REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on guarantees covered by the general budget Situation at 30 June 2012
Date: 2013-04-18
Institutions: European Commission
Subjects: EIB loan, budgetary reserve (EU), general budget (EU), investment protection, third country

EUROPEAN 
COMMISSION 

Brussels, 18.4.2013  
COM(2013) 211 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

on guarantees covered by the general budget 
Situation at 30 June 2012 

{SWD(2013) 130 final} 

EN 

   EN 

 
 
 
 
  
 
 
TABLE OF CONTENTS 

1. 

2. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

4. 

4.1. 

4.2. 

4.3. 

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

Types of operations covered by the Budget................................................................. 3 

Events since the last report at 31 December 2011 ....................................................... 4 

Balance of payments support to non-euro Member States........................................... 4 

Macro-financial assistance ........................................................................................... 4 

Euratom ........................................................................................................................ 4 

European Financial Stabilisation Mechanism.............................................................. 4 

Budget guarantee for EIB external financing............................................................... 5 

Data on risks covered by the Budget............................................................................ 5 

Definition of risk .......................................................................................................... 5 

Risk composition.......................................................................................................... 5 

Annual risk covered by the Budget.............................................................................. 7 

4.3.1.  Risk linked to Member States ...................................................................................... 7 

4.3.2.  Risk linked to third countries ....................................................................................... 8 

4.4. 

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

5. 

5.1. 

5.2. 

5.3. 

6. 

6.1. 

6.2. 

6.3. 

7. 

7.1. 

7.2. 

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

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

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

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

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

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

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

Target amount ............................................................................................................ 13 

Evaluation of risks: economic and financial situation of third countries witgh the 
largest exposure.......................................................................................................... 13 

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

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

2 

 
 
 
1. 

INTRODUCTION 

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

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

2. 

TYPES OF OPERATIONS COVERED BY THE BUDGET 

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

–  loans granted by the European Union with macroeconomic objectives, i.e. macro-financial 
assistance2  ("MFA")  loans  to  third  countries  in  conjunction  with  the  Bretton  Woods 
institutions,  balance-of-payments3  ("BOP")  loans  granting  support  to  non-euro  Member 
States  experiencing  balance-of-payments  difficulties,  loans  under  the  European  financial 
stabilisation mechanism ("EFSM")4 granting support to all Member States experiencing or 
seriously  threatened  with  a  severe  economic  financial  disturbance  caused  by  exceptional 
occurrences beyond their control; and 

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

The  guaranteed  EIB  external  financing,  the  Euratom  loans  and  the  MFA  loans  have  since 
1994 been covered by the Guarantee Fund for external actions ("the Fund"),6 while BOP and 
EFSM loans are directly covered by the Budget. 

The Fund covers defaults on loans and loan guarantees granted to non-Member States or for 
projects in non-Member States. It was established: 

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

or late payment on a guaranteed loan arises; and 

1 

2 
3 

4 
5 
6 

COM(2012)609 final and SEC(2012)347 final make up the previous report on the guarantees covered 
by the Budget at 31 December 2011. 
MFA may also take the form of grants to third countries.  
Council Regulation (EC) N° 332/2002 of 18 February 2002 establishing a facility providing medium-
term financial assistance for Member States' balances of payments (OJ L 53, 23.2.2002, p.1). 
Council Regulation (EU) No 407/2010 of 11 May 2010 (OJ L 118, 12.5.2010, p.1).  
References to legal bases are listed in Table A4 of the SWD. 
Council  Regulation  (EC,  Euratom)  No  480/2009  of  25 May 2009  establishing  a  Guarantee  Fund  for 
external actions (codified version), the "Guarantee Fund Regulation" (OJ L 145, 10.6.2009, p.10). 

3 

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

If  third  countries  become  Member  States,  loans  relating  to  such  countries  are  no  longer 
covered  by  the  Fund  and  the  risk  has  to  be  directly  borne  by  the  Budget.  The  Fund  is 
provisioned  from  the  Budget  and  has  to  be  maintained  at  a  certain  percentage  of  the 
outstanding amount of the loans and loan guarantees covered by the Fund. This percentage, 
known  as  the  target  rate,  is  currently  9%.  If  resources  of  the  Fund  are  not  sufficient,  the 
Budget will provide the necessary funds. 

3. 

EVENTS SINCE THE LAST REPORT AT 31 DECEMBER 2011 

3.1. 

Balance of payments support to non-euro Member States 

No operations took place during the first semester 2012. The precautionary EU medium-term 
financial assistance for Romania has not been activated at 30 June 2012.  

3.2.  Macro-financial assistance 

The second and final tranche of EUR 39 million to Armenia was disbursed in February and 
EUR 19 million were repaid (BiH: EUR 2 million, fYRoM EUR 5million and Tajikistan EUR 
12 million). .  

3.3. 

Euratom 

No  loan  disbursements  took  place  during  the  reported  period.  Repaid  amounts  consisted  of 
EUR 10.5 million from Bulgaria and EUR 2.8 million from Ukraine. 

3.4. 

European Financial Stabilisation Mechanism 

Disbursements to Ireland and Portugal amounted respectively to EUR 4.5 billion and EUR 6 
billion during the first six months 2012.  

Outstanding amounts at 30 June 2012 for the four facilities are presented in table 1. 

As part of the response to the crisis, several other mechanisms have been established which, 
however, do not imply any risk to the Budget: 

– 

– 

7 

8 
9 

European  Financial  Stability  Facility  (EFSF8)/  European  Stability  Mechanism 
(ESM9) guaranteed by participating Member States, on a pro-rata basis, and 

the  Greek  Loan  Facility10  which  is  financed  via  bilateral  loans  from  the  other  euro 
area Member States, centrally administered by the Commission. 

Although external risks are covered in fine by the EU budget, the Guarantee Fund acts as an instrument 
to  protect  the  EU  budget  against  the  risk  of  payment  defaults.  For  a  comprehensive  report  on  the 
functioning  of  the  Fund,  see  COM(2012)399  final  and  the  accompanying  Staff  Working  Document 
(SWD(2012)217 final). 
About EFSF: http://www.efsf.europa.eu 
About ESM: http://www.esm.europa.eu 

4 

 
 
                                                 
3.5. 

Budget guarantee for EIB external financing 

Under the 2007-2013 external mandate, the loan signatures increased by 3% during the first 
semester 2012 and amounted to EUR 605 million. The amount of loans disbursed was EUR 
1,065  million.  Thus,  the  cumulative  amount  of  loans  disbursed  under  the  mandate  reached 
EUR 9,626 million at 30 June 2012, up by 12.5% compared to 31 December 2011. 

4. 

 DATA ON RISKS COVERED BY THE BUDGET 

4.1. 

Definition of risk 

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

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

–  "The total risk covered" is based on the sum of the total amount of capital outstanding for 

the operations concerned on a given date including accrued interest11.  

–  The budgetary approach defined as "the annual risk borne by the Budget" is based on the 
calculation of the maximum amount of annual payments due which the EU would have to 
pay  out  in  a  financial  year  assuming  that  all  payments  of  the  guaranteed  loans  are  in 
default12. 

4.2. 

Risk composition 

Until  2010  the  maximum  risk  in  terms  of  total  outstanding  amounts  covered  was  mainly 
linked to loans granted to third countries. Since 2011 the financial crisis has impacted heavily 
on the public finances of the Member States leading to an increase in the lending activity of 
the EU to support higher government financing needs. 

As a consequence the composition of risk has changed. At 30 June 2012: 

• 

10 

11 
12 

73%  of  the  total  outstanding  amount  guaranteed  concerns  borrowing  operations 
linked  to  loans  to  Member  States  which  are  directly  covered  by  the  Budget 
(compared to 45% at 31.12.2010). 

The Greek Loan Facility - ECFIN - European Commission: 
http://ec.europa.eu/economy_finance/assistance_eu_ms/greek_loan_facility/index_en.htm 
See Table 1 of the Report. 
For  the  purpose  of  this  calculation,  it  is  assumed  that  defaulting  loans  are  not  accelerated,  i.e.  only 
payments due are taken into account (see also Tables 2 and 3 of the Report and Table A2 of the SWD). 

5 

 
 
                                                                                                                                                         
The total risk covered by the Budget at 30 June 2012 is presented in the following table 1. 

Table  1:  Total  outstanding  amounts  covered  by  the  Budget  at  30  June  2012  in  EUR 
million 

Outstanding 
Capital 

Accrued 
Interest 

Total 

% 

Member States* 

MFA 

Euratom 

BOP 

EIB*** 

EFSM 

Sub-total 
States 

Member 

Third Countries** 

MFA 

Euratom 

EIB*** 

Sub-total third countries 

Total 

25

393

11,400

2,838

38,500

53,156

585

41

21,205

21,831

74,987

0

2

145

24

444

615

21

0

171

192

808

25 

<1%

395 

1%

11,545 

15%

2,862 

38,944 

53,771 

4%

52%

73%

606 

1%

41 

<1%

21,376 

22,024 

26%

27%

75,795 

100%

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

countries prior to their accession to the EU. 

** This risk is covered by the Fund. 

***About 82% of EIB lending operations (sovereign and sub-sovereign lending operations) are covered by 
a  comprehensive  guarantee  while  on  the  remaining  operations  the  EIB  benefits  from  a  political  risk 
coverage only. 

6 

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

The  total  outstanding  amount  of  capital  and  interest  covered  by  the  budget  continued  to 
increase mainly because of the amounts granted under the EFSM. 

4.3. 

Annual risk covered by the Budget 

For the second semester 2012, the Budget may cover (directly and via the Fund) EUR 1,871 
million13  representing  the  amounts  (capital  and  interests)  which  fall  due  during  this  period. 
Table A2 of the SWD provides details on the weight of each country in the total risk covered.  

4.3.1.  Risk linked to Member States 

The risk linked to Member States concerns: 

(a) EIB lending and/or MFA and/or Euratom loans granted before the accession to the EU  

(b) the loans granted under the BOP facility, and  

(c) the loans granted under the EFSM scheme. 

13 

Representing the amounts due for the last semester 2012 (out of the total outstanding at 30 June 2012) 
and assuming that defaulting loans are not accelerated (for details see Table A2 in SWD). 

7 

 
 
                                                 
Table 2: Ranking of the Member States according to the maximum risk borne by the Budget 
for the 2nd semester 2012 (EUR million) 

Ranking 

Country 

Loans 

Maximum 
risk 

Weight of the 
country vis-à-vis 
total risk of 
Member States 
(MS) 

Weight of the 
country vis a 
vis total risk 
(MS and non-
MS) 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

Portugal 

Ireland  

Romania 

Hungary 

Bulgaria  

Poland 

Czech 
Republic  

Slovak 
Republic  

c) 

c) 

a)+b) 

a)+b) 

a) 

a) 

a) 

a) 

Latvia  

a)+b) 

Slovenia  

Cyprus  

Lithuania  

Malta 

a) 

a) 

a) 

a) 

207.6

192.7

160.4

79.0

43.4

40.2

35.1

22.1

8.5

5.7

3.9

2.6

0.4

25.9% 

24.0% 

20.0% 

9.9% 

5.4% 

5.0% 

4.6% 

11.1%

10.3%

8.6%

4.2%

2.3%

2.2%

1.9%

2.8% 

1.2%

1.1% 

0.7% 

0.5% 

0.3% 

0.0% 

0.5%

0.3%

0.2%

0.1%

0.0%

Total 

801.5

100% 

42.8%

4.3.2.  Risk linked to third countries 

The  Fund  covers  guaranteed  loans  to  third  countries  with  maturities  extending  up  to  2042. 
The  Fund  will  bear  a  maximum  annual  risk  related  to  third  countries  of  EUR 1,070  million 
(57% of the total annual risk). 

The top ten countries (out of forty-six) are ranked below according to their total outstanding. 
They  account  for  EUR  841  million  or  78.6%  of  the  annual  risk  borne  by  the  Fund.  The 
economic  situation  of  these  countries  is  analysed  and  commented  in  point  3  of  the  SWD. 
Creditworthiness as assessed by the rating agencies is also indicated in each country table.  

8 

 
 
 
 
The risk linked to third countries concerns EIB lending and/or MFA and/or Euratom loans 
(details are included in table A3b and A4 of the SWD). 

Table 3: Ranking of the 10 most important third countries according to the maximum risk 
borne by the Fund for the 2nd semester 2012 (EUR million). 

Ranking 

Country 

Maximum 
risk 

1 

2 

3 

4 

5 

6 

7 

8 

9 

Turkey 

Serbia  

Tunisia 

Egypt  

Morocco  

South Africa  

Lebanon  

Syria 

Bosnia and Herzegovina 

10 

Jordan 

249.4

103.1

96.8

95.8

93.4

57.5

48.8

41.5

28.0

26.8

Weight of the 
country vis-à-
vis total risk 
of third 
countries 

Weight of the 
country vis-à-
vis total risk 
(MS and non-
MS)  

23.3%

13.3%

9.6%

9.1%

9.0%

8.7%

5.4%

4.6%

3.9%

2.6%

2.5%

5.5%

5.2%

5.1%

5.0%

3.1%

2.6%

2.2%

1.5%

1.4%

Total of the 10 

841.1

78.6%

45.0%

4.4. 

Evolution of risk 

The level of uncertainty remains high as the global economic and financial crisis continues to 
affect the economic recovery in the EU and the global growth. Geopolitical tensions affecting 
some Southern Mediterranean countries added also uncertainty on the economic recovery in 
certain third countries. 

9 

 
 
 
 
•  Balance of payments facility 

The  EU  medium-term  financial  assistance  under  the  BOP  facility  was  re-activated  in 
November 2008 to help Hungary and subsequently in January and May 2009 to help Latvia 
and Romania to restore market confidence for a total commitment of EUR 14.6 billion. EUR 
1.2 billion will not be disbursed as the deadline for disbursement has expired.  

In addition to the EUR 5 billion of BOP assistance for Romania already provided, the Council 
decided on 12 May 2011 to provide precautionary financial assistance for this country of up to 
EUR 1.4 billion14 of which no disbursements has been made yet.  

The  BOP  facility  with  its  overall  ceiling  of  EUR  50  billion  has  a  remaining  capacity  of 
EUR 37.2 billion EUR to provide further BOP assistance if required. 

•  European Financial Stabilisation Mechanism (EFSM) 

Tensions in the sovereign bond markets remained high during the first semester 2012. Issuing 
conditions  for  peripheral  euro-area  sovereigns  remain  stressed  despite  the  activation  of  the 
EFSM  -  supplemented  by  bilateral  loans  -  and  the  EFSF.  The  successful  fulfiment  of  the 
increased refinancing needs of Member States' governments in the coming months and years 
will remain challenging. 

The  Ecofin  Council  conclusions  set 
to 
EUR 60 billion15,  but  the  legal  limit  is  provided  in  Article  2(2)  of  the  Council  Regulation, 
which  limits  the  outstanding  amount  to  the  margin  available  under  the  own  resources 
ceiling16. 

the  maximum  volume  of 

the  mechanism 

Following  the  Council  decisions  to  grant  Union  financial  assistance  to  Ireland17  and 
Portugal18, disbursements reach EUR 18.4 billion to Ireland and EUR 20.1 billion to Portugal. 

Out of its maximum volume of EUR 60 billion, the EFSM has - at 30 June 2012 - a remaining 
capacity of EUR 21.5 billion to provide further assistance if required19 . 

14 

15 

16 

17 

18 

19 

Council  Decision  2011/288/EU  of  12  May  2011  providing  precautionary  EU  medium-term  financial 
assistance for Romania (OJ L 132, 19.5.2011, p.15). 
Cf. Press release on extraordinary Ecofin Council meeting 9/10 May 2010 
(http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/114324.pdf) 
Council Regulation (EU) No 407/2010 of 11 May 2010 establishing a European financial stabilisation 
mechanism (OJ L 118, 12.5.2010, p.1). 
Council  Implementing  Decision  2011/77/EU  of  7  December  2011  on  granting  Union  financial 
assistance to Ireland (OJ L 30, 4.2.2011, p348). 
Council Implementing Decision 2011/344/EU of 30 May 2011 on granting Union financial assistance to 
Portugal  (OJ  L  159,  17.6.2011,  p.88)  and  Corrigendum  Council  Implementing  Decision  of  17  May 
2011 on granting Union financial assistance to Portugal (OJ L 178, 10.7.2012, p.15).. 
For further information on EFSM, see also the report from the Commission on borrowing and lending 
activities of the European Union in 2011, COM(2012)419.  

10 

 
 
 
                                                 
•  Macro-financial assistance loans 

Following the entry into force of the Lisbon Treaty, MFA decisions are no longre taken by the 
Council alone, but in accordance with the ordinary legislative procedure (co-decision). A new 
legislative proposal for a MFA Framework Regulation has been adopted by the Commission 
on 4.7.2011 to improve the decision–making process under the Lisbon Treaty20.  

Under the proposed Framework Regulation, the procedure for MFA would become similar to 
that  of  other  external  financing  instruments,  whereby  the  Commission  would  have 
competence  for  adopting  decisions  granting  MFA  under  the  supervision  of  a  committee  of 
Member  States  representatives  in  accordance  with  the  examination  procedure  introduced  by 
the new comitology rules, which entered into force on 1 March 201121. The Parliament and 
the  Council  continued  discussions  on  the  proposed  Regulation  in  2012,  including  on  the 
procedure for the MFA decision-making. 

•  Euratom loans 

The Euratom lending to Member States or in certain eligible non-member countries (Russian 
Federation,  Armenia,  Ukraine)  has  a  ceiling  of  EUR 4 billion  of  which  around  85%  has 
already been used. The remaining rouhgly EUR 600 million could be used for financing new 
projects.  

•  EIB loans 

Under the EIB general mandate covering the period 2007-2013 a total amount of EUR 19,998 
million had been signed at 30 June 2012, of which EUR 9,626 million had been disbursed at 
that date (see Table A6 of the SWD). For more information on the countries covered by the  
EIB mandates, see Tables A1 and A2 of the SWD. 

The EIB started experiencing defaults on certain interests payments and loan repayments from 
the Syrian Government as of end of 2011 (see paragraph 5.3 below).  

5. 

DEFAULTS, ACTIVATION OF BUDGET GUARANTEES AND ARREARS 

5.1. 

Payments from cash resources 

The Commission draws on its cash resources in order to avoid delays and resulting costs in 
servicing its borrowing operations when a debtor is late in paying the EU22. 

20 
21 

22 

COM(2011) 396 final – 2011/0176 (COD) of 4.7.2011. 
Regulation  (EU)  182/2011  of  the  European  Parliament  and  of  the  Council  laying  down  the  rules  and 
general principles concerning mechanisms for control by Member States of the Commission’s exercise 
of implementing powers (OJ L 55, 28.2.2011, p. 13), which replaces Council Decision 1999/468/EC. 
See  Article  12  of  Council  Regulation  (EC, Euratom)  No  1150/2000  of  22  May  2000  implementing 
Decision  2007/436/EC,  Euratom,  on  the  system  of  the  European  Communities  own  resources  (OJ  L 
130, 31.5.2000,p.1). 

11 

 
 
                                                 
5.2. 

Payments from the Budget 

As  no  defaults  from  Member  States  were  recorded  during  the  first  half  of  2012  ,  no 
appropriation was requested under the p.m. lines of Article 01 04 01 of the Budget "European 
Union  guarantees  for  Union  and  Euratom  borrowing  operations  and  for  EIB  lending 
operations". 

5.3. 

Activation of the Guarantee Fund for external actions 

In  the  event  of  late  payment  by  the  beneficiary  of  a  loan  to  third  countries  granted  or 
guaranteed by the EU, the Fund is called on to cover the default within three months of the 
request23. 

The  EIB  experienced  defaults  on  certain  interest  payments  and  loan  repayments  from  the 
Syrian Government. Since official payment requests have remained unsuccessful, the EIB has 
called the Guarantee Fund in May 2012 for the payment of EUR 15.5 million corresponding 
to non payments due in November and December 2011. This amount was withdrawn from the 
Guarantee Fund account in August 2012. Three other payment requests for unpaid loans by 
the Syrian Government have been sent for EUR 8,6 million, EUR 2,6 million and EUR 15,4 
million  to  be  paid  by  the  Fund  to  the  Bank  respectively  in  November  2012,  January  and 
February 2013. In the meantime, EUR 2,1 million have been recovered by the Bank. Unless 
the country situation improves, further calls are to be expected. 

total  capital  outstanding  of  guaranteed 

to 
The 
EUR 551 million,  with  the  last  loan  maturity  in  2030.  In  conformity  with  the  Guarantee 
Agreements, when the EU has made a payment under the EU Guarantee, it subrogates into the 
right  and  remedies  of  the  EIB.  Recovery  proceedings  are  to  be  undertaken  by  the  EIB  in 
respect of the subrogated sums. 

to  Syria  amounts 

loans  related 

6. 

GUARANTEE FUND FOR EXTERNAL ACTIONS 

6.1. 

Recoveries24 

At 30 June 2012, the Fund had no arrears to recover, since no payments have been made. 

6.2. 

Assets 

At 30 June 2012, the net assets25 of the Fund amounted to EUR 1,839,956,496.39. 

23 

24 

25 

Since its inception in 1994, the Fund has been called for a cumulative amount of EUR 493 million. For 
more details, see Section 2.5.3 of the SWD. 
Since  its  inception  in  1994,  the  total  recoveries  by  the  Fund  have  amounted  to  EUR  576  million  (it 
includes  the  amount  of  capital  and  interest  repaid,  plus  penalties  interests  for  late  payments,  plus 
exchange rate gains and losses realized). 
Total assets of the Fund minus accrued payables (EIB fees and audit fees). 

12 

 
 
                                                 
6.3. 

Target amount 

The Fund has to reach an appropriate level (target amount) set at 9% of the total outstanding 
capital liabilities arising from each operation, plus accrued interest. At 31 December 2011, the 
ratio  between  the  Fund's  resources  (EUR 1,755.43  million)  and  the  outstanding  capital 
liabilities26 (EUR 21,234.34 million) within the meaning of the Fund Regulation were lower 
than the target amount. Consequently, a provisioning of EUR 155,66 million was inserted in 
the preliminary Budget of 2013. 

In  February  2012,  the  Budget  paid  EUR 260,17  million  to  the  Fund  as  provisionned  in  the 
preliminary draft Budget of 2012 and in accordance with the rules of the Fund Regulation (the 
9% target amount). 

7. 

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

7.1. 

Objectives 

The previous sections of this report provided information on quantitative aspects of the risk 
borne  by  the  Budget,  relating  to  third  countries.  Section  3  of  the  SWD,  provides  a 
macroeconomic analysis of the third countries to which the Budget has the largest exposure, 
or which benefit from the EU lending facilities (MFA and Euratom loans). 

7.2. 

Risk assessment methods 

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

Country  risk  indicators  included  in  the  tables  in  the  SWD  indicate  the  evolution  of  risk  of 
defaults. This analysis is provided in the section 3 of the SWD for the countries having the 
highest credit risk and exposure to the Budget (MFA and Euratom loans included) at 30 June 
2012. 

26 

Including accrued interests. 

13