5

8/12/2013

18/05/2014

100%

77/270-271/Euratom 29/03/1977
20/12/1979
15/03/1982
5/12/1985
23/04/1990

80/29/Euratom
82/170/Euratom
85/537/Euratom
90/212/Euratom

closed

closed

closed

20
15
17
15
15
16
16
14

17
19
18

10
-

99/731/EC

08.11.99

9/12/2011
7/11/2014
6/04/2016

3/04/2014
27/01/2015
10/05/2019
20/10/2025

27/01/2015
10/05/2019
22/09/2017
4/04/2018
4/10/2018

4/12/2015
4/04/2018
4/06/2021

4/06/2021
3/06/2016

10/05/2021
15/01/2017
19/08/2019
18/06/2018
16/01/2019
10/09/2020
4/04/2021
23/02/2020

21.07.2022
26.11.2024
23.02.2024

21.12.2009
-

60,000.0

4,000.0

(b)
(c)
(c)
(c)

(b)
(c)
(c)
(c)
(c)

(c)
(c)
(c)
(c)
(c)
(c)

(d)

(c)
(c)
(c)

(c)
(c)

(c)
(c)
(c)
(c)
(b)

(c)
(c)
(c)
(c)
(c)
(c)
(c)
(c)

(c)
(c)
(c)

(c)
(c)

ROMANIA IV*

99/732/EC

08.11.99

closed

     1st tranche
     2nd tranche
     3rd tranche
* Member States as of 01.01.2007
** Means that no further request for disbursement are possible (either because the total amount has been disbursed or because the facility has expired)
TOTAL

29.06.2010
17.07.2013

(c)
(c)
(a)

10
10

 -

 -

16,000.0
6,500.0

3,100.0

5,000.0

1,400.0

48,500.0

22,500.0

26,000.0

4,000.0
500.0
500.0
1,000.0
1,000.0
1,000.0

212.5

223.5

300.0

100.0
40.0
60.0

200.0
100.0
50.0
50.0

1,350.0
0.0

0.0
0.0

0.0

0.0

1,350.0

0.0

12,050.0
5,500.0
2,000.0
2,000.0
1,500.0

2,900.0
1,000.0
1,200.0
500.0
200.0

3,650.0
1,500.0
1,000.0
1,150.0

1,200.0
150.0

17,900.0

11,400.0

5,000.0
3,400.0
3,000.0

6,500.0
1,750.0
4,750.0
0.0

0.0

0.0

0.0

416.8

193.3
40.0
8.5
23.8
18.8
29.8
30.0
25.0
17.5

223.5
100.0
90.0
33.5
37.5

0.0
0.0
0.0

37.5
0.0
37.5
0.0

0.0

0.0

6.5

6.5

0.8
1.3
1.3
1.8
1.5

0.0

0.0

0.0

0.0

0.0

13,400.0
5,500.0
2,000.0
2,000.0
1,500.0

2,900.0
1,000.0
1,200.0
500.0
200.0

5,000.0
1,500.0
1,000.0
1,150.0
1,200.0
150.0

17,900.0

11,400.0

5,000.0
3,400.0
3,000.0

6,500.0
1,750.0
4,750.0
410.3

186.8
40.0
7.8
22.5
17.5
28.0
28.5
25.0
17.5

223.5
100.0
90.0
33.5
37.5

0.0
0.0
0.0

37.5
0.0
37.5
0.0

68,800.0

12,921.0

19,250.0

13.0

31,747.8

(1) Regulation establishing the facility stipulating that the outstanding amount of loans to be granted to Member States  shall be limited to EUR 50 billion in principal

(b) 

Lending operations to non Member States are covered by the Guarantee Fund for external 
actions. These include MFA, Euratom (Table A3b) and EIB guaranteed lending operations 
to third countries (table A4). 

EN 

8 

   EN 

 
 
 
TABLE A3b
 European Union (MFA) and Euratom loans to non-member States (EUR million) 
Changes in amounts outstanding during six-month period 31.12.2010 to 30.06.2011, broken down by countries and tranches

   COUNTRY

Decision

Date
of decision

Availability
Period
(for Request for Funds)

Loan
term
(years)

Expiry
date

Loan
situation

Amount
decided

 - closed (a)
 - partially disbursed (b)
 - disbursed in full (c)
 - not yet disbursed (d)

Amount
outstanding
at 31.12.2010

Operations in 
six-month period

Amounts
disbursed

Amounts
repaid

Amount
outstanding
at 30.06.2011

1629.0

462.5

0.0

3.0

459.5

MFA

BOSNIA AND HERZEGOVINA I
     1st tranche
     2nd tranche
BOSNIA AND HERZEGOVINA II
     1st tranche
     2nd tranche
FYROM I
     1st tranche
     2nd tranche
FYROM II
     1st tranche
     2nd tranche
     3rd tranche
     4th tranche
GEORGIA
TAJIKISTAN
     1st tranche
SERBIA AND MONTENEGRO *
SERBIA AND MONTENEGRO *
     1st tranche
     2nd tranche
     3rd tranche
ALBANIA
LEBANON
ARMENIA
BOSNIA & HERZEGOVINA
SERBIA
UKRAINE IV
UKRAINE V

EURATOM

UKRAINE (Euratom)

94/179/EC

99/325/EC

10.05.99

02/883/EC

09.11.02

97/471/EC

22.07.97

99/733/EC

08.11.99

97/787/EC
2000/244/EC

17.11.97
20.03.00

closed

2001/549/EC
2002/882/EC

16.07.01
09.11.02

2004/580/EC
2007/860/EC
2009/890/EC
2009/891/EC
2009/892/EC
2002/639/EC
388/2010/EU

closed
15/11/2012
8/08/2012
5/04/2012
open **
not yet fixed ***

29.04.04
21.12.07
30.11.09
30.11.09
30.11.09
12.07.02
7.07.10

21.03.94
15.03.07
06.10.08
15.10.09

15
-

15
15

15
15

15
15
15
15
15

15
15

15
15
15
15
10

22.12.14
-

16.01.19
9.02.21

27.09.12
13.02.13

15.01.16
30.01.17
04.06.18
23.12.18
24.07.13

30.03.16
17.10.16

28.02.18
1.09.18
4.05.20
23.03.21
4.06.14

11

29.07.18

(c)
(c)

(c)
(c)

(c)
(c)

(c)
(c)
(c)
(c)
(c)
(b)
(c)
(c)

(c)
(c)
(c)
(c)
(b)
(d)
(d)
(d)
(d)
(d)

(c)
(c)
(c)
(c)

20.0
10.0
10.0
20.0
10.0
10.0
40.0
25.0
15.0
50.0
10.0
12.0
10.0
18.0
110.0
75.0
60.0
225.0
55.0
10.0
30.0
15.0
9.0
50.0
65.0
100.0
200.0
110.0
500.0

EUR equivalent ****
39.0 EUR
22.0 USD
10.3 USD

of USD 83 million

8.0
10.0
0.0
10.0
10.0
0.0
10.0
9.0
0.0
10.0
12.0
10.0
18.0
13.5

28.0
225.0

10.0
30.0
15.0
9.0
25.0

49.0
29.3
13.0
6.8

TOTAL
* The outstanding amounts of the two countries have been split as of  01.01.11 
following the signature of the loan agreement with Montenegro on 09/02/2010 confirmed by Serbia on 24/11/2010
** Means that the Council decision did not foresee any expiry date and the total amount has not been disbursed
*** Means that the Memorandum of Understanding and the Loan Agreement have not been signed nor have they entered into force
**** Including exchange rate valuation

511.5

0.0

0.0
8.0
10.0
0.0
10.0
10.0
0.0
10.0
6.0
0.0
10.0
12.0
10.0
18.0
13.5

28.0
225.0

10.0
30.0
15.0
9.0
25.0

44.8 *
27.3
11.2
6.3

504.3

3.0

2.8
2.0
0.8
0.0

5.8

EN 

9 

   EN 

 
 
 
 
 
 
TABLE A4

LOAN GUARANTEES TO EIB

in EUR million 

Geographical Area

Decision

Date
of decision

Rate
of guarantee

MED. Financial protocols(1)

MED. Horizontal cooperation

1762/92/EEC

TOTAL MED. (3)

C and E Europe I

C and E Europe II

Asia, Latin America I

Asia, Latin America Interim

Asia, Latin America Interim

South Africa

New mandates

FYROM

Bosnia and Herzegovina

Turkey Terra

Mandates 2000-2007

The Baltic Sea basin of Russia

Russia, Belarus, Rep. Of Moldova and 
Ukraine

90/62/EEC(4)

91/252/EEC(5)

93/696/EC(6)

93/115/EEC

96/723/EC

96/723/EC

95/207/EC

97/256/EC(7)

98/348/EC

98/729/CE

99/786/EC

2000/24/EC(8)

2001/777/EC(9)

8.03.77

29.06.92

12.02.90

14.05.91

13.12.93

15.02.93

12.12.96

12.12.96

01.06.95

14.04.97

19.05.98

14.12.98

29.11.99

22.12.99

06.11.01

75% (2)

75% (2)

100%

100%

100%

100%

100%

70%

100%

70%

70%

70%

65%

65%

100%

100%

Date of
guarantee
contract
30.10.78/10.11.78

09.11.92/18.11.92

24.04.90/14.05.90

19.01.93/04.02.93

22.07.94/12.08.94

04.11.93/17.11.93

18.03.97/26.03.97

21.10.97

04.10.95/16.10.95

Amount
decided

6,062 

1,800 

7,862 

1,000 

700 

3,000 

750 

153 

122 

300 

Loans signed

Amount outstanding

        (minus cancellations)

at 31.12.10
5,548 

at 30.06.11
5,548 

at 31.12.10
402 

at 30.06.11
360 

1,656 

7,204 

912 

493 

2,464 

571 

139 

122 

285 

1,656 

7,204 

912 

493 

2,464 

571 

139 

122 

285 

293 

695 

76 

- 

372 

103 

4 

5 

3 

234 

594 

58 

- 

330 

86 

4 

4 

2 

25.07.97/29.07.97

7,105 

6,139 

6,139 

2,116 

1,946 

29.07.98/07.08.98

16.06.99/22.06.99

18.04.00/23.05.00

150 

100 

600 

150 

100 

600 

150 

100 

600 

96 

67 

491 

91 

65 

478 

19.07.00/24.07.00 (11)

19,460 

18,630 

18,594 

11,724 

11,296 

2005/48/EC(10)

22.12.04

06.05.02/07.05.02

21.12.05/09.12.05

100 

500 

Mandate 2007-2013

2006/1016/EC(12)

19.12.06

65%

01.08.07/29.08.07 (13)

25,800 

TOTAL

67,702 

85 

230 

16,600 

54,724 

85 

230 

17,691 

55,779 

72 

160 

6,003 

21,987 

66 

203 

7,029 

22,251 

(1) Including EUR 1,500 million for Spain, Greece and Portugal.
(2) General guarantee of 75% for all credits made available under lending operations under a guarantee contract signed between the Community and the EIB on 30.10.78 and 10.11.78.
(3) The Community has guaranteed EUR 5,497 million, of which EUR 141.5 million were covered by a 100% guarantee for Portugal.
(4)  Poland, Hungary.
(5) Czech Republic and Slovak Republic, Bulgaria, Romania.
(6) Poland, Hungary, Czech Republic and Slovak Republic, Bulgaria, Romania, Baltic States and Albania.
(7) Central and Eastern Europe, Mediterranean, Asia and Latin America, South Africa.
(8) South-eastern Neighbours, Mediterranean countries, Latin America and Asia, Republic of South Africa, Special action Turkey, as amended (2005/47/EC).
(9) A special lending action for selected environmental projects in the Baltic Sea basin of Russia under the Northern Dimension.
(10) A special lending action for certain types of projects in Russia, Belarus,Republic of Moldova and Ukraine.
(11) Restated and amended in 2005.
(12) Pre-Accession countries, Neighbourhood and Partnership countries, Asia and Latin America, Republic of South Africa.
(13) The initial amount  of EUR 25,800 will be increased up to  EUR 29,484 million further to a Council and European Parliament Decision of 13.10.2011 (1080/2011/EU of 25 October 2011), 
granting  an additional mandate of EUR 2,000 million to tackle climate change and an amount of EUR 1,684 million to foster EIB risk policy.

EN 

10 

   EN 

 
      
           
           
               
               
      
           
           
               
               
      
           
           
               
               
      
              
              
                 
                 
         
              
              
                    
                    
      
           
           
               
               
         
              
              
               
                 
         
              
              
                   
                   
         
              
              
                   
                   
         
              
              
                   
                   
      
           
           
            
            
         
              
              
                 
                 
         
              
              
                 
                 
         
              
              
               
               
    
         
         
          
          
         
                
                
                 
                 
         
              
              
               
               
    
         
         
            
            
    
         
         
          
          
 
2.5. 

Evolution of risk 

The evolution of risk corresponds to the schedule of the total annual repayments (amount in capital 
including  interests  due)  under  all  financial  instruments  guaranteed  by  the  Budget.  The  situation  of 
loans  to  Member  States  implies  that  the  risk  is  directly  covered  by  the  Budget.  Regarding  the 
situation of loans to third countries the risk is covered in the first instance by the Guarantee Fund for 
external actions. 

2.5.1. 

Situation of loans to Member States 

With the implemenation of the EFSM the total risk towards Member States including BoP, Euratom, 
EIB and MFA lending has drastically increased during the first semester 2011.  

The EFSM was activated for Ireland with disbursements in January, March and May for a total of 
EUR 11.4 billion. Portugal has also required lending under this programme and disbursements took 
place in May and June, amounting to EUR 6.5 billion. Additionnal instalments have been disbursed 
after  30.06.2011  for  a  total  of  respectively  EUR  2.5  billion  for  Ireland  and  EUR  7.6  billion  for 
Portugal  but  they  are  not  taken  into  consideration  in  graph  A1  below,  since  the  relating  loan 
operations were not disbursed at the closing date of the report. 

Two  additional  tranches  for  BoP  loans  were  disbursed  for  Romania  for  a  total  amount  of 
EUR 1.35 billion. 

There were no reimbursements over the period, however the first tranche of EUR 2 billion disbursed 
to Hungary in December 2008 is due in December 2011 (included in Graph A1).  

Regarding  Euratom  loans,  no  disbursements  took  place  and  EUR  6.6  million  was  reimbursed  by 
Bulgaria. 

Exposure to EU Member States represents now 64% of the total outstanding in comparison with 45% 
at 31.12.2010 and this trend will most likely continue over the next years. 

Graph A1: Total Annual Risk to the Budget3 relating to Member States at 30.06.20114 (EUR 
million) for the period 2011-2017 

3 
4 

Based on the amounts due (capital and interest) under operations disbursed at 30.06.2011. 
As of 30 June 2011, the 2011 annual risk for Member States was EUR 2,618 million. 

EN 

11 

   EN 

 
                                                 
9,000 

8,000 

7,000 

6,000 

5,000 

4,000 

3,000 

2,000 

1,000 

-

EFSM

MFA

BOP

ATOM

EIB

2011

2012

2013

2014

2015

2016

2017

2.5.2. 

Situation of loans to third countries 

At 30 June 2011, a total of EUR 2,316 million remained to be disbursed by the EIB under the EUR 
20,060 million EIB external lending mandate for 2000 – 2007: 

Table A5: Disbursement forecast for EIB loans on general mandate 2000 - 2007 

Ceiling

Loans made available
(minus cancellations) at
30.06.2011***

EUR million

to be disbursed****

Mediterranean
South-Eastern Neighbours**
Asia, Latin America
South Africa
Sub-total third countries

Member States*

6,520
10,235
2,480
825
20,060

20,060

6,192
7,335
2,105
817
16,449

2,744

19,194

836
1,414
25
41
2,316

481

2,797

* No ceiling for Member States as the loan operations were decided before enlargement rounds under the Mandate. Mediterranean and

South-Eastern Neighbours ceilings were amended following the enlargements rounds. 

** The ceiling includes Terra Turkey and Special Action Turkey.
*** Signatures up to 31.07.2008 (end of the Mandate 2000-2007). No additional signatures allowed after this date.
**** Loans have to be drawn within 10 years from the end of the Mandate.

At the same date, an amount of EUR 10,430 million remained to be disbursed out of signatures made 
under the EIB external mandate for 2007-2013. 

Table A6: Disbursement forecast for EIB loans on general mandate 2007 - 2013*

Ceiling

Loans made available
(minus cancellations) at
30.06.2011

EUR million

to be disbursed

A. Pre-Accession Countries
B. Neighbourhood and partnership countries
C. Asia and Latin America
D. South Africa

8,700
12,400
3,800
900

25,800

12 

7,598
6,888
2,633
571

17,691

5,597
3,436
1,170
227

10,430

   EN 

EN 

 
 
 
 
 
 
 
 
 
Graph A2: Total Annual Risk borne by the Budget related to third countries (EUR million) at 
30.06.2011 for the period 2011-2017 

2500

2000

1500

1000

500

0

MFA

ATOM

EIB

2011

2012

2013

2014

2015

2016

2017

Graph A2 presents the result of simulations aiming at estimating the outstanding amount covered by 
the Fund for the period 2011 to 2016. These simulations are based on disbursement of loans signed 
and disbursed at the reporting date under the mandates preceding the current EIB external mandate, 
as well as under the current mandate, established for the period 1 February 2007—31 October 2011 
by  Decision  No  633/2009/EC  of  the  European  Parliament  and  of  the  Council  which  has  been 
extended to 31.12.2013 by Decision 1080/2011/EU of the European Parliament and of the Council of 
25 October 2011 (OJ L 280, 27.10.2011, p. 1). 

EN 

13 

   EN 

 
 
Graph  A3:  Estimated  outstanding  amount  covered  by  the  Fund  from  2011  to  2017  (EUR 
million). 

45 000

40 000

35 000

30 000

25 000

20 000

15 000

10 000

5 000

-

Euratom

MFA

EIB

2011

2012

2013

2014

2015

2016

2017

Graph A3 presents the result of simulations aiming at estimating the outstanding amount covered by 
the Fund for the period 2011 to 2016. These simulations are based on disbursement scenarios5 under 
the  mandates  preceding  the  current  EIB  external  mandate,  as  well  as  under  the  current  mandate, 
established for the period 1 February 2007—31 October 2011 by Decision No 633/2009/EC of the 
European  Parliament  and  of  the  Council  which  has  been  extended  to  31.12.2013  by  Decision 
1080/2011/EU  of  the  European  Parliament  and  of  the  Council  of  25  October  2011  (OJ  L  280, 
27.10.2011, p. 1). 

The rhythm of disbursements has a strong impact on the amount of the provisioning of the Fund in 
future years. The simulation is therefore subject to a non-negligible degree of uncertainty. 

2.6. 

Payment under the Budget guarantees 

The  EU  borrows  on  the  financial  market  and  on-lends  the  proceeds  to  Member States  (balance  of 
payment, EFSM), and to third countries (macro-financial assistance) or utility companies (Euratom).  

Procedures have been set up to guarantee the repayments of the borrowings due by the EU and also 
the guarantees given in connection with the EIB financing operations. 

5 

The rhythms of disbursement of loans not yet signed and, or not yet disbursed are assumed. 

EN 

14 

   EN 

 
 
                                                 
2.6.1.  Borrowing/lending operations 

The loan repayments are scheduled to match the repayments of the borrowings due by the EU. If the 
recipient of the loan is in default, the Commission will first draw on its own cash resources to ensure 
a timely repayment of the EU borrowing on the contractual due date. 

Should the amounts needed for the necessary cash coverage exceed, in a certain period or date, the 
available Commission's treasury balances, the Commission would, in accordance with Article 12 of 
Council Regulation 1150/20006, draw on additional cash resources from the Member States in order 
to fulfil its legal obligations towards its lenders.  

In the case of BoP loans, where amounts to be reimbursed can be very high, the beneficiary Member 
States are required to transfer the amounts due to the European Central Bank seven business days in 
advance of the contractual due date. This gives enough time for the Commission and Member States 
to provide for the cash advance to ensure timely repayment in case of default. The same process is 
beeing applied for the EFSM loans with 14 days lead time. 

In a second step, the treasury situation would be regularised as follows: 

Euratom and MFA loans 

a) 

b) 

if the payment delay reaches three months after the due date, the Commission draws on the 
Fund to cover for the default and obtain the necessary funds to replenish its treasury.  

the Commission might also need to draw on the Budget, most likely by means of a transfer, 
to  provide  the  corresponding  Budget  line  under  article  "01  04  01  European  Union 
guarantees  for  Union  and  Euratom  borrowing  operations  and  for  EIB  lending  operations" 
with  the  necessary  appropriations  needed  to  cover  the  default.  This  method  is  used  when 
there are insufficient appropriations in the Fund or if the borrower is a Member State7 and 
the transfers are likely to require advance authorisation by the budgetary authority.  

c) 

by the re-use of recovered funds, if any. 

Balance of Payments (BoP) and EFSM loans 

a) 

by the re-use of funds from late payments 

b) 
the Commission may also need to propose a transfer or an Amending Budget to budget the 
cash advance under the corresponding budget line "01 04 01 01 European Union guarantee for Union 
borrowings for balance-of-payments support" or "01 04 01 03 European Union guarantee for Union 
borrowings for financial assistance under the European financial stabilisation mechanism". 

6 

7 

Council Regulation (EC, Euratom) No 1150/2000 of 22 May 2000 (OJ L 130, 31.5.2000, p.1-12) implementing 
Council  Decision  2007/436/EC,  Euratom  of  7  June  2007  on  the  system  of  European  Communities'  own 
resources (OJ L 163, 23.6.2007, p. 17-21). 
The loans (and loans guarantees) to accession countries were covered by the Guarantee Fund until the date of 
accession. From that date, those that remained outstanding ceased to be external actions of the Union and are 
therefore covered directly by the Budget. 

EN 

15 

   EN 

 
                                                 
2.6.2.  Guarantees given to third parties 

The EU provides a guarantee in respect of financing granted by the EIB under the external mandates. 
When the recipient of a guaranteed loan fails to make a payment on the due date, the EIB asks the 
Commission  to  pay  the  amounts  owed  by  the  defaulting  entity  in  accordance  with  the  relevant 
guarantee agreement. 

The guarantee call must be paid within three months of receiving the EIB's request, either from the 
Fund8 or directly from the Budget should the resources of the Fund be insufficient9. 

The EIB administers the loan with all the care required by good banking practice and is obliged to 
seek the recovery of the payments due after the guarantee has been activated. 

2.6.3.  Default interest penalties for late payment 

(a) 

EU or Euratom loans 

For loans granted by the EU or Euratom, default interest is owed by loan beneficiaries for the time 
between  the  date  at  which  cash  resources  are  made  available  by  the  Budget  and  the  date  of 
repayment to the EU.  

(b) 

EIB loans 

For EIB loans, EIB is entitled to default interest which is calculated during the period between the 
due date of a defaulted loan instalment and the date of receipt of the cash resources by the EIB from 
the Commission. From the latter date, default interest is due to the Commission. 

8 

9 

Since the entry into force of the Regulation establishing the Guarantee Fund for external actions, the Agreement 
between the EU and the EIB on the management of the Fund foresees that the Commission must authorise the 
Bank to withdraw the corresponding amounts from the Fund within three months from the date the EIB calls in 
the guarantee. 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). 
If  there  are  insufficient  resources  in  the  Fund,  the  procedure  for  activating  the  guarantee  is  the  same  as  for 
borrowing/lending operations, see 2.6.1 above. 

EN 

16 

   EN 

 
                                                 
3. 

COUNTRY-RISK EVALUATION 

Third countries representing important risks to the Budget during the second semester 2011, 
and either categorised as “severely indebted” according to criteria set by the World Bank or 
facing  significant  imbalances  in  their  external  or  debt  situation,  are  included  in  the  country 
risk evaluation. 

The  evaluation  presented  below  comprises  short  maroeconomic  analyses  and  tables  of  risk 
indicators.  The  evaluated  countries  are  grouped  in  6  sub-sections:  candidate  countries  (3.1), 
potential  candidate  countries  (3.2),  Mediterranean  partners  (3.3),  Eastern  Partnerships  (3.4), 
BRICS countries (3.5) and other countries (3.6).  

Explanatory notes for country-risk indicators 

Abbreviations and English words used in tables 

S&P 

FDI 

GDP 

CPI 

est. 

m EUR 

bn USD 

NA 

Standard and Poor's 

Foreign Direct Investment 

Gross Domestic Product 

Consumer Price Index 

Estimates 

EUR million 

USD billion 

not available 

Standard footnotes used in the table 

1) 

2) 

Includes only EU and EIB loans (outstanding disbursements) to CEEC10, NIS11 and 
MED12. 

The  higher  the  ranking  number,  the  lower  the  creditworthiness  of  the  country. 
Countries are rated on a scale of zero to 185 or to 100 (the number of countries has 
been reduced from 185 to 100 from January 2011). 185, respectively 100, represents 
the highest risk of default. A given country may improve its rating and still fall in the 
ranking if the average global rating for all rated countries improves. 

3.1. 

Candidate countries 

3.1.1.  FYROM 

Growth  accelerated  in  the  Former  Yugoslav  Republic  of  Macedonia  during  the  first  half  of 
2011, reaching 5.2%. This situation was mainly driven by gross fixed capital formation in the 
first quarter and private consumption in the second quarter. Increased public construction and 

10 
11 
12 

Central and Eastern European Countries. 
New Independent States. 
Mediterranean countries 

EN 

17 

   EN 

 
                                                 
subsidy  payments  have  also  contributed  to  the  growth  acceleration.  In  line  with  strong 
domestic demand, stronger imports led to a widening in the trade deficit to 12% of estimated 
full-year GDP (from 10.5% in the first half of 2010). Net current transfers amount to 8% of 
GDP and the current account deficit widened to 3.5% of GDP (from 2.8% in 2010). Capital 
inflows  continued  to  surpass  the  current  account  deficit.  However,  a  significant  part  of  this 
inflow was due to drawing funds from a Pre-cautionary Credit Line agreed with the IMF in 
late  2010.  This  credit  line  amounts  to  some  6%  of  GDP,  with  about  half  of  the  credit  line 
drawn  in  March.  As  a  result  of  the  inflow  of  funds  from  the  pre-cautionary  credit  line,  the 
stock of foreign exchange reserves increased by EUR 2 billion representing between 3 and 4 
months of imports. Gross external debt rose to 61% in mid-2011, up from 59.5 % of GDP in 
mid-2010. 

Country-risk indicators : The former Yugoslav Republic of Macedonia

2009

2010

2011 ( proj)

Out put  and prices

Real GDP growth rate
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)

Public finances

Gen er al g o ver n m en t  b alan ce

Balance of  paym ent s

Exports of goods and services f.o.b
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) m EUR
Months' imports of goods and services
Exchange rate (end of period)

Ext ernal debt

External debt  (end of period)
External debt/GDP
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure (capital and interest due)
EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangem ent s

Type
(Date)
On track

Indicat ors of  m arket 's percept ion of  credit w ort hiness
Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney
   Position in the ranking 
   (number of countries)
* ECFIN forecast Spring 2011
(1) (2)   See explanatory notes

3.1.2.  Montenegro 

(%)
(% labour force)
(% ch an g e)

(% of GDP)

(bn EUR)
(% of GDP)
(m EUR)

goods
( p er  EUR)

(m EUR)
(%)
(%)
(%)
(m EUR)

       (m EUR)
(%)    (1)
(%)
(%)

-1.0
32.2
-0.8

-2.7

1.9
-6.7
136.9
1,598.7
5.5
61.3

3,780.4
56.6

1.8
32.1
1.6

-2.5

2.6
-2.8
219.9
1,715.3
5.2
61.5

4,133.8
59.5

252.0
1.6
6.7
12.9

283.0
1.5
6.8
11.1

2.5
31.4
4.3

-2.5

2.7
-3.1
N/A
2,000.0
3.5
61.5

4,647.5
61.4
NA
NA
NA

305.0
1.5
6.6
11.2

none
BB
03/09    09/09
111   137
(186)  (186)

none
BB

none
BB

03/10  09/10        03/11     

84   90
(185)  (185)

87
100

(2)

The  economy  of  Montenegro,  after  contracting  by  5.7%  in  2009,  started  to  recover  in  2010 
and grew by 2.5% in 2010 and is expected to expand by 2.7% in 2011. On the supply side, 
manufacturing accelerated by 9.7%, while the construction sector expanded by 30.8% in the 
first  half  of  2011.  On  the  demand  side,  retail  sales  increased  by  14.3%.  Consumer  prices 
remained  subdued  during  2010,  thanks  to  a  reduction  in  food  prices  and  the  reduction  of 
annually  adjusted  electricity  prices  before  accelerating  to  3.5%  in  the  first  half  of  2011. 
Unilateral use of EURO implies that there is only limited scope for domestic monetary policy 

EN 

18 

   EN 

 
 
instruments.  In  2010  the  consolidated  budget  deficit  widened  to  5%  of  GDP  (including  tax 
arrears  worth  2%  of  GDP)  and  stood  at  1.6%  of  GDP  in  the  first  half  of  2011.  Public  debt 
increased from 41% of GDP in 2010 to 45% of GDP in June 2011. The current account deficit 
contracted  to  25%  of  GDP  in  2010  (compared  to  30%  a  year  earlier)  and  decreased  further 
during  the  first  half  of  2011  to  22.4%  of  GDP.  The  improvement  was  mainly  driven  by  a 
widening surplus on the services and income accounts. The current account deficits are being 
largely covered by net FDI and net portfolio investments. 

Country-risk indicators : Montenegro

Out put  and prices

Real GDP growth rate
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)

Public finances

Gen er al g o ver n m en t  b alan ce

Balance of  paym ent s

Exports of goods and services f.o.b
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) m EUR
Months' imports of goods and services
Exchange rate (end of period)

Ext ernal debt

External debt  (end of period)
External debt/GDP
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure (capital and interest due)
EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangem ent s

Type
(Date)
On track

Indicat ors of  m arket 's percept ion of  credit w ort hiness
Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney
   Position in the ranking 
   (number of countries)
* ECFIN forecast Spring 2011
** per June 2011
(1) (2)   See explanatory notes

3.1.3.  Turkey 

(%)
(% labour force)
(% ch an g e)

(% of GDP)

(bn EUR)
(% of GDP)
(m EUR)

goods
( p er  EUR)

(m EUR)
(%)
(%)
(%)
(m EUR)

       (m EUR)
(%)    (1)
(%)
(%)

2009

2010

2011 ( proj)

-5.7
11.4
3.4

-4.4

1.0
-30.1
1,066.5
397.5
2.9
1.00

2,781.3
38.2
5.1

126.0
0.8
4.5
12.9

2.5
12.2
0.5

-5.0

1.1
-25.7
543.1
416.4
3.0
1.00

3,110.1
42.0
3.6

188.0
1.0
6.0
17.0

2.7
19.4
3.7

-3.1

0.8
-22.7**
178.0 **
409.8 **
2.8**
1.00

N/A
N/A
NA
NA
NA

193.0
1.0
N/A
24.1

(none)

(none)

(none)

Ba3
BB+
03/09    09/09
133   126
(186)  (186)

Ba3
BB

Ba3
BB

03/10  09/10        03/11    

95    140
(185)  (185)

none
100

(2)

The  economy  of  Turkey  has  recovered  strongly  after  the  dramatic  contraction  of  4.8  %  in 
2009; with a growth reaching 9% in 2010 and 10.2% in the first half of 2011. A double-digit 
growth of imports, combined with a domestic credit boom, fuelled private consumption and 
investment.  Headline  inflation  eased  after  reaching  10%  in  early  2010  and  was  hovering  at 
around 6.5% in the first half of 2011.  

On the back of the strong GDP growth, the fiscal deficit narrowed to 3.6 % of GDP in 2010, 
and  the  public  debt  stock  decreased  by  almost  4  %  of  GDP  in  the  previous  year  but  still 
amounts to 40% of GDP at the end of 2010. In the first half of 2011, Turkey reports strong 
fiscal results, with the overall budget balance improving on an annual basis due to a surge in 
tax revenues and falling interest expenditures. The current account deficit rose rapidly to 6.6% 

EN 

19 

   EN 

 
 
of GDP as imports increased by more than 15% in volume and the terms of trade worsened on 
higher  oil  and  commodity  prices.  In  the  first  half  of  2011,  the  current-account  deficit  more 
than doubled compared with the previous year, reaching EUR 35 billion (about 8% of GDP). 
Turkey's gross external debt amounts to 40% of GDP with private external debt representing 
two  thirds  of  the  total.  International  reserves  fell  by  about  3%  to  EUR  80  billion  covering 
about  4  months  of  imports.  In  large  part  as  a  result  of  the  country's  monetary  policy,  the 
domestic  currency  depreciated  against  the  US  dollar  and  the  EUR,  in  particular  in  the  first 
half of 2011.  

Country-risk indicators : Turkey

Out put  and prices

Real GDP growth rate
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)

Public finances

Gen er al g o ver n m en t  b alan ce

Balance of  paym ent s

Exports of goods and services f.o.b
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) m EUR
Months' imports of goods and services
Exchange rate (end of period)

Ext ernal debt

External debt  (end of period)
External debt/GDP
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure (capital and interest due)
EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangem ent s

Type
(Date)
On track

(%)
(% labour force)
(% ch an g e)

(% of GDP)

(bn EUR)
(% of GDP)
(m EUR)

goods
( p er  EUR)

(bn EUR)
(%)
(%)
(%)
(m EUR)

       (m EUR)
(%)    (1)
(%)
(%)

2009

2010

2011 ( proj) *

-4.8
14.1
6.3

-5.7

102.4
-2.3
4,981.5
74,990.8
8.9
2.16

1,818.2
43.5
35.6
none
none

5,704.0
35.1
3.1
5.6

9.0
12.0
8.6

-3.6

117.4
-6.6
5,907.1
80,312.2
6.9
2.00

213.2
39.4
32.6
none
none

7,429.0
40.2
3.6
6.0

6.1
10.2
6.5

-2.8

125.2
-7.7
9,165.0
65,391.0
5.1
NA

210.0
40.1
NA
NA
NA

7,818.0
39.4
3.7
6.2

Indicat ors of  m arket 's percept ion of  credit w ort hiness
Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney
   Position in the ranking 
   (number of countries)

Ba3
BB-
03/09    09/09
68   67
(186)  (186)

Ba2
BB
03/10  09/10
50     59
(185)  (185)

Ba2
BB
       3/11    
54
100

(2)

* ECFIN forecast Spring 2011
(1) (2)   See explanatory notes

3.2. 

Potential candidate countries  

3.2.1.  Albania 

Albania's  real  GDP  grew  by  an  estimated  3.4%  in  the  first  quarter  of  2011  (from  4.1%  in 
2010). Inflation pressures accelerated in early 2011 reaching a peak of 3.5% (year on year) in 
February  before  receding  thereafter  to  3.1%  in  August.  The  main  drivers  of  inflation  were 
higher prices on electricity and water, food prices and the depreciation of the lek. The banking 
sector,  the  main  source  of  financial  intermediation  in  Albania,  remains  well  capitalised  and 
liquid even if non-performing loans increased sharply, from 9.1% in 2009, to 12.6% in 2010 
and  further  to  16.6%  in  the  second  quarter  of  2011.  The  fiscal  deficit  amounted  to  3.1%  of 
GDP  in  2010,  less  than  half  of  2009  which  came  in  at  7.1%  of  GDP.  Lower  than  planned 

EN 

20 

   EN 

 
 
revenue  in  the  first  half  of  2011  obliged  the  government  to  re-balance  the  2011  budget. 
Revenue  shortfalls  were  reflecting  over-optimistic  projections  and  underperforming  indirect 
tax  receipts  amid  sluggish  domestic  demand.  The  revised  budget  envisages  a  reduction  in 
revenue and expenditure, while keeping the  2011 deficit target unchanged at 3.5% of GDP. 
Public debt levels remained relatively high, although the debt-to-GDP ratio declined to 58.5% 
in 2010, from 59.3% in the previous year. Contingent liabilities from state guarantees account 
for some 3.8% of GDP. The current account deficit contracted to 11.9% of GDP in 2010 but 
is  estimated  to  have  increased  to  13%  of  GDP  in  the  second  quarter  of  2011  due  to  both 
slower exports and higher imports. 

Country-risk indicators : Albania

Out put  and prices

Real GDP growth rate
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)

Public finances

Gen er al g o ver n m en t  b alan ce

Balance of  paym ent s

Exports of goods and services f.o.b
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) m EUR
Months' imports of goods and services
Exchange rate (end of period)

Ext ernal debt

External debt  (end of period)
External debt/GDP
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure (capital and interest due)
EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangem ent s

Type
(Date)
On track

(%)
(% labour force)
(% ch an g e)

(% of GDP)

(bn EUR)
(% of GDP)
(m EUR)

goods
( p er  EUR)

(m EUR)
(%)
(%)
(%)
(m EUR)

       (m EUR)
(%)    (1)
(%)
(%)

2009

2010

2011 ( proj)

3.3
13.0
2.3

-7.0

2.5
-15.4
668.3
1,567.4
6.2
131.8

2,028.5
23.8

4.1
13.7
3.6

-3.1

2.9
-11.9
837.1
1,825.3
6.7
137.5

2,240.3
26.3

223.0
1.4
11.0
8.8

244.0
1.3
10.9
8.5

2.5
NA
3.5

-3.7

3.3
-10.9
645
1,802.6
4.3
NA

2,484.3
26.3
NA
NA
NA

254.0
1.3
10.2
7.7

Indicat ors of  m arket 's percept ion of  credit w ort hiness
Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney
   Position in the ranking 
   (number of countries)

Ba1
none
03/09    09/09
89     109
(186)  (186)

Ba1
B+
03/11  09/10
93     82
(185)  (185)

Ba1
B+
3/11
92
100

(2)

(1) (2)   See explanatory notes

3.2.2.  Bosnia and Herzegovina, 

The country recovered in 2010, after the recession of 2009, with a real growth rate of 0.7%. 
According  to  available  indicators,  domestic  demand  is  increasing  in  2011.  Industrial 
production rose by 7.7% (year-on-year) in the first half of 2011, while the retail sales soared 
by  14.4%.  However,  the  unemployment  rate  remains  high  at  43.1%.  The  inflation  is  on 
upward  trend,  reaching  4%  in  June  2011.However,  the  acceleration  of  the  consumer  prices 
growth is not demand-driven but rather a result of global movements (food, oil prices).  

Financial  and  monetary  stability  has  been  preserved,  also  due  to  the  high  credibility  of  the 
currency  board  arrangement.  Following  the  significant  improvement  of  the  current  account 

EN 

21 

   EN 

 
 
balance in 2009 and in the first half of 2010, the deficit started to rise again, mainly due to 
rising  imports.  Net  inflow  of  FDI  remains  low,  covering  slightly  less  than  one  fifth  of  the 
current account deficit in the first half of 2011. External public debt soared by 20.2% in 2010, 
while witnessing some slight decline in the course of 2011 to around 24% of GDP. Official 
foreign  exchange  reserves  were  5.7%  lower  in  June  2011  compared  to  end  2010,  covering 
about  5  months  of  imports.  The  inability  of  the  political  parties  to  agree  on  State-level 
government formation after the last general elections, held in October 2010, did not allow for 
programme discussions and reviews under the Stand-By Arrangement with the International 
Monetary Fund to take place in the course of 2011. 

Country-risk indicators : Bosnia and Herzegovina

2009

2010

2011 ( proj)

Out put  and prices

Real GDP growth rate
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)

Public finances

Gen er al g o ver n m ent  b alan ce

Balance of  paym ent s

Exports of goods and services f.o.b
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) m EUR
Months' imports of goods and services
Exchange rate (end of period)

Ext ernal debt

External debt  (end of period)
External debt/GDP
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure (capital and interest due)
EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangem ent s

Stand-by Arrangement €1.2bn three years
08 July 2009
Off track; last programme discussions November 2010
Indicat ors of  m arket 's percept ion of  credit w ort hiness
Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney
   Position in the ranking 
   (number of countries)

(1) (2)   See explanatory notes

3.2.3. 

Serbia 

(%)
(% labour force)
(% ch an ge)

(% of GDP)

(bn EUR)
(% of GDP)
(m EUR)

goods
(p er  EUR)

(m EUR)
(%)
(%)
(%)
(m EUR)

       (m EUR)
(%)    (1)
(%)
(%)

-2.9
42.7
-0.4

-4.5

4.0
-6.3
176.1
3,176.2
6.0
1.96

2,676.2
21.8

0.7
42.7
3.1

-2.5

4.7
-6.1
141.9
3,301.8
5.7
1.96

3,215.4
25.7

472.0
2.9
17.6
11.9

583.0
3.2
18.1
12.4

3.0
43.1
2.5

-3.0

4.9
-5.5
378.0
3,733.0
5.6
NA

3,859.4
29.4
NA
NA
NA

627.0
3.2
16.2
12.8

B2
B+
03/09    09/09
116   129
(186)  (186)

B2
B+
03/10  09/10
101   113
(185)  (185)

B2
B+
3/11

        none
100

(2)

During the first half of 2011, the gradual economic recovery of Serbia was on track as GDP 
growth  accelerated  to  3%.  However,  in  the  light  of  the  recent  evolution  of  international 
environment,  a slowdown of activity is  expected  and real GDP growth  should be limited to 
2%-2.5% for 2011. The economy continues to be driven by solid export activity but domestic 
demand  remains  weak  as  private  consumption  is  constrained  by  eroded  disposable  income 
while investment is picking up slowly. The export activity, which in 2010, was supported by 
the depreciation of the dinar, has helped to keep the current account deficit at around 7% of 
GDP. Financial and capital flows have started to strengthen in 2011, with FDI and portfolio 
investment  substantially  higher  than  the  previous  year.  Foreign  exchange  reserves  with  the 
National  Bank  of  Serbia  (NBS)  have  stabilised  at  about  EUR 10 billion,  covering  around  8 

EN 

22 

   EN 

 
 
months’ of imports. By end of July 2011, total external debt reached just over EUR 23 billion 
representing 75% of GDP. While the external position remained broadly solid, the economy 
came  under  pressure  as  inflation  spiked  as  a  result  of  rising  agricultural  and  food  prices. 
Inflation peaked in April 2011 at 15% (year-on-year), but thereafter began to recede mainly 
thanks to falling food prices. The fiscal deficit reached 4.7% of GDP at the end of 2010 and, 
by  consequence,  public  debt  grew  by  more  than  EUR  1.6  billion  by  end  of  August 
representing almost EUR 13.8 billion and 41.7% of GDP. 

Country-risk indicators : Serbia

Out put  and prices

Real GDP growth rate
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)

Public finances

Gen er al g o ver n m en t  b alan ce

Balance of  paym ent s

Exports of goods and services f.o.b
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) m EUR
Months' imports of goods and services
Exchange rate (end of period)

Ext ernal debt

External debt  (end of period)
External debt/GDP
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure (capital and interest due)
EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangem ent s

Type
(Date)
On track

2009

2010

2011 ( proj)

-3.1
16.1
6.6

-4.5

8.5
-7.1
1,369.2
10,601.9
11.5
95.88

22,465.9
77.6

1.0
20.0
10.3

-4.8

10.1
-7.2
861.4
10,001.6
9.8
105.93

23,763.3
81.7

(%)
(% labour force)
(% ch an g e)

(% of GDP)

(bn EUR)
(% of GDP)
(m EUR)

goods
( p er  EUR)

(m EUR)
(%)
(%)
(%)
(m EUR)

       (m EUR)
(%)    (1)
(%)
(%)

1,317.9
8.1
5.9
15.5

1,609.0
8.7
6.8
16.0

2.0
NA
7.9

-4.5

11.5
-7.6
1,400.0
10,200.0
NA
NA

24,700.0
75.3
NA
NA
NA

1,818.0
9.2
7.4
15.8

Stand-by
sept-11

Indicat ors of  m arket 's percept ion of  credit w ort hiness
Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney
   Position in the ranking 
   (number of countries)

none
BB-
03/09    09/09
122     109
(186)  (186)

none
BB-

none
BB

03/10  09/10        03/11    

76   70
(185)  (185)

86
100

(2)

(1) (2)   See explanatory notes

3.3.  Mediterranean partners 

3.3.1.  Egypt 

The Egyptian economy grew by 0.4% in the second quarter of 2011 following a drop of 4.2% 
in the previous quarter due to the impact of the spring uprising on the domestic and external 
side of the economy. Real GDP is expected to have grown by about 1.2% in 2010-2011 (July 
– June). The fiscal deficit is estimated to have deteriorated to about 10% of GDP during the 
same period partly due to a strong fall in tax and customs revenues in the first half of 2011, as 
well as the impact of higher spending on food and fuel subsidies.  

The  current  account  balance  deteriorated  rapidly  in  the  first  quarter  of  2011.  The  Egyptian 
government estimates that tourism revenue has fallen by about 25% in 2010-2011, compared 

EN 

23 

   EN 

 
 
to  the  previous  fiscal  year.  Remittances  were  also  hit  as  expatriate  workers  started  to  be 
displaced from Libya. The current account deteriorated to around -3.5% of GDP in 2010-2011 
from  -1.5%  of  GDP  in  the  previous  year.  There  were  strong  capital  outflows  in  the  first 
quarter of 2011 linked to the government bond market; around USD 6 billion was withdrawn 
by  foreign  investors.  The  authorities  have  drawn  down  foreign  currency  reserves,  including 
those held at commercial banks, to finance the widening current account deficit and support 
the  managed  float  of  the  Egyptian  pound  against  the  US  dollar.  Since  the  start  of  2011, 
official currency reserves have fallen sharply from around USD 50 billion to around USD 33 
billion in August 2011, now equal to about five months of imports, while the monthly pace of 
decline is slowing. Consumer price inflation was 10.4% in July 2011, year-on-year, the same 
rate as in July 2010. 

Country-risk indicators : Egypt

Out put  and prices

Real GDP growth rate
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)

Public finances

Gen er al g o ver n m en t  b alan ce

Balance of  paym ent s

Exports of goods and services f.o.b
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) bn USD
Months' imports of goods and services
Exchange rate (end of period)

Ext ernal debt

External debt  (end of period)
External debt/GDP
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure (capital and interest due)
EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangem ent s

Type
(Date)
On track

(%)
(% labour force)
(% ch an g e)

(% of GDP)

(bn EUR)
(% of GDP)
(bn EUR)

( p er  EUR)

(bn EUR)
(%)
(%)
(%)
(m EUR)

       (m EUR)
(%)    (1)
(%)
(%)

2009

2010

2011 ( proj)

4.7
9.4
11.8

-6.6

30.3
0.5
12.1
46.0
7.0
7.7

22.5
16.9
4.6
no
no

2,240.7
13.8
8.2
6.1

no
-
-

5.2
9.6
11.1

-8.0

36.0
-2.4
10.0
50.0
7.6
7.5

24.0
15.9
6.4
no
no

2,178.0
11.8
7.3
5.8

no
-
-

1.2
12.2
13.3

-8.6

35.0
-3.5
6.0
33.0
5.0
8.36

24.3
16.0
5.5
no
no

1,973.0
9.9
8.1
5.6

no
-
-

Indicat ors of  m arket 's percept ion of  credit w ort hiness
Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney
   Position in the ranking 
   (number of countries)

Ba1
BB+
03/09   09/09
70  70
(186)   (186) 

Ba2
BB
03/10   09/10
    69    64

(185)   (185)

Ba3
BB
       03/11  
88
100.00

(2)

(1) (2)   See explanatory notes

3.3.2.  Lebanon  

Real GDP growth in Lebanon is projected to slow to around 1% in 2011 following the recent 
domestic  political  stalemate  and  the  conflict in  Syria.  Tourism  revenues  and  exports  fell  by 
15% and 8.5% respectively during the first quarter of 2011. Financial flows and international 
reserves have also experienced a downward trend during the first half of the year. Inflation is 
estimated  at  5%  in  light  of  sustained  global  price  increases.  Despite  the  formation  of 
government  in  July  2011,  five  months  after  the  collapse  of  the  previous  one,  the  economic 
situation remains vulnerable, especially on the fiscal side. According to IMF projections, the 

EN 

24 

   EN 

 
 
fiscal deficit would exceed 10% of GDP in 2011-2012, while the primary surplus would drop 
from  3%  of  GDP  in  2010 to  1%  in  2011  in  view  of  reduced  revenues.  Increasing  financing 
needs  have  been  putting  pressures  on  the  public  debt,  which  remains  exceptionally  high, 
although  sustainable  (currently  estimated  at  135%  of  GDP),  with  almost  half  of  it 
denominated  in  foreign  currency.  On  the  external  side,  sustained  energy  prices  and  the 
regional turmoil have contributed to widening the current account deficit to an estimated 14% 
of GDP for 2011. This effect combined with the slowdown in FDIs has impacted the balance 
of  payments  since  the  collapse  of  the  government  leading  to  a  reduction  in  international 
reserves  during  the  first  months  of  2011  (from  the  exceptionally  high  level  of  USD  30,2 
billion at the end of 2010). Nevertheless reserves have recovered since August 2001 and are 
projected to reach an amount of USD 30.5 billion by the end of 2011. 

The EU has supported the country in the past by providing MFA (a combination of medium-
term loans of EUR 50 million and grants of EUR 30 million), planned to be disbursed in two 
tranches. The first tranches of grants and loans were disbursed successfully in December 2008 
and  June  2009  respectively,  but  the  disbursement  of  the  second  tranche  was  cancelled 
reflecting  the  IMF  arrangement  expiration  in  June  2009  and  lack  of  compliance  with 
structural reform conditions. No follow-up MFA operation or IMF arrangement to Lebanon is 
currently being considered. 

Country-risk indicators : Lebanon

Out put  and prices

Real GDP growth rate
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)

Public finances

Gen er al g o ver n m en t  b alan ce

Balance of  paym ent s

Exports of goods and services f.o.b
Current account balance (incl. official transfers)
Net inflow of foreign direct investment
Official reserves, including gold (end of period) bn USD
Months' imports of goods and services
Exchange rate (end of period)

Ext ernal debt

External debt  (end of period)
External debt/GDP (includes non-residents deposits)
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure (capital and interest due)
EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangem ent s

Type
(Date)
On track

Indicat ors of  m arket 's percept ion of  credit w ort hiness
Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney
   Position in the ranking 
   (number of countries)

(1) (2)   See explanatory notes

2009

2010

2011 ( proj)

(%)
(% labour force)
(% ch an g e)

(% of GDP)

(bn USD)
(% of GDP)
(bn USD)
( bn USD)

9.0
n.a.
1.2

-8.1

4.7
-9.5
3.6
27.4

8.0
n.a.
5.0

-8.7

5.2
-11.1
3.9
30.2

( p er  EUR)

2,147.6

2,003.7

(bn USD)
(%)
(%)
(%)
(m EUR)

       (m EUR)
(%)    (1)
(%)
(%)

59.1
171.0
41.0
no
no

538.8
3.3
1.3
16.6

62.7
160.0
33.6
no
no

598.0
3.2
1.4
16.6

EPCA II
adopted 3-11
yes (concluded June 2009)

1.0
n.a.
5.0

-9.6

5.7
-14.0
3.6
30.5

n.a.

68.8
162.0
n.a.
no
no

584.0
2.9
1.2
14.8

B3
B-
03/08   09/08
127   134
(185)   (186)

B3
B
03/09  09/09
102   80
(185)   (185)

B1
B
       03/11  
91
100

(2)

EN 

25 

   EN 

 
 
3.3.3.  Morocco 

The economy grew by 4.2% in the second quarter of 2011 (from 4.9% in the previous quarter) 
driven by strong activity in both agricultural and non-agricultural sector. The only sector of 
the economy which contracted in the first quarter of 2011 was hotels and restaurants due to 
the  terrorist  bombing  in  Marrakech.  Tourism  represents  around  10%  of  GDP.  The  fiscal 
deficit expanded in 2010 to 4.5% of GDP from 2.1% of GDP in 2009 owing to increases in 
capital expenditure, expenditures related to subsidies on fuel prices and the negative impact of 
tax  cuts  on  revenue.  Public  debt  increased  to  just  above  50%  of  GDP  in  2010,  of  which 
around 22% is external public debt. For 2011, the Ministry of Economy and Finance expects 
real GDP growth of 5%. This may be slightly optimistic given that subsidy spending will be 
much  higher  in  2011  and  growth  in  the  first  half  of  the  year  has  been  slightly  lower  than 
foreseen. Unemployment remained stable at 9.1% in 2010 with a marginal reduction in urban 
unemployment  from  13.8%  in  2009  to  13.7%.  Foreign  reserves  increased  slightly  in  2010 
remaining at a comfortable level of about seven months of imports of goods and services and 
more  than  the  level  of  external  debt.  The  index  of  the  Casablanca  Stock  Exchange  (CSE) 
increased  by  30%  during  2010  but  has  slipped  back  by  about  15%  since  the  start  of  2011 
partly due to the regional unrest. Inflationary pressures have increased in 2011 due to higher 
food  and  fuel  prices.  Consumer  price  inflation  is  expected  to  be  about  1.6%  at  the  end  of 
2011, year-on-year, compared to 1.4% for 2010. 

Country-risk indicators : Morocco

Out put  and prices

Real GDP growth rate
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)

Public finances

Gen er al g o ver n m en t  b alan ce

Balance of  paym ent s

Exports of goods and services f.o.b
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) m EUR
Months' imports of goods and services
Exchange rate (end of period)

Ext ernal debt

External debt  (end of period)
External debt/GDP
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure (capital and interest due)
EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangem ent s

Type
(Date)
On track

Indicat ors of  m arket 's percept ion of  credit w ort hiness
Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney
   Position in the ranking 
   (number of countries)

(1) (2)   See explanatory notes

(%)
(% labour force)
(% ch an g e)

(% of GDP)

(bn EUR)
(% of GDP)
(bn EUR)

( p er  EUR)

(bn EUR)
(%)
(%)
(%)
(m EUR)

       (m EUR)
(%)    (1)
(%)
(%)

2009

2010

2011 ( proj)

4.9
9.1
1.0

-2.1

13.8
-5.8
0.72
23.5
7
11.2

18.8
20.9
6.6
no
no

3.7
9.1
1.4

-4.5

14.8
-3.1
2.4
23.6
6.9
11.2

20.1
22.8
6.4
no
no

5.0
9.2
1.6

-5.5

16.1
-8.0
2.6
22.4
6.8
11.3

19.5
23.0
6.5
no
no

2,224.0
13.7
11.8
16.1

no
-
-

2,425.0
13.1
12.1
16.4

no
-
-

2,485.0
12.5
12.7
15.4

no
-
-

Ba1
BB+
03/09  09/09

    63       54

(186)    (186) 

Ba1
BBB-
03/10   09/10
   57      62
(185)    (185) 

Ba1
BBB-
       03/11   
67
100

(2)

EN 

26 

   EN 

 
 
3.3.4. 

Syria 

Continuous violent unrest, since March 2011, has seriously affected the Syrian economy and 
the confidence of business sector in the regime. Consumption has decreased by around 50% 
on  almost  all  non-essential  products.  As  a  consequence  the  retail  sector  is  suffering 
significantly  with  the  closure  of  major  retail  outlets,  furthermore  many  firms  are  no  longer 
able  to  pay  their  employees  and  have  had  to  dismiss  them  or  to  reduce  working  hours 
drastically. In the external sector Syrian exporters have also experienced unrest and political 
uncertainty  in  partner  countries  (Egypt,  Lebanon,  Tunisia,  and  Yemen)  and  have  seen  their 
activity  suffer  a  drop  or  even  stop.  Imports  have  also  decreased  significantly.  The  tourism 
sector  is  devastated,  with  most  of  hotels  completely  unoccupied.  In  absence  of  reliable 
statistical data it is obvious that the GDP has dramatically decreased in the first semester of 
2011  (following  an  increase  of  3.2%  in  2010).  Food  and  energy  subsidies  have  been 
reintroduced by the new government; contributing to maintaining inflation at 6% (compared 
with  4.4%  in  2010).  No  fiscal  revenues,  from  the  private  sector,  are  foreseen  for  the  2011 
budget. As the budget for current expenses was exhausted in July, the increasing expenditure 
for public salaries (rise by up to 62%), subsidies and military spending must be financed from 
funds earmarked for investment. The budget deficit is expected to reach at least 8% of GDP 
(twice the level of 2010).  

The  level  of  remittances  is  down,  most  probably,  because  expatriate  workers  prefer  to  keep 
their  money  out  of  Syria.  More  generally,  the  lack  of  confidence  in  the  country's  financial 
sector is obvious with the withdrawal of some leading actors from the banking sector and the 
postponing of decisions by foreign investors.  

By using part of Syria's foreign currency reserves, the government has succeeded to limit the 
depreciation  of  the  value  of  SYP  against  the  USD  to  an  estimated  15%,  which  is  still  an 
artificially  high  level.  Foreign  exchange  reserves  still  remain  (officially)  at  18  billion  USD 
and cover 12 months of imports. The situation of the country will worsen with the adoption of 
sanctions, from the EU, regarding the ban on exports of Syrian oil. The risk of total collapse 
of  the  Syrian  economy  in  the  current  context  of  civil  war  cannot  be  excluded  if  there  is  no 
political change to direct the country out of the crisis.  

In  the  wake  of  a  deteriorating  situation  in  Syria  resulting  from  serious  violations  of  human 
rights  and  fundamental  freedoms,  the  Foreign  Affairs  Council  of  23  May  2011  decided  to 
suspend all preparations in relation to new bilateral cooperation programmes and to suspend 
the  ongoing  bilateral  programmes  with  the  Syrian  authorities  under  the  European 
Neighbourhood  and  Partnership  Instrument  (ENPI)  and  MEDA  instruments.  Moreover,  the 
Council invited the European Investment Bank (EIB) to not approve new financing operations 
in  Syria  .  The  European  Parliament  in  its  Resolution  of  7  July  2011  welcomed  the  Council 
conclusions  to  impose  restrictive  measures  on  Syria  as  well  as  the  suspension  of  new  EIB 
operations in the country. 

In addition, the Council decided on 14 November 2011 to prohibit disbursements by the EIB 
in  connection  with  existing  loan  agreements  between  Syria  and  the  EIB  as  well  as  suspend 
EIB  technical  assistance  contracts  for  sovereign  projects  in  Syria  .  This  Decision  has  been 
thereafter  consolidated  in  Council  Decision  2011/782/CFSP  of  1st  December  2011  and 
Council Regulation (EU) N° XXX/2011 of X December 2011. 

EN 

27 

   EN 

 
Country-risk indicators : Syria

Out put  and prices

Real GDP growth rate
Unemployment (end of period)
Inflation rate (CPI) (Jun/Jun)

Public finances

Gen er al g o ver n m en t  b alan ce

Balance of  paym ent s

Exports of goods and services f.o.b
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) bn EUR
Months' imports of goods and services
Exchange rate (end of period)

Ext ernal debt

External debt  (end of period)
External debt/GDP
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure (capital and interest due)
EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangem ent s

Type
(Date)
On track

2009

2010

2011 (proj)

(%)
(% labour force)
(% ch an g e)

5.0
8.5
3.8

5.0
8.4
4.4

(% of GDP)

-9.0

-3.2

(bn EUR)
(% of GDP)
(m EUR)

( p er  EUR)

(m EUR)
(%)
(%)
(%)
(m EUR)

       (m EUR)
(%)    (1)
(%)
(%)

11.8
-4.5
1,121.0
12.7
10.7
33.7

5,367.0
13.9
0.8
no
no

762.8
762.8
4.7
13.7

no

-
-

14.3
-3.9
1,370.0
13.7
9.4
33.9

5,404.0
12.3
1.5
no
no

796.0
796.0
4.3
14.6

no

-
-

-2.0
8.1
6.0

-8.0

9.4
-6.1
n/a
12
13.6
34,7 ( I Qtr)

5,925.0
13.1
1.5
no
no

753.1
753.0
3.8
12.7

Indicat ors of  m arket 's percept ion of  credit w ort hiness
Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney
   Position in the ranking 
   (number of countries)

none
none
03/09   09/09
163    149
(186)  (186)

(2)

(1) (2)   See explanatory notes

3.3.5.  Tunisia 

none
none

none
none
03/10   09/10       03/11  
none
   140    128
100

(185)  (185)

Economic  activity  has  been  significantly  affected  by  the  political  unrest  and  the  conflict  in 
Libya. Real GDP growth of Tunisia shall be nearly zero in 2011 (compared to almost 3% in 
2010),  reflecting  the  impact  of  the  regional  crisis  on  tourism,  remittances,  trade,  foreign 
investments and production interruptions due to strikes. Inflation remains moderate with a rate 
of  3.5%  for  2011  (from  4.4%  in  2010)  due  to  the  weak  domestic  demand  and  the 
implementation of food and energy subsidies. On the fiscal side, implementation of a planned 
fiscal  stimulus  combined  with  the  negative  impact  of  weakened  economic  activity  on 
revenues  have  been  putting  pressure  on  public  finances,  and  will  contribute  to  a  widened 
budget  deficit  of  nearly  4.5%  of  GDP  in  2011  (compared  to  1.3%  of  GDP  in  2010).  The 
public debt is expected to rise to a level of almost 42% of GDP by the end of the year, mainly 
due to additional external borrowing. External debt will nevertheless not exceed 50% of GDP. 
The  fall  in  external  receipts  and  the  rise  in  international  food  and  fuel  prices  have  already 
impacted the current account which is expected to record a deficit of 5.7% of GDP in 2011 
(from  almost  4.8%  of  GDP  in  2010).  Although  international  reserves  decreased  by  USD  2 
billion between January and July, they increased to USD 8.6 billion in August following the 
disbursement of external support. Pressures on the exchange rate have been relatively smooth 
with the depreciation of 2% of the Tunisian dinar against the EUR since the beginning of the 
year,  leading  to  a  10%  increase  in  exports.  According  to  the  IMF,  the  nominal  effective 
exchange  rate  has  been  broadly  stable.  The  Tunis  stock  exchange  has  recently  shown  some 

EN 

28 

   EN 

 
 
recovery but remains volatile. The TUNINDEX capitalisation index has currently stabilized at 
about 8% below its level of the end of 2010.  

No  request  has  been  submitted  for  an  IMF  arrangement  but  this  is  likely  to  come  after  the 
October elections which would, in principle, make Tunisia a potential candidate for EU MFA. 

Country-risk indicators : Tunisia

Out put  and prices

Real GDP growth rate
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)

Public finances

Gen er al g o ver n m en t  b alan ce

Balance of  paym ent s

Exports of goods and services f.o.b
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) b USD
Months' imports of goods and services
Exchange rate (end of period)

Ext ernal debt

External debt  (end of period)
External debt/GDP
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure (capital and interest due)
EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangem ent s

Type
(Date)
On track

(%)
(% labour force)
(% ch an g e)

(% of GDP)

(bn USD)
(% of GDP)
(m USD)

( p er  EUR)

(b USD)
(%)
(%)
(%)
(m EUR)

       (m EUR)
(%)    (1)
(%)
(%)

2009

2010

2011 ( proj)

3.0
13.3
3.5

-3.0

14.4
-4.2
1.5
10.6
6.7

21.4
48.1
11.9
no
no

1,899.6
11.7
12.6
15.1

no
-
-

3.0
13.0
4.4

-1.3

14.6
-4.8
1.5
9.5
6.0

19.9
47.9
10.7
no
no

2,220.0
12.0
15.1
17.1

no
-
-

0.0
13.0
3.5

-4.5

15.3
-5.7
1.2
7.5
3.5

22.4
49.2
12.6
no
no

2,320.0
11.7
15.0
21.9

no
-
-

Indicat ors of  m arket 's percept ion of  credit w ort hiness
Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney
   Position in the ranking 
   (number of countries)

Baa2
BBB 
03/09   09/09
62    64
(186) (186)

Baa2
BBB 
03/10   09/10
  53       52
  (185)  (185)

Baa3
BBB-
     03/11 
81
100

(2)

(1) (2)   See explanatory notes

3.4. 

Eastern Partnerships 

3.4.1.  Georgia 

After two years of low or negative growth, the year 2010 saw a strong revival of economic 
activity  with  real  GDP  increasing  by  6.3%,  driven  by  exports  and  public  investments.  For 
2001,  GDP  growth  is  projected  to  reach  5.5%.  In  this  context  the  fiscal  deficit  has  been 
reduced from 9.2% of GDP in 2009 to 6.6% in 2010 and is expected to decrease to 3.7% in 
2011.  Inflation  was  7.1%  in  2010  but  it  reached  14.3%  (year-on-year)  in  May  2011  due  to 
increased international prices for food and gas. The current account deficit remains large, at 
9.6%  of  GDP  in  2010,  and  it  is  expected  to  widen  to  10.8%  of  GDP  in  2011.  Despite  a 
significant  recovery  of  export  volumes,  trade  deficit  reached  22.2%  of  GDP  in  2010 
remaining unchanged in comparison to 2009. As far as the financing of the current account is 
concerned,  FDI  inflows  were  negatively  affected  by  the  crisis  and  declined  in  2010  in 
comparison to the previous year; they are expected to remain subdued in 2011 at around USD 

EN 

29 

   EN 

 
 
700  million.  At  the  end  of  2010,  official  reserves  were  at  USD  2.3  billion;  by  April  2011, 
monetary authorities accumulated further official reserves that reached USD 2.8 billion; they 
remained  at  that  level  since  then.  A  vulnerability  in  the  balance  of  payments  relates  to  a 
relatively  high  level  of  external  debt  (at  61.9%  in  2010)  and,  in  particular,  a  strong  recent 
increase in external public debt which increased from only 20.9% of GDP in 2008 to 34.4% in 
2009, broadly the same level as in 2010 (34.1% of GDP). 

Country-risk indicators : Georgia

Out put  and prices

Real GDP growth rate
Unemployment (end of period)
Inflation rate (CPI) (period average)

Public finances

Gen er al g o ver n m en t  b alan ce

Balance of  paym ent s

Exports of goods and services f.o.b
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) m EUR
Months' imports of goods and services
Exchange rate (average)

Ext ernal debt

External debt  (end of period)
External debt/GDP
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure (capital and interest due)
EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangem ent s

(%)
(% labour force)
(% ch an g e)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)

( p er  EUR)

(m EUR)
(%)
(%)
(%)
(m EUR)

       (m EUR)
(%)    (1)
(%)
(%)

Type

(Date)

On track

Indicat ors of  m arket 's percept ion of  credit w ort hiness
Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney
   Position in the ranking 
   (number of countries)

(1) (2)   See explanatory notes

3.4.2.  Ukraine 

2009

2010

2011 ( proj)

-3.8
16.9
1.7

-9.2

2,308.0
-11.2
474.0
1,518.0
4.2
2.3

4,497.0
58.0
23.6
0
0

36.0
0.2
0.8
1.6

6.4
16.3
7.1

-6.6

3,067.0
-9.6
372.0
1,710.0
3.7
2.4

5,909.0
61.9
17.2
0
0

41.0
0.2
0.7
1.3

5.5
16.2
9.5

-3.7

3,589.0
-10.8
507.0
1,992.0
4.3
n.a.

6,066.0
62
26.9
0
0

48.0
0.2
0.8
1.3

Standby: 
USD 750 m, 
increased to 
USD 1.17 bn in 
August 2009

Standby: 
USD 750 m, 
increased to 
USD 1.17 bn 
in August 
2009

Standby: 
USD 750 m, 
increased to 
USD 1.17 bn in 
August 2009

Sept 2008 to 
March 2010, 
extended to 
June 2011

Sept 2008 to 
June 2011

Sept 2008 to 
June 2011

on track 

on track

terminated in 
June 2011

none
B
03/09 09/09
105      111
(186)   (186)

Ba3
B+
03/10   09/10
   87   71
(185)   (185)

Ba3
B+
       03/11   
76
100

Ukraine  has  been  hardly  hit  by  the  global  economic  crisis.  From  late  2008  it  suffered  a 
parallel  balance-of-payments  and  banking  crisis  explaining  that  GDP  contracted  by  nearly 
15% in 2009. The situation improved in 2010 with the GDP growing by 4.2% with a forecast 
of 4.7 % for 2011. In 2010, at just over 5% of GDP, the general government deficit was lower 

EN 

30 

   EN 

 
 
than  the  programme  target  of  5.5%,  and  in  the  first  half  of  2011,  revenue  performance  was 
strong while budget spending remained prudent. However, the 2011 target deficit of 3.5% will 
be difficult to accomplish in the context of the overall economic slowdown. By the end of the 
first  half  of  2011,  general  government  debt  stood  at  USD  60  billion  (36%  of  GDP),  which 
represents  a  notable  improvement  compared  to  the  situation  of  2008  and  2009.  In  2011, 
inflation stood at 7.7% in the first quarter and at 9.2% by the end of the second quarter, before 
slowing down to 9% until the end of September. Nevertheless, due to expected higher energy 
and food prices in the second half of the year, inflation might move into double-digit area.  

Trade  deficit  reached  USD  8.7  billion  in  2010  (6.3%  of  GDP)  and  is  expected  to  widen  in 
2011 to USD 11.4 billion (7.3% of GDP). Foreign exchange reserves amounted to USD 34.8 
billion by the end of April 2011 before decreasing by USD 3 billion in September 2011. In the 
first half of the year of 2011, the current account deficit widened, reaching USD 2.5 billion 
(corresponding  to  3.7%  of  GDP)  and  is  forecasted  to  reach  4%  of  GDP  for  the  whole  year 
(compared to 3.1% in 2010). Foreign direct investments, however, are not expected to recover 
significantly in comparison to 2010. 

Country-risk indicators : Ukraine

Out put  and prices

Real GDP growth rate
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)

Public finances

Gen er al g o ver n m en t  b alan ce

Balance of  paym ent s

Exports of goods and services f.o.b
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) m EUR
Months' imports of goods and services
Exchange rate (average)

Ext ernal debt

External debt  (end of period)
External debt/GDP
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure (capital and interest due)
EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangem ent s

(%)
(% labour force)
(% ch an g e)

(% of GDP)

(bn EUR)
(% of GDP)
(m EUR)

( p er  EUR)

(m EUR)
(%)
(%)
(%)
(m EUR)

      (m EUR)

(%) 
(%)
(%)

Type

(Date)

On track

Indicat ors of  m arket 's percept ion of  credit w ort hiness
Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney
   Position in the ranking 
   (number of countries)

2009

2010

2011 ( proj)

-14.8
9.6
15.9

-8.7

39.0
-1.5
3,349.0
19,073.0
4.4
10.8

74,403.0
88.2
44.5
-
-

126.0
0.8
0.2
0.3

4.2
8.8
9.4

-5

52.3
-3.1
4,349.0
26,108.0
4.5
10.5

88,605.0
85.1
31.1
-
-

200.0
1.1
0.2
0.4

4.7
7.9
9.3

-3.5

59.9
-4.0
4,284.0
28,841.0
5.1
11.1

95,584.0
84.9
26.4
-
-

235.1
1.2
0.2
0.4

Stand-By 
programme of 
USD 16,5 bn, 
Since Nov. 
2008

Stand-By 
programme of 
USD 15,2 bn
July 2010- 
Dec 2012

Stand-By 
programme of 
USD 15,2 bn
July 2010- Dec 
2012

on track

off-track since 
Nov. 2009

off-track since 
March 2011

B2
CCC+
03/09  09/09
87    93
(186)  (186)

B2
B+
03/10  09/10
98    78
(185)  (185)

B2
B+
    03/11   
89
100

EN 

31 

   EN 

 
 
3.5. 

B.R.I.C.S. 

3.5.1.  Brazil 

Brazil recovered strongly from the crisis and grew at a record 7.5% in 2010 driven mainly by 
strong  domestic  demand  and  good  prospects  for  the  Brazilian  economy  (high  commodity 
prices, low unemployment, and high confidence). The IMF expects GDP growth to moderate 
to 3.8% in 2011 while inflation should be limited to 7.5% in 2011. Concerns on the existence 
of  credit  bubbles  have  been  voiced  as  credit  growth  has  remained  very  high,  and  housing 
prices  have  been  increasing.  Nevertheless,  banks  remain  well  capitalised  and  the  mortgage 
markets  are  still  in  their  early  stages  of  development.  The  current  account  deficit  has  been 
deteriorating,  driven  by  lower  trade  surplus  and  by  higher  services  and  income  deficits. 
Recent  data  show  some  moderation  in  the  current  account  deficit.  On  the  fiscal  side,  the 
government announced spending cuts worth USD 30 billion (around 1.3% of GDP) for 2011. 
The debt-to-GDP ratio declined from to 40.4 % in 2010 and the Brazilian Ministry of Finance 
expects it to drop to 37.8% in 2011. 

Recent  concerns  about  a  potential  global  recession  and  falling  commodity  prices  led  to  a 
significant depreciation of the real. From 1 August to 26 September 2011, the real depreciated 
by 10.3% against the EUR and by 16.3% vis-à-vis the USD. This prompted the central bank 
to intervene on 18 September. The strong depreciation of the currency, while helping exports 
in the short run, is worrying policy makers of the country as it could aggravate the problems 
already existing with inflation while increasing the external-debt repayment burden. 

Country-risk indicators : Brazil

Out put  and prices

Real GDP growth rate
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)

Public finances

Gen er al g o ver n m en t  b alan ce

Balance of  paym ent s

Exports of goods and services f.o.b
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) m EUR
Months' imports of goods and services
Exchange rate (end of period)

Ext ernal debt

External debt  (end of period)
External debt/GDP
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure (capital and interest due)
EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangem ent s

Type
(Date)
On track

Indicat ors of  m arket 's percept ion of  credit w ort hiness
Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney
   Position in the ranking 
   (number of countries)

(1) (2)   See explanatory notes

(%)
(% labour force)
(% ch an g e)

(% of GDP)

(bn EUR)
(% of GDP)
(m EUR)

2009

2010

2011 ( proj)

-0.6
8.1
4.9

-3.5

7.5
6.7
5.0

-1.7

153
-1.5
14,152.7
238.5

202
-2.2
30,357.2
288.5

3.8
6.7
7.5

-2.8

260.0
-2.3
28,542.0
241.0

( p er  EUR)

2.8

2.3

2.3

(m EUR)
(%)
(%)
(%)
(m EUR)

       (m EUR)
(%)    (1)
(%)
(%)

134,275.0
12.2
51.3
no
no

189,254.0
12.3
50.4
no
no

691.2
4.3
0.5
0.6

826.0
4.5
0.5
0.6

210,777.0
11.9
38.5
no
no

786.0
4.0
0.4
0.3

Baa3
BBB-
03/09   09/09
51   48
(186)   (186)

Baa3
BBB-
03/10   09/10
42   41
(185)  (185)

Baa2
BBB-
       03/11   
42
100

(2)

EN 

32 

   EN 

 
 
3.5.2. 

South Africa 

South  African  economy  recovered  in  2010  with  a  growth  rate  of  2.8%.  In  the  current  year 
GDP is likely to continue increasing; growth rate is likely to exceed 3.3%, driven mainly by 
household consumption which is however a bit less than previously expected. The downward 
revision  is  due  to  the  increasingly  uncertain  external  environment,  social  unrest  and  rising 
unemployment.  Although  economic  growth  is  not  strong  enough  to  make  an  impact  on  the 
high unemployment rate (estimated to be above 24% in 2011, with the manufacturing, trading 
and  mining  sectors  shedding  the  largest  numbers  of  jobs),  higher  salaries  and  subdued 
inflation will support consumers' domestic demand. Annual inflation reached 5.1% (year-to-
year) in June 2011 due to the rise in food prices, fuel and electricity prices, and wage growth. 
Monetary  policy  will  remain  focused  on  keeping  annual  inflation  within  the  official  target 
range of 3 to 6%. The SARB (South African Reserve Bank's) monetary policy committee cut 
rates aggressively in 2009-2010 and in November 2010 proceeded to a further reduction of 50 
basis  points  in  the  repo  rate  (to  5.5%,  the  lowest  level  for  40  years).  According  to  the  new 
budget  plans,  the  government  deficit  will  remain  at  4.2%  of  GDP  in  2011-2012  and  should 
decline slowly in the coming years, larger than foreseen previously. The public debt burden 
will however remain relatively low at below 50% of GDP.  

Country-risk indicators :  South Africa
Output and prices

Real GDP growth rate
Unemployment (average)
Consumer price Inflation (average)

Public finances

General government balance

Balance of  paym ent s

Exports of goods and services f.o.b
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period)
Months of imports of goods and services
Exchange rate (end of period, + is depreciation of LE)

Ext ernal debt

External debt  ( end of period)
External debt/GDP
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure (capital and interest due)
EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangem ent s

Type
(Date)
On track

Indicat ors of  m arket s' percept ion of  credit w ort hiness
Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney
Position in the ranking 
(number of countries)

(1) (2)   See explanatory notes
* Source: IMF World Economic Outlook

(%)
(% labour force)
(% ch an g e)

(% of GDP)

(bn EUR)
(en % du PIB)
(m  €)

      bn USD

(r an d s p er  €)

(m €)
(%)
(%)
(m €)
(m €)

       (m EUR)
(%)   (1)
(%)
(%)

2009

2010

2011 (Proj)*

-1.8
24.3
7.1

-5.0

56.3
-4.0

2.8
24.8
4.3

-4.8

79.1
-2.8

3.4
24.5
5.9

-4.2

89.6
-3.4

9,586.1

11,977.9

41,357.7

35.8
6.7
10.7

42.3
6.3
8.9

53.9
6.0
6.7

41,604.2

42,277.1

41,135.6

14.6
10.9
no
no

742.5
4.6
1.4
1.3

no
-
-

14.3
10.8
no
no

1,087.0
5.9
2.0
1.4

no
-
-

12.9
9.7
no
no

1,237.0
6.2
3.0
NA

no
-
-

A3
BBB+
03/09   09/09
50     47
(186)  (186)

A3
BBB+
03/10   09/10
47     47
(185)  (185)

A3
BBB+
       03/11   
48
100

(2)

EN 

33 

   EN 

 
 
3.6. 

Other 

3.6.1.  Tajikistan 

Tajikistan's GDP rose by 6.5% in 2010 (year-on-year) and is expected to expand by 5.8% in 
2011.  The  moderate  slowdown  in  growth,  despite  rising  remittances,  reflects  the  impact  of 
global economic trends on demand for Tajikistan's exports. Inflation should remain stable in 
the  coming  months  and  reflect  global  price  trends  (food  prices  have  gone  up  sharply  in  the 
recent past). 

The tax base remains narrow, with a large share of revenue still linked to the performance of 
the aluminium and cotton sectors, which presents an ongoing risk to the government’s fiscal 
targets. Despite the high level of social spending the budget deficit is expected to remain at 
around  1%  of  GDP  in  2011.  International  aid  continues  to  meet  some  of  the  government’s 
spending requirements. 

Tajikistan  remains  dependent  on  sales  of  aluminium,  cotton  and  electricity  for  most  of  its 
export  revenue.  Aluminium  exports  rose  in  2010,  following  a  sharp  fall  in  2009  that  partly 
reflected  a  cut  in  output  because  of  power  supply  problems  and  lower  external  demand. 
Export revenue continued to rise in 2011. The current-account balance is expected to register 
a deficit of around 3.7% of GDP in 2011, compared with the surplus of 2.2% of GDP in 2010. 
While  Tajikistan's  external  as  share  of  GDP  is  slowly  decreasing,  the  country's  external 
position remains fragile, in particular in view of a low level of international reserves (about 
1.5 months of imports). 

EN 

34 

   EN 

 
Country-risk indicators : Tajikistan

Out put  and prices

Real GDP growth rate
Unemployment (end of period)
Inflation rate (CPI) (Dec/Dec)

Public finances

Gen er al g o ver n m en t  b alan ce

Balance of  paym ent s

Exports of goods and services f.o.b
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) m Dollar
Months' imports of goods and services
Exchange rate (end of period)

Ext ernal debt

External debt  (end of period)
External debt/GDP
Debt service/exports of goods and services
Arrears (on both interest and principal)
Debt relief agreements and rescheduling

Indicators of EU exposure

EU exposure (capital and interest due)
EU exposure/total EU exposure
EU exposure/external debt
EU exposure/exports of goods and services

IMF arrangem ent s

Type

(Date)
On track

Indicat ors of  m arket 's percept ion of  credit w ort hiness
Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Euromoney
   Position in the ranking 
   (number of countries)

(1) (2)   See explanatory notes

(%)
(% labour force)
(% ch an g e)

(% of GDP)

(m Dollar)
(% of GDP)
(m Dollar)

( p er  Do llar )

(m Dollar)
(%)
(%)
(%)
(m EUR)

       (m EUR)
(%)    (1)
(%)
(%)

2009

2010

2011 ( proj)

3.9
2.1
5.0

-0.5

408.0
-5.9
16.0
278.0
1.2
4.1

6.5
2.2
9.8

-0.4

575.0
2.2
49.0
447.0
1.4
4.4

5.8
2.2
12.6

-1.0

827.0
-3.7
110.0
557.0
1.6

1,692.0
35.0
20.3

1,942.0
34.4
7.3

2,260.0
33.1
5.2

29.0
0.2
2.5
0.0

29.0
0.2
2.2
0.0

29.0
0.1
1.9
0.0

PRGF arrangement 
21 April 2009
yes

none
none

none
none

03/09   09/09 03/10  09/10   

150   152
(186)  (186)

148  162
(185)  (185)

none
none
      03/11 
none
100

(2)

EN 

35 

   EN