REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on guarantees covered by the general budget Situation at 31 December 2014
Date: 2015-07-31
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EIB loan, EU Member State, Euratom loan, budgetary reserve (EU), credit guarantee, economic stabilisation, financial aid, general budget (EU), macroeconomics, third country

EUROPEAN 
COMMISSION 

Brussels, 31.7.2015  
COM(2015) 373 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

on guarantees covered by the general budget 
Situation at 31 December 2014 

{SWD(2015) 148 final} 

EN 

   EN 

 
 
 
 
  
 
 
Table of Contents 

1. 

2. 

3. 

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

Operations guaranteed by the EU budget..................................................................... 3 

Evolutions of guaranteed operations............................................................................ 5 

3.1. 

Operations managed directly by the Commission ....................................................... 6 

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

3.1.2.  Balance of payments facility........................................................................................ 6 

3.1.3.  Macro-financial assistance loans.................................................................................. 7 

3.1.4.  Euratom loans............................................................................................................... 8 

3.2. 

Evolution of the EIB external financing operations..................................................... 8 

4. 

4.1. 

4.2. 

4.3. 

Risks covered by the EU budget .................................................................................. 9 

Definition of risk .......................................................................................................... 9 

Total risk composition.................................................................................................. 9 

Annual risk covered by the EU budget ...................................................................... 10 

4.3.1.  Risk linked to Member States .................................................................................... 11 

4.3.2.  Risk linked to third countries ..................................................................................... 12 

5. 

 Activation of the guarantees and evolution of the Fund ........................................... 13 

5.1. 

Activation of guarantees ............................................................................................ 13 

5.1.1.  Payments from cash resources ................................................................................... 13 

5.1.2.  Payments from the EU budget ................................................................................... 13 

5.1.3.  Calls on the Fund and recoveries ............................................................................... 13 

5.2. 

Evolution of the Fund................................................................................................. 14 

2 

 
 
 
1. 

INTRODUCTION 

The  objective  of  this  report  is  to  monitor  the  credit  risks  borne  by  the  EU  budget  resulting 
from the guarantees given and the lending operations implemented directly by the European 
Union  or  indirectly  through  the  guarantee  granted  for  EIB  financing  projects  outside  the 
Union. 

This report is submitted pursuant to Article 149 of the Financial Regulation1 which requires 
the  Commission  to  report  annually  to  the  European  Parliament  and  to  the  Council  on  EU 
budget guarantees and the corresponding risks2. 

The  report  is  structured  as  follows:  section  2  recalls  the  key  features  of  the  operations 
guaranteed by the EU budget; several other additional crisis management mechanisms, which 
do not imply any risk for the EU budget, are also presented. Section 3 lays out the evolution 
of  the  guaranteed  operations.  Then,  section  4  highlights  the  main  risks  covered  by  the  EU 
budget  while  section  5  outlines  the  activation  of  the  guarantees  and  the  evolution  of  the 
Guarantee Fund for external actions ("the Fund")3. 

A  Commission  Staff  Working  Document  (SWD)  complements  this  report  with  a  set  of 
detailed  tables  and  explanatory  notes.  It  also  provides  a  macroeconomic  analysis  of  the 
countries benefitting from EU loans and/or guarantees, representing the bulk of the exposure 
of the Fund. 

2. 

OPERATIONS GUARANTEED BY THE EU BUDGET 

The risks covered by the EU 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 
assistance4 ("MFA") loans to third countries, balance-of-payments5 ("BOP") loans granting 
support  to  non-euro  Member  States  experiencing  balance-of-payments  difficulties,  loans 
under  the  European  financial  stabilisation  mechanism  ("EFSM")6  granting  support  to  all 
Member  States  experiencing  or  seriously  threatened  with  a  severe  economic  financial 
disturbance  caused  by  exceptional  occurrences  beyond  their  control  and  are  usually 
activated  in  conjunction  with  a  financial  support  by  the  International  Monetary  Fund 
(IMF); 

1 

2 

3 

4 
5 

6 

Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 
2012  on  the  financial  rules  applicable  to  the  general  budget  of  the  Union  and  repealing  Council 
Regulation (EC, Euratom) No 1605/2002 (OJ L 298, 26.10.2012, p. 1). 
COM(2014)540 final and SWD(2014)269 final make up the previous report on the guarantees covered 
by the Budget at 31 December 2013. 
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). 
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 establishing a European financial stabilisation 
mechanism (OJ L 118, 12.5.2010, p.1).  

3 

 
                                                 
–  loans with microeconomic objectives, i.e. Euratom loans and, most significantly, European 
Investment  Bank  ("EIB")  financing  of  operations  in  non-Member  States  ("EIB  external 
financing") that are covered by EU guarantees7. 

The guaranteed EIB external financing, MFA and Euratom loans to third countries have since 
1994 been covered by the Fund, while BOP, EFSM and Euratom loans to Member States are 
directly covered by the EU 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  EU  budget  every  time  a 

default or late payment on a guaranteed loan arises; and 

–  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  third 
countries8. 

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  EU  budget.  The  Fund  is 
provisioned  from  the  EU  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%9. If resources of the Fund are not sufficient, the EU 
budget will provide the necessary funds. 

Other crisis management mechanisms which are not covered by the EU budget 

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

- the Greek Loan Facility (GLF)10 which is financed via bilateral loans from other euro area 
Member States to Greece, centrally administered by the Commission. 

-  European  Financial  Stability  Facility  (EFSF)11:  The  EFSF  was  created  by  the  euro  area 
Member States as a temporary rescue mechanism in June 2010 to provide financial assistance 
to  euro  area  Member  States  within  the  framework  of  a  macroeconomic  adjustment 
programme.  The  Treaty  for  a  permanent  rescue  mechanism,  the  European  Stability 
Mechanism  (ESM)  entered  into  force  on  27  September  2012.  Since  1  July  2013,  the  EFSF 
continues with its ongoing programmes to Greece (together with the IMF and some Member 
States) as well as to Ireland  and Portugal  (together with the IMF,  some Member  States and 

7 
8 

9 

10 

11 

References to legal bases are listed in the Annex of Table A3 of the SWD. 
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 the latest annual report on the Fund 
and  its  management,  see  COM(2014)463  final  and  the  accompanying  Staff  Working  Document 
(SWD(2014)241  final).  The  report  for  2014  is  expected  to  be  available  by  July  2015  on  http://eur-
lex.europa.eu/homepage.html . 
For  a  comprehensive  report  on  the  functioning  of  the  Fund  and  the  provisioning  target  rate,  see 
COM(2014)214 final and the accompanying Staff Working Document (SWD(2014)129 final). 
About the GLF:  
http://ec.europa.eu/economy_finance/assistance_eu_ms/greek_loan_facility/index_en.htm. 
About the EFSF: http://www.efsf.europa.eu. 

4 

 
                                                 
EU/EFSM)12  but  is  no  longer  engaged  in  new  financing  programmes  or  loan  facility 
agreements  

-  European  Stability  Mechanism  (ESM)13:  The  ESM  is  an  important  component  of  the 
comprehensive EU strategy designed to safeguard financial stability within the euro area by 
providing  financial  assistance  to  euro  area  Member  States  experiencing  or  threatened  by 
financing difficulties. It is an intergovernmental organization under public international law, 
based in Luxembourg, with an effective lending capacity of EUR 500,000 million. 

3. 

EVOLUTIONS OF GUARANTEED OPERATIONS  

This  section  sets  out  the  evolution  of  the  guaranteed  operations;  firstly  of  those  managed 
directly by the Commission and then of those managed by the EIB.  

Table 1: Total outstanding amounts covered by the EU budget at 31 December 2014 (in 
EUR million) 

Outstanding 
Capital 

Accrued 
Interest 

Total 

% 

Member States* 

Euratom 

BOP 

EIB 

EFSM 

Sub-total 
States 

Member 

Third Countries** 

MFA 

Euratom 

EIB*** 

Sub-total third countries 

Total 

324

8,400

2,315

46,800

57,840

1,829

24

24,431

26,283

84,123

1

190

19

707

917

13

< 1

164

178

326 

< 1

8,590 

2,334 

47,507 

58,757 

1,842 

24 

24,595 

26,461 

10

3

56

69

2

< 1

29

31

1,095

85,218 

100

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

countries prior to their accession to the EU. 

**   This risk is covered by the Fund. 

***  Loans  subrogated 

to 

the  EU 

following  Syria  defaults  on  EIB 

loans  are 

included

(amount: EUR 107 million). 

12 
13 

The loans granted under the EU/EFSM are guaranteed by the EU budget. 
About the ESM : http://esm.europa.eu. 

5 

 
 
 
 
 
 
 
 
                                                 
Tables  A1,  A2a,  A2b  and  A3  of  the  SWD  provide  more  detailed  information  on  these 
outstanding amounts, in particular in terms of ceiling, disbursed amounts or guarantee rates. 

3.1. 

Operations managed directly by the Commission  

3.1.1.  European Financial Stabilisation Mechanism (EFSM) 

In its conclusions of 9/10 May 2010, the Ecofin Council foresaw a maximum volume of the 
mechanism  of  EUR 60,000 million14.  Moreover,  Article  2(2)  of  Council  Regulation  No 
407/201015  limits  the  outstanding  amount  of  loans  or  credit  lines  to  be  granted  to  Member 
States to the margin available under the own resources ceiling for payment appropriations. 

Following the Council decisions to grant Union financial assistance to Ireland16 (up to EUR 
22,500  million)  and  Portugal17  (up  to  EUR  26,000  million),  disbursements  reached  EUR 
22,500 million to Ireland and EUR 24,300 million to Portugal. 

Developments during 2014 

In  March  2014,  the  final  tranche  of  EUR  800  million  was  disbursed  to  Ireland,  using  the 
maximum loan capacity for the country.  

Regarding Portugal, EUR 2,200 million were disbursed in two tranches. The remaining EUR 
1,700 million will not be used as the Portuguese government had decided not to request the 
disbursement. Moreover, the deadline for disbursement has expired. 

At 31 December 2014, the EFSM had a remaining capacity of EUR 13,200 million, out of its 
maximum  volume  of  EUR 60,000 million,  to  provide  further  assistance  to  any  euro  area 
Member State, if required18. 

3.1.2.  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 Latvia and Romania, in January and May 
2009,  to  restore  market  confidence  for  a  total  commitment  of  EUR  14,600  million.  Of  this 
amount, EUR 1,200 million was not disbursed due to no further requests and expiration of the 
deadline for disbursement.  

Developments during 2014 

Hungary repaid EUR 2,000 million and Latvia EUR 1,000 million.  

14 

15  

16 

17 

18 

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, p. 348). 
Council Implementing Decision 2011/344/EU of 17 May 2011 on granting Union financial assistance to 
Portugal (OJ L 159, 17.6.2011, p. 88); see also corrigendum  (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 2013 (COM(2014)529 final). The report for 2014 is expected to be 
available by July 2015 on http://eur-lex.europa.eu/homepage.html. 

6 

 
                                                 
As  regards  Romania,  the  Council  had  decided  on  22  October  2013  to  make  available  to 
Romania  a  second  precautionary  medium-term  financial  assistance19  amounting  to  a 
maximum of EUR 2,000 million in the form of a loan with a maximum average maturity of 8 
years. No disbursements have been made yet but the facility may be activated and funds can 
be requested until 30 September 2015. 

At 31 December 2014, the BOP facility had a remaining capacity of EUR 39,600 million out 
of an overall ceiling of EUR 50,000 million to provide further assistance if required.  

The outstanding amount of BOP loans has decreased from EUR 11,400 million to EUR 8,400 
million in 2014.  

Developments subsequent to 31 December 2014 

Two  additionnal  re-imbursements  were  made  in  January  2015  amounting  to  EUR  1,200 
million for Latvia and to EUR 1,500 million for Romania. Hence, outstanding BOP loans as 
of 31 March 2015 amount to EUR 5,700 million. 

3.1.3.  Macro-financial assistance loans 

As  a  general  rule,  MFA  decisions  are  taken  by  the  European  Parliament  and  the  Council 
(Article 212 of the TFEU). However, the Council may adopt the decision on a proposal from 
the  Commission  when  the  situation  in  a  third  country  requires  urgent  financial  assistance 
(Article  213  of  the  TFEU)  and  this  procedure  was  used  in  the  second  MFA  package  for 
Ukraine in 2014. 

Developments during 2014 

On  14 April  2014,  the  Council  decided  to  provide  MFA  loans  to  Ukraine20  for  a  maximum 
amount of EUR 1,000 million, which was fully disbursed in 2014.  

The  MFA  assistance  to  Ukraine  approved  in  201021  together  with  funds  still  available  from 
assistance  approved  in  200222  amount  to  EUR  610  million  in  loans.  EUR  360  million  were 
disbursed in 2014.  

On  15  May  2014,  the  European  Parliament  and  the  Council  decided  to  provide  macro-
financial assistance to the Republic of Tunisia23 of a maximum amount of EUR 300 milion in 
the form of loans.  

Regarding  repayments,  EUR  96  million  were  repaid  by  the  beneficiary  countries  (Bosnia 
Herzegovina  EUR  4  million,  former  Yugolav  Republic  of  Macedonia  EUR  10  million, 

19 

20 

21 

22 

23  

Council Decision 2013/531/EU of 22 October 2013 providing precautionary EU medium-term financial 
assistance for Romania (OJ L 286, 29.10.2013, p.1). 
Council  Decision  No  2014/215/EU  of  the  Council  of  14  April  2014  providing  macro-financial 
assistance to Ukraine (OJ L 111, 15.4.2014, p. 85). 
Decision  No  388/2010/EU  of  the  European  Parliament  and  of  the  Council  of  7  July  2010  providing 
macro-financial assistance to Ukraine (OJ L 179, 14.7.2010, p. 1). 
Council Decision 2002/639/EC of 12 July 2002 providing supplementary macro-financial assistance to 
Ukraine (OJ L 209, 6.8.2002, p. 22). 
Decision  534/2014/EU  of  the  European  Parliament  and  of  the  Council  of  15  May  2014  providing 
macro-financial assistance to the Republic of Tunisia (OJ L 151, 21.05.2014, p. 9). 

7 

 
                                                 
Lebanon EUR 25 million, Montenegro EUR 1 million Serbia EUR 52 million, and Tajikistan 
EUR 4 million).  

The outstanding amount of MFA loans has increased from EUR 564.6 million to EUR 1,828.6 
million at 31 December 2014.  

Developments subsequent to 31 December 2014 

The first tranche of EUR 100 milllion to Jordan (out of the EUR 180 million decision) was 
disbursed in February 2015. 

In April 2015, the remaining amount of EUR 250 million decided previously was disbursed to 
Ukraine together with the first EUR 10 million tranche to Georgia (out of the EUR 23 million 
decision). 

The first tranche of EUR 100 million to Tunisia (out of the EUR 300 million decision) was 
disbursed in May 2015. 

3.1.4.  Euratom loans 

The Euratom lending to Member States or in certain eligible non-member countries (Russian 
Federation, Armenia, Ukraine) has a ceiling of EUR 4,000 million of which around 85% has 
already been disbursed. A loan of EUR 300 million to Ukraine dedicated to the safety upgrade 
of existing nuclear facilities was signed on 7 August 2013. The disbursement can occur once 
all conditions for effectiveness have been satisfactorily completed.  

EUR 326 million remaining out of the EUR 4,000 million decision could be devoted to new 
projects. 

Developments during 2014 

No  disbursements  took  place  in  2014.  Repaid  amounts  consisted  of  EUR  22.6  million  from 
Bulgaria, EUR 10 million from Romania and EUR equivalent of 6.6 million from Ukraine.  

3.2. 

Evolution of the EIB external financing operations 

Developments during 2014 

The existing EU guarantee for the EIB external financing covering the period 2007-2013 ("the 
2007-2013 external mandate") was extended until 30 June 2014 as no decision on a new EU 
guarantee  to  the  EIB  had  been  adopted  by  the  Council  and  the  European  Parliament  at  31 
December 2013.  

The  new  Decision  granting  an  EU  guarantee  for  EIB  operations  outside  the  Union  for  the 
period 2014-202024 was adopted in April 2014. It establishes that the maximum ceiling of the 
EU  guarantee  should  be  broken  down  into  a  fixed  ceiling  of  a  maximum  amount  of  EUR 
27,000 million and an optional additional amount of EUR 3,000 million. Activation, in whole 
or in part, of the optional additional amount will be decided in accordance with the ordinary 

24 

Decision No 466/2014/EU of the European Parliament and of the Council of 16 April 2014 granting an 
EU  guarantee  to  the  European  Investment  Bank  against  losses  under  financing  operation  supporting 
investments projects outside the Union (OJ L 135, 8.5.2014, p. 1). 

8 

 
                                                 
legislative procedure on the basis of the mid-term review of the implementation by the EIB of 
the Decision and the evolution of EIB operations. In parallel, a new Guarantee Agreement has 
been signed on 22 July 2014 as required by Article 14 of the Decision. 

In 2014, with the use of the 2007-2013 and 2014-2020 external mandate, the loan signatures 
increased by 15% in comparison with the previous year and amounted to EUR 4,059 million. 
The  amount  of  loans  disbursed  was  EUR  2,260  million  (+  17%  compared  to  31  December 
2013).  The  2007-2013  Mandate  has  been  almost  fully  used,  taking  into  account  that  net 
signatures reach EUR 29,026 milllion, when the authorized ceiling was EUR 29,484 milllion. 
For previous EIB external mandates, see Table A3 of the SWD. 

Defaults on interests payments and loan repayments from the Syrian Government continued 
in  2014.  The  EIB  has  called  on  the  Guarantee  Fund  to  cover  these  defaults  (see  paragraph 
5.1.3 below). 

Outstanding amounts at 31 December 2014 for the various facilities referred to in this section 
are presented in Table 1. 

4. 

RISKS COVERED BY THE EU BUDGET 

4.1. 

Definition of risk 

The risk borne by the EU 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 EU 
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 interest25.  

–  The budgetary approach defined as "the annual risk borne by the EU 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 
default26. 

4.2. 

Total 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 sovereign financing needs in Member States. 

As  a  consequence  the  composition  of  risk  has  changed.  At  31  December  2014,  69%  of  the 
total outstanding amount27 concerns borrowing operations linked to loans to Member States 
which are directly covered by the EU budget (compared to 45% at 31.12.2010). 

25 
26 

27  

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 Tables 2 and 3 of the report and Table A4 of the SWD). 
See Table 1. 

9 

 
                                                 
4.3. 

Annual risk covered by the EU budget 

For  2015,  the  maximum  amount  which  the  EU  would  have  to  pay  out  (directly  and  via  the 
Fund)  -  assuming  that  all  guaranteed  loans  would  be  in  default  -  is  EUR 12,379.8  million. 
This  represents  the  capital  and  interest  payments  from  guaranteed  loans  falling  due  during 
2015, assuming that defaulting loans are not accelerated (for details see Table A4 in SWD).  

10 

 
4.3.1.  Risk linked to Member States 

In  2015,  the  Fund  will  bear  a  maximum  annual  risk  related  to  Member  States  (MS)  of 
EUR 9,811  million (ca. 79% of the total annual risk). The risk linked to MS concerns: 

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

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

(c) the loans granted under the EFSM scheme.  

Table 2: Ranking of the Member States according to the annual risk borne by the EU budget 
in 2015 (EUR million) 

Ranking  Country 

Loans  Max annual 

risk 

Weight of the 
country vis-à-
vis annual risk 
of MS 

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

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

Ireland  

Romania  

Latvia  

Portugal  

Bulgaria  

c) 

a)+b) 

a)+b) 

c) 

a) 

Hungary  

a)+b) 

Czech 
Republic  

Poland  

Croatia 

Slovak 
Republic  

Lithuania  

Slovenia  

a) 

a) 

a) 

a) 

a) 

a) 

5,676.4

1,882.5

1,265.3

684.5

86.1

63.0

45.7

42.8

40.6

15.1

4.8

4.4

Total 

9,811.1

57.9%

19.2%

12.9%

7.0%

0.9%

0.6%

0.5%

0.4%

0.4%

0.2%

< 0.1%

< 0.1%

100%

45.9%

15.2%

10.2%

5.5%

0.7%

0.5%

0.4%

0.3%

0.3%

0.1%

< 0.1%

< 0.1%

79.3%

11 

 
 
 
 
4.3.2.  Risk linked to third countries 

In 2015, the Fund will bear a maximum annual risk related to third countries of EUR 2,568.7 
million (21% of the total annual risk). The risk linked to third countries concerns EIB lending 
and/or MFA and/or Euratom loans (details are included in table A2b of the SWD). The Fund 
covers guaranteed loans to third countries with maturities extending up to 2042. 

The top ten countries (out of forty-one) are ranked below according to the repayments due in 
2015. They account for EUR 2,106 million or 82% of the annual risk related to third countries 
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.  

Table  3:  Ranking  of  the  10  most  important  third  countries  according  to  the  annual  risk 
borne by the EU budget in 2015 (EUR million)  

Ranking 

Country 

Max annual 
risk 

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

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

1 

2 

3 

4 

5 

6 

7 

8 

9 

Turkey 

Morocco  

Brazil  

Serbia 

Tunisia  

Egypt  

Bosnia 
Herzegovina  

and 

Lebanon 

South Africa  

10 

Syria  

535.9

309.8

254.0

242.0

227.3

204.2

99.9

86.9

86.3

57.0

20.9%

12.1%

10.0%

9.4%

8.8%

7.9%

3.9%

3.4%

3.4%

2.2%

4.3%

2.5%

2.1%

2.0%

1.8%

1.6%

0.8%

0.7%

0.7%

0.5%

Total of the 10 

2,106.3

82.0%

17.0%

12 

 
 
 
5. 

 ACTIVATION OF THE GUARANTEES AND EVOLUTION OF THE FUND 

5.1. 

Activation of guarantees 

5.1.1.  Payments from cash resources 

When a debtor is late in paying the EU, the Commission draws on its cash resources in order 
to  avoid  delays  and  resulting  costs  in  servicing  its  borrowing  operations28.  This  did  not 
happen in 2014. 

5.1.2.  Payments from the EU budget  

If there would be an eventual default, the EU budget would be called to cover the shortfall. As 
no  defaults  from  Member  States  occurred  during  the  year  2014,  no  appropriation  was 
requested.   

5.1.3.  Calls on the Fund and recoveries 

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 
request29. 

Starting from December 2011, the EIB has experienced defaults on certain interest payments 
and  loan  repayments  from  the  Syrian  Government.  Since  official  payment  requests  have 
remained  unsuccessful,  the  EIB  started  to  call  the  Fund  in  May  2012.  The  evolution  of  the 
calls on the Fund corresponding to defaulting loans in Syria is presented in Table 4. 

The  amounts  called  by  the  EIB  are  withdrawn  from  the  Guarantee  Fund  account  after 
authorization  by  the  Commission  services.  When  the  EU  makes  a  payment  under  the  EU 
Guarantee, it is subrogated into the rights and remedies of the EIB.  

Recovery  proceedings  are  undertaken  by  the  EIB  on  behalf  of  the  EU  in  respect  of  the 
subrogated sums. 

28 

29 

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). 
Since  its  inception  in  1994  and  as  at  the  reporting  date,  the  Fund  has  been  called  for  a  cumulative 
amount of EUR 645 million. EUR 579 million were recovered (this includes the amount of capital and 
interest repaid, plus penalties interests for late payments, plus exchange rate gains and losses realized). 
For more details, see Section 2.5.4 of the SWD. 

13 

 
                                                 
 
Table 4: Calls on the Guarantee Fund on defaulting loans in Syria (in EUR million) 

Year 

Number of 
calls paid 

Amount of 
due 
instalments

Penalties 
and accrued 
interests (1) 

Amount 
recovered 

Total 

2012 

2013 

2014 

Total 

2 

8 

8 

24.02

59.27

58.68

18 

141.97

n.a.

1.36

1.54

2.90

2.15

21.87 

0

60.63 

2.15

60.22 

2.15

142.72 

(1)  Penalties  and  accrued  interests  are  claimed  by  the  EIB  only  with  the  second  payment  request  of  each 
individual loan and run from the default date until the payment date by the Guarantee Fund.  

At  31  December  2014,  the  total  capital  outstanding  of  guaranteed  loans  related  to  Syria 
amounts to EUR 554 million30, with the last loan maturity in 2030. 

Developments subsequent to 31 December 2014 

Two  additionnal  calls  have  been  received  during  the  four  first  months  of  2015  for  a  total 
amount of EUR 12.15 million. 

5.2. 

Evolution of the Fund 

In accordance with the Guarantee Fund Regulation, 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.  A  provisioning  mechanism  is  in  place  to  ensure  the  target 
amount is met. 

On  the  basis  of  the  provisioning  mechanism,  the  EU  budget  paid  EUR 58.43  million  to  the 
Fund  in  February  2014,  while  in  February  2015,  the  respective  payment  amounted  to  EUR 
144.40 million. 

At 31 December 2014, the net assets31 of the Fund amounted to EUR 2,114.67 million. The 
ratio between the net assets and the outstanding capital liabilities32 (EUR 26,353.17 million), 
within  the  meaning  of  the  Guarantee  Fund  Regulation,  was  lower  than  the  target  amount. 
Consequently,  a  provisioning  of  EUR 257.12  million was  inserted  in  the  preliminary  EU 
budget of 2016. 

At 31 December 2014, the Fund had EUR 142.72 million arrears to recover. 

30  

31 
32 

This  includes  the  amount  of  EUR  142.72  million  already  called  by  the  EIB  and  paid  by  the 
Commission. 
Total assets of the Fund minus accrued payables (EIB fees and audit fees). 
Including accrued interests. 

14