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 31 december 2011
Date: 2012-10-22
Institutions: European Commission
Subjects: EIB loan, budgetary reserve (EU), general budget (EU), investment protection, third country

EUROPEAN 
COMMISSION 

Brussels, 22.10.2012  
SWD(2012) 347 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 31 december 2011 

{COM(2012) 609 final}

EN 

   EN 

 
 
 
 
 
  
 
Table of Contents 

1. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

2.5. 

Introduction ..................................................................................................................3 

Situation of risks covered by the Budget......................................................................3 

Overview of capital loan operations covered by the EU guarantee .............................3 

Risk factors ...................................................................................................................5 

Cumulative and annual Budget guarantee exposures ...................................................6 

Loan operations covered by the Budget guarantee.......................................................8 

Evolution of risk .........................................................................................................11 

2.5.1.  Situation of loans to Member States...........................................................................11 

2.5.2.  Situation of loans to third countries............................................................................11 

2.5.3.  Borrowing/lending operations ....................................................................................13 

2.5.4.  Guarantees given to third parties ................................................................................14 

2.5.5.  Default interest penalties for late payment .................................................................14 

3. 

Country-risk evaluation ..............................................................................................15 

3.1. 

Candidate countries ....................................................................................................15 

3.1.1.  FYROM ......................................................................................................................15 

3.1.2.  Montenegro.................................................................................................................17 

3.1.3.  Serbia ..........................................................................................................................18 

3.1.4.  Turkey.........................................................................................................................19 

3.2. 

Potential candidate countries ......................................................................................20 

3.2.1.  Albania........................................................................................................................20 

3.2.2.  Bosnia and Herzegovina,............................................................................................21 

3.3. 

Mediterranean partners ...............................................................................................22 

3.3.1.  Egypt...........................................................................................................................22 

3.3.2.  Lebanon ......................................................................................................................23 

3.3.3.  Morocco......................................................................................................................25 

3.3.4.  Syria............................................................................................................................26 

3.3.5.  Tunisia ........................................................................................................................27 

3.4. 

Eastern Partnerships ...................................................................................................29 

3.4.1.  Armenia ......................................................................................................................29 

3.4.2.  Georgia .......................................................................................................................30 

 
 
3.4.3.  Ukraine .......................................................................................................................31 

3.5. 

B.R.I.C.S.....................................................................................................................32 

3.5.1.  Brazil ..........................................................................................................................32 

3.5.2.  South Africa................................................................................................................33 

3.6. 

Other ...........................................................................................................................35 

3.6.1.  Tajikistan ....................................................................................................................35 

 
 
1. 

INTRODUCTION 

This working document is published in parallel with the report of the Commission to the European 
Parliament and the Council on guarantees covered by the budget at 31 December 2011. It provides 
information on quantitative aspects of the risk borne by the EU Budget related to Member States and 
third countries. 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. 

 
 
TABLE A1: CAPITAL OUTSTANDING IN RESPECT OF OPERATIONS DISBURSED at 31.12.2011 (in EUR million)

Authorised
ceiling (a)

Capital
outstanding at
30.06.2011 (b)

Capital
outstanding at
31.12.2011 (b)

Remainder
to be disbursed
at 31.12.2011  (c) 

Operations

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

BoP
Hungary
Latvia
Romania

EFSM
Ireland
Portugal

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

6,500
3,100
5,000

22,500
26,000

63,100

9
65
40
90
142
50
473
7
75

3,061
38
410

5,500
2,900
5,000

11,400
6,500

34,808

9
0
38
66
14
25
273
7
28

460
45

8,632
7,163
2,455
940

22,251
19,695
54,503

2,965
25
404

3,500
2,900
5,000

13,900
14,100

42,794

9
26
36
61
0
25
373
7
28

565
43

9,074
7,506
2,703
1,034
150
23,432
21,075
63,868

349

200

8,600
11,900

21,049

39

25
100

164
9

3,205
6,479
1,226
155
1,850
13,264
13,087
34,136

951

Sub total MFA
B. EURATOM (1)
C. Other
EIB Pre-Accession countries
EIB Neighbourhood and Partnership countries
EIB Asia and Latin America
EIB South Africa
EIB climate change (3)
Sub total EIB (2)
THIRD COUNTRIES - TOTAL
GRAND TOTAL
(1) The overall ceiling is EUR 4 000 million for loans to Member States and to certain non-member States. 

29,103
29,490
8,357
2,436
2,000
71,386
72,337
135,437

(2) The subtotal EIB includes the EIB loans to Member States. 

(3) The Climate change mandate has been adopted together with the 2007-2013 Mandate's increase up to EUR 29,484 million (Decision n°1080/2011/EU)

• 

(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, but  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,  they  still  amount  to  37%.  However,  the 

 
 
 
 
 
 
 
 
 
 
 
 
 
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 31.12.2011 (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
Climate change mandate

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 31.12.2011 (b)

29,484
9,048
13,548
9,700
3,848
3,952
1,040
2,912
936
2,000

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

49,544
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
71,386

19,436
7,665
8,268
6,560
1,708
2,761
783
1,978
591
150

19,112
7,324
6,127
2,105
817
2,740
38,548
6,482
477
1,587
809
375
3,235
6,482
7,047
713
4,478
1,857
7,047
5,320
29
315
710
285
3,982
5,320
57,397

8,561
3,899
2,396
2,079
318
1,690
386
1,305
425
150

16,335
6,073
5,335
1,793
732
2,404
24,896
6,094
450
1,510
673
273
3,188
6,094
7,217
724
4,534
1,959
7,217
5,392
29
305
724
204
4,130
5,392
43,599

8,343
3,869
2,248
2,045
203
1,656
386
1,271
420
150

11,863
4,919
4,087
853
547
1,458
20,206
1,977
235
442
106
65
1,130
1,977
530
49
443
38
530
718
2
287
88
2
339
718
23,431

(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. 

 
 
 
                                                 
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, by Decision 
N° 633/2009/EC and by Decision N°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. 

An  additional  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  31  December  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. 

 
 
                                                 
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 31.12.2011. 

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 31.12.2011

Ranking

Country

2012

2013

2014

2015

2016

2017

2018

2019-2041

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

61

Turkey

Ireland

Portugal

Romania

Egypt

Tunisia

Morocco

Serbia

Hungary

South Africa

Latvia

Bulgaria

Lebanon

Syria

Poland

Czech Republic

Bosnia and Herzegovina

Brazil

Slovak Republic

Jordan

FYROM

Croatia

Colombia

Argentina

Vietnam

Albania

Peru

Israel

the Philippines

Pakistan

Indonesia

Tadjikistan

Slovenia

Montenegro

India

Russia

Ukraine

Sri Lanka

Paraguay

China

Cyprus

Panama

Thailand

Maldives

Lithuania

Bangladesh

Ecuador

Mexico

Costa Rica

Uruguay

The West Bank and the Gaza Strip

Laos

Armenia

Malaysia

Republic of Moldova

El Salvador

Malta

Georgia

Estonia

Nicaragua

Algeria

Grand total

MS

% of MS in the total

458.8

412.7

400.8

395.1

207.9

185.8

179.4

154.2

142.4

122.3

96.8

92.8

84.6

81.3

81.0

70.8

54.8

51.2

51.1

49.8

48.2

46.1

23.6

21.9

19.4

18.8

16.5

15.7

14.7

13.0

12.9

12.4

11.4

11.2

10.5

10.3

9.5

9.1

7.9

7.8

7.7

6.8

6.8

5.8

5.3

4.6

4.5

4.3

3.9

3.9

2.8

2.7

2.0

2.0

1.7

1.0

0.7

0.6

0.5

0.1

0.0

447.8

412.4

403.6

391.3

202.3

197.0

182.8

160.9

133.3

84.5

96.6

83.6

88.5

77.2

74.8

68.1

49.4

79.5

37.2

42.2

45.9

45.9

25.8

48.8

20.3

16.7

16.2

14.8

15.4

9.8

12.9

12.1

9.4

14.0

22.3

10.0

7.2

10.7

15.5

7.6

5.1

6.7

9.2

5.6

5.1

8.4

4.4

3.6

3.9

4.5

2.8

2.7

2.2

1.0

1.7

1.6

0.4

0.0

0.0

0.1

0.0

501.4

412.4

403.6

371.4

184.6

196.1

185.6

177.3

2,128.4

90.4

585.9

5,412.4

403.6

1,869.9

184.2

194.0

288.2

236.4

63.0

98.8

1,096.5

1,265.1

83.8

96.7

76.4

53.7

56.4

49.3

80.0

72.3

81.1

43.6

45.7

91.8

555.9

287.4

5,153.6

299.6

185.4

193.0

164.3

188.6

1,558.8

104.3

26.8

77.3

64.2

80.0

29.3

43.7

46.4

110.2

247.1

230.7

25.8

39.4

48.3

42.5

25.8

39.3

23.8

20.9

16.2

17.4

17.0

6.7

12.9

4.0

7.4

16.9

28.8

9.6

7.1

13.8

15.5

8.0

3.3

6.7

2.2

5.6

5.0

0.0

4.4

3.6

0.0

5.0

2.8

2.7

2.2

0.0

1.8

1.4

0.0

0.8

0.0

0.1

0.0

15.1

32.0

41.9

40.5

25.8

37.9

20.7

21.8

16.2

14.5

15.7

6.7

12.9

0.0

4.4

19.0

33.6

11.9

11.5

15.5

15.5

9.9

0.0

6.8

0.0

5.6

4.8

0.0

4.4

3.6

0.0

4.2

2.8

2.8

2.3

0.0

2.7

2.0

0.0

1.7

0.0

0.1

0.0

14.7

30.2

29.5

38.9

25.8

32.4

21.4

21.6

13.4

12.5

14.4

4.7

8.4

0.0

2.1

19.0

33.6

19.3

18.0

13.9

11.6

5.0

0.0

7.1

0.0

5.6

4.6

0.0

4.4

3.6

0.0

4.2

2.7

2.8

2.5

0.0

3.5

2.6

0.0

2.7

0.0

0.2

0.0

941.1

287.4

273.0

1,439.9

178.4

183.7

162.5

176.3

2.1

97.9

26.0

71.9

52.9

55.7

21.5

25.9

55.0

74.2

14.2

30.0

21.1

38.0

25.8

31.1

20.5

22.9

13.4

11.9

9.1

3.9

8.4

0.0

0.0

18.3

28.6

17.5

20.1

13.3

7.7

5.3

0.0

7.6

0.0

3.8

4.4

0.0

4.4

3.6

0.0

2.1

2.5

2.8

2.5

0.0

3.9

2.1

0.0

3.3

0.0

0.3

0.0

502.7

4,187.4

873.0

1,590.8

174.5

162.9

154.5

184.1

0.0

109.8

25.9

61.4

46.3

55.3

20.7

13.2

45.7

38.3

13.8

30.2

15.7

35.8

18.0

29.7

18.7

21.5

5.6

11.9

3.7

3.9

6.2

0.0

0.0

22.0

18.6

14.5

16.2

12.9

0.0

5.4

0.0

7.6

0.0

3.8

3.5

0.0

4.4

86.1

0.0

0.0

2.1

2.9

2.5

0.0

3.8

2.1

0.0

3.3

0.0

0.3

0.0

4,337.1

5,795.0

9,826.3

1,754.3

720.0

1,043.0

1,166.2

681.1

0.0

596.1

760.7

185.3

89.3

220.9

70.6

47.2

274.1

78.6

73.4

165.9

33.4

194.2

8.2

28.3

103.6

123.0

0.5

161.2

14.5

1.9

8.0

0.0

0.0

76.8

23.1

111.5

157.7

31.8

0.0

47.6

0.0

123.3

0.0

5.1

5.3

0.0

2.2

3.6

0.0

0.0

0.1

58.4

84.5

0.0

20.7

23.0

0.0

45.1

0.0

3.3

0.0

Total 
outstanding

8,330.7

17,206.9

17,737.6

8,112.3

2,037.2

2,355.4

2,483.5

1,959.0

4,028.0

1,304.1

3,394.5

736.2

594.8

728.0

395.3

371.0

666.4

909.8

245.3

419.7

284.0

481.9

178.9

269.6

248.4

267.2

98.1

259.9

104.3

50.5

82.6

28.5

34.8

197.2

199.0

204.7

247.2

121.1

73.6

96.5

16.1

172.5

18.2

40.7

38.0

13.0

33.0

111.8

7.9

23.9

18.7

77.8

100.6

3.0

39.8

35.7

1.1

57.6

0.5

4.8

0.0

3,782.5

1,769.3

47%

3,763.4

1,721.0

46%

6,768.9

4,647.7

69%

11,729.7

9,207.6

78%

9,726.1

7,497.9

77%

4,529.7

2,166.4

48%

8,673.0

6,789.7

78%

29,385.0

18,518.0

63%

78,358.2

52,317.6

67%

 
 
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 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 30.06.2011 - 31.12.2011

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 30.06.2011

Operations carried out during 
the 2nd semester 2011 

Amounts
disbursed

Amounts
repaid

Outstanding
amount
at 31.12.2011

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 **

until 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
3rd instalment - tranche 1
3rd instalment - tranche 2

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

2nd instalment - tranche 1
2nd instalment - tranche 2
2nd instalment - tranche 3

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*

ROMANIA IV*
     1st tranche
     2nd tranche
     3rd tranche

TOTAL

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
29/09/2011
6/10/2011

30/05/2011
31/05/2011
1/06/2011
21/09/2011
29/09/2011
6/10/2011

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

99/732/EC

08.11.99

100%

8/12/2013

18/05/2014

closed

closed

closed

4, 9
7
10
15
6,5

10
5
10
15
6,5

20
15
17
15
15
16
16
14

17
19
18

10
10

 -

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
4/09/2026
4/10/2018

4/06/2021
3/06/2016
21/09/2021
4/09/2026
4/10/2018

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

29.06.2010
17.07.2013

 -

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)
(c)

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

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

(c)
(c)
(c)

(c)
(c)
(a)

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

200.0

200.0
100.0
50.0
50.0

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

37.5
0.0
37.5
0.0

0.0
0.0

2,000.0
2,000.0
2,000.0

0.0

0.0

0.0

0.0

10,100.0

2,500.0

2,000.0
500.0

7,600.0

5,000.0
2,000.0
600.0
0.0

0.0

0.0

0.0

6.5

6.5

0.8
1.3
1.3
1.8
1.5

0.0

0.0

12.5

12.5

12.5

11,400.0
3,500.0
0.0
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

28,000.0

13,900.0

5,000.0
3,400.0
3,000.0
2,000.0
500.0

14,100.0
1,750.0
4,750.0
5,000.0
2,000.0
600.0
403.8

180.3
40.0
7.0
21.3
16.3
26.3
27.0
25.0
17.5

223.5
100.0
90.0
33.5
25.0

25.0
0.0
25.0
0.0

68,700.0

31,747.8

10,100.0

2,019.0

39,828.8

* 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)
(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). 

TABLE A3b
 European Union (MFA) and Euratom loans to non-member States (EUR million) 
Changes in amounts outstanding during six-month period 30.06.2011 to 31.12.2011, 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 30.06.2011

Operations in 
six-month period

Amounts
disbursed

Amounts
repaid

Amount
outstanding
at 31.12.2011

MFA

1629.0

459.5

126.0

99/325/EC

99/733/EC

97/471/EC

02/883/EC

97/787/EC
2000/244/EC

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
TADJIKISTAN
     1st tranche
SERBIA AND MONTENEGRO * 2001/549/EC
Serbia
Montenegro
SERBIA AND MONTENEGRO * 2002/882/EC
     1st tranche
     Serbia
    Montenegro
     2nd tranche
     Serbia
     Montenegro
     3rd tranche
     Serbia
     Montenegro
ALBANIA
LEBANON
ARMENIA
BOSNIA & HERZEGOVINA
SERBIA
UKRAINE IV
UKRAINE V

2004/580/EC
2007/860/EC
2009/890/EC
2009/891/EC
2009/892/EC
2002/639/EC
2010/646/EC

EURATOM
UKRAINE (Euratom)

94/179/EC

10.05.99

09.11.02

22.07.97

08.11.99

17.11.97
20.03.00

16.07.01

09.11.02

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

closed

closed
15/11/2012
08/08/2012
05/04/2012
open **
not yet fixed ***

15
-

15
15

15
15

15
15
15
15
15

15
15

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
24.07.12

30.03.16
17.10.16

15

28.02.18

15

1.09.18

15

4.05.20

15
10
15

8

23.03.21
4.06.14
27.07.2026

12.07.2019

11

29.07.18

(c)
(c)

(c)
(c)

(c)
(c)

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

(c)

(c)

(c)

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

10.0
10.0

10.0
6.0

10.0
12.0
10.0
18.0
13.5

28.0

223.8
1.2

9.0
1.0

27.0
3.0

13.5
1.5
9.0
25.0

44.8
27.3
11.2
6.3

26.0

100.0

20.5

2.0

5.0

13.5

3.8
2.0
0.9
1.0

565.0

0.0
6.0
10.0
0.0
10.0
10.0
0.0
5.0
6.0
0.0
10.0
12.0
10.0
18.0
0.0

28.0
0.0
223.8
1.2

9.0
1.0

27.0
3.0

13.5
1.5
9.0
25.0
26.0

100.0

43.0
25.3
11.7
6.0

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

126.0

24.3

608.0

 
 
 
 
 
 
 
TABLE A4

LOAN GUARANTEES TO EIB

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)

2005/48/EC(10)

Mandate 2007-2013

2006/1016/EC(12) (13)

Climate change Mandate (14)

1080/2011/EU (12)(13)

TOTAL

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

22.12.04

19.12.06

25.10.11

75% (2)

75% (2)

100%

100%

100%

100%

100%

70%

100%

70%

70%

70%

65%

65%

100%

100%

65%

65%

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

Loans signed

Amount
decided         (minus cancellations)
at 30.06.11
5,548 

at 31.12.11
5,533 

6,062 

1,800 

7,862 

1,000 

700 

3,000 

750 

153 

122 

300 

1,656 

7,204 

912 

493 

2,464 

571 

139 

122 

285 

1,656 

7,189 

912 

493 

2,464 

571 

139 

122 

285 

in EUR million 

Amount outstanding

at 30.06.11
360 

at 31.12.11
318 

234 

594 

58 

- 

330 

86 

4 

4 

2 

212 

530 

51 

- 

290 

84 

4 

3 

2 

25.07.97/29.07.97

7,105 

6,139 

6,110 

1,946 

1,826 

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 

588 

91 

65 

478 

86 

62 

464 

19.07.00/24.07.00 (11)

19,460 

18,594 

18,524 

11,296 

11,399 

06.05.02/07.05.02

21.12.05/09.12.05

100 

500 

85 

230 

01.08.07/29.08.07 (14)

29,484 

17,691 

01.08.07/29.08.07 (14)

2,000 

- 

71,386 

55,779 

85 

230 

19,286 

150 

57,398 

66 

203 

7,029 

- 

22,251 

68 

219 

8,193 

150 

23,431 

(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 has been 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.
(14) Restated and amended in 2011.
(15) The amount of EUR 2,000 million is included in the overall mandate of EUR 29,484 million.

 
 
       
            
            
                
                
       
            
            
                
                
       
            
            
                
                
       
               
               
                  
                  
          
               
               
                     
                     
       
            
            
                
                
          
               
               
                  
                  
          
               
               
                    
                    
          
               
               
                    
                    
          
               
               
                    
                    
       
            
            
             
             
          
               
               
                  
                  
          
               
               
                  
                  
          
               
               
                
                
     
          
          
           
           
          
                 
                 
                  
                  
          
               
               
                
                
     
          
          
             
             
       
                    
               
                     
                
     
          
          
           
           
 
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 in 2011.  

EFSM assistance for Ireland and Portugal reached a total of respectively EUR 13.9 billion and EUR 
14.1  billion  at  31.12.2011.  Total  outstanding  for  BOP  loans  decreased  from  EUR 13.4  billion  to 
EUR 11.4 billion, with Hungary reimbursing EUR 2 billion during the 2nd semester 2011. 

Regarding  Euratom  loans,  no  disbursement  took  place  and  EUR  6.5  million  were  reimbursed  by 
Bulgaria during the 2nd semester 2011. 

Member States represent 67% of the Budget exposure (cumulated total risk borne by the Budget, see 
table A2 of the SWD) with the following breakdown between the financial instruments:  

Graph A1: Total Annual Risk to the Budget3 relating to Member States at 31.12.20114 (EUR 
million) for the period 2012-2018 

10,000

9,000

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

0

EFSM

MFA

BOP

ATOM

EIB

2012

2013

2014

2015

2016

2017

2018

2.5.2. 

Situation of loans to third countries 

At 31 December 2011, a total of EUR 1,804 million remained to be disbursed by the EIB under the 
EUR 20,060 million EIB external lending mandate for 2000 – 2007: 

3 
4 

Based on the amounts due (capital and interest) under operations disbursed at 31.12.2011. 
As of 31 December 2011, the 2012 annual risk for Member States was EUR 1,769 million. 

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

Ceiling

Loans made available
(minus cancellations) at
31.12.2011***

EUR million

to be disbursed

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

Member States*

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

20,060

7,324
6,127
2,105
817
16,372

2,740

19,112

1,249
530
25
0
1,804

349

2,154

* The ceiling includes Terra Turkey and Special Action Turkey.

** 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. 

*** Signatures up to 31.07.2008 (end of the Mandate 2000-2007). No additional signatures allowed after this date.

At the same date, an amount of EUR 11,085 million remained to be disbursed under commitments 
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
31.12.2011

EUR million

to be disbursed

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

9,048
13,548
3,952
936
2,000

29,484

7,665
8,268
2,761
591
150

19,436

3,792
5,938
1,201
155
0

11,085

For both mandates (2000-2007 and 2007-2013), loans have to be drawn within 10 years from the end 
of the Mandate. 

Graph A2: Total Annual Risk borne by the Budget related to third countries (EUR million) at 
31.12.2011 for the period 2012-2018 

3,000

2,500

2,000

1,500

1,000

500

0

MFA

ATOM

EIB

2012

2013

2014

2015

2016

2017

2018

Graph A2 presents the result of simulations aiming at estimating the outstanding amount covered by 
the Fund for the period 2012 to 2018. These simulations are based on disbursements of loans signed 

 
 
 
 
 
 
 
and  disbursed  at  the  reporting  date  under  all  EIB  mandates.  As  graph  A2  illustrates,  the  weight  of 
MFA and Euratom loans are marginal in the total annual risk. 

Payment under the Budget guarantees 

The  EU  borrows  on  financial  markets  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. 

2.5.3.  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 1150/20005, 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  7  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 
Guarantee Fund to cover the default and 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 State6 and 
the transfers are likely to require advance authorisation by the budgetary authority.  

c) 

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

BOP and EFSM loans 

a) 

by the re-use of funds from late payments 

5 

6 

Council  Regulation  (EC,  Euratom)  No  1150/2000  of  22  May  2000  (OJ  L  130,  31.5.2000,  p.1)  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). 
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. 

 
 
                                                 
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". 

2.5.4.  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 
Fund7 or directly from the Budget should the resources of the Fund be insufficient8. 

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. 

2.5.5.  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. 

7 

8 

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 2.5.3 above. 

 
 
                                                 
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  CEEC9,  NIS10  and 
MED11. 

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 decelerated during the second half of 2011, bringing average growth from 5.2% in the 
first  half  to  close  to  3%  for  the  whole  year.  The  growth  dynamics  in  the  second  half  were 
mainly driven by a slowdown in private consumption and exports. In the first half year, the 
main  sources  of  growth  were  public  construction  and  private  consumption,  bolstered  by 
subsidy  payments.  Annual  inflation  continued  to  decelerate  in  the  second  half  of  2011, 

9 
10 
11 

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

 
 
                                                 
coming down to 2.8% in December, compared to a peak of 5.8% in May. However, annual 
average inflation was markedly higher than a year before, at 3.9%, compared to 1.6% in 2010. 
The  main  factors  behind  the  price  increase  were  higher  prices  for  food,  rents  and  energy. 
Despite  lower  than  expected  revenues,  the  authorities  managed  to  keep  the  fiscal  deficit  at 
2.5% of GDP in 2011, as in the previous year, through a supplementary budget in September 
2011, which reduced the total amount of spending.  

In terms of the trade balance, due to strong domestic demand higher imports led to a widening 
in  the  end-year  trade  deficit  to  21%  of  the  estimated  full-year  GDP  (up  from  18%  the  year 
before).  Net  current  transfers  amounted  to  17%  of  GDP  and  the  current  account  deficit 
widened  to  about  4%  of  GDP  (from  around  2.2%  in  2010).  Capital  inflows  continued  to 
surpass the current account deficit. However, a significant part of this inflow was the drawing 
of funds from a Precautionary Credit Line (PLC) agreed with the IMF in late 2010. This credit 
line amounts to some 6% of GDP, and about half of it was drawn in March 2011. The inflow 
of  funds  from  the  precautionary  credit  line  helped  to  bolster  the  stock  of  foreign  exchange 
reserves  to  EUR 2.3 billion,  representing  some  5  months  of  expected  imports  by  end-year. 
Gross external debt rose to 61% of GDP by September 2011, up from 58.5% of GDP the year 
before.  In  the  context  of  a  monetary  policy  that  maintains  an  informal  peg  of  the  domestic 
currency to the euro, the exchange rate has remained largely unchanged at around 61.5 dinars 
(MKD) per euro.  

Country-risk indicators : The fYR of Macedonia
Output and prices

2009

2010

2011

(%)
(% labour force)
(% change)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)
(m EUR)
(months)
(per EUR)

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

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

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

Public finances

General government balance

Balance of payments

Exports of goods and services f.o.b.
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) 
In months of subsequent year's imports

Exchange rate (end of period)

External 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 arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Fitch long-term foreign currency rating (end of period)

(1)   See explanatory notes

-1.0
32.2
-0.8

-2.7

1,948.9
-6.7
136.9
1,598.7
5.5
61.28

3,780.4
56.6
n.a.
n.a.
n.a.

252
1.6
6.7
12.9

1.7
32.0
1.6

-2.5

2,552.7
-2.8
219.9
1,715.3
5.2
61.51

4,133.8
59.5
n.a.
n.a.
n.a.

283
1.5
6.8
11.1

3.0f
30.5f
3.4

-2.5f

3,276.3
-4.0f
300.0e
2,302.3
5.0e
61.53

4,647.5
61.4
n.a.
n.a.
n.a.

284.0
1.3
6.1
8.7

PCL
19/01/2011
On-track

none
BB
BB+

none
BB
BB+

none
BB
BB+

 
 
 
3.1.2.  Montenegro 

The Montenegrin economy is still recovering, following a hard landing in 2009. In 2010 the 
economy  expanded  by  2.5%,  and  further  accelerated  by  an  estimated  2.7%  in  2011.  On  the 
supply side, manufacturing and  mining output grew on average by some 6.5% in 2011, and 
the construction sector increased by 11% year-on-year. On the demand side, retail sales rose 
by 15% in real terms. Consumer price growth averaged 3% in 2011, driven by food, transport 
as  well  as  alcoholic  beverages  and  tobacco,  the  latter  including  a  rise  in  excise  taxes.  The 
unilateral use of the euro implies that there is only limited scope for domestic monetary policy 
instruments.  Consequently,  the  foreign  exchange  risk  is  reduced,  but  the  external  financing 
risk  remains  an  issue.  In  terms  of  fiscal  policies,  the  consolidation  efforts  reduced  general 
government expenditures to 43% of GDP in 2011, compared to 47% a year earlier. However, 
a weak performance of revenues still resulted in a consolidated budget deficit of 4% of GDP, 
compared to 4.9% a year before. Public debt increased to 45% of GDP in 2011, although it 
remained  primarily  on  concessional  terms,  with  average  interest  rates  and  maturity  at  about 
3.9% and 6.7 years, respectively. The total external debt reached 99.3% of GDP.  

The  current  account  deficit  contracted  to  19%  of  GDP  in  2011,  compared  to  25%  a  year 
earlier.  The  improvement  was  mainly  driven  by  a  widening  surplus  on  the  services  and 
income  accounts.  The  current  account  deficit  is  financed  primarily  by  large  foreign  direct 
investments  and  tourism  receipts.  A  cutback  in  capital  inflows,  notably  on  greenfield 
investments, represents a major risk as it would depress domestic demand, and further weaken 
the fiscal performance, given the reliance of indirect tax revenues from imports. 

(%)
(% labour force)
(% change)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)
(m EUR)
(months)
(per EUR)

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

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

Country-risk indicators : Montenegro
Output and prices

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

Public finances

General government balance

Balance of payments

Exports of goods and services f.o.b.
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) 
In months of subsequent year's imports

Exchange rate (end of period)

External 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 arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Fitch long-term foreign currency rating (end of period)

(1)   See explanatory notes

2009

2010

2011

-5.7
11.4
3.4

-4.4

976.8
-30.1
1,066.5
397.5
2.9
1.0

2,781.3
93.3
5.1

2.5
12.2
0.5

-5.0

1,103.6
-24.7
543.1
416.4
3.0
1.0

3,110.1
98.9
3.6

2.7f
11.6
3.1

-3.1

1,323.7
-19.5
389.1
303.5
2.0
1.0

3,089.2
99.3
3.6

none

none

none

126.0
0.8
4.5
12.9

188.0
1.0
6.0
17.0

197.2
0.9
6.4
14.9

none

none

none

Ba3
BB+
none

Ba3
BB
none

Ba3
BB
none

 
 
 
3.1.3. 

Serbia 

In 2011, the economic recovery continued, with a GDP growth of 1.9% fuelled by a revival of 
investment  activity.  However,  it  came  under  pressure  due  to  the  difficult  international 
economic environment towards the end of the year. Inflation, which had peaked in April 2011 
at  close  to  15%,  declined  to  7%  by  December,  i.e.  well  above  the  upper  boundary  of  the 
4.5±1.5% target band. The budgetary deficit of 4.5%  of  GDP  was  also  higher than targeted 
initially,  as  revenues  underperformed  given  the  slower-than-expected  economic  upswing.  A 
rally in government borrowing led to a surge in public debt to EUR 14.8 billion, overshooting 
the legal threshold of 45% of GDP by a notch.  

In  the  face  of  slowing  export  growth,  the  current  account  deficit  widened  to  around  9%  of 
GDP. Foreign currency inflows picked up and the quality of external financing improved, as 
FDI increased more than twofold, reaching almost EUR 1.6 billion. By the end of the year, 
foreign  exchange  reserves  with  the  national  bank  of  Serbia  increased  to  EUR  12  billion, 
sufficient to cover more than 10 months of imports. At close to EUR 24 billion, Serbia's total 
external  debt  remained  relatively  stable,  accounting  for  around  ¾  of  GDP.  With  the  aim  of 
anchoring macroeconomic stability as well as the structural reform commitments during the 
new  election  cycle,  Serbia  signed  in  September  2011  a  follow-up  precautionary  Stand-By 
Arrangement  with  the  IMF  in  the  total  amount  of  EUR  1.1  billion,  covering  18  months, 
effective from 1 October. 

Country-risk indicators : Serbia
Output and prices

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

Public finances

General government balance

Balance of payments

Exports of goods and services f.o.b.
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) 
In months of subsequent year's imports

Exchange rate (end of period)

External 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 arrangements

Type
(Date)
On track

(%)
(% labour force)
(% change)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)
(m EUR)
(months)
(per EUR)

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

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

2009

2010

2011

-3.5
16.1
6.6

-4.5

8,477.7
-7.4
1,369.2
10,601.9
11.5
95.88

22,465.9
77.6
n.a.
n.a.
n.a.

1317.9
8.1
5.9
15.5

1.0
19.2
10.3

-4.9

10,069.5
-7.5
861.4
10,001.6
9.8
105.93

23,763.3
81.7
n.a.
n.a.
n.a.

1609.0
8.7
6.8
16.0

1.9
23.7
7.0

-5.1

11,470.1
-9.5
1,840.1
12,057.7
10.3
106.95

24,101.6
76.7
n.a.
n.a.
n.a.

1,959.0
9.2
8.1
17.1

Stand-By
January 2009 - Aprill 2011
On-track

On-track

On-track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Fitch long-term foreign currency rating (end of period)

(1)   See explanatory notes

none
BB-
BB-

none
BB-
BB-

none
BB
BB-

 
 
 
3.1.4.  Turkey 

The economy of Turkey has grown strongly after the dramatic contraction of 4.7% in 2009; 
with  a  growth  reaching  9%  in  2010  and  about  8.5%  in  2011.  A  double-digit  growth  of 
imports, combined with a domestic credit boom, fuelled private consumption and investment. 
Headline inflation increased rapidly, in large part as a result of a weak lira and some indirect 
tax increases, and reached 10% in late 2011 from about 6.5% in the first half of the year. On 
the  back  of  the  strong  GDP  growth,  the  fiscal  deficit  narrowed  to  1.5  %  of  GDP  in  2011, 
while the public debt stock decreased by about 2 % of GDP, amounting to 39% of GDP at the 
end of 2011.  

The  current  account  deficit  has  been  ballooning  in  tandem  with  a  large  and  widening 
merchandise trade deficit, driven in particular by the impact of strong domestic demand and 
high oil prices. As a result, it amounted to about 10% of GDP in 2011, compared with 6.5% in 
2010.  Turkey's  gross  external  debt  amounts  to  less  than  40%  of  GDP  with  private  external 
debt representing two thirds of the total. International reserves fell by about 5% to EUR 70 
billion  covering  around  4  months  of  imports.  The  domestic  currency  depreciated  by  about 
20% against the US dollar and the euro in 2011.  

(%)
(% labour force)
(% change)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)
(m EUR)
(months)
(per EUR)

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

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

Country-risk indicators : Turkey
Output and prices

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

Public finances

General government balance

Balance of payments

Exports of goods and services f.o.b.
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) 
In months of subsequent year's imports

Exchange rate (end of period)

External 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 arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Fitch long-term foreign currency rating (end of period)

(1)   See explanatory notes

3.2. 

Potential candidate countries  

3.2.1.  Albania 

2009

2010

2011

-4.8
14.1
6.3

-5.7

102,752.4
-2.3
4,981.5
77,064.1
9.2
2.16

182,107.7
43.6
37.8
none
none

5,704.0
35.1
3.1
5.6

9.0
12.0
8.6

-3.6

117,781.4
-6.4
5,726.0
83,215.5
7.1
2.00

213,734.5
39.5
28.3
none
none

7,429.0
40.2
3.6
6.0

8.5
9.2
10.4

-1.5

131,084.7
-9.9
9,665.3
84,024.2
4.8
2.46

232,330.8
39.3
23.8
none
none

8,330.7
39.2
3.6
6.4

none

none

none

Ba3
BB-
BB+

Ba2
BB
BB+

Ba2
BB
BB+

Albania's  real  GDP  grew  by  an  estimated  2.6%  year-on-year  in  the  third  quarter  of  2011, 
recovering  somewhat  from  a  weak  economic  performance  in  the  second  trimester,  but  still 

 
 
 
below  the  historical  average.  Inflation  eased  in  the  second  half  of  2011  reaching  a  low  of 
1.7%  (year-on-year)  in  December.  It  receded  further  to  0.6%  in  February  2012  driven 
primarily  by  a  deceleration  in  food  prices,  which  account  for  a  substantial  share  in  the 
consumer  price  index.  The  banking  sector,  the  main  source  of  financial  intermediation  in 
Albania,  remained  well  capitalised  and  liquid.  However,  non-performing  loans  continued  to 
rise  and  stood  at  18.9%  in  the  last  quarter  of  2011.  The  government  deficit  is  estimated  to 
have  increased  to  3.5%  of  GDP  in  2011  from  3.1%  in  2010,  reflecting  weak  revenue  and 
strong expenditure growth. The 2012 budget projects a decline in the fiscal deficit to 3% of 
GDP,  as  revenue  is  assumed  to  grow  more  than  expenditure.  Public  debt  levels  remained 
relatively high, with the total debt-to-GDP ratio estimated at 58.9% in 2011, up from 57.8% in 
the previous year. Contingent liabilities from state guarantees account for some 3.7% of GDP.  

The current account deficit increased from an estimated 12.9% of GDP in the second quarter 
of 2011 to 13.1% of GDP in the third quarter, reflecting a worsening merchandise trade gap 
and  continued  decline  in  remittances.  FDI  inflows  declined  by  some  23%  in  the  first  three 
quarters of 2011, reflecting base effects, the recapitalisation of a foreign-owned bank and the 
repatriation  of  foreign  capital.  However,  FDI  remains  an  important  source  of  external 
financing,  representing  slightly  more  than  half  of  the  current  account  imbalance.  Albania's 
gross  external  debt  amounts  to  some  45%  of  GDP,  with  government  long-term  borrowing 
accounting  for  almost  half  of  the  total.  In  the  third  quarter  of  2011,  international  reserves 
increased by 7.6% to EUR 1.8 billion covering around 4.2 months of imports. The domestic 
currency  depreciated  by  around  2%  vis-à-vis  the  euro  and  by  some  2.9%  against  the  US 
dollar. 

(%)
(% labour force)
(% change)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)
(m EUR)
(months)
(per EUR)

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

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

Country-risk indicators : Albania
Output and prices

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

Public finances

General government balance

Balance of payments

Exports of goods and services f.o.b.
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) 
In months of subsequent year's imports (2)

Exchange rate (end of period)

External 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 arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Fitch long-term foreign currency rating (end of period)

(1)   See explanatory notes
(2) Ratio of 12 months imports of goods moving average.
* Source: Economic and Fiscal Program (EFP) 2012

2009

2010

2011

3.3
13.0
2.3

-7.0

2,522.1
-15.1
668.3
1567.4
6.2
131.82

2,028.5
23.8
n.a.
n.a.
n.a.

223.0
1.4
11.0
8.8

4.1
13.7
3.6

-3.1

2,873.9
-11.6
822.8
1825.3
6.7
137.48

2,240.3
26.3
n.a.
n.a.
n.a.

244.0
1.3
10.9
8.5

3.0*
13.3
3.5

-3.5*

3 321.4
-12.5*
852.8*
1852.4
4.3
140.07

2,484.3
26.3
n.a.
n.a.
n.a.

267.2
1.3
10.7
8.0

none

none

none

none
none
none

B1
B+
none

B1
B+
none

 
 
 
3.2.2.  Bosnia and Herzegovina, 

In  2011,  the  economy  continued  its  recovery,  with  the  GDP  growth  estimated  at  1.7%, 
representing a slight acceleration from the 0.7% expansion a year earlier. Domestic demand 
picked  up,  supported  by  a  rising  inflow  of  remittances  and  an  accelerating  credit  growth. 
Industrial  production  rose  by  5.6%,  while  retail  sales  soared  by  12.5%.  However,  the 
unemployment rate rose further, reaching 43.8% at end-2011, due to some labour shedding in 
the private sector, most notably in construction. Annual inflation accelerated slightly to 3.7% 
in 2011, up from 2.1% in the previous year. The acceleration of the consumer prices growth 
was 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.  

After the improvements registered in the previous couple of years, the current account deficit 
surged by 70.5% in the first nine months of 2011, reaching an estimated 8.7% of GDP. The 
deterioration was mainly driven by the rising imports of goods. Net inflow of FDI remained 
low, covering slightly less than one fifth of the current account deficit. External public debt 
rose by 5.7% in 2011, accounting for 25.8% of GDP. Official foreign exchange reserves rose 
only marginally, covering about 5 months of imports. The inability of the political parties to 
agree  on  State-level  government  formation  after  the  October  2010  general  elections  did  not 
allow for programme discussions and reviews under the Stand-By Arrangement with the IMF 
to take place in the course of 2011.  

No  funds  were  disbursed  in  2011  under  the  EU  macro-financial  assistance  to  Bosnia  and 
Herzegovina  (loan  facility  of  up  to  EUR  100  million,  Council  Decision  2009/891/EC  of  30 
November 2009) due to the non-functional IMF programme and the failure of the authorities 
to meet all structural reform conditions. Standard and Poor's downgraded in November 2011 
the country's sovereign ratings from B+ to B on account of the political stalemate and related 
delays in economic reforms. 

 
 
Country-risk indicators : Bosnia and Herzegovina
Output and prices

2009

2010

2011

(%)
(% labour force)
(% change)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)
(m EUR)
(months)
(per EUR)

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

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

-2.9
42.7
-0.4

-4.5

3,992.7
-6.3
177.6
3,219.7
6.0
1.94

2,708.8
21.8
n.a.
n.a.
n.a.

472.0
2.9
17.6
11.9

0.7
42.7
2.1

-2.5

4,759.5
-6.1
143.9
3,330.5
5.6
1.93

3,256.9
25.6
n.a.
n.a.
n.a.

583.0
3.2
18.1
12.4

1.7e
43.8
3.7

NA

4,900.0
-8.7*
233.4**
3,333.3
4.9
1.93

3,442.7
25.8
n.a.
n.a.
n.a.

666.4
3.1
19.4
13.6

Stand-by Arrangement €1.2bn three years
08 July 2009
Off track; last programme discussions November 2010

B2
B+
none

B2
B+
none

B2
B
none

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

Public finances

General government balance

Balance of payments

Exports of goods and services f.o.b.
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) 
In months of subsequent year's imports

Exchange rate (end of period)

External 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 arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Fitch long-term foreign currency rating (end of period)

(1)   See explanatory notes
* as of Q3/11
** Jan-Sep/2011

3.3.  Mediterranean partners 

3.3.1.  Egypt 

The  Egyptian  economy  has  suffered  severely  since  early  2011.  The  economy  declined 
markedly the first quarter of 2011 (4.2% GDP contraction, year-on-year), and remained flat 
during the following two quarters. Overall, the economy is estimated to have fallen in 2011 by 
about  3.5%.  Growth  is  expected  to  slowly  recover  building  on  regained  political  stability, 
although  these  forecasts  are  subject  to  substantial  downside  risks.  Inflation  fell  to  one-digit 
figures by mid 2011, although still remains high (February 2012 y-o-y inflation of 9.2%) and 
is proving difficult to bring down. Monetary policy has remained neutral since October 2009 
through  October  2011,  when  it  was  slightly  tightened.  The  budgeted  fiscal  deficit  for  fiscal 
year 2011/12 (8.6%) is expected to be exceeded by at least 1.5 percentage points, building on 
a  growing  deficit  also  the  year  before.  At  the  same  time,  government  borrowing  costs  have 
increased by some 500 basis points. Fiscal consolidation has therefore become a vital priority. 

Egypt's balance of payments deteriorated significantly during the first three quarters of 2011 
as a result of portfolio capital outflows (USD 8.6 billion) and an almost complete stop of FDI 
flows  (-93%).  Simultaneously,  the  current  account  deteriorated  more  gradually  as  the  solid 
export performance (particularly of petroleum products) cushioned the significant reduction in 
tourism receipts. However, by the third quarter of 2011 the current account had deteriorated 
significantly  due  to  higher  prices  for  imported  energy  and  food  prices,  and  a  steep  fall  in 
tourism  receipts.  Egypt  has  drawn  down  foreign  currency  reserves,  including  those  held  at 
commercial  banks,  to  finance  the  balance  of  payments  deficit  and  to  support  the  Egyptian 

 
 
 
pound  against  the  US  dollar  (it  has  still  depreciated  by  about  4%  since  early  2011).  Net 
foreign exchange reserves have more than halved since December 2010 to USD 15.7 billion 
by  end-February  2012.  On  the  face  of  a  weaker  financing  situation,  Egypt  has  been 
downgraded several notches by the various rating agencies throughout 2011. 

A satisfactory political transition in Egypt, supported by sound macroeconomic policies and 
structural  reforms,  would  do  much  to  bring  back  the  Egyptian  economy  onto  a  path  of 
sustainable growth. 

(%)
(% labour force)
(% change)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)
(m EUR)
(months)
(EG£ per EUR)

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

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

Country-risk indicators : Egypt
Output and prices

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

Public finances

General government balance

Balance of payments

Exports of goods and services f.o.b.
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) 
In months of subsequent year's imports

Exchange rate (end of period)

External 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 arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Fitch long-term foreign currency rating (end of period)

(1)  Fiscal year ends 30th June

2009

2010

2011 est.

4.7
9.4
11.8

-6.6

35,159.7
0.5
5,816.9
24,328.2
5.8
7.8

23,843.6
17.8
6.0
no
no

2,240.7
13.8
8.2
6.1

5.2
9.6
11.1

-8.0

35,751.6
-2.4
5,097.8
26,998.6
6.6
7.8

26,363.4
16.3
6.8
no
no

2,178.0
11.8
7.3
5.8

1.8
12.4
10.2

-10.0

35,140.6
-3.0
1,572.3
13,760.8
3.3
7.8

24,520.8
14.8
10.0
no
no

2,037.2
9.6
8.3
5.8

no

no

no*

Ba1
BB+
BB+

Ba1
BB+
BB+

B2
B+
BB-

* The Government withthrew its request for an IMF programme in mid 2011. Discussions were renewed in early 2012.

3.3.2.  Lebanon  

Real  GDP  growth  in  Lebanon  slowed  significantly  in  2011  to  1.5%  compared  to  previous 
years' average of 8%, due to a combination of domestic political uncertainty in the first half of 
2011  and  regional  turmoil,  which  led  to  weak  domestic  demand  and  a  slowdown  in  export 
growth.  Inflation  increased  slightly  in  2011  from  5.1%  to  5.5%,  mirroring  high  global  food 
and  fuel  prices,  while  core  inflation  remained  moderate.  The  fiscal  situation  remains 
vulnerable and there is a great need for fiscal consolidation. Public debt amounted to 134% of 
GDP in 2011, while the fiscal deficit worsened from 7.5% of GDP in 2010 to 8.3% in 2011. 
Tax  revenues  decreased  in  2011  and  primary  expenditure  increased  due  to  an  increase  in 
military  wages  and  higher  transfers  to  the  electricity  company.  As  a  result,  the  primary 
surplus fell from 2.7% of GDP to 1% in 2011. In addition, there is currency risk as 47% of 
government debt is denominated in foreign currencies. 

 
 
 
A decline in tourism as a result of regional turmoil combined with higher food and fuel prices 
have contributed to a worsening of the current account deficit from 10.6% of GDP in 2010 to 
14.1% in 2011. This, combined with a decrease in FDI, put strain on foreign reserves. Still, 
reserves recovered and amounted to USD 30.6  billion at the end of 2011 (covering over 10 
months  of  imports).  While  the  external  debt-to-GDP  ratio  decreased  slightly  in  2011,  it 
remains  among  the  highest  in  the  world  at  157.6%.  About  80%  of  external  debt  consists  of 
short-term  non-resident  deposits  in  the  banking  sector,  which  could  increase  vulnerabilities; 
however, as these deposits are largely owned by the Lebanese diaspora, they behave more like 
long-term  deposits  and  have  demonstrated  high  resilience  in  crisis.  The  exchange  rate  peg 
plays an important role in ensuring macroeconomic and financial stability, especially in light 
of high and increasing dollarization. No IMF arrangement was foreseen in Lebanon at the end 
of 2011. Long-term foreign currency ratings remained unchanged in 2011. 

Country-risk indicators : Lebanon
Output and prices

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

Public finances

General government balance

Balance of payments

Exports of goods and services f.o.b.
Current account balance
Net inflow of foreign direct investment
Official reserves (end of period) 

In months of subsequent year's imports

Exchange rate (end of period)

External 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 arrangements

Type

(Date)

On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Fitch long-term foreign currency rating (end of period)

(1)   See explanatory notes

3.3.3.  Morocco 

2009

2010

2011 (proj)

(%)
(% labour force)
(% change)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)
(m EUR)
(months)
(per EUR)

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

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

8.5
n.a.
3.4

-8.2

16,400.0
-9.7
2,660.0
19,700.0
10.6
2,147.6

43,900.0
174.9
20.6
no
no

538.8
3.3
1.3
16.6

7.0
n.a.
5.1

-7.5

17,900.0
-10.6
2,730.0
21,700.0
10.8
2,003.7

4,500.0
161.1
17.3
no
no

598.0
3.2
1.4
16.6

1.5
n.a.
5.5

-8.3

18,600.0
-14.1
2,400.0
22,000.0
10.3
1,943.7

45,900.0
157.6
n.a.
no
no

594.8
2.8
1.3
3.2

no

no 

EPCA II
Nov 2008 - June 
2009
On-track

B2
B-
B-

B1
B
B

B1
B
B

The  Moroccan  economy  remained  resilient  in  2011  despite  the  social  demands  that  arose 
during the Arab Spring, with GDP growth estimated at 4.6%. GDP is forecast to grow above 
4%  in  both  2012  and  2013.  Monetary  policy  has  been  neutral  since  March  2009,  having 
focussed  during  2011  on  supporting  the  economy's  liquidity  needs  by  a  large  gradual 
reduction of banks' reserve requirements and by increasing its refinancing to banks. Inflation 
remains  in  check  below  2%,  despite  the  pressure  from  rising  international  food  and  energy 
prices,  as  a  result  of  the  existing  subsidies  system.  Price  subsidies,  however,  carry  a 
significant cost for the Moroccan public finances (estimated at 5.5% of GDP in 2011). This 
comes in addition to further fiscal measures including increases in civil service and minimum 

 
 
 
wages. Overall, Morocco's budget deficit for 2011 is estimated to have risen to 5.7% of GDP, 
prompting an increase of the accumulated general government debt to an estimated 54.2% in 
2011, an increase of almost 7 percentage points since 2008. A process of fiscal consolidation, 
starting in 2012, should bring the deficit down to 3% of GDP in the medium term, stabilising 
general  government  debt  to  about  50%  of  GDP.  However,  this  forecast  is  subject  to  some 
downside risk, namely on account of Morocco's strong dependence on the performance of the 
Euro-area economies. 

Morocco's current account deficit deteriorated by 26% in 2011 as higher prices of energy and 
food commodities took a toll on the import balance. However, the higher cost of imports was 
partly  counterbalanced  by  the  good  performance  of  exports  of  goods  and  services  (in 
particular tourism receipts) and transfers (mainly workers' remittances). The current account 
deficit (USD 5.3 billion) was partly financed by the resilient capital account surplus (USD 4 
billion),  including  substantial  FDI  flows.  Foreign  investors  seem  to  continue  viewing 
Morocco as a politically stable country with solid macroeconomic policies in place. The level 
of total external debt remained stable at 24.8% of GDP. Gross foreign reserves are stabilised 
above USD 23 billion. 

Country-risk indicators : Morocco
Output and prices

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

Public finances

General government balance

Balance of payments

Exports of goods and services f.o.b.
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) 
In months of subsequent year's imports

Exchange rate (end of period)

External 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 arrangements

Type
(Date)
On track

(%)
(% labour force)
(% change)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)
(m EUR)
(months)
(MAD per EUR)

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

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

2009

2010

2011 est

4.8
9.1
0.9

-2.2

26,668.4
-5.4
1,400.3
17,160.6
7.1
11.3

21,179.7
23.3
9.2
no
no

2,224.0
13.7
11.8
8.3

3.7
9.1
1.0

-4.6

30,208.0
-4.3
982.5
17,255.3
5.8
11.2

21,156.4
24.6
8.7
no
no

2,425.0
13.1
12.1
8.0

4.6
9.2
1.5

-5.7

34,850.4
-5.2
1391.3
16,200.6
5.5
11.1

23,719.4
24.8
10.7
no
no

2,483.5
11.7
10.5
7.1

no

 no 

 no 

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Fitch long-term foreign currency rating (end of period)

Ba1
BB+
BBB-

Ba1
BBB-
BBB-

Ba1
BBB-
BBB-

(1)   See explanatory notes

3.3.4. 

Syria 

Real GDP is estimated to have decreased by 2 % in 2011 due to the on-going unrest and the 
resulting  international  sanctions.  Inflation  was  estimated  at  6%  in  2011,  although  food 
products have suffered from hyperinflation at the beginning of 2012. The budget deficit was 
estimated to rise sharply to at least 8% of GDP at the end of 2011 due to a decrease in revenue 

 
 
 
(tax and customs duties) and an increase in military expenditure, public salaries and subsidies. 
At  the  end  of  October  2011,  the  governor  of  the  Central  Bank  stated  that  due  to  sanctions 
Syria had not received a total of USD 1.2 billion earmarked for projects by the EU, the EIB 
and other European Institutions. 

Exports  and  imports  fell  sharply  in  2011  as  a  result  of  the  crisis.  The  external  economic 
position weakened significantly with the current account deficit estimated to have risen to 6% 
of GDP in 2011. Before the beginning of the unrest in March 2011, foreign exchange reserves 
were officially at USD 17 billion; however by the end of November 2011, the Central Bank 
governor stated that Syria had spent USD 1.2 billion of those reserves to finance investment 
projects  after  international  credit  was  withdrawn  and  about  USD  3.7  billion  to  finance 
imports.  The  Central  Bank  also  used  foreign  currency  reserves  as  a  means  to  maintain  the 
value of the Syrian pound in response to an estimated capital outflow of USD 4 billion since 
March  2011.  According  to  calculations  by  some  analysts  (Dun  &  Bradstreet  country  report 
December 2011) foreign exchange reserves amounted to about USD 10 billion at the end of 
2011. If the fall of the reserves continues at the same speed, reserves will be fully depleted by 
the  end  of  2012.  Despite  efforts  to  maintain  the  exchange  rate,  the  Syrian  pound  (SYP) 
depreciated against the EUR by some 12% in 2011.  

No  data  is  available  on  total  external  debt.  The  credit  risk  has  increased  massively  due  to 
potential  financial  difficulties  linked  to  lower-than-expected  oil  revenue  stream  and  to  EU 
sanctions.  This  risk  is  expected  to  increase  further  in  light  of  the  Council  Decision  of  27 
February 2012 to tighten the EU's restrictive measures against the Syrian regime. 

(%)
(% labour force)
(% change)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)
(m EUR)
(months)
(per EUR)

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

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

Country-risk indicators : Syria
Output and prices

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

Public finances

General government balance

Balance of payments

Exports of goods f.o.b.
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) 
In months of subsequent year's imports

Exchange rate (end of period)

External debt

External debt (end of period)
External debt/GDP
Debt service/exports of goods and services
Arrears (on both interest and principal) (only EIB)
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 arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Fitch long-term foreign currency rating (end of period)

(1)   See explanatory notes

2009

2010

2011 (proj)

3.2
8.4
6.3

-3.2

-2.0
n.a.
6.0

-8.0

10,100.0
-3.9
1,000.0
13,700.0
9.4
62.6

n.a.
-6.1
n.a.
10,000.0 (est.)
n.a.
69.9

n.a.
n.a.
n.a.
no
no

796.0
4.3
4.3
14.6

n.a.
n.a.
n.a.
15.4
n.a.

728.0
3.4
n.a.
n.a.

6.0
8.1
1.7

-9.0

7,800.0
-3.6
1,900.0
12,700.0
10.7
65.1

5,367.0
13.9
0.8
no
no

762.0
4.7
4.7
13.7

none

none
none
none

none
none
none

none
none
none

 
 
 
3.3.5.  Tunisia 

Tunisia's economy was significantly affected by the domestic political unrest and the conflict 
in  Libya.  Annual  GDP  growth  slightly  decreased  in  2011  after  reaching  3%  in  2010, 
reflecting the impact of the regional crisis on tourism, remittances and foreign investments, as 
well  as  production  interruptions  due  to  strikes.  Inflation  decelerated  to  3.5%  in  2011  (from 
4.4%  in  2010)  reflecting  weaker  domestic  demand  and  food  and  energy  subsidies.  Whilst 
price increases did halt following the revolution, they started accelerating again significantly 
in  the  second  semester  2011  and  exceeded  that  of  2010  by  year-end.  On  the  fiscal  front, 
public  finances  came  under  strain  due  to  reduced  revenues  and  the  adoption  of  more 
expansionary fiscal policies. The budget deficit rose to 3.7% of GDP in 2011 against 1.3% of 
GDP in 2010, putting pressure on external debt, which increased to 54% of GDP from 40.5% 
of GDP in the previous year.  

On the external side, the rebound of exports was more than offset by the fall in remittances 
and tourism revenues, contributing, together with increasing commodity prices, to a widening 
of  the  current  account  deficit  to  5.5%  of  GDP,  as  compared  to  4.8%  of  GDP  in  2010.  Net 
foreign direct investments also dropped from 3.8% of GDP in 2010 to 1.2% of GDP in 2011. 
Given  the  deteriorating  balance  of  payments  situation,  international  reserves  declined  by 
nearly  EUR  1.5  billion  during  the  first  seven  months  of  2011  and,  following  a  temporary 
recovery  in  August  due  to  disbursements  of  external  support,  they  sized  down  to  EUR  5.8 
billion at end-2011. This corresponds to only 3.5 months of imports. The main rating agencies 
downgraded Tunisia’s credit rating and added a ‘negative perspective’. Yet, Tunisia remains 
in the investment-grade category. To boost bank liquidity, the Central Bank reduced the level 
of  reserve  requirements  to  2%  in  June  2011  against  12.5%  in  May  2010  and  cut  its  key 
interest rate to 3.5% in September 2011 from 4.5% in December 2010.  

Although  the  macroeconomic  environment  has  shown  some  signs  of  stabilization,  the 
situation remains particularly vulnerable given ongoing uncertainly in the region, the global 
economic dynamics and the outlook in the EU, Tunisia’s main trading and investment partner. 
No request for an IMF arrangement has been submitted so far, mainly for political reasons. To 
meet the external and fiscal financing needs of 2012, national authorities intend to further use 
foreign  exchange  reserves  and  to  attract  substantial  external  resources,  including  from  the 
World Bank (Programme d’Appui à la Relance) and from Arab Funds. Also, they will try to 
raise funds domestically.  

 
 
Country-risk indicators : Tunisia
Output and prices

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

Public finances

General government balance

Balance of payments

Exports of goods and services f.o.b.
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) 
In months of subsequent year's imports

Exchange rate (end of period)

External 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 arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Fitch long-term foreign currency rating (end of period)

(1)   See explanatory notes

3.4. 

Eastern Partnerships 

3.4.1.  Armenia 

2009

2010

2011

(%)
(% labour force)
(% change)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)
(m EUR)
(months)
(per EUR)

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

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

3.1
13.3
3.5

-3

13,885
-2.8
1047
8,188
6.7
1.89

14,948
49.4
11.9
no
no

1,900.0
11.7
12.6
15.1

3.1
13.0
4.4

-1.3

16,371
-4.8
1046
7,102
5.1
1.87

14,876
48.6
10.7
no
no

2220.0
12.0
15.1
17.1

-1.8
14.0
3.5

-3.7

17,823
-7.1
772
5,793
3.5
1.94

17,303
54.0
11.9
no
no

2,355.4
11.1
13.6
13.2

no

no

no

Baa2
BBB 
BBB 

Baa2
BBB 
BBB 

Baa3
BBB-
BBB-

After a strong contraction of GDP in 2009 (-14.1%) and a moderate recovery in 2010 (2.1%), 
the GDP growth accelerated in 2011 and reached 4.6%. The growth was mainly driven by an 
increase in exports and remittances. The average inflation rate in 2011 of 7.7% was slightly 
lower than in 2010 (8.2%). The headline inflation reached its peak of 11.5% in March 2011 
mostly due to global price movements. Reacting to the soaring inflation rates in the beginning 
of 2011, the Central Bank of Armenia increased the interest rates. The rates where cut again 
in  September,  as  the  inflation  pressures  receded,  mostly  due  to  a  recovery  in  agriculture, 
diminishing global price pressures and limited private spending. The fiscal deficit decreased 
to  3.6%  of  GDP,  which  is  below  the  initial  target  of  3.9%  of  GDP;  in  2010  the  deficit  was 
4.5%.  The  public  debt-to-GDP  ratio  increased  to  42%  in  2011  (from  39.2%  in  2010),  as  a 
result of counter-cyclical measures and loans from the international community.  

Driven  by  relatively  strong  export  growth  along  with  a  growth  in  remittances,  the  current 
account deficit narrowed to 12.2% of GDP in 2011 from 14.7% of GDP in 2010. The level of 
external  debt  continued  to  increase  and  reached  65.5%  of  GDP.  The  net  inflow  of  FDI 
increased only slightly when compared to 2010. Foreign reserves changed very little in 2011, 
they  were  around  EUR  1.3  billion,  or  4.5  months  of  imports  of  goods  and  services.  In 
November 2011, Moody`s changed Armenia's outlook to negative but kept the rating at Ba2 
level. In December 2011, the IMF Board successfully completed its third review of Armenia’s 

 
 
 
economic  performance  under  the  on-going  three  year  programme  supported  by  Extended 
Fund Facility and Extended Credit Facility arrangements. 

Country-risk indicators : Armenia
Output and prices

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

Public finances

General government balance

Balance of payments

Exports of goods and services f.o.b.
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) 
In months of subsequent year's imports

Exchange rate (end of period)

External 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 arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Fitch long-term foreign currency rating (end of period)

2009

2010

2011

(%)
(% labour force)
(% change)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)
(m EUR)
(months)
(per EUR)

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

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

14.1
7.0
3.4

-7.9

942.0
-15.8
511.1
1,413.1
5.7
542.2

3,439.6
57.8
5.4
n.a.
n.a.

n.a
n.a
n.a
n.a

2.1
7.0
8.2

-4.5

1,365.8
-14.7
396.1
1,315.8
4.8
495.4

4,339.3
64.6
4.7
n.a.
n.a.

n.a
n.a
n.a
n.a

4.6
6.2
7.7

-3.6

1,618.2
-12.2
399.8
1,273.4
4.5
498.7

4,615.0
65.5
4.8
n.a.
n.a.

100.6
0.5
2.2
6.2

SBA
(March 2009)
On track

EFF/ECF

EFF/ECF

(from June2010) (from June 2010)

On track

On track

Ba2
none
BB-

Ba2
none
BB-

Ba2
none
BB-

(1)   See explanatory notes
Sources: Central Bank of Armenia, National Statistical Service of Armenia, Commission, IMF, Moody`s, Fitch

3.4.2.  Georgia 

Following two years of low or negative growth, real GDP grew by 6.3% in 2010 and by an 
estimated 6.8% in 2011. Average inflation accelerated in 2011 due to increased international 
prices  for  food  and  gas  and  reached  8.5%.  On  the  back  of  the  economic  recovery,  the 
government  tightened  its  budgetary  and  monetary  policies.  The  fiscal  deficit  was  reduced 
from 9.2% of GDP in 2009 to 3.6% in 2011 and a 2012 budget entailing a deficit of 3.5% of 
GDP was approved in December 2011.  

The current account deficit of 12.7% of GDP in 2011 widened against 9.6% of GDP in 2010. 
In  tandem,  the  trade  deficit,  at  22.9%  of  GDP  in  2010,  further  increased  in  2011  to  around 
28.7%  of  GDP.  Georgia's  exports  continue  to  suffer  from  the  trade  embargo  imposed  by 
Russia  in  2006.  The  high  trade  deficit  was  partly  offset  by  growing  tourism  revenues  and 
remittances. Recovering FDI and official assistance also helped financing the current account 
deficit. In 2011, net FDI reached EUR 698 million, against EUR 615 million in 2010. Official 
reserves increased from EUR 1.7 billion at end-2010, to EUR 2 billion at end 2011 (around 
4.3 months of imports). The external debt remained relatively high (62% of GDP). A peak in 
public  debt  roll-over  in  the  coming  years  represents  a  concern.  Substantial  external  debt 
repayment obligations are due in 2013-15, reflecting the repayment of the Eurobond of USD 
500 million issued in 2008 and large repurchases under the IMF’s Stand-By Arrangement.   

 
 
 
The IMF Stand-By Arrangement that ran from November 2008 was completed successfully in 
June 2011, but the authorities did not draw the installments that became available since July 
2010.  The  authorities  are  currently  negotiating  a  new  programme  with  the  IMF,  but  of  a 
precautionary nature this time. The country's long-term foreign currency rating was upgraded 
by S&P and Fitch to BB- towards the end of 2011.  

Country-risk indicators : Georgia
Output and prices

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

Public finances

General government balance

Balance of payments

Exports of goods and services f.o.b.
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) 
In months of subsequent year's imports

Exchange rate (end of period)

External 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 arrangements

Type

(Date)

On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Fitch long-term foreign currency rating (end of period)

(*) latest estimates
(1) See explanatory notes

3.4.3.  Ukraine 

(%)
(% labour force)
(% change)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)
(m EUR)
(months)
(per EUR)

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

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

2009

2010

2011

-3.8
16.9
3

-9.2

2,308
-11.2
0
0
4.2
2.4

0
58.0
23.6
0
0

36.0
0.2
0.8
1.6

6.3
16.3
11.2

-6.6

3,067
-9.6
0
0
3.7
2.4

0
67.1
17.2
0
0

41.0
0.2
0.7
1.3

6,8 *
16,2 *
2

 -3,6 *

3,589
 -12,7 *
0
0
4,3 *
2.2

6.066 *
62.0 *
26.9 *
0
0

57.6
0.3
0.9
1.6

Stand-By of USD 750 m, increased to USD 1.17 
bn in August 2009 

Originally from Sept 2008 to March 2010; extended 
till June 2011

on track 

on track

completed in 
June 2011

none
B
B+

Ba3
B+
B+

Ba3
BB-
BB-

In  2011,  Ukraine's  economic  recovery  continued,  with  a  relatively  strong  growth 
performance:  GDP  growth  was  5.2%,  after  4.2%  in  2010.  The  National  Bank  of  Ukraine 
managed to control inflation and to further stabilise the exchange rate. However, risks for the 
economic outlook for 2012 are on the downside as a consequence of the deterioration of the 
world  economy  and  lack  of  diversification  of  Ukraine's  economy.  Delays  in  adjustment  of 
domestic  energy  prices  and  low  investment  levels  present  risks  to  the  fiscal  balance.  Public 
debt is expected to remain at about 40% of GDP in 2012. 

As a result of strong domestic demand, a weaker export performance and historically high gas 
import prices, the current account deficit is expected to increase to 6.5% of GDP in 2012, up 
from 5.9% of GDP in 2011. The 2011 current account deficit was only partially covered by 
foreign  direct  investment  (FDI),  which  only  improved  marginally  despite  capital  inflows 
following  the  privatisation  of  the  telecommunications  company  Ukrtelecom  and  increased 

 
 
 
investment  in  preparation  of  the  European  football  championship.  Recent  trends  point  to 
renewed net currency outflows, as European banks decrease their exposure to risk as a result 
of the sovereign debt crisis. While foreign exchange reserves are still at comfortable levels, 
covering  about  four  months  of  imports,  the  trend  in  the  second  half  of  2011  pointed 
downwards,  and  a  persistent  current  account  deficit  in  the  absence  of  IMF  support  would 
result in further decreases. 

The implementation of the IMF programme was suspended in 2011 as the government failed 
to  increase  retail  energy  prices  towards  cost  recovery  levels  and  thus  meet  the  IMF's 
conditions under the Stand-By Arrangement. As a consequence, access to international capital 
markets  at  reasonable  interest  rates  has  become  difficult.  The  three  main  rating  agencies 
continue  to  assess  Ukraine  at  five  notches  below  investment  grade.  External  debt  rose 
substantially over the last three years, reaching EUR 98.7 billion, or 79% of GDP, at the end 
of  2011.  There  are  substantial  external  debt  repayments  (EUR  41  billion,  out  of  which  5.8 
billion public debt) falling due until the end of 2012.  

Country-risk indicators : Ukraine
Output and prices

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

Public finances

General government balance

Balance of payments

Exports of goods and services f.o.b.
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) 
In months of subsequent year's imports

Exchange rate (end of period)

External 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 arrangements

Type

(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Fitch long-term foreign currency rating (end of period)

(1)   See explanatory notes

3.5. 

B.R.I.C.S. 

3.5.1.  Brazil 

(%)
(% labour force)
(% change)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)
(m EUR)
(months)
(per EUR)

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

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

2009

2010

2011

-14.8
9.6
15.9

-8.7

37,928
-1.5
3,349
19,073
5.7
10.8

74,403
88.2
33.75
n/a
n/a

126.0
0.8
0.2
0.3

4.2
8.8
9.4

-5

51,020
-2.2
4,349
26,108
5.7
10.5

88,605
85.1
35.77
n/a
n/a

200.0
1.1
0.2
0.4

5.2
8.5
4.6

-4.3

58,461
-5.9
5,077
24,460
3.9
10.5

98,610
79.0
n/a
n/a
n/a

247.2
1.2
0.3
0.4

SBA 16.5bn 
USD
Nov 08 - Jul 10
completed

SBA 15.2bn USD

Jul 2010 - Dec 2012

On track

Off track

B2
CCC+
B-

B2
B+
B

B2
B+
B

Brazil recovered strongly from the 2008 economic and financial crisis and grew at a record 
7.5% in 2010, driven mainly by strong domestic demand. Inflation picked up momentum in 
the second half of 2010 and led to policy tightening in the first half of 2011. This, combined 
with weakening global momentum, slowed down the Brazilian economy in the second half of 

 
 
 
 
2011. The IMF expects a GDP growth rate of 2.9% for 2011. Inflation has started to abate in 
the second half of the year reaching 6.6% (annual average) in 2011. The government kept a 
broadly neutral fiscal stance in 2011. For 2012 the government is targeting a surplus of 3.1%, 
after a deficit of 2.8% in 2011. Public sector net debt in percentage of GDP continues to fall 
and is expected to stabilise at around 36% of GDP in 2011 (it was 39.1% in 2010). 

The real, after depreciating marginally in the second half of 2011, started appreciating at the 
end of December. Foreign reserves grew further in 2011 and reached around USD 350 billion 
(EUR  240  billion),  corresponding  to  12.4  months  of  imports.  The  current  account  deficit  is 
expected to be 2.1% of GDP in 2011, similar to that of 2010 (2.2%). 

Potential risks to growth are the increasingly growing credit to the private sector (19% growth 
year-on-year  in  2011),  and  the  rapid  rising  of  housing  prices.  Nevertheless,  the  Brazilian 
economy is relatively well balanced and should be able to absorb shocks, given the high level 
of foreign reserves and the large reserves of the banking system at the central bank.  

Country-risk indicators : Brazil
Output and prices

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

Public finances

General government balance

Balance of payments

Exports of goods and services f.o.b.
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) 
In months of subsequent year's imports

Exchange rate (end of period)

External 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 arrangements

Type
(Date)
On track

(%)
(% labour force)
(% change)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)
(m EUR)
(months)
(per EUR)

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

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

2009

2010

2011

-0.3
8.1
4.9

-3.5

128,937.4
-1.4
14,152.7
149,476.5
13.2
2.8

142,862.0
13.1
24.0
n.a.
n.a.

691.2
4.3
0.5
0.6

7.5
6.7
5.0

-1.7

176,725.0
-2.2
30,340.2
196,842.2
11.9
2.3

178,501.6
12.0
26.3
n.a.
n.a.

826.0
4.5
0.5
0.6

2.9
6.0
6.6

-2.8

211,519.8
-2.1
39,370.2
241,228.4
12.4
2.3

209,084.6
12.4
21.4
n.a.
n.a.

909.8
4.3
0.4
0.4

no

no

no

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Fitch long-term foreign currency rating (end of period)

Baa3
BBB-
BBB-

Baa3
BBB-
BBB-

Baa2
BBB
BBB

(1)   See explanatory notes

3.5.2. 

South Africa 

Following a contraction in GDP by 1.5% in  2009, the South African economy recovered in 
2010  with  a  growth  rate  of  2.9%.  Growth  in  the  fourth  quarter  of  2011  was  2.9%  year-on-
year, down from 3.1% in the previous quarter, from 3.2% in second quarter of 2011 and from 
3.3% in the first quarter. The government estimates a 3.1% growth in 2011, a 2.7% in 2012. 
Although  economic  growth  is  not  strong  enough  to  make  an  impact  on  the  high 

 
 
 
unemployment  rate  (estimated  to  be  above  24%  in  2011),  higher  salaries  will  support 
consumers' domestic demand. End-year inflation increased to 6.3% in December 2011. It was 
driven  by  the  rise  in  food  prices  observed  globally,  fuel  and  electricity  prices,  and  wage 
growth. Annual average inflation was 5.0% in 2011. Monetary policy will remain focused on 
keeping annual inflation, as measured by the CPI, within the official target range of 3%-6%. 
South African Reserve Bank's monetary policy committee cut rates aggressively in 2009-10 
and since then has kept an easy stance. The current repo rate is 5.5%, the lowest level for 40 
years.  According  to  the  new  budget  plans,  the  government  deficit  will  be  4.6%  of  GDP  in 
2012/2013,  up  from  4.2%  the  year  before.  The  public  debt  burden  will,  however,  remain 
below 50% of GDP.  

The current account deficit reached 2.9% of GDP in 2010 and is expected to widen to 3.2% of 
GDP in 2011 as imports grew faster than exports. External debt remained low at about 13% of 
GDP.  The  saving  ratio  is  one  of  the  lowest  among  Emerging  Market  Economies  (16.5%). 
Higher savings, channelled to investments, and the creation of better business environment (in 
order to attract more foreign direct investments) would greatly benefit the entire economy. 

(%)
(% labour force)
(% change)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)
(m EUR)
(months)
(per EUR)

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

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

Country-risk indicators : South Africa
Output and prices

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

Public finances

General government balance

Balance of payments

Exports of goods and services f.o.b.
Current account balance
Net inflow of foreign direct investment
Official reserves, including gold (end of period) 
In months of subsequent year's imports

Exchange rate (average)

External 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 arrangements

Type
(Date)
On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Fitch long-term foreign currency rating (end of period)

(1)   See explanatory notes

2009

2010

2011

-1.5
23.9
7.1

-5.1

45,104.4
-4.0
9,586.1
25,950.2
4.6
7.5

41,604.2
14.6
10.9
n.a.
n.a.

742.5
4.6
1.4
1.3

2.9
24.9
4.3

-5.0

61,977.6
-2.9
11,977.9
32,017.1
4.4
10.4

42,277.1
14.3
10.8
n.a.
n.a.

1,087.0
5.9
2.0
1.4

3.1
24.9
5

-4.2

69,775.7
-3.2
41,357.7
35,668.7
4.1
9.8

41,135.6
12.9
9.7
n.a.
n.a.

1,304.1
6.1
3.2
1.9

no

no

no

A3
BBB+
BBB+

A3
BBB+
BBB+

A3
BBB+
BBB+

 
 
 
3.6. 

Other 

3.6.1.  Tajikistan 

Strong growth in remittance inflows supported the rise in economic activity in Tajikistan in 
2010-2011. GDP rose by 6% in 2011 and is expected to expand by another 6% in 2012. The 
outlook is subject to downside risks stemming from a potential global or regional slow-down 
and an expected fall in international commodity prices. Average inflation in 2011 was 13% 
but  it  is  likely  to  recede  in  2012  in  line  with  stabilising  global  food  and  energy  prices.  The 
damage to export competitiveness from high inflation in 2011 was partly offset by currency 
depreciation.  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. The budget deficit, excluding public investment programmes, is 
expected to remain at around 0.5% of GDP in 2012 with its composition reflecting a gradual 
shift  to  higher  social  spending,  which  is  low  even  by  regional  levels.  Some  parts  of  public 
spending are covered by international aid for food supplies, infrastructure repairs and capacity 
building. 

Tajikistan  remains  dependent  on  sales  of  aluminium,  cotton  and  electricity  for  most  of  its 
export revenue. Despite higher aluminium prices in 2011, revenue earnings were hampered by 
a  fall  in  production.  While  this  trend  was  somewhat  counter-balanced  by  higher  revenues 
from sales of cotton fibre, Tajikistan's export revenue declined in 2011 after the peak in 2010 
and is projected to fall further in 2012. The current-account deficit is expected to deteriorate 
to 6.5% of GDP in 2012, compared with a deficit of 4.1% of GDP in 2011. As Tajikistan's 
external debt is projected to increase to 33.1% of GDP in 2012 from 31.3% GDP in 2011, the 
country's external position remains fragile, in particular given a very low level of international 
reserves (about 1.5 months of imports in 2011). 

The  three-year  Extended  Credit  Facility  (ECF)  arrangement  (about  USD  116  million)  with 
Tajikistan,  which  was  originally  approved  by  the  IMF’s  Executive  Board  in  2009  and 
subsequently  augmented  in  2010,  expires  in  April  2012.  Given  the  programme’s  role  in 
maintaining  macroeconomic  stability,  the  authorities  have  expressed  interest  in  a  continued 
engagement  with  the  IMF.  So  far  the  performance  was  mixed,  as  Tajikistan  missed  four 
indicative targets, with the most important being the breach of net international reserves and 
liquidity loans from the central bank to commercial banks. 

 
 
Country-risk indicators : Tajikistan
Output and prices

Real GDP growth rate - IMF
Unemployment*
Inflation rate (CPI) (Dec/Dec) - IMF

Public finances

General government balance

Balance of payments - IMF

Exports of goods 
Current account balance 
Net inflow of foreign direct investment
Gross international reserves, (end of period) 
In months of subsequent year's imports 

Exchange rate (end of period) 

External debt - IMF

Total public and publicly guaranteed debt
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 arrangements

Type
(Date)
On track

(%)
(% labour force)
(% change)

(% of GDP)

(m EUR)
(% of GDP)
(m EUR)
(m EUR)
(months)
(per EUR)

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

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

2009

2010

2011 est

3.9
2.1
5.0

-5.4

293
-6
11.0
199
1.2
5.77

1,213
34.0
20.3
n.a.
n.a.

29
0.2
2.5
9.9

6.5
n.a.
9.8

-3.7

448
2.1
12.0
359
1.4
5.81

1,465
34.4
7.3
n.a.
n.a.

29.0
0.2
2.2
6.5

6.0
n.a.
13.4

-3.1

422.0
-4.1
22.0
418.0
1.5
6.68

1,515
31.3
6.2
n.a.
n.a.

28.5
0.1
1.9
6.8

Extended Credit Facility
signed in 2009 till April 2012, augmented in 2010
On track

On track

On track

Indicators of market's perception of creditworthiness

Moody's long-term foreign currency rating (end of period)
S&P long-term foreign currency rating (end of period)
Fitch long-term foreign currency rating (end of period)

* annual average, oficially registered

(1)   See explanatory notes

none
none
none

none
none
none

none
none
none