REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on guarantees covered by the general budget Situation at 31 December 2015
Date: 2016-09-13
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, 13.9.2016  
COM(2016) 576 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

on guarantees covered by the general budget 
Situation at 31 December 2015 

{SWD(2016) 292 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 ....................................................... 7 

3.1.1.  European Financial Stabilisation Mechanism (EFSM)................................................ 7 

3.1.2.  Balance of payments facility........................................................................................ 8 

3.1.3.  Macro-financial assistance loans.................................................................................. 8 

3.1.4.  Euratom loans............................................................................................................... 9 

3.2. 

Evolution of the EIB external financing operations................................................... 10 

4. 

4.1. 

4.2. 

4.3. 

Risks covered by the EU budget ................................................................................ 10 

Definition of risk ........................................................................................................ 10 

Total risk composition................................................................................................ 10 

Annual risk covered by the EU budget ...................................................................... 11 

4.3.1.  Member States exposure ............................................................................................ 12 

4.3.2.  Third countries exposure............................................................................................ 13 

5. 

Activation of the guarantees and evolution of the Fund ............................................ 14 

5.1. 

Activation of guarantees ............................................................................................ 14 

5.1.1.  Payments from cash resources ................................................................................... 14 

5.1.2.  Payments from the EU budget ................................................................................... 14 

5.1.3.  Calls on the Fund and recoveries ............................................................................... 14 

5.2. 

Evolution of the Fund................................................................................................. 15 

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 risks. 

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")2. 

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 
assistance3 ("MFA") loans to third countries, balance-of-payments4 ("BOP") loans granting 
support  to  non-euro  Member  States  experiencing  balance-of-payments  difficulties,  loans 
under  the  European  financial  stabilisation  mechanism  ("EFSM")5  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); 

–  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 guarantees6. 

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). 
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.  References  to  legal  bases  are  listed  in  the 
Annex of Table A2B of the SWD. 
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).  
References to legal bases are listed in the Annex of Table A3 of the SWD. 

3 

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

- Guarante Fund for external Actions 

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 
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  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%8. If resources of the Fund are not sufficient, the EU 
budget will provide the necessary funds. 

- Guarante Fund of the European Fund for Strategic Investments 

The EU Guarantee covers financing and investment operations signed by the EIB under the 
Infrastructure and Innovation Window and by the EIF under the SME Window. Part of these 
operations is covered by the EU Guarantee while a part is carried out at the own risk of the 
EIB Group9.  

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  establishing  a  permanent  rescue  mechanism,  the  European  Stability 
Mechanism  (ESM),  entered  into  force  on  27  September  2012.  Since  1  July  2013,  the  EFSF 

7 

8 

9  

10 

11 

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(2015)  343  final  of  16.07.2015  and  its  Staff  Working  Document 
(SWD(2015) 163 final of 20.8.2015). The report for 2015 is expected to be available by July 2016 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 of 8.4.2014 and its Staff Working Document (2014) 129 final 
For  more  information  on  the  management  of  the  EFSI  Guarantee  Fund,  see  COM(2016)353  final  of 
31.5.2016.  
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 

 
                                                 
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 
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.  

12 
13 

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

5 

 
                                                 
Table 1: Total outstanding amounts covered by the EU budget at 31 December 2015 (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 

283

5,700

1,971

46,800

54,753

3,007

17

25,417

28,441

83,194

1

111

16

709

837

17

< 1

149

166

284 

5,811 

1,987 

47,509 

55,591 

0.3

6.9

2.4

56.4

66.0

3,024 

3.6

17 

<0.1

25,565 

28,606 

30.4

34.0

100

1,003

84,197 

* 

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  figures  does  no  include  EFSI  operations,  where  EUR  202  million  have  been  disbursed  at  the 

reporting date. 

***  The risk covered by the Fund is limited to 19.45 billion 

**** Loans  subrogated 

to 

the  EU 

following  Syria  defaults  on  EIB 

loans  are 

included

(amount: EUR 155 million). 

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. 

6 

 
 
 
 
 
 
 
 
 
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 volume of the mechanism 
of  EUR 60,000 million14.  In  addition,  euro-area  Member  States  stood  ready  to  complement 
such  resources  if  necessary.  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  (the  remaining  EUR  1,700 
million  was  not  disbursed  since  not  requested  by  the  Portuguese  government  and  due  to 
expiration of the deadline for disbursement). 

Developments during 2015 

In  April  2013  the  Eurogroup/ECOFIN  had  decided  to  increase  the  maximum  weighted 
average  maturity  of  EFSM  loans  from  12.5  to  19.5  years,  thus  offering  an  option  to  the 
beneficiary  countries  to  request  a  lengthening  of  loan  maturities  up  to  2026  (tranche  by 
tranche). 

A  request  to  lengthen  the  first  EFSM  loan  of  EUR  5  billion  disbursed  to  Ireland  in  2011  - 
which was due in December 2015 - was received from  Ireland on 27 July 2015. The loan was 
refinanced in three transactions with maturities in 2023 (EUR 2 billion), 2029 (EUR 1 billion) 
and 2035 (EUR 2 billion). 

In addition, a bridge loan amounting to EUR 7.16 billion was funded and on-lent to Greece18 
for a period of one month between 20 July and 20 August 2015. That loan was fully repaid. 

At 31 December 2015, the EFSM had a remaining capacity of EUR 13,200 million, out of its 
volume of EUR 60,000 million, to provide further assistance to any euro area Member States, 
if required19. 

Developments subsequent to 31 December 2015 

On  11  January  2016  the  Portuguese  government  also  requested  a  lengthening  of  the  second 
EFSM  loan  of  EUR  4.75  billion  disbursed  in  2011  and  due  in  June  2016.  Refinancing  has 

14 

15  

16 

17 

18  

19 

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). 
Council  Implementing  Decision  (EU)  2015/1181  of  17  July  2015  on  granting  short-term  Union 
financial assistance to Greece (OJ L 192, 18.7.2015, p. 15). 
For further information on EFSM, see also the report from the Commission on borrowing and lending 
activities of the European Union in 2014 (COM(2015)327 final). The report for 2015 is expected to be 
available by July 2016 on http://eur-lex.europa.eu/homepage.html. 

7 

 
                                                 
been done in three transactions maturing in 2023 (EUR 1.5 billion), 2031 (EUR 2.25 billion) 
and 2036 (EUR 1 billion). 

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  that 
amount, EUR 1,200 million was not disbursed due to no further requests and expiration of the 
deadline for disbursement.  

Developments during 2015 

Latvia repaid EUR 1,200 million and Romania EUR 1,500 million. 

As  regards  Romania,  the  Council  had  decided  on  22  October  2013  to  make  available  to 
Romania  a  second  precautionary  medium-term  financial  assistance20  amounting  to  a 
maximum of EUR 2,000 million in the form of a loan with a maximum average maturity of 8 
years.  The  facility  has  not  been  used  and  the  deadline  for  request  for  funds  expired  on  30 
September 2015. 

At 31 December 2015, the BOP facility had a remaining capacity of EUR 44,300 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 8,400 million to EUR 5,700 
million in 2015.  

Developments subsequent to 31 December 2015 

Hungary repaid its final loan tranche of EUR 1,500 million in April 2016. 

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  that  procedure  was  used  in  the  second  MFA  package  for 
Ukraine in 2014. 

Developments during 2015 

On  15  April  2015,  the  European  Parliament  and  the  Council  decided  to  provide  macro-
financial assistance to Ukraine21 of a maximum amount of EUR 1,800 milion in the form of 
loans. A first tranche of EUR 600 million was disbursed in July.  

20  

21 

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). 
Decision (EU) 2015/601 of 15 April 2015 providing macro- financial assistance for Ukraine (OJ L 100, 
17.4.2015, p.1). 

8 

 
                                                 
In  April  2015,  the  remaining  amount  of  EUR  250  million  of  Ukraine’s  first  programme 
approved in 201022 was disbursed together with the first EUR 10 million tranche to Georgia 
(out of the EUR 23 million decision). 

The MFA loan granted to Jordan (out of the EUR 180 million decision) was fully disbursed in 
2015 – a first tranche of EUR 100 million in February and the second and final one of EUR 
80 million in October. 

The first two tranches of the loan granted to Tunisia23 (out of the EUR 300 million decision) 
were disbursed in 2015 – a first tranche of EUR 100 million in May and the second one of 
EUR 100 million in December. 

Regarding repayments, EUR 67 million were repaid by the beneficiary countries (Bosnia and 
Herzegovina  EUR  4  million,  former  Yugolav  Republic  of  Macedonia  EUR  10  million, 
Montenegro EUR 1 million, and Serbia EUR 52 million).  

The  outstanding  amount  of  MFA  loans  has  increased  from  EUR  1,828.6  million  to  EUR 
3,006.6  million  between  31  December  2014  and  31  December  2015.  Loans  to  Ukraine 
represent 73.5% of the total MFA exposure. 

Developments subsequent to 31 December 2015 

The first tranche (EUR 10 million out of the EUR 15 million decision) of the loan granted to 
the Kyrgyz Republic24 was disbursed in April 2016. 

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.These loans also benefit from  third 
parties guarantees which cover 100% of the amounts outstanding at year end. 

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

Developments during 2015 

All conditions precedent to initial avalaibility of the loan have been satisfactorily completed 
based on the Commission’s assessment. While a borrowing decision for a first tranche up to 
EUR 100 million was adopted on 27 May 2015, due to delays in the implementation process 
no disbursements have taken place to date.  

No  disbursements  took  place  in  2015.  Repaid  amounts  consisted  of  EUR  22.6  million  from 
Bulgaria, EUR 19 million from Romania and EUR equivalent of 6.9 million from Ukraine.  

22 

23  

24  

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). 
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). 
Decision 1025/2013/EU of the European Parliament and of the Council of 22 October 2013 providing 
macro-financial assistance to the Kyrgyz Republic (OJ L 283, 25.10.2013, p. 1). 

9 

 
                                                 
3.2. 

Evolution of the EIB external financing operations 

Developments during 2015 

Under the EIB general mandate covering the period 2014-2020, a total amount of EUR 6,920 
million  had  been  signed  at  31  December  2015,  of  which  only  EUR 525  million  had  been 
disbursed  at  that  date  (see  Table  A5a  of  the  SWD).  For  more  information  on  the  countries 
covered by the EIB mandates, see Tables A1 and A2 of the SWD. 

For previous EIB external mandates, see Table A3 of the SWD. 

Defaults on interests payments and loan repayments from the Syrian Government continued 
in  2015.  The  EIB  has  called  on  the  Guarantee  Fund  to  cover  those  defaults  (see  paragraph 
5.1.3 below). 

Outstanding amounts at 31 December 2015 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 heavily affected 
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  2015,  66%  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  that  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. 

10 

 
                                                 
4.3. 

Annual risk covered by the EU budget 

With reference to outstanding loans at 31 December 2015 (see Table 1) the maximum amount 
which  the  EU  would  have  to  pay  out  during  the  year  2016  (directly  and  via  the  Fund)  - 
assuming  that  all  guaranteed  loans  would  be  in  default  -  is  EUR 10,718.5  million.  That 
amount represents the capital and interest payments from guaranteed loans falling due during 
2016, assuming that defaulting loans are not accelerated (for details see Table A4 in SWD).  

11 

 
4.3.1.  Member States exposure 

In 2016, the EU will bear a maximum annual risk related to operations with Member States 
(MS) of EUR 8,160 million (ca. 76% of the total annual risk). That risk concerns: 

(a) EIB lending and/or Euratom loans granted before Member States' 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 2016 (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) 

66.6%

19.1%

7.5%

3.9%

1.0%

0.5%

0.5%

0.4%

0.3%

0.2%

0.1%

< 0.1%

100%

50.7%

14.5%

5.7%

2.9%

0.8%

0.4%

0.4%

0.3%

0.3%

0.1%

< 0.1%

< 0.1%

76.1%

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

Total 

Portugal  

c) 

5,434.13

Hungary  

a)+b) 

1,558.78

Ireland  

c) 

Romania  

a)+b) 

Bulgaria  

Czech 
Republic  

Croatia  

Poland  

Latvia  

Slovak 
Republic  

Lithuania  

Slovenia  

a) 

a) 

a) 

a) 

a+b) 

a) 

a) 

a) 

609.39

314.19

83.24

43.66

38.88

29.36

27.10

14.66

4.60

2.09

8.160.1

12 

 
 
 
 
4.3.2.  Third countries exposure 

In 2016, the Fund will bear a maximum annual risk related to the exposure to third countries 
of  EUR 2,258.4  million  (24%  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-three) are ranked below according to the repayments due in 
2016. They account for EUR 2,069 million or 81% of the annual risk related to third countries 
borne by the Fund. The economic situation of those 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 2016 (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 

Brazil  

Tunisia  

Egypt  

Morocco  

Serbia  

South Africa  

Lebanon 

Bosnia 
Herzegovina  

and 

10 

Syria  

554.91

285.13

278.87

230.85

217.61

203.75

89.52

88.62

60.05

56.54

Total of the 10 

2,068.85

21.7%

11.1%

10.9%

9.0%

8.5%

8.0%

3.5%

3.5%

2.3%

2.2%

80.7%

5.2%

2.7%

2.6%

2.2%

2.0%

1.9%

0.8%

0.8%

0.6%

0.5%

19.3%

13 

 
 
 
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 2015. 

5.1.2.  Payments from the EU budget  

If  there  were  to  be  a  default,  the  EU  budget  would  be  called  to  cover  the  shortfall.  As  no 
defaults from Member States occurred during the year 2015, 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 705 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 2.4.2 of the SWD. 

14 

 
                                                 
 
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 

2015 

Total 

2 

8 

8 

8 

24.02

59.27

58.68

58.66

26 

200.64

n.a.

1.36

1.54

1.50

4.40

2.15

21.87 

0

0

0

60.63 

60.23 

60.16 

2.15

202.89 

(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  2015,  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 2015 

Three additionnal calls have been received by the end of 2015 to be paid in 2016, plus one in 
January 2016 for a total amount of EUR 29.90 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 144.40 million to the 
Fund  in  February  2015,  while  in  February  2016  the  respective  payment  amounted  to  EUR 
257.12 million. 

At 31 December 2015, the net assets31 of the Fund amounted to EUR 2,320.06 million. The 
ratio between the net assets and the outstanding capital liabilities32 (EUR 28,312.24 million), 
within  the  meaning  of  the  Guarantee  Fund  Regulation,  was  lower  than  the  target  amount. 
Consequently,  a  provisioning  of  EUR 228.04  million was  inserted  in  the  preliminary  EU 
budget of 2017. 

30  

31 
32 

This  includes  the  amount  of  EUR  200.64  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. 

15 

 
                                                 
At 31 December 2015, the Fund had EUR 202.89 million arrears to recover. 

In the context of the last comprehensive report33, it was announced that a review to assess the 
main parameters of the Fund, in particular the target rate, should be undertaken at the time of 
the  mid-term  review  of  the  EIB  external  lending  mandate.  An  evaluation  of  the  Guarantee 
Fund is currently carried out by an external contractor taking into account the risk profile of 
the Fund and its effectiveness in the light of the evolution of the external financing covered by 
the Fund and the related risks. Results are expected to be delivered in September 2016. 

33  

See footnote 8. 

16