COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE EVALUATION Mid-term evaluation of the European Union Guarantee for the EIB External Lending Mandate Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the mid-term review of the application of the Decision N° 466/2014/EU as regards the EU guarantee to the European Investment Bank against losses under financing operations supporting investment projects outside the Union
Date: 2016-09-14
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EIB loan, EU investment, European Investment Bank, adaptation to climate change, credit guarantee, financial loss, investment abroad, investment protection, private sector, project evaluation

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   EN 

   EUROPEAN COMMISSION  Brussels, 14.9.2016  SWD(2016) 294 final   COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE EVALUATION  Mid-term evaluation of the European Union Guarantee for the EIB External Lending Mandate Accompanying the document REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL  on the mid-term review of the application of the Decision N° 466/2014/EU as regards the EU guarantee to the European Investment Bank against losses under financing operations supporting investment projects outside the Union {COM(2016) 584 final} {SWD(2016) 295 final}  
 
 
Executive Summary 

This  Staff  Working  Document  communicates 
the  methodology,  analysis,  findings, 
conclusions  and  recommendations  of  the  mid-term  evaluation  of  the  European  Union 
Guarantee  for  the  European  Investment  Bank  ("EIB")  External  Lending  Mandate  ("ELM"). 
The purpose of this evaluation was to assess the application in the first years of Decision No 
466/2014/EU ("the Decision") adopted on 16 April 2014 by the European Parliament and the 
Council. 

The  independent  external  evaluation  has  been  executed  by  a  contractor  who  works  under 
direct monitoring and supervision of a Steering Committee consisting of representatives from 
relevant Commission DGs, the European External Action Service ("EEAS") and the EIB. The 
findings of the final evaluation report of the Contractor and contribution from EIB feed into 
the Commission's mid-term report. 

Background 

The  Decision  has  the  purpose  of  granting  an  EU  guarantee  to  the  EIB  against  losses  under 
financing  operations  signed  over  the  period  2014-2020  in  support  of  investment  projects  in 
eligible  countries outside the Union (Annex III to  the Decision). Following  the signature of 
the Guarantee Agreement by the Commission and the EIB on 25 July 2014, the current ELM 
entered into force. The EU guarantee is granted as a global guarantee in respect of payments 
which were due to the EIB but were not received by it. Those payments must be in connection 
with loans, loan guarantees and debt capital market instruments granted for or issued for the 
benefit of EIB investment projects outside the Union. 

The EU guarantee is granted only for EIB financing operations which, while complying with 
the  requirements  laid  out  in  the  Decision,  have  added  value  on  the  basis  of  the  EIB's  own 
assessment and support any of the following high-level objectives, defined in the Decision: 

1.  Development  of  the  local  private  sector,  in  particular  support to  small  and  medium-sized 
enterprises ("SMEs"); 

2.  Development  of  social  and  economic  infrastructure,  including  transport,  energy, 
environmental  infrastructure,  information  and  communication  technology,  health  and 
education; 

3. Climate change mitigation and adaptation. 

In  addition  to  those  three  high-level  objectives,  regional  integration  among  countries  is 
considered as  an underlying  objective, including in  particular economic integration between 
Pre-accession countries, Neighbourhood countries and the Union. 

Evaluation results and conclusions 

The design of the ELM 

All the operations launched under the ELM since its inception in July 2014 are fully aligned 
with the three objectives stated in the Decision. Those three objectives themselves are aligned 
with  the  Sustainable  Development  Goals  as  defined  by  the  United  Nations.  Moreover,  the 
ELM  has  supported  the  Union's  external  policy  agenda,  showing  sufficient  flexibility  and 
reactivity to the geopolitical challenges as demonstrated through the cases of Syria, Ukraine 

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(the  Ukrainian  crisis),  Egypt  and  Morocco  (“Arab  spring”)  and  Jordan  (the  refugee  crisis). 
The ELM has played a role in the economic and political stabilisation of those countries hit by 
a political crisis. As a result, in some of the regions (Asia; South Africa; Central Asia; Russia, 
Eastern Europe, South Caucasus), the volume of funds allocated so far represents up to 78% 
of  the  regional  ceiling,  which  leaves  limited  leeway  for  responding  to  potential  future 
challenges.  EIB  cooperation  with  Russia  is  restricted  because  of  the  restrictive  measures 
introduced by the European Union in the context of the Ukraine conflict.   

The management of the ELM 

The  management  of  the  ELM  by  the  EIB  has  been  compliant  with  the  requirements  of  the 
Decision  and  contributed  to  the  effective  use  of  the  EU  guarantee.  Indeed,  the  project 
appraisal results in a comprehensive analysis of the project and provides the decision-maker 
with sufficient information for assessing the quality and the relevance of the latter. Key part 
of  the  appraisal,  the  Result  Measurement  Framework  ("REM")  is  well  adapted  to  the 
operational objectives of the EIB in the framework of the ELM. The reporting from the EIB to 
the Commission is compliant with the requirements of the Decision and covers effectively the 
main aspects of the ELM. 

The added value of the ELM  

Without  the  EU  guarantee,  the  EIB  would  not  have  financed  most  of  the  projects  under 
consideration,  as  the  country  profiles  of  the  recipient  countries  are  too  risky  for  the  EIB  to 
carry  out  the  lending  using  the  own-risk  facilities.  The  added  value  of  the  ELM  financing 
operations is substantial compared to private sector both in terms of the interest rate – much 
lower than the local commercial interest rates – and longer maturity. Thus, it expands greatly 
the access to funds for the local SMEs and midcaps.  Moreover, there is a clear evidence of 
non-financial  benefits  for  the  final  beneficiaries  generated  by  the  EIB  lending:  technical 
assistance,  promotion  of  good  financial  standards  within  the  local  banking  sector, 
procurement standards. 

Climate change mitigation and adaptation  

The ELM has substantially contributed to the climate change-related objectives, especially in 
terms  of  mitigation.  It  exceeds  the  quantitative  target  of  25%  and  even  the  future  target  of 
35%  by  2020,  as  the  climate  change-related  actions  account  for  40%  of  the  total  EIB 
contribution.  In  addition,  the  ELM  operations  have  allowed  saving  an  estimated  1.35  Mt 
CO2-eq/year  of  greenhouse  has  ("GHG")  emissions  through  the  operations  signed  between 
July 2014 and December 2015.  

The communication and the ELM contribution to the visibility of the Union 

The  communication  efforts  allowed  the  borrower  to  be  informed  of  the  Union  support. 
However, it does not ensure that the visibility of the Union is sufficiently enhanced at the final 
beneficiary  level.  Communication  and  visibility  objective  should  be  further  promoted  and 
supported within the ELM. 

In  light  of the evaluation conclusions, the Commission  considered the following changes in 
the mandate in order to achieve the specific policy and operational objectives: 

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  Review of the eligible countries' list specified in Decision 466/2014/EU according to 

the country risk profile.  

  Better  target  the  External  Lending  Mandate  on  the  Union  priorities  in  order  to 
improve  the  response  to  external  policy  objectives:  A  new  horizontal  high-level 
objective in response to the migration crisis,  increase of the target for climate action 
projects  to  35%  of  the  total  volume  of  EIB  operations,  reinforcement  of  the  EIB's 
mandate contribution to climate change adaptation, reinforcement of the added value 
of EIB operations with a focus of the lending under the ELM on higher risk profiles by 
a review of the allocation policy, activation of the optional additional amount of EUR 
3  billion  (of  which    EUR  1.4  billion  for  the  EIB  Resilience  initiative  for  operations 
involving  public  counterparts,  increase  of  the  overall  ceiling  by  EUR  2.3  billion  for 
EIB financing operations to private sector applicable to projects in support of refugees 
and/or host-communities with an extension of risk coverage by the EU guarantee for 
these operations, introduction of more flexibility with re-allocation of funds between 
regions  and  sub-regions  to  20%,  enhancement  of  EIB  support  to  SMEs  from  the 
Union,  direct  contribution  of  EIB  mandate  to  the  achievement  of  some  goals  of  the 
SDGs. 

  Improvement  of  the  communication  strategy  for  all  projects  at  country  level  to 
reinforce  the  impact  of  the  ELM  and  EU  visibility,  through  reinforcement  of  the 
cooperation between the EIB, the Commission and other entities of the EU working in 
a specific country. 

  Update of the Regional Technical Operational Guidelines, which should reflect the 
evolutions  of  the  Union's  priorities  and  the  EIB's  alignment  with  them.  The  EEAS 
should continue to be closely associated to the elaboration of the Regional Technical 
Operational Guidelines. 

  Improvement  of  the  reporting  between  the  EIB  and  the  Commission  and  new 
reporting,  with  some  improvements  in  the  procedure  and  coordination  between  the 
EIB  and  the  Commission  which  could  further  enhance  the  reporting  system.  The 
annual reporting from the Commission to the European Parliament and to the Council 
on EIB financing operations  with  EU guarantee should include an assessment of the 
contribution of EIB financing operations in response to the migration crisis. The EIB 
should  implement  and  develop  a  set  of  indicators  in  its  Results  Measurement 
framework  for  projects  in  the  public  sector  and  in  the  private  sector  directed  to 
refugees and host communities. 

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