External evaluation of the EU guarantee under the EIB's external lending mandate : final report.
Date: 2017-01-06
Institutions: Directorate-General for Economic and Financial Affairs
Subjects: EIB loan, European Investment Bank, European Union, added value, climate change policy, financial intervention, financing policy, fund (EU), guarantee, innovation, loan, small and medium-sized enterprises

External evaluation of the EU 
guarantee under the EIB's 
external lending mandate 

Final Report 

Written by PwC 
June – 2016 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
This report was commissioned by the European Commission from PwC. 

The opinions expressed in this document represent the authors' point of view which is not 
necessarily shared by the Commission. 

Neither the Commission nor any person acting on its behalf is responsible for the use which 
might be made of the following information. 

EUROPEAN COMMISSION 

Directorate-General for Economic and Financial Affairs 

Directorate L — Treasury and financial operations 

Unit L.1 — Coordination with the EIB Group, EBRD and IFIs 

European Commission 

B-1049 Brussels 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EUROPEAN COMMISSION 

External evaluation of the EU 
guarantee under the EIB's 
external lending mandate 

Final Report 

Directorate-General for Economic and Financial Affairs  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Luxembourg: Publications Office of the European Union, 2017 

Catalogue number: KC-01-16-062-EN-N 

ISBN 978-92-79-64145-9 

doi:10.2765/369137 

© European Union, 2017

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
www.pwc.lu 

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European Commission 
Directorate General 
Economic and 
Financial Affairs 
(DG ECFIN) 
Final Report for the 
External evaluation of the 
application of the 
European Union 
Guarantee for the EIB 
lending operations outside 
the European Union 

08 June 2016 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Final Report for the External evaluation of the application of the European Union Guarantee for the EIB lending 
operations outside the European Union 

Table of contents 

Foreword 

1 

1.1 

Presentation of the External Lending Mandate (ELM) 

EU guarantee for the EIB ELM financing operations: objectives and characteristics 

1.1.1  Overview of EIB operations inside and outside the European Union (EU) 

1.1.2  Legal and strategic framework: Decision 466/2014/EU 

1.1.3  The purpose and the objectives of the ELM 

1.1.4  Financing ceiling: EUR 27 billion plus an optional EUR 3 billion 

1.1.5  Geographical breakdown of the financing under ELM 

1.1.6  EU guarantee: coverage and activation 

1.2 

2 

2.1 

The intervention logic of the ELM 

The evaluation approach 

The scope of the evaluation 

2.2  Evaluation question analysis 

2.3  Main phases of the mid-term review 

2.3.1  Methodological tools employed 

2.4  Data collected for the evaluation 

2.5  Main limits of the approach and mitigation actions 

3 

3.1 

3.2 

3.3 

Institutional analysis 

Policy context 

Stakeholders analysis 

Implementation principles 

3.3.1  ELM project life and processes 

3.3.2  Reporting 

4 

Portfolio analysis 

4.1  Overview 

4.1.1  Distribution by region and by country: external policy priorities drive the allocation of 

funds 

4.1.2  Distribution across sectors: energy and transport at the top 

4.1.3  Project cost and EIB contribution: focus on Ukraine, Egypt and Turkey 

4.1.4  Disbursement rate: few operations with funds disbursed 

4.1.5  Type of final beneficiaries: prevalence of SMEs and Mid-Caps. 

4.1.6  EIB financing type: mainly investment and multi-beneficiary loans 

4.1.7  Appraisal duration: 9 months on average. 

4.1.8  Comprehensive vs Political risk guarantee 

4.1.9  Co-financing and blending 

2 

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Final Report for the External evaluation of the application of the European Union Guarantee for the EIB lending 
operations outside the European Union 

4.1.10 The 25% target of climate action is exceeded by large margin 

5 

In-depth  analysis  of  the  ELM  operations  2014-2015  –  case 
studies 

5.1  Design of the intervention 

5.1.1  Alignment of the ELM with the EU external policy agenda 

5.1.2  Relevance and added value of the geographical distribution and regional ceilings 

5.1.3  Relevance  of  the  allocation  policy  and  the  choice  of  own-risk  financing  vs  financing 

under the EU guarantee 

5.2  Management of the Programme and implementation of the operations 

5.2.1  ELM operations lifecycle 

5.2.2  Assessment of the needs and the results: the Results Measurement Framework (REM) 

5.2.3  Complementarity  and  coordination  with  other  EU 

financing 

facilities  and 

International Financial Institutions 

5.3  Added value of the External Lending Mandate 

5.3.1  Exchange rate risk: a drag on the demand for EIB loans 

5.4  Climate change mitigation and adaptation 

5.4.1  ELM strategic framework as regards climate action 

5.4.2  Contribution of the 20 case studies to climate change objectives 

5.4.3  ELM contribution to GHG emissions reduction 

5.5 

6 

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

Conclusions and recommendations 

6.1.1  Main conclusions by themes 

6.1.2  Recommendations 

Appendices 

Annex 1: List of persons interviewed 

Annex 2: List of documents consulted 

Annex 3: Tables and figures 

Annexe 4: Minutes of the workshop with NGOs – 10/05/2016 

List of participants 

1. Introduction 

2. Open discussion with NGOs 

58 

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Final Report for the External evaluation of the application of the European Union Guarantee for the EIB lending 
operations outside the European Union 

Glossary 

A2A 
ACP 
ADB 
AFD 
AFDB 
AFS 
AIF 
AfIF 
BCIE 
CBA 
CCGT 
CCI 
CFE 
CIF 
CIF 
COP 
EBRD 
ECON 
ECSO 
EEAS 
EIA 
EIB 
ELM 
ENPI-MEDA  European  Neighbourhood  and  Partnership  Instrument 

Agreement to appraise 
African, Caribbean and Pacific 
Asian Development Bank 
Agence Française de Développement 
African Development Bank 
Appraisal Fact Sheet 
Asia Investment Facility 
Africa Investment Facility 
Central American Bank for Economic Integration 
Cost-Benefit Analysis  
Combined Cycle Gas Turbine  
Climate Change Indicator 
Carbon Footprint Exercise 
Caribbean Investment Facility 
Climate Investment Funds 
Corporate operational plan  
European Bank for Reconstruction and Development 
Economics Department (EIB) 
Environment Climate & Social Office (EIB) 
European External Action Service 
Environmental Impact Assessment  
European Investment Bank 
External Lending Mandate 

for  Mediterranean 

EPAP 
EQ 
ERR 
ETS 
EU 
FEMIP 
FX 
GEEREF 
GEF 
GHG 
GCF 
IADB 
IBRD 
IDFC 
IDP 
IFCA 
IFI 
IFP 
IMF 
INDC 
IPA 
IPCC 
ITF 
JU 
KfW 
LAIF 
MDB 
MDG 

Countries 
Egyptian pollution abatement  
Evaluation Question 
Economic Rate of Return  
Emissions trading system 
European Union 
Facility for Euro-Mediterranean Investment and Partnership 
Foreign Exchange 
Global Energy Efficiency and Renewable Energy Fund (GEEREF) 
Global Environment Facility 
Greenhouse gas 
Green Climate Fund  
InterAmerican Development Bank 
International Bank for Reconstruction and Development 
International Development Finance Club 
internally displaced population  
Investment Facility for Central Asia 
International financial institutions 
Investment Facility for the Pacific 
International Monetary Fund  
Intended Nationally Determined Contributions 
Instrument for Pre-Accession  
Intergovernmental Panel on Climate Change  
Africa Infrastructure Trust Fund 
Legal Directorate (EIB) 
Kreditanstalt für Wiederaufbau  
Latin America Investment Facility 
Multilateral Development Bank 
Millennium Development Goals 

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Final Report for the External evaluation of the application of the European Union Guarantee for the EIB lending 
operations outside the European Union 

MFA 
MoU 
NIF 
OCHA 
OECD 
OFA 
OFID 
OPS 
ORF 
PIN 
PJ 
REM 
RM 
RPA 
RTOG 
SDG 
SME 
TA 
TFEU 
ToR 
UNFCCC 
WRI 
WB 
WBIF 

Macro financial assistance 
Memorandum of Understanding 
Neighbourhood Investment Facility 
Office for the Coordination of Humanitarian Affairs  
Organisation for Economic Co-operation and Development 
Opinion for Appraisal  
OPEC Fund for International Development 
Directorate for Operations (EIB) 
Own Risk Facilities 
Preliminary Information Note 
Projects Directorate (EIB) 
Results Measurement framework 
Risk Management Directorate (EIB) 
Recovery and Peacebuilding Assessment  
Regional Operational Technical Guidelines 
Sustainable Development Goals 
Small and medium enterprises 
Technical Assistance 
Treaty on the Functioning of the European Union 
Terms of Reference 
United Nations Framework Convention on Climate Change 
World Resources Institute 
World Bank 
Western Balkans Investment Framework 

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Final Report for the External evaluation of the application of the European Union Guarantee for the EIB lending 
operations outside the European Union 

Foreword  

The main purpose of the Draft final report is to re-summarise the evaluation approach, present the 
institutional  framework  of  the  External  Lending  Mandate  (ELM),  and  describe  the  data  portfolio 
related  to  the  ELM  and  the  in-depth  analysis  on  20  case  studies  in  line  with  the  evaluation 
question, sketching the conclusions and the recommendations of the study.  

Thus, the report is organised in the following way:  

  The  first  section  recalls  of  the  purpose,  the  objectives  and  the  characteristics  of  the  External 

Lending Mandate, and of its intervention logic; 

  The second section is dedicated to the outline of the evaluation approach, presenting the scope 

and the evaluation questions, the judgment criteria and the corresponding indicators;  

  The third section presents the institutional framework of the ELM from the policy context to the 
implementation  principles,  including  a  stakeholder  mapping,  presenting  the  stakeholders 
involved in the ELM operations, their roles and responsibilities; 

  The  fourth  section  presents  and  analyses  the  data  on  the  financing  operations  that  have  been 
running  under  the  ELM  from  its  initiation  in  July  2014  to  December  2015  and  draws  some 
preliminary results from the analysis of the data collected; 

  Section five presents the in-depth analysis of the ELM operations; 

  Section six provides the conclusions and recommendations of the study. 

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Final Report for the External evaluation of the application of the European Union Guarantee for the EIB lending 
operations outside the European Union 

1  Presentation  of  the  External  Lending  Mandate 

(ELM)  

This  section  provides  a  detailed  presentation  of  the  ELM  rationale,  objectives,  principles  and 
intervention logic.  

1.1  EU  guarantee  for  the  EIB  ELM  financing  operations: 

objectives and characteristics 

1.1.1  Overview of EIB operations inside and outside the European Union (EU) 

As set out in the Treaty on the Functioning of the European Union (TFEU), the European 
Investment Bank (EIB) is the financing institution of the EU. The shareholders of the EIB are the 
member states of the EU. As a policy-driven bank, the EIB uses its financing operations to support 
economic growth and jobs, thereby aiming to support European integration and social cohesion. 
The EIB’s activities within the EU focus on four priority policy areas together with two cross cutting 
objectives: 

  Innovation and skills; 
  Access to finance for smaller businesses; 
  Infrastructure; 
  Environment;  
  Cross cutting: Climate Action and Cohesion (European regional integration). 

In addition to its activities within the EU, the EIB undertakes operations in countries outside the 
EU in support of the Union’s external policies. The majority of these operations takes place under 
one of two separate legal frameworks: either based on a mandate from the EU, the ELM, with an 
EU budgetary guarantee covering a list of non-EU countries (except African, Caribbean and Pacific 
group of countries - ACP countries), or at the Bank’s own risk, under dedicated facilities created in 
the EIB, referred to as “Own Risk Facilities” (ORF)1. The Bank also has other operations outside the 
EU  –  notably  in  the  ACP  countries  –  which  take  place  under  a  separate  framework,  the  ACP-EU 
Cotonou Agreement. 

Combined,  the  ORF,  ELM  and  Cotonou  Agreement  activities  have  traditionally  made  up  around 
10% of the EIB total lending. In 2014, the EIB invested some EUR 8 billion outside the EU (10.4% 
of  total  EUR 77  billion  signed),  of  which  EUR 4.2  billion  were  invested  under  the  ELM,  EUR 2.6 
billion under the ORF and around EUR 1 billion was invested in the ACP/OCT countries. 

In 2014, the EIB signed financing contracts for 92 new projects outside the EU. Total approved EIB 
financing for these new projects is EUR 7.98bn 

A fundamental distinction must be drawn between the ORF and the ELM. Unlike for the Own-Risk 
Facility financing, the ELM operations are covered by the EU guarantee for the comprehensive risk 
and  the  political  risk  dimensions.  While  all  EIB  operations  outside  the  EU  support  EU  policies, 
ELM operations follow the specific EU external policy goals set out in the  Decision agreed by the 
Council and the European Parliament. 

1 Under the ORFs, the Bank has an amount of up to EUR 12 billion at its disposal for the 2014-16 period. This is split as: 

- 

Pre-Accession Facility (PAF): up to EUR 7 bn for financing operations in candidate and pre-accession countries, including all lending 
priorities.  

-  Neighbourhood Financing Facility (NFF): up to a total volume of EUR 3 bn for projects in neighbourhood countries.  
-  Climate  Action  and  Environment  Facility  (CAEF):  provides  loans  up  to  a  total  volume  of  EUR 1.5  bn,  to  finance  climate  change 
mitigation and adaption projects, protection of biodiversity projects and environment protection projects in all regions outside the Pre-
Accession and Neighbourhood countries. 

-  Strategic  Projects  Facility  (SPF):  up  to  EUR 0.5  bn  for  financing  strategic  investment  projects  identified  by  EU  banks  or  companies 

outside the Pre-Accession and Neighbourhood countries. 

Under  the  ORF,  the  EIB  also  manages  the  EFTA  (European  Free  Trade  Association)  Loan  Faclity  to  support  the  close  economic  ties 
between the EU and EFTA countries. 

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Final Report for the External evaluation of the application of the European Union Guarantee for the EIB lending 
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1.1.2  Legal and strategic framework: Decision 466/2014/EU 

ELM 2014-2020 

The  ELM  is  established  by  Decision  No  466/2014/EU  of  the  European  Parliament  and  of  the 
Council, adopted on  16  April  2014 (further referred to  as “the Decision”). The  Decision  grants an 
EU guarantee to the EIB against losses under financing operations supporting investment projects 
outside the EU.  

The 2014-2020 ELM became effective on 25 July 2014 following the signature of the Guarantee 
and Recovery Agreements between the Commission and the EIB. 

The decision regarding whether an operation shall be financed under the ELM or under an ORF is 
taken according to an allocation policy, established by the Commission and the EIB in the ELM 
Guarantee  Agreement.  In  line  with  the  Article  8  of  the  Decision,  as  a  general  principle,  the  EIB 
should  focus  its  financing  under  the  ELM  on  those  operations  where  the  EU  guarantee  would 
generate the highest added value. Operations should be financed at the Bank’s own risk whenever 
the underlying investment projects have sufficient creditworthiness. 

The  practical  measures  linking  the  general  objectives  of  the  EU  guarantee  (see  1.1.3  below)  and 
their  implementation  via  EIB  financing  operations  are  set  out  in  the  Regional  Technical 
Operational Guidelines for EIB financing operations under Decision 466/2014/EU (henceforth 
“the Guidelines”). These provide a framework to ensure that the EIB financing operations under the 
ELM  are  complementary  with  the  overall  EU  external  strategy  and  specifically  with  the  EU’s 
assistance  policies,  programmes  and  instruments  in  the  corresponding  regions.  The  Decision 
466/2014/EU also specifies that EIB financing operations should be consistent with the beneficiary 
country's own strategies.  

The  Guarantee  Fund,  established  by  Council  Regulation  (EC,  Euratom)  No  480/2009  (1), 
provides a liquidity cushion for the EU against losses incurred on EIB financing operations (as well 
as  on  macro-financial  assistance  and  Euratom  loans)  outside the Union.  Its  provisioning  is made 
ex-post on the basis of the outturn figures for outstanding guaranteed external lending at the end of 
year n-2. 

The ELM Climate Strategy, requested by the Mandate Decision, sets another piece of legislative 
framework. The update of the ELM Climate Strategy published on 28th December 2015, guides all 
operations supported by the EU guarantee under the ELM. The Mandate for the 2014-2020 period 
reinforces support to EU Climate action, by setting an overall quantitative target of at least 25% of 
total EIB financing operations covering climate change adaptation and mitigation.  

The ELM Climate Strategy 2014-2020 sets three overarching objectives: 

1)  Implementing EIB Climate Action Strategy in non-EU operations; 
2)  Delivering on the Mandate Requirements; 
3)  Using new channels and instruments to increase impact, in particular financial instruments and 

Green Climate Funds. 

The second objective presents how the EIB intends to contribute to climate change mitigation and 
adaptation within the framework of the ELM requirements set in the Decision. Thus, although the 
ELM  Decision  sets  a  target  of  at  least  25%  climate  action  for  all  operations  falling  under  the 
Decision, the EIB wants to go further with an increase of the climate action lending target to 35% of 
all external lending in developing countries by 2020. The EIB will build a climate action portfolio 
with a focus on high impact climate action projects. These projects are defined as “projects that (i) 
bring  significant  mitigation  or  adaptation  gains;  and/or  (ii)  catalyse  and  mobilise  additional 
climate finance from a range of sources; and/or (iii) reduce financial and non-financial barriers to 
the investments needed for the transition to a low-carbon resilient economy”2.  

2 External lending Mandate Climate Strategy, p13. 

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Final Report for the External evaluation of the application of the European Union Guarantee for the EIB lending 
operations outside the European Union 

Stepping  up  of  adaptation  and  climate  resilience  in  the  portfolio  will  be  developed  with  the 
introduction  of  systematic  screening  for  climate  risk  (already  started  in  2015)  and  carrying  out 
climate  risk  and  vulnerability  assessments  for  new  investments  as  required  –  using  Technical 
Assistance funds as needed. In order to increase the climate adaptation activities in the portfolio, 
the EIB will also prioritise investments in sectors and activities where climate change impacts are 
expected  to  be  significant,  and  where  opportunities  exist  to  improve  climate  resilience  of  cities, 
communities and businesses, such as land and water resource management. 

Climate  change  objectives will  be  also  pursued  through  blending mechanisms,  which  represented 
nearly a third of the EIB’s commitment under the ELM in 20143.  

The  EIB  intends  also  to  strengthen  the  existing  greenhouse  gas  (GHG)  emissions  assessment  by 
exploring new approaches, tools and metrics to assess the overall climate impact of operations, and 
the extent to which they support countries’ climate commitments and plans. 

Previous ELMs 

The current ELM follows similar programmes, which existed in the periods 2007-20134 and 2000-
20075.  The  2014-2020  ELM  has  maintained  most  of  the  key  aspects  from  the  preceding 
programming  period  (2007-2013).  Notably,  it  maintains  the  strong  alignment  between  EIB 
activities  outside  the  EU  with  the  EU’s  external  policies  and  actions,  and  retains  the  previous 
harmonized high-level objectives for financing in all regions. 

The previous evaluation of the ELM was conducted in 2010 and covered loans under the mandates 
for the period 2000-2006 and the first years of the 2007-2013 mandate. This evaluation provides 
useful information on the way the ELM has evolved and on the main challenges it faced at that time 
or/and it could potentially face in the present period. 

The most relevant conclusions of this evaluation within the framework of our study are: 

  In  terms  of  reporting  on  operations  under  the  ELM,  the  2010  evaluation  identified  that  the 
reporting did not sufficiently assess the contribution and the consistency of financing operations 
with  EU  policy  objectives  and  focused  only  on  EIB  objectives  and  priorities.  The  current 
evaluation  will  therefore  account  for  this  critique  and  assess  the  fulfilment  of  reporting 
requirements as presented in section 3.3.2; 

  In  terms  of  allocation  of  resources,  the  2010  evaluation  found  that  the  limited  staff  resources 
available  for  mandate  loan  operations  had  affected  not  only  the  monitoring,  but  also  the 
effectiveness  through  the  project  selection  process.  This  will  be  another  point  of  attention  for 
this evaluation; 

  In terms of the added value to beneficiaries, the evaluation found the main added value relied on 
the longer maturity of loans, while the added value for shorter maturity loans of the Bank was 
more  limited.  In  that  respect,  the  assessment  of  added  value  of  the  ELM  financing  operations 
has to consider the types of financing offered by the EIB under the Mandate and in particular, 
how  this  is  reflected  once  the  structuring  of  the  financing  operation  is  considered  during  the 
appraisal phase; 

  In terms of  cooperation  and  co-financing  with other  International  Financial  Institutions (IFI), 
the  level  of  cooperation  and  co-financing  was  deemed  significant.  A  number  of  cooperation 
agreements were made, however they focused on operational cooperation rather than strategic 
orientation.  In  addition,  attention  should  be  paid  that  IFI  cooperation  does  not  imply 

3 External lending Mandate Climate Strategy, p13. 
4  Established  by  the  Decision  2006/1016/EC  of  19  December  2006,  superseded  by  the  Decision  No  633/2009/EC,  itself  subsequently 
repealed by the Decision 1080/2011/EU. 
5 Established for the general external lending mandate, in particular the South-eastern neighbours, Mediterranean countries, Latin America, 
Asia and the Republic of South Africa in Council Decision 2008/580/EC), for projects in Russia, Ukraine, Republic of Moldova and Belarus in 
Council  Decision  2005/48/EC  and  for  selected  environmental  projects  in  the  Baltic  Sea  basin  of  Russia  under  the  Northern  Dimension  in 
Council Decision 2001/777/EC. 

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duplication of negotiations, reporting requirements,  and  other forms of administrative  burden 
for  the  beneficiaries.  Within  the  framework  of  the  present  evaluation,  the  level  of  cooperation 
and coordination will be assessed. In addition, the evaluation team will focus on the nature and 
modalities  of  this  cooperation.  In  particular,  an  assessment  will  be  made  of  whether 
coordination  and  cooperation  remain  at  an  operational  level  or  whether  a  strategic  alignment 
with other IFI is also sought. Then, we will investigate the various case of “mutual reliance”6 to 
observe the impact of such agreement on joint co-financing of projects. 

1.1.3  The purpose and the objectives of the ELM 

The  guarantee  provided  under  the  ELM  enables  the  EIB  to  conduct  financing  operations  outside 
the EU without this activity affecting the credit rating of the EIB. In this way, the ELM allows EU 
budget funds for external regions to be complemented by the financial strength of the EIB, thereby 
increasing the benefit of the targeted third countries. 

The  projects  financed  in  the  context  of  the  EIB  external  operations  often  take  place  in  less 
developed  markets  with  higher  risks  and  more  complex  challenges.  One  of  the  main  strengths  of 
EIB interventions outside the EU is therefore the Bank’s ability to mobilise finance on terms that 
usually are not easily available in these markets (e.g. longer loan tenors, grace period, etc.). This is 
complemented by a lean business model, which aligns significant financial capacity with technical 
expertise for the assessment of viable investments, leveraging on the EIB's core experience within 
the EU. In addition, the Bank brings further added value by providing projects with both an EU and 
an  IFI  ‘label’.  In  some  of  the  supported  countries,  therefore,  the  overall  lack  of  financing  and 
complex social and political issues increase the relevance of the EIB financing provided under the 
ELM. 

The Decision defines the following high-level objectives for the ELM: 

  Local  private  sector  development,  in  particular  support  to  Small  and  Medium  Enterprises 
(SMEs):  in  order  for  private  sector  investments  to  have  the  greatest  development  impact,  the 
EIB should try to strengthen the local private sector in beneficiary countries through support to 
local  investment;  operations  under  this  objective  could  also  include  support  to  investment 
projects by local and European SMEs; 

infrastructure, 

  Development  of  social  and  economic 

transport,  energy, 
environmental  infrastructure,  and  information  and  communication  technology:  according  to 
the  Decision,  emphasis  should  be  put  on  the  production  and  integration  of  energy  from 
renewable sources, energy systems transformation enabling a switch to lower carbon intensive 
technologies and fuels, sustainable energy security and energy infrastructure, including for gas 
production  and  transportation  to  Union  energy  market,  electrification  of  rural  areas, 
environmental 
infrastructure, 
infrastructure  such  as  water  and  sanitation  and  green 
telecommunications and broadband network infrastructure; 

including 

  Climate  change  mitigation  and  adaptation:  EIB  support  should  cover  projects  related  to 
climate  change  mitigation  and  adaptation  contributing  to  the  overall  objective  of  the  United 
Nations  Framework  Convention  on  Climate  Change.  This  includes  projects  seeking  to  reduce 
greenhouse gas emissions and related to renewable energy, energy efficiency and lower-carbon 
transport,  and  other  mitigation  activities,  and/or  projects  increasing  resilience  to  the  adverse 
impacts of climate change on vulnerable countries, sectors and communities. 

Regional integration among countries, including in particular economic integration between Pre-
Accession countries, Neighbourhood countries and the EU, shall be an underlying objective for EIB 
financing operations within areas covered by the general objectives as outlined above. 

In addition, EIB operations must comply with the general principles guiding the EU external action 
(consolidating  and  supporting  democracy  and  the  rule  of  law,  human  rights  and  fundamental 

6 Mutual reliance is “an agreement between Financial Institutions (FIs) to rely, whenever possible, on the project identification, due diligence 
(especially  environmental  and  social  due  diligence,  procurement,  and  disbursement  procedures),  monitoring  and  evaluation  of  and  by  the 
Lead Finance Institution”. Mid‐Term Review of EIB external mandate – Report of the Steering Committee – Feb. 2010, p.32 

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freedoms)  and  the  implementation  of  international  commitments  and  agreements  to  which  the 
Union is a part. In particular, in the case of EIB financing in developing countries (as defined by the 
OECD),  the  Bank  should  indirectly  contribute  to  EU  development  policy  objectives  of  reducing 
inclusive  growth  and  sustainable  economic,  environmental  and  social 
poverty  through 
development. 

The  main  purpose  of  this  mid-term  evaluation  is  to  assess  the  extent  to  which  the  objectives 
described above have been, or are likely to be, attained. 

A  comprehensive  analysis  of  the  ELM  objectives  (at  various  levels)  and  chains  of  effects  is 
presented with the intervention logic in section 1.2. 

1.1.4  Financing ceiling: EUR 27 billion plus an optional EUR 3 billion   

The Decision fixes at EUR 30 billion the maximum ceiling for EIB operations under the ELM from 
January 2014 until December 2020. This ceiling is split into a fixed amount of EUR 27 billion and 
an optional additional amount of EUR 3 billion. The allocation of this optional amount depends, in 
particular, on the results of this mid-term evaluation. 

According to the Decision, the issues considered for the activation of the optional amount include: 

  Progress  in  the  implementation  of  the  Decision  by  the  EIB,  in  particular  the  results  of  EIB 
operations based on information from, inter alia, the Results Measurement framework (REM);  
  The provisioning needs of the Guarantee Fund taking into account past and future outstanding 

amounts on all activities covered by the Guarantee Fund;  

  The macroeconomic, financial and political situation of the eligible regions and countries at the 

time of the mid-term review. 

Other factors include the operational environment (e.g. legal restrictions to EIB investment); new 
EU  priorities  and  commitments,  particularly  those  related  to  the  Sustainable  Development  Goals 
(SDGs) and COP 21 objectives; and developments in EU external policy and the required flexibility 
to operate efficiently and reactively to challenges facing the EU. 

1.1.5  Geographical breakdown of the financing under ELM 

The  Decision  defines  the  geographical  areas  covered  by  the  ELM7  and  establishes  ceilings  on  the 
budgetary guarantee for each. These ceilings represent the maximum amounts and do not induce 
an obligation to meet that target. According to the Decision, the distribution of regional ceilings is 
to  be  addressed  in  this  mid-term  evaluation,  notably  in  light  of  possible  changes  to  the  list  of 
countries eligible for EIB financing. 

The  Guidelines  provide  also  guidance  on  the  way  to  implement  ELM  operations  in  the  various 
geographical  areas.  In  particular,  it  presents  the  general  context  of  EU  external  relations,  an 
overview of EIB activity over the period 2007-2014, the regional macroeconomic situation, the EIB 
cooperation  with  the  Commission,  European  External  Action  Service  (EEAS)  and  IFI,  and  finally 
the operational focus for 2014 2020 for each area. 

The countries currently covered by the ELM are represented in the following figure: 

7 The full list of eligible countries is given in Annex III of the Decision. 

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Figure 1: External Lending Mandate: geographical coverage 

Pre-accession countries 

Asia 

Mediterranean countries  

Russia (currently no operations) 

Eastern Europe, Southern Caucasus 

Central Asia 

South Africa 

Latin America 

Potentially eligible 

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Table 1 below shows a detailed statement of the ceiling on the volume of loans potentially covered 
by the EU guarantee by region, in amounts and in percentage. The Pre-accession countries together 
with the Neighbourhood and Partnership countries are the main priorities under the ELM, with the 
ceiling of more than EUR 23.1 billion of guarantees for financing operations in these countries. 

Table 1: Regional ceilings, in EUR billion and in percentage of the total 

Candidate and 

Pre-candidate 

countries 

Neighbourhood and Partnership 

Asia and Latin 

countries 

America 

Mediterranean 

countries 

Eastern Europe, 

Southern Caucasus, 

Russia 

Latin 

America 

Asia 

Central 

South 

Asia 

Africa 

TOTAL 

Amount, bln 

EUR 

% total  

8,74 

32% 

9,6 

36% 

4,83 

2,29 

0.94 

0,18 

0,42 

27 

18% 

8% 

3% 

1% 

2% 

100% 

Source: Decision 466/2014/EU, Annex I, figures rounded off  

The full list of countries eligible under the ELM is provided in the Appendix C of the Decision.  

1.1.6  EU guarantee: coverage and activation 

According  to  the  Decision,  the  EU  guarantee  is  provided  under  two  different  modalities  covering 
different types of risks: 

  The  Comprehensive guarantee  is  provided  for  financing  operations, excluding  those  involving 
debt capital market instruments, where the borrower (or a guarantor) is a State, regional, local 
public entity or corporations and institutions under state control.  

  The  Political  Risk  guarantee  is  provided  for  all  cases  not  covered  by  the  Comprehensive 

guarantee and in the event of non-payment induced by one of the following events: 
-  Non-transfer of currency; 
-  Expropriation; 
-  War or civil disturbance; 
-  Denial of justice upon breach of contract. 

The  Political  Risk  guarantee  also  applies  to  all  the  operations  involving  debt  capital  market 
instruments.  

As described in the following scheme (Figure 2), in the event of partial or complete non-receipt of 
funds due to the EIB by a borrower under an ELM financing operation, the EIB initiates a call upon 
the guarantee and a corresponding flow of funds is disbursed from the Guarantee Fund in line with 
the Guarantee Agreement.  

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Figure 2: The External Lending Mandate under the EU guarantee: how it works 

No default: regular loan reimbursement procedure 

EUROPEAN  
INVESTMENT  
BANK (EIB)  

Undertakes financing operations 
outside the EU under the EU 
guarantee 

Call for 
guarantee 

Payment 

GUARANTEE  
FUND   

Provision of a liquidity cushion for 
the EU budget against losses on 
EIB financing operations and on 
Macro-Financial Assistance (MFA) 
and Euratom loans outside the EU 

Financing through… 

LOCAL FINANCIAL 

INTERMEDIARY 

INSTITUTIONS 

Direct financing 

PRIVATE 
CORPORATE 
BORROWERS 

PUBLIC 
BORROWERS 

Default notification: activation of the Political Risk Guarantee  

Default  notification:  activation  of 
Guarantee  

the  Comprehensive 

Legend: 

Flows of funds 

EU stakeholders 

Default-related decisions  

External stakeholders 

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operations outside the European Union 

1.2  The intervention logic of the ELM  

The intervention logic is a representation of how the ELM is understood to contribute to a chain of 
results that produce the expected or actual impacts. It represents the causal chain in five steps: 

  Inputs:  this  refers  to  the  resources  mobilised  for  the  implementation  of  the  Programme 

(financial, technical, human, etc.); 

  Activities:  this  is  what  is  produced  (financed/accomplished)  with  the  inputs  allocated  to  the 

Programme; 

  Outputs: these are the first level results / the operational objectives of the ELM; 
  Outcomes:  these  are  the  mid-term/long  term  effects  of  the  ELM.  They  represent  the  overall 

objectives of the Programme; 

  Impacts:  they  represent  what  the  ELM  is  expected  to  contribute  to.  They  are  not  necessarily 
specific to the Programme (cross-cutting objectives, also influenced by others external factors), 
but represent what could be its long-term effects. 

The  intervention  logic  is  the  conceptual  basis  for  the  design  of  the  evaluation  approach,  in 
particular the analysis of the evaluation questions. Each evaluation question reflects one or several 
causal  links  of  the  intervention  logic,  which  allows  defining  judgment  criteria  and  indicators  (as 
presented in section 2.2).  

The intervention logic will act as the foundation for the whole evaluation report in general and the 
analysis of the 20 EIB financing operations selected for case studies in particular. Setting up a clear 
and  consistent  intervention  logic  is  not  only  a  prerequisite  for  the  successful  undertaking  of  the 
evaluation. It also ensures logical, coherent and transparent analysis and judgment. It also enables 
the  evaluation  team  to  illustrate  the  complementarities  between  objectives,  set  necessary 
assumptions, and identify external influencing factors.  

The  intervention  logic  of  the  ELM  presented  below  has  been  elaborated  with  DG  ECFIN  and  the 
EIB  during  a  dedicated  workshop.  We  used  a  collaborative  approach  to  produce  a  common 
understanding  of  the  ELM  logic  of  intervention,  in  particular  to  agree  on  the  actual  inputs  and 
activities  of  the  Programme  and  the  expected  outputs,  outcomes  and  impacts.  It  also  allowed 
combining internal opinions on the ELM (focus on resources, implementation and objectives) and 
an evaluation point of view (focus on causal effects).  

The following figure represents the Intervention logic presiding over the ELM operations: 

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Figure 3: Intervention logic for the External Lending Mandate operations 

Source: PwC 

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Given the short operating timeframe of the ELM, the evaluation will mainly focus on its inputs, 
activities and outputs, as outcomes and impacts can only be partially estimated and judged at 
present. The assessment should show, however, if the right conditions are in place to deliver results 
and  impacts  in  the  future.  The  previous  programming  period  will  also  be  taken  into  account, 
allowing  for  a  more  comprehensive  picture  of  the  whole  Programme  to  be  drawn,  especially  with 
regard to outcomes and impacts. 

The  analysis  of  the  intervention  logic  underlines  three  main  chains  of  causal  effects  (horizontal 
channels). These chains are composed of inputs – activities – outputs that have a direct causal link 
and  refer  to  the  same  aspect  of  the  ELM.  It  does  not  mean  that  they  are  independent  one  from 
another,  but  rather  that  they  allow  narrowing  the  methodological  approach  and  in  particular  the 
evaluation criteria. 

The first chain focuses on the financial impacts of the ELM and is related to the effectiveness of 
the Programme. This chain can be described as follows. The financial resources (inputs) brought by 
the  EU  with  the  guarantee  and  the  EIB  through  the  financing  of  projects  allow  expanding  the 
financing operations outside the EU, but also encourage connection with budgetary resources from 
other  EU  and  financial  intermediaries’  programmes.  It  also  develops  the  range  of  financial 
instruments  offered  to  beneficiaries.  All  this  results  in  better  financing  conditions  for  the 
beneficiaries, in particular the SMEs and in multiplier effects on financial intermediaries’ activities. 

The  second  chain  of  effects  relies  on  the  consistency  and  the  contribution  of  the 
Programme to the EU objectives and deals with the relevance and the coherence of the ELM. This 
chain  can  be  described  in  the  following  way.  First,  the  legal  basis  of  the  ELM  (inputs)  sets  the 
objectives  and  the  guiding  principles  of  the  Programme  (defined  in  the  Decision)  as  well  as  the 
practical  measures  to  implement  the  Programme  (defined  in  the  Guidelines).  This  framework  is 
complemented  with  the  application  of  the  allocation  policy  (activities)  and  the  coordination 
through  the  EU  platform.  This  is  expected  to  create  the  conditions  for  the  coordination  and 
cooperation of the ELM with other relevant EU programmes and a strengthened dialogue between 
the Commission and the EIB. Finally, the latter are expected to make the ELM consistent with the 
EU priorities and to make it contributing to the EU external objectives.  

The  third chain  of effects focuses on the  internal performance of the ELM  and deals mainly 
with  the  efficiency  of  the  Programme.  The  description  of  the  chain  goes  as  follows.  Specific 
technical resources mobilised by the EIB during the different steps of the project lifecycle (project 
initiation/identification,  project  appraisal  on  financial,  economic,  social,  environmental  and 
technical aspects, project review/approval, negotiation, project signature, project implementation, 
monitoring  and  evaluation)  and  the  implementation  requirements  (in  particular  as  regards 
reporting)  are  expected  to  contribute  to  a  better  assessment  and  monitoring  of  projects.  This,  in 
turn,  is  expected  to  increase  the  quality  of  the  projects  founded  and  the  overall  internal 
performance of the ELM, but also to strengthen beneficiaries’ capacity on projects appraisal. 

The three chains of effects are complementary and converge to produce the expected outcomes set 
out  in  the  Decision.  The  first  chain  deals  with  producing  higher  financial  impact.  The  second 
orients this financial impact towards the EU objectives. The third one ensures that this is done in 
an efficient way.  

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2  The evaluation approach  

This section outlines and details the evaluation approach, along with the evaluation techniques that 
will be used and the status of each of the evaluation steps. 

2.1  The scope of the evaluation  

According  to  the  EU  Evaluation  Guidelines,  an  evaluation  is  defined  as  “an  evidence-based 
judgement of the extent to which an intervention has: 

  Been effective and efficient; 
  Been relevant given the needs and its objectives; 
  Been coherent both internally and with other EU policy interventions and 
  Achieved EU added-value.” 

However,  given  the  short  period  of  time  that  elapsed  since  the  beginning  of  the  current  ELM 
period, the mid-term evaluation should focus mainly on relevance, and should consequently assess 
the consistency of the intervention, since  the intervention  is not mature enough to  assess results. 
The aim of a mid-term evaluation is to assess if the conditions are in place to allow the programme 
to achieve its objectives. Impact and sustainability are normally used only when the intervention is 
advanced enough to observe its primary effects, where there is a better opportunity to evaluate its 
long-term effects. 

In this respect, the mid-term evaluation will therefore analyse if the expected impacts are likely to 
be  achieved.  The  evaluation  will  analyse  the  probability  and  potential  for  longer-term  impact  to 
occur. In addition, the selection of case studies will include the maximum of financing operations 
with full or non-zero disbursement rate, to assess the actual outputs and short term outcomes when 
feasible.  

The  table  below  summarises  our  approach  to  analyse  if  the  conditions  are  in  place  to  allow  the 
programme to maximise its impacts and to reach its initial objectives and targets. The analysis will 
include  an  assessment  of  outputs  and  outcomes  whenever  the  timeframe  of  the  operation  has 
allowed them to come about.  

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Table  2:  Our  proposed  approach  to  analyse  the  potential  for  ELM  to  achieve  its 
objectives  

2007-2013 
peripheral scope 

Period: 

Link  between  the 
two periods 

2014-2020  Period: 
scope 

central 

The  evaluation  will 
factually  at 
analyse 
the  project  level  if  the 
learned 
lessons 
and 
the 
recommendations 
from  the  2007-2013 
programming  period 
have 
the 
design  of  the  2014-
2020 programme and, 
if  not,  why.  The 
evaluation  will  not 
seek  to  question  the 
these 
of 
validity 
recommendations. 

into 

fed 

the 

results 

current  ELM, 
collect 
from 

To  the  extent  that  it  is  relevant 
the 
for 
and 
evaluation  will 
analyse 
the 
2007-2013 
programming 
period,  but  the  evaluation  team 
will  not  do  any  additional 
primary  data  collection  and  no 
attribution analysis. 

No  analysis  of  the  causes  of 
success.  

  Synthesis of best practices 
  Aggregated outputs/outcome 

and impacts if  this 
information is available 

Objectives 

Outcomes 
of the 
analysis 

Data 
collection 
& Sources 

Secondary  data  sources  and 
/monitoring 
evaluation 
aggregation 
(data 
already available). 

synthesis 

Since  it  is  too  early  to  assess 
results,  a  relevant  approach  is  to 
analyse  if  the  conditions  are  in 
place  to  ensure  results  will  be 
achieved  (relevance,  assessment  of 
involvement, 
needs,  stakeholder 
institutional  framework,  synergies 
between the EIB and the EC, etc.).  

Analysis of the conditions to allow 
future impacts: 

  Consistency of the design; 
  Quality of the operational set 

up and monitoring; 

  Portfolio analysis: breakdown 
of allocation per country, 
sector, type of instruments; 

  Outputs and preliminary 

outcomes for some operations, 
provided sufficient time 
elapsed since the disbursement 
of funds. 

Primary sources of data 
collection: desk research (based 
on the REM for outputs and first 
outcomes), interviews, and field 
visits. 

The framework of the evaluation of the ELM will include firstly an evaluation of the EIB’s external 
financing  activities  under  the  EU  guarantee  (including  risk-capital  and  technical  assistance)  and 
secondly  an  assessment  of  the  wider  impact  of  the  EIB’s  external  lending  in  Programme  regions 
(including  relevant  policies,  agreements  and  cooperation).  Thirdly,  it  will  draw  conclusions  and 
recommendations to improve the processes in the future. The evaluation approach is structured in 
the following way:  

  First, the evaluation team will assess if the strategic conditions are in place to generate results. 
The  team  will  thus  analyse  relevance  and  coherence  of  the  programme  in  terms  of  strategic 
high-level  objectives.  This step  is  a  prerequisite  for  the  evaluation  and  will  provide  a  basis  for 
answering the questions contained in the ToR; 

  Secondly, the evaluation team will assess if the operational conditions are in place to maximise 
the  programme’s  impact  on  the  ground  (monitoring,  cooperation  mechanisms  and  synergies, 
operational set up); 

  Third, the evaluation team will investigate the preliminary effects of the EU guarantee applied to 

the EIB operations under the ELM.  

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The evaluation will address:  

  Compliance of EIB financing operations with the Decision, their added value and contribution 
to  the  Union  external  policies,  their  quality,  their  development  impact  drawing  on  the  EIB’s 
REM and the financial benefits transferred to beneficiaries on an aggregated basis; 

  Climate change and biodiversity financing under the Decision; 
  Functioning of the Memorandum of Understanding between the European Commission and the 
European Investment Bank with respect to cooperation and coordination in the regions covered 
by  the  External  Mandate,  which  was  revised  in  2013  enhancing  cooperation  and  early  mutual 
exchange of information between the Commission, the EEAS and the EIB at operational level; 
  Cooperation with the Commission and other European and international financial institutions, 

including co-financing; 

  Coherence with respect to the EU external policy agenda in the areas covered by the ELM (e.g. 
issues)  and  the  reinforcement  of  the  dimension  of 

economic,  social,  environmental 
internationalisation of European businesses; 

  Application by the EIB of the Guidelines, as well as assessment of its usefulness for the EIB and 

the necessity of regular reviewing; 

  Relation/complementarity with the ACP Cotonou Agreement in terms of overall strategic policy 

context. 

The  evaluation  will  also  address  the  allocation  policy  regarding,  in  particular,  the  geographic 
distribution  of  the  financing  operations,  the  sector  allocation,  and  the  choice  of  the  financing 
instruments. In addition, it will also take into account the existence of the Own-Risk-Facility as the 
alternative setup for the EIB financing operations outside the EU. The evaluation of the Own-Risk 
Facility  and  the  analysis  whether,  on  a  case  by  case  basis,  a  given  operation  should  have  been 
financed  under  the  ELM  or  through  the  Own-Risk  Facility  as  such  are  outside  the  scope  of  the 
evaluation. Nevertheless, the extent to which the allocation policy contributes to the effective use of 
the EU guarantee will be part of this evaluation.  

Furthermore, the evaluation will assess the EIB reporting system and provide recommendations if 
appropriate on how to improve and rationalise it further (as required by the Decision).  

The  evaluation  will  also  provide  recommendations  on  the  potential  activation  of  the  optional 
mandate considering the priority areas, both in terms of regions and of thematic areas (e.g. climate 
change) in which the additional funds could be oriented and the absorption capacity of the EIB for 
allocation of new funds. 

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2.2  Evaluation question analysis 

The operational approach for the ELM mid-term evaluation seeks to answer the evaluation questions by rephrasing and reordering them in a logical sequence 
that follows the intervention logic of the ELM operations. The primary step consisted in identifying objectives, the design characteristics and the implementation 
logic of the ELM. Based on this, the evaluator detailed each question with judgement criteria and related indicators, aiming at making the final judgment explicit 
and at structuring the final answers to the evaluation questions.  

Table 3: Evaluation questions with regard to the legal basis of the Programme 

Legend 
 
 
 

EQ: Evaluation question 
JC: Judgment criteria 
I: Indicator 

Evaluation 
criteria 

Judgment Criteria 

Means of verification (indicator) 

Sources 

EQ1: Are the objectives set out in Decision No 466/2014/EU still relevant considering the changes in the context, in particular with regard to 
geopolitics, emerging post-2015 development finance and climate framework, and the EU external policy agenda, including its external 
blending mechanism? 

JC1.1: The Decision is aligned with the EU external policy 
objectives  

I1.1.1:  Points  of  alignment  (common  references)  for 
projects, sectors and regions 

I1.1.1: Cases of fund allocation changes when needed 

Relevance 

JC1.2:  The  Decision’s  objectives  take  into  account  the 
the 
Millennium  Development  Goals 
Sustainable Development Goals (SDGs)  

(MDG)  and 

I1.3.1: Points of alignment between the Decision objectives 
and the MDCs and the SDGs goals 

JC1.3: The Decision’s objectives are aligned with the goals 
of the Aid Effectiveness framework 

I1.3.1: Points of alignment between the Decision objectives 
and the Aid Effectiveness framework 

Strategic documents (on ELM – Decision, 
previous evaluations; for each of the 
operations, the supporting 
documentation;) + analysis of the 
database 
Interviews with high level policy officers 
(EIB, DG DEVCO, DG ECFIN, DG NEAR, 
DG GROW, DG BUDG, DG CLIMA) 

Strategic documents (on ELM – Decision 
and MDGs and SDGs strategic document 
Interviews with high level policy officers 
(EIB, DG DEVCO, DG ECFIN, DG 
GROW) 

Strategic documents : Cotonou 
Agreement, EEAS strategy, DG DEVCO 
Strategies 
Paris Agreement, Busan partnership for 

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Evaluation 
criteria 

Judgment Criteria 

Means of verification (indicator) 

Sources 

JC1.4:  The  Decision  is  in  line  with  the  EU  climate 
is  aligned  with 
the  EU  and 
objectives  outside 
International Climate agreements 

I1.4.1:  Identification  of  common  references  in  terms  of 
quantitative targets and priority sectors. 

J.C.1.5:  The  Programme  demonstrates  its  capacity  to 
adapt to geopolitical changes  

I1.5.1:  Considerations  of  political  risk  within  country  risk 
reports and regularly planned assessments 

I1.5.2:  Occurrences  of  changes  in  fund  allocation  (for  a 
specific  country,  sector)  to  align  with  the  EU  policy 
requirements (e.g. Russia, Syria) 

effective development cooperation 
Interviews with high level policy officers 
(EIB, EEAS, DG DEVCO ) 

Strategic documents: climate change 
strategy of the ELM, others EU 
commitment and strategy on climate 
change and sustainable development  
Interviews with DG CLIMA and EIB 
Environment Climate and Social Office 
(ECSO) (EIB) 

Desk research.  
Interviews with high level policy officers 
(EIB and EEAS) 

EQ2: Regarding the relevance of design, how does the allocation policy contribute to the effective use of the EU guarantee? 

JC2.1:  The  allocation  policy  provides  a  common 
framework,  which  allows  the  Programme  reflecting  the 
EU external objectives 

J.C.2.2:  The  allocation  policy  foresees  leeway  for  further 
adaptation to the intervention’s context 

J.C.2.3: The Programme is consistent with the beneficiary 
country’s own strategy 

I2.1.1: Existence of precise targets and thresholds and level 
of  application  of  these  targets  (in  particular  as  regards 
geographical and risk based allocation). 
I2.1.2:  Consistency  of 
Programme’s actions with the allocation policy. 

the  sectorial  distribution  of 

I2.2.1: Level of flexibility allowed in the allocation policy, in 
particular in terms of thresholds, geographical distribution 
and modus operandi 
I2.2.2: Application of the concept of differentiation 
I2.3.1: Points of alignment between the Decision objectives 
and  the  country’s  own  strategy  (as  perceived  by  the 
beneficiaries) 

Desk research :Regional Technical 
Operational Guidelines 
Portfolio analysis 
Project appraisal documentation & file 
(contracts, feasibility study, second 
opinion) 
Interviews with high level policy officers 
(EIB’s operations division) 

Desk research 
Interviews 

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Table 4: Evaluation questions with regard to the selection of the operations and the reporting 

Evaluation 
criteria 

Judgment Criteria 

Means of verification (indicator) 

Sources 

EQ3: Are the methods used by the EIB relevant to analyse the financial needs of the beneficiaries, their absorption capacity and the 
availability of other sources of private or public financing for the relevant investments?  

JC3.1: The methods include an assessment of 
beneficiaries’ needs, assessment of their absorption 
capacity, and its potential leverage effect on private and 
public financing 

I3.1.1:  Identification  of  needs  and  absorption  capacity 
assessment  as  well  as  potential  leverage  effects  at  project 
level  

Relevance 

JC3.2:  The  methods  are  in  line  or  reflect  best  practises 
with  respect  to  those  of  other  multilateral  and  bilateral 
financing organisations 

I3.2.1: Existence of an analysis of best practice methods  

I3.2.2:  Methods  of  other  financial  institutions  for  similar 
interventions have been taken into account 

JC3.3:  The  methods  have  been  tested  and  are  regularly 
updated (if needed) 

I3.3.1:  Tests  have  been  realised  and  methods  updated 
following changes in the context of intervention  

I3.3.2:  An  update  of  the  needs  analysis  is  has  been 
conducted or is planned 

Desk research: project appraisal 
documentation and REM framework 
Interviews with EIB’s operations division 
(Loan officers, OPS, PJ) 

Project appraisal documentation & file 
(contracts, feasibility study, second 
opinion) 
Interviews with EIB’s operations division 
(Loan officers, OPS, PJ) 

Portfolio analysis 
Project appraisal documentation & file 
(contracts, feasibility study, second 
opinion) 
Interviews with EIB’s operations 
division(Loan officers, OPS, PJ) 

Compliance 

EQ4: How does the EIB reporting towards the commission allow to assess the compliance of EIB financing operations with the Decision No 
466/2014/EU and what are appropriate measures for improvement (if applicable)? Are the reporting requirements regarding greenhouse gas 
emissions related to EIB financing operations being fulfilled?   

JC4.1:  The  EIB  reporting  requirements  towards  the 
Commission 
regarding  greenhouse  gas 
emissions) are formalised (e.g. clearly stated) and met. 

(including 

I4.1.1: Level of fulfilment of the reporting requirements as 
defined in the Article 11 of the Decision 

Desk analysis of the reporting activities of 
the EIB towards the Commission 
Interviews with EIB’s reporting team ( 
OPS, Board, and EC (DG ECFIN) 

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Table 5: Evaluation questions with regard to the monitoring and evaluation of the Programme 

Evaluation 
criteria 

Monitoring 
mechanisms 
and other 
processes 

Judgment Criteria 

Means of verification (indicator) 

Sources 

EQ5: What is the relevance of the set of indicators and criteria developed by the EIB, the REM for the evaluation of the Programme? 

JC5.1:  The  REM  and  its  indicators  are  aligned  with  the 
best  practices  of  the  multilateral  and  bilateral  financing 
organisations 

JC5.2:  The  REM  and  its  indicators  allow  reflecting 
adequately all the features related to the ELM operational 
objectives 

I5.1.1: Existence of an analysis of best practice methods  

I5.1.2: Measurement methodologies of other financial 
institutions for similar interventions have been taken into 
account 

I5.2.1:  Extent  of  match  with  the  operational  objectives 
(leverage and catalytic effect, etc.) 

Interviews with EIB operations division, 
REM and EV 
Interviews with multilateral and bilateral 
financing organisations 

Desk research (strategy 
documents)/intervention logic 
Portfolio analysis 

Interviews (REM, Ops) 

EQ6: How does the EIB monitoring system contribute to the identification of barriers to effectiveness and allow overcoming  them and how 
does the REM framework contribute to the ex-ante assessment of expected project results and enhance the EIB’s ability to report on actual 
results? 

JC6.1: Mechanisms are in place to identify the barriers to 
effectiveness at all level of the Programme (including 
Financial intermediary and project level) 

I6.1.1: Existence of continuous internal and external 
monitoring processes to identify effectiveness gaps and to 
identify failure factors 

JC6.2: Mechanisms are in place to identify side effect or 
unexpected effects of the programme (Financial 
intermediary and project level) 

Monitoring 
mechanisms 

JC6.3: Indicators collected through the REM are used 
and provided relevant information for the ex-ante 
assessment of expected project results 

JC6.4: Indicators collected through the REM are used by 
the EIB to report on actual results 

I6.2.1:  Existence  of  continuous  internal  and  external 
monitoring  processes  to  detect  unexpected  effects  of  the 
programme 
I7.2.2:  Existence  of  mechanisms  to  collect  best  practices 
and to promote them 
I7.2.3:  Cases  where  monitoring  results  of  whatever  nature 
led to change in the scope or scale of the project, including 
stopping it   

I6.3.1: REM results feed into the reporting process 

I6.3.2: Use of REM indicators in projects selection 

I6.3.2: Use of REM indicators in reporting  

Desk research: documents produced in 
through the reporting and monitoring of 
the ELM 
Interviews (with EIB Internal audit, 
REM, OPS, PJ and TMR) 

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Final Report for the External evaluation of the application of the European Union Guarantee for the EIB lending operations outside the European Union 

Evaluation 
criteria 

Judgment Criteria 

Means of verification (indicator) 

Sources 

EQ7: Is the programme able to detect and take into account the unintended effects on stakeholders? 

JC7.1:  Mechanisms  are  in  place  to  detect  unintended 
effects and alleviate them 

Monitoring 
mechanisms 

JC7.2:  Mechanism  are  in  place  to  take  into  account 
external comments or remarks 

JC7.3: Action taken following the detection of unintended 
effects 

I7.1.1: Existence of monitoring mechanisms 
(formal/informal meetings, contact point, regular report, 
etc.) allowing identification of unintended effects 
I7.1.2: Examples of identification of such unintended 
effects and means deployed to alleviate them exists 
I7.2.1: Involvement of stakeholders during project planning 
is ensured 
I7.2.2:  Publication  by  external  actors,  governmental  or 
non-governmental are taken into account 
I7.3.1:  Number  of  responsive  measures  that  had  been 
undertaken (if necessary) 

Table 6: Evaluation questions with regard to the complementarity of the Programme with other EU programmes 

Desk research: documents produced in 
through the reporting and monitoring of 
the ELM 

Interviews (with EIB Internal audit, 
REM, OPS and TMR) 

Evaluation 
criteria 

Judgment Criteria 

Means of verification (indicator) 

Sources 

EQ8: Are there overlaps, realised or potential complementarities between the Programme and any other EU, MS and IFI actions in the 
relevant areas? Could the coherence and synergies of the Programme with other EU and/or MS interventions that are designed to contribute 
to the EU external policy objectives be further improved? What lessons can be learned from interaction between EIB under ELM and the 
blending facilities - also in terms of complementarity? 

JC8.1: The Programme has set up high-level mechanisms 
to  identify  beforehand  potential  cooperation,  overlaps, 
and contradictions with EU, DFI or IFI on the field. 

Coherence 

I8.1.1: High-level mechanism to detect possible cooperation 
exists at project level. 
identification  of  contradictions 
I3.1.2:  Assessment  of 
between  the  Programme  and  EU,  MS  and  IF  actions  per 
sector/region/countries. 
I3.1.3: Identification of ex-ante cooperation when potential 
overlaps are identified. 

Desk research (strategy documents) 
Portfolio analysis 
Interviews with EC (DG DEVCO, DG 
ECFIN, DG GROW, DG NEAR, DG 
CLIMA, DG BUDG), EEAS and relevant 
IFIs 

JC8.2:  The  Programme  seeks  for  cooperation  to  ensure 
the identification and appraisal of joint financing 

I8.2.1:  Mechanisms  avoiding  duplication  of  cost,  of 
procedures and heavy administrative cost is in place 

Desk research (strategy documents) 
Portfolio analysis 

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Evaluation 
criteria 

Judgment Criteria 

Means of verification (indicator) 

Sources 

I8.2.2: Number of co-financed projects 
I8.2.3: Case of double-financing 
I8.2.4: Critical mass is obtained in terms of available funds 
which leads to an increase in project size 
I8.2.5:  Existence  of  clear  definition  of  leadership  during 
cooperation  
I8.2.6: Justification for non-cooperation is available 
I8.2.7:  Existence  of  platforms  where  the 
overlapping/complementarities are effectively discussed 

issues  of 

Interviews with EC (DG DEVCO, DG 
ECFIN, DG GROW, DG NEAR, DG 
CLIMA), EEAS and relevant IFIs 

Table 7: Evaluation questions with regard to the management of the Programme 

Evaluation 
criteria 

Efficiency 

Judgment Criteria 

Means of verification (indicator) 

Sources 

EQ9: To what extent are the desired effects achieved at a reasonable cost in comparison to other similar organisations/Programmes? What 
aspects of the Programme are the most efficient or inefficient, especially in terms of resources that are mobilised by final beneficiaries, the 
EIB and the Commission during the different phases of the project? 

JC9.1: The Programme imposes minimal additional costs 
from the point of view of the Commission 

I9.1.1: Perceived costs by the Commission per project phase 

Interviews with EC 

JC9.2:  Management  costs  for  the  EIB  are  known  and 
mitigated  
The  volume  of  human  resources  is  sufficient  to  ensure 
proper  management  of  the  Programme  during  the 
financial 
selection  of  FIs, 
operations and the monitoring 

implementation  of 

the 

I9.2.1:  Identification  of  the  various  costs  related  to  the 
Programme (from the EIB side) 
I9.2.2:  Identification  of  actions  /  mechanisms  to  mitigate 
these costs 
I9.2.3: Number of directly and indirectly (support services) 
resources  which  had  been  involved  in  the  Programme  and 
on project bases  
I9.2.4:  Average  number  of  projects  monitored  with  the 
existing human resources 

Interviews (EIB OPS, PJ) 
Interviews with financial intermediaries 
and final beneficiaries  
EIB’s personnel timesheets analysis 

JC9.3:  Project  holders  (final  beneficiaries)  are  not 
discouraged  from  participating  by  high  administrative 
burdens 

I9.3.1: Project holders can clearly state project related costs 
(in terms of time, delays and paperwork) and perceive it as 
manageable 

Interviews with financial intermediaries 
and final beneficiaries  

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Final Report for the External evaluation of the application of the European Union Guarantee for the EIB lending operations outside the European Union 

Evaluation 
criteria 

Judgment Criteria 

Means of verification (indicator) 

Sources 

JC9.4:  Cooperation  among  EIB  employees/  Commission 
employees contributes to an efficient management of the 
Programme 

JC9.5:  comparison  between  the  EIB  activities  under  the 
EU  guarantee  and  EIB  activities  involving  blending  with 
EU budget grants  

I9.4.1:  Existence  of  knowledge  sharing  mechanism  among 
and between the Commission and the EIB / Added value of 
such mechanisms. 
I9.4.2:  Existence  of 
communication  and 
internal 
information  sharing  processes:  meeting  agendas,  action 
plans,  breakdown  of  role  and  responsibilities,  work 
plans/planning  and  follow  up  mechanisms  /  Added-value 
of such mechanisms. 
I9.5.1:  assessment  of  perceived  relative  administrative 
burden  on  the  EU  by  the  Commission  and  the  EIB 
representatives 
I9.5.2:  relative  added  value  of  the  two  modalities  as 
perceived by the beneficiaries 

Interviews (EIB OPS, PJ) 

Interviews 
Field visits 

Table 8: Evaluation questions with regard to the added value of the Programme 

Evaluation 
criteria 

Effectiveness 
through 
added value 

Judgment Criteria 

Means of verification (indicator) 

Sources 

EQ10: What is the added value of the Programme for beneficiaries (ref. EIB performance indicators, incl. qualitative and quantitative effects) 
and in the selection of specific lending activities, how is the highest added value to beneficiaries ensured? 

JC10.1: The Programme (the existence of the Guarantee) 
improves  final  beneficiaries’  access  to  finance  and 
borrowing terms (cost of funding) 

JC10.2: The  Programme creates a  multiplier effect and a 
catalytic effect on financial intermediaries’ activities 

I10.1.1:  Existence  of  projects  which  would  not  have  been 
launched  without  the  ELM  (based  on  statement  of  project 
holders) 
I10.1.2: Comparison of the cost of funding through the ELM 
mechanism with the private market. 
I10.1.3: Interest rate differential with a benchmark (country 
related risks) 
I10.1.4:  Providers  collateral  requirements  are  lower  than 
from private market 
I10.2.1:  Perceived  multiplier  effect  or  conditions  to 
generate a multiplier effect by beneficiaries 
I10.2.2: Perceived catalytic effect or conditions to generate 
a catalytic effect by beneficiaries 

Interviews (EIB OPS, PJ) 
Interviews with financial intermediaries 
and final beneficiaries  

Portfolio analysis 

Interviews EIB (SG, OPS) 

REM analysis 
Interviews with financial intermediaries 

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Final Report for the External evaluation of the application of the European Union Guarantee for the EIB lending operations outside the European Union 

Evaluation 
criteria 

Judgment Criteria 

Means of verification (indicator) 

Sources 

JC10.3:  The  Programme  spreads  higher  banking 
standards  and  best  practices  among  FI  ,  in  particular  in 
terms  of  reporting  and  ex-ante  assessment  of  projects 
(including capacity to appraise environmental, social and 
development components of investment operation) 

I10.3.1:  Identification  of  mechanisms  to  share  best 
practices  with  FIs  (guideline,  meeting,  workshop,  capacity 
building) 

and final beneficiaries  

Interviews with financial intermediaries 
and final beneficiaries  

JC10.4:  The  selection  of  partner  FIs  is  based  on  their 
alignment with EIB objectives 

I10.5.1:  Identification  of  criteria  related  to  the  selection  of 
partner FIs 

Desk research (appraisal documents) 

Interviews with the EIB (Ops) 

Table 9: Evaluation questions with regard to climate change objectives and visibility of the EU 

Evaluation 
criteria 

Sustainability 

Judgment Criteria 

Means of verification (indicator) 

Sources 

EQ11: What is the volume of climate change lending against the target of 25% and what is the result of the new system to ex-ante assess 
greenhouse gas emission of projects supported by the EU guarantee? How does the EIB reinforce the climate resilience for all relevant 
financing operations, and integrate carbon pricing in economic cost benefit analysis? 

JC11.1: The volume of climate change lending reaches the 
targets of 25% 

JC11.2: Ex-ante assessment of greenhouse gas emission of 
financing 
projects  allows  capturing  the 

impact  of 

I11.1.1:  Number  and  share  of  financed  projects  setting  as 
primary/significant  objective  climate  change  mitigation/ 
adaptation 
I11.1.2:  Geographical  and  sector  distribution  of  climate 
change  mitigation  related  lending  is  representative  of 
overall lending 
I11.1.3:  Geographical  and  sector  distribution  of  climate 
change  adaptation  related  lending  is  representative  of 
overall lending 
I.11.2.1: Share of projects assessed 
I.11.2.2:  Ex-ante  assessed  impact  of  projects  in  terms  of 
reducing GHG emissions (emissions avoided) 

Portfolio analysis 

Desk research (appraisal documents) 

REM framework 

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Final Report for the External evaluation of the application of the European Union Guarantee for the EIB lending operations outside the European Union 

Evaluation 
criteria 

Judgment Criteria 

Means of verification (indicator) 

Sources 

operations in terms of reduction of GHG emissions 

the  relevant 
JC11.3:  Ex-ante  assessments  provide 
information  for  projects  selection  and  contribute  to 
project design/adjustment 

JC11.4:  The  system  of  ex-ante  assessment  of  greenhouse 
emission pushes financial intermediaries to conduct  such 
assessment  in  every  project  (including  those  outside  the 
Programme) 

I11.2.3:  Existence  of  a  common  and  scientifically  robust 
methodology for assessing greenhouse gas emission 
I11.2.4:  Consistency  in  the  methodology  used  across 
projects 

I11.3.1:  Reference  to  the  outcomes  of  ex-ante  assessments 
in project selection 

I11.3.2:  Consideration for  recommendations  of  the  ex-ante 
assessment in project design 

I11.3.3:  Existence  of  Cost-Benefit  Analysis  assessment  of 
the projects and inclusion of carbon pricing considerations 

I11.4.1: Knowledge sharing mechanism is in place  

Interviews EIB  

Desk research (appraisal documents) 

REM framework 

Interviews EIB 

Interviews with financial intermediaries 
and final beneficiaries 

I11.4.2:  Level  of  perception  of  ex-ante  assessment  among 
financial intermediaries 

Interviews EIB Ops 

EQ12: What is the effectiveness of communication efforts of the EIB on the visibility* of the EU, including at project level? 

JC12.1:  EU  rules  on  communication  are  clearly  defined 
and  applied  at  financial  intermediary  level  and  project 
level  

Effectiveness 
through 
visibility 

JC12.2: The EIB communication is adapted to the targets 
and to specific geographical areas 

I12.1.1: Number and type of communication tools deployed 
both at the financial intermediary level and project level 

Interviews with financial intermediaries 
and final beneficiaries 

I12.1.2:  Inclusion  of  explicit  reference  to  the  EU  at  the 
project  level  through  logo  or  dedicated  information  is 
visible for each financing operation 

I12.2.1:  Presence  of  local  adaptation  of  communication 
tools  to  the  different  targets  (financial  intermediary  and 
final  beneficiaries)  and  with  regard  to  geographical  areas 
(language,  culture,  key  issues,  EIB  background  in  this 
location, etc.) 

I12.2.2:  Clear  understanding  and  knowledge  of  the 
Programme  opportunity  and  advantage  among  financial 

Interviews EIB OPS and PJ 

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Final Report for the External evaluation of the application of the European Union Guarantee for the EIB lending operations outside the European Union 

Evaluation 
criteria 

Judgment Criteria 

Means of verification (indicator) 

Sources 

JC12.3  The  EIB  communication  makes  the  EU  and  its 
external 
financial 
intermediaries and project levels. 

objectives 

visible 

policy 

at 

intermediaries 

I12.3.1: Level of awareness (perception) of the funds’ origin 
(EU’s  involvement)  among  financial  intermediaries  and 
final beneficiaries. 

I12.3.2: Level of awareness (perception) of the EU external 
objectives  (including  as  regards  climate  change  mitigation 
and  adaptation)  among  financial  intermediaries  and  final 
beneficiaries. 

Interviews with financial intermediaries 
and final beneficiaries 

*Assessing  the  EU’s  visibility  mostly  rely  on  stakeholder’s  perception  and  non-measurable  indicators,  subject  to  different  interpretation.  This  limit  of  the  approach  will  be  addressed  in  the  final 
analysis (triangulation of sources) and flagged. NB: A regular update will be provided on the status of each of these questions in the following reports. 

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Final Report for the External evaluation of the application of the European Union Guarantee for the EIB lending operations outside the European Union 

2.3  Main phases of the mid-term review 

The evaluation work has been articulated in five phases as illustrated below. 

Figure 4: Breakdown of the assignment work phases  

27 

 
 
 
 
Final Report for the External evaluation of the application of the European Union Guarantee for the EIB lending 
operations outside the European Union 

2.3.1  Methodological tools employed  

Financial database creation 

The task involved close cooperation between the evaluation team and the EIB staff to ensure that 
the evaluation team has possession of and understands all the data available relevant to the study.  

The primary step has been the constitution of the database of financial operations of the EIB under 
the  ELM  for  the years 2014-2015, including,  where  possible,  foreseeable  upcoming  operations,  in 
particular those awaiting signature.  

For each of the 578 financing operations, the financial database comprises in particular:  

  The project title and description (purpose, region, sector, country, etc.); 
  Date of signature; 
  Appraisal time (in months); 
  The stakeholders under consideration (financial intermediaries and final beneficiaries); 
  The  financial  characteristics  of  the  project  (project  cost,  percentage  of  the  EIB  contribution, 

volume of funds disbursed so far); 

  The results of the risk assessment exercise; 
  The climate change indicator (Climate Action Indicator% for tracking climate change mitigation 

and adaptation); 

  Nature of the EU guarantee (Political risk vs. Comprehensive); 
  For  multi-beneficiary 

loans:  number  of 

financial 
characteristics  of  each  of  the  loans  provided  by  the  financial  intermediaries  to  the  final 
beneficiaries); 

final  beneficiaries  (specifying 

the 

  For  the  framework  loans:  number  of  sub-projects  covered/in  the  pipeline  (specifying  the 

financial characteristics of each of the sub-projects). 

The preliminary data provided by the EIB have been stored in an excel spreadsheet as illustrated 
below: 

8  Within 
INTERCONNECTION » counts twice since it concerns two separate countries and two contracts have been signed. 

the  portfolio  analysis,  we  have  considered  57  operations. 

In 

fact,  one  project,  e.g  « TAJIK  -  KYRGYZ  POWER 

28 

 
 
 
 
 
 
                                                             
Final Report for the External evaluation of the application of the European Union Guarantee for the EIB lending operations outside the European Union 

Figure 5: Financial database: a snapshot9 

Source: EIB 

9 The snapshot does not provide all the information contained in the database but the most relevant in the context of the evaluation 

29 

Operation numberContract numberOperation nameAvancement (gb)EU Guarantee limited to Political RisksMandate / FacilityFundsRegionCountrySector(s)First signature of the operationSignature within current ELM periodAppraisal duration (months)EIB financing type Project cost EUR  Approved (operation-level) EUR  Signed in EUR  Contract currency  Signed in contract currency Climate Change indicator (%)Climate Change mitigation indicator (%)Climate Change adaptation indicator (%) Disbursed as % of net signed Type of final beneficiaryCo-financing with other IFIsTA / grant component2014045985294NICARAGUA HYDRO DEVELOPMENT AND TRANSMISSIONFully SignedNoELM Latin America 2014-2020EIB own resourcesLatin AmericaNicaraguaEnergy29/12/201529/12/201511Investm. Loan1,090,445,860        145,586,897         146,092,038     USD160,000,000 85             100               0%Sovereign entityYes2010061382167CAIRO METRO LINE 3 (PHASE 3)Approv BoDNoELM MED 2014-2020EIB own resourcesMediterranean countriesEgyptTransport14/11/201229/12/201512Investm. Loan2,417,900,000        600,000,000         200,000,000     EUR200,000,000 100           100               0%Public sector entityYesYes2015047685055UKRAINE AGRI-FOOD APEX LOANFully SignedNoELM East-Ru. 2014-2020EIB own resourcesRussia, E.Europe,Sth. CaucasusUkraineCredit lines28/12/201528/12/20153Multi BI Loan800,000,000           400,000,000         400,000,000     EUR400,000,000 35             11                 24                 0%SMEs / MidCapsYes2015002284434AFFORESTATION AND EROSION CONTROL IIIFully SignedNoELM Pre-Accession 2014-EIB own resourcesCandidate countriesTurkeyAgriculture, fisheries, 28/12/201528/12/20159Investm. Loan330,816,000           120,000,000         120,000,000     EUR120,000,000 100           70                 30                 0%Sovereign entity2015002184433TUBITAK RESEARCH PROMOTION IIFully SignedNoELM Pre-Accession 2014-2020EIB own resourcesCandidate countriesTurkeyServices28/12/201528/12/20159Investm. Loan535,500,000           200,000,000         200,000,000     EUR200,000,000 3               3                   0%Public sector entity2015030884809MODERNISATION ROUTIERE IIFully SignedNoELM MED 2014-2020EIB own resourcesMediterranean countriesTunisiaTransport18/12/201518/12/20151Framewk loan342,900,000           150,000,000         150,000,000     EUR150,000,000 2               2                   0%Sovereign entityYes2015029484794ISTANBUL UNDERGROUND RAIL NETWORKApprov BoDNoELM Pre-Accession 2014-2020EIB own resourcesCandidate countriesTurkeyTransport18/12/201518/12/20154Investm. Loan1,400,000,000        350,000,000         295,000,000     EUR295,000,000 100           100               0%Regional or local authorities2014023283634ROUTE 10 RAIL REHABILITATIONApprov BoDNoELM Pre-Accession 2014-2020EIB own resourcesPotential candidate countriesKosovoTransport08/12/201508/12/201516Investm. Loan208,400,000           80,000,000           42,000,000       EUR42,000,000   100           100               0%Commercial companyYes2014053484869DAMANHOUR CCGT POWER PLANTFully SignedNoELM MED 2014-2020EIB own resourcesMediterranean countriesEgyptEnergy06/12/201506/12/20155Investm. Loan1,207,530,255        537,875,392         550,357,733     USD600,000,000 2               2                   0%Public sector entityYes2012040784944NEPAL GRID DEVELOPMENT PROGRAMMEFully SignedNoELM Asia 2014-2020EIB own resourcesAsia (excl. Central Asia)NepalEnergy03/12/201503/12/20158Investm. Loan65,159,212             30,000,000           30,000,000       EUR30,000,000   84             84                 0%Regional or local YesYes2013058783156VIENTIANE SUSTAINABLE URBAN TRANSPORTApprov BoDNoELM Asia 2014-2020EIB own resourcesAsia (excl. Central Asia)Lao People's Democratic Transport30/11/201530/11/201514Investm. Loan87,760,000             20,000,000           18,905,379       USD20,000,000   100           100               0%Regional or local YesYes 
 
 
 
 
 
                                                             
Final Report for the External evaluation of the application of the European Union Guarantee for the EIB lending 
operations outside the European Union 

Portfolio analysis 

The EIB provided the evaluation team with the data for the  57 financing operations signed under 
the  current  ELM  from  July  2014  up  to  31  December  2015.  The  data  was  extracted  from  the  EIB 
database Serapis with detailed information on each financing operation.  

From  this  database,  the  evaluation  team  performed  a  portfolio  analysis  of  the  57  financing 
operations  in  the  database.  This  analysis  provides  a  descriptive  and  analytical  overview  of  the 
ongoing status of the ELM operations, including: 

  Regional distribution; 
  Country distribution; 
  Sector distribution; 
  EIB financing type; 
  Appraisal duration; 
  Coverage of the EU guarantee; 
  Project cost and EIB contribution per projects; 
  Disbursement; 
  Type of final beneficiaries; 
  Climate change indicators. 

This  allows  drawing  a  global  snapshot  of  the  portfolio  and  outlining  some  findings  and  build 
hypotheses, which were addressed more in depth during the case studies. 

Workshop on ELM projects lifecycle 

A workshop was organised with the EIB to present some of the key elements of the ELM: project 
lifecycle,  project  monitoring,  the  economic  and  financial  assessment  of  project,  the  EU  call  for 
guarantee  process,  the  REM  framework  and  a  specific  case  study  of  the  financial  operation 
conducted in Armenia.  

Stakeholders mapping 

The  stakeholders  mapping  consisted  in  the  identification  of  the  various  stakeholders  involved 
directly  and  indirectly  in  the  strategic  orientation,  the  implementation,  the  reporting  and  the 
monitoring  of  the Programme  as well  as  stakeholders  from  the beneficiaries  side.  Then  their  role 
and their interaction was defined to draw an overall picture of the stakeholders’ interactions. The 
stakeholder  mapping  was  necessary  to  prepare  the  stakeholder  interviews,  ensuring  that  the 
evaluation team identified all the relevant stakeholders. 

Stakeholder interviews 

Interviews  were  conducted  with  a  set  of  relevant  stakeholders  identified  in  the  stakeholders 
mapping.  The  evaluation  team  used  a  semi-structured  interview  approach  that  provided  a  set  of 
questions  to  be  tackled  during  the  interview  while  allowing  the  interviewer  to  ask  follow-up 
questions.  This  approach  enabled  the  evaluation  team  to  obtain  the  largest  possible  volume  of 
information during each interview.  

The list of stakeholders interviewed is presented in the Appendices 1. 

Case studies 

The  evaluation  team  conducted  an  in-depth  analysis  for  20  financing  operations  by  studying  the 
documentation  related to  these  projects.  This  documentation  set  the  background  of  the  financing 
operation, the appraisal procedure, the contractual specificities and the modalities of the execution 
of  the  financing  operation.  This  desk  research  was  completed  by  interviews  with  relevant 
stakeholders. 

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The analytical grid for the twenty case studies is presented in the appendices. This grid introduces 
the various themes to be addressed for each of the case studies. 

2.4  Data collected for the evaluation 

The  evaluation  team  collected  project-specific  documentation  for  each of  the  twenty case  studies: 
PIN, appraisal report, contracts, REM reports, the financial data (interest rate of the loan, maturity, 
collateral, guarantee arrangement), reporting documents, documents on methods used by the EIB 
to ex-ante assess projects.  

The evaluation team also collected and analysed the following documents: 

  Legal framework (the Decision, the Guidelines, allocation policy, the Guarantee Agreement and 

the Recovery Agreement); 

  Strategic  documentation  (ELM  Climate  change  strategy,  various  EU  strategies  as  regards 

climate change, migration or external policies, etc.); 

  Past evaluation report on the ELM; 
  Project  cycle  guidelines  from  the  EIB  and  presentation  on  REM  framework,  economic  and 

financial analysis and monitoring; 

  Financial data on each of the 57 financing operations. 

The full list of strategic documents consulted through the evaluation is provided in the appendices.  

2.5  Main limits of the approach and mitigation actions 

The overall approach for the study presents two main constraints: 

First,  considering  the  short  operating  timeframe  of  the  Programme,  a  small  number  of 
operations have already been signed (57) and an even smaller number of operations have already 
been disbursed (9), which reduces the explanatory power of the analysis. Any extrapolation to the 
whole population of operations (both running and upcoming under this ELM period), in particular, 
would  be  hazardous.  Given  this  short  timeframe,  the  evaluation  approach  is  mainly  qualitative, 
addressing  the  conditions  for  success.  The  judgment  on  the  actual  effectiveness,  efficiency, 
coherence of the ELM is completed with an analysis of whether the conditions for the Programme 
to  achieve  its  objectives  are  in  place.  The  evaluation  team  applied  this  approach  throughout  the 
entire  analysis  of  the  ELM  including  the  internal  functioning  of  the  ELM.  This  is  all  the  more 
relevant as it helps to draw recommendations for the improvement of the Programme.  

Data  availability  is  another  issue,  in  particular  as  regards  data  at  the  final  beneficiaries’  level. 
This  is  partly  due  to  the  short  operating  timeframe  of  certain  operations  or  the  way  they  are 
structured,  in  particular  for  multi-beneficiary  loan.  However,  at  the  Programme  level,  all 
aggregated financial and non-financial data have been made available and allowed to produce the 
required analysis for this evaluation. 

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3  Institutional analysis 

This  section  analyses  the  institutional  framework  of  the  ELM  focusing  on  policy  context, 
stakeholders  involved  and  implementation  mechanisms.  It  provides  qualitative  information  on 
various aspects of the ELM, particularly relevant within the scope of the present evaluation.  

3.1  Policy context 

The overall purpose of the ELM is to contribute to the EU external policy objectives. In that respect, 
being consistent with the EU political agenda and its evolutions is one of the key challenges of the 
ELM and is logically reflected in the present evaluation. 

To assess the consistency of the ELM with the EU policy agenda, it is crucial to stress key elements 
of the EU policy agenda over the last year and a half and to understand the ongoing discussions that 
may influence the EU external priorities.  

First,  climate  change  mitigation  and  adaptation  is  among  the  EU’s  top  priorities  and  has 
been high on the EU and international political agenda in recent years, culminating with the 2015 
Paris  climate  change  conference  (COP21).  Climate  action  encompasses  the  development  and 
implementation of strategies, policies and projects to either mitigate climate change or to adapt to 
it. The EU has set itself targets for reducing its greenhouse gas emissions progressively up to 2050. 
They are presented in three documents: 

  2020 climate and energy package: enacted in 2009, the 2020 package defines three key targets 
for the EU as a whole in terms of climate change mitigation with a 20% cut in  the greenhouse 
gas emissions (from 1990 levels), a 20% share of EU energy produced from renewable sources 
and 20% improvement in energy efficiency. EU member states have taken on binding national 
targets,  which  vary  according  to  national  wealth  and  depending  on  the  countries'  different 
starting points for renewables production and ability to further increasing it. For cutting GHG 
emissions  from  large-scale  facilities  in  the  power  and  industry  sectors,  as  well  as  the  aviation 
sector,  the  EU  created  the  emissions  trading  system  (ETS).  The  EU  supports  also  the 
development  of  low  carbon  technologies  for  instance  through  the  NER300  programme  for 
renewable energy technologies and carbon capture & storage or the Horizon 2020 funding for 
research & innovation. 

  2030 climate and energy framework: adopted in 2014, the framework sets three key targets for 
the year 2030:  at  least 40% cuts  in  greenhouse  gas emissions (from 1990 levels),  at least 27% 
share for renewable energy and at least 27% improvement in energy efficiency. 

  2050 low-carbon roadmap: it sets the overall target for GHG emissions by 2050. By 2050, the 
EU  should  cut  emissions  to  80%  below  1990  levels.  All  sectors  need  to  contribute  to  the  low-
carbon  transition  according  to  their  technological  and  economic  potential  (power  generation, 
industry, transport, buildings, construction and agriculture). 

The EU climate change adaptation strategy was defined in 2013 in the “EU strategy on adaptation 
to climate change.” This strategy is mainly targeted at the EU, but it sets some guiding principles 
that are also applicable to external actions. The overall objective of the strategy is to deal with the 
unavoidable  climate  impacts  and  their  economic,  environmental  and  social  costs  through 
promoting  action  by  Member States (subsidiarity  principle),  promoting  better  informed  decision-
making and promoting adaptation in key vulnerable sectors. These are outlined in 8 actions, which 
are the levers to achieve these objectives. Some of these actions are also relevant for the EU external 
actions.  In  particular,  action  7  deals  with  ensuring  more  resilient  infrastructure,  which  will  be 
achieved  by  providing  industry-relevant  standards  in  the  area  of  energy,  transport  and  buildings 
and  by  producing  guidelines  to  help  project  developers  working  on  infrastructure  and  physical 
assets  to  climate-proof  vulnerable  investments.  In  addition,  action  8  intends  promoting  financial 
products for resilient investments and business decisions. 

Some  guiding  principles  of  the  EU  actions  in  climate  change  mitigation  and  adaptation  can  be 
drawn  from  this  strategic  framework.  These  principles  mark  the  EU  policy  objectives  and  will  be 
considered  when  assessing  the  consistency  of  the  ELM  with  the  EU  political  agenda.  These 
principles are: 

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  Setting  clear,  ambitious  and  long-term  targets  for  GHG  emissions.  This  implies  setting 
progressive  targets  for  portfolio  of  projects,  assessing  the  expected  GHG  emissions  of  projects 
and GHG emissions at various maturities. 

  Making  all  sectors  contribute  to  GHG  reductions.  This  implies  considering  potential  GHG 
emissions  for  all  projects/operations  and  taking  mitigation  measures  when  possible.  It  also 
results in maximising the potential of each sector in terms of GHG emissions reduction. 

  Making  the  most  of  infrastructure  potential  in  particular  in  energy,  transport  and  buildings. 
Projects or operations involving the development of infrastructure should put a high premium 
on contributing to GHG emissions reduction. 

  Integrating  climate  adaptation/resilience  into  operations  and  developing  adapted  financial 

products for financing climate-resilient investments. 

The COP21 and the Paris Agreement are also important milestones for the EU policy in the aspects 
of  the  climate  change  adaptation  and  mitigation.  The  European  Commission  prepared  a 
communication towards the European Council assessing the implications of the Paris Agreement10.  

Climate change is also integrated in external policies through green diplomacy. In this respect, the 
EU  strategy  dates  back  to  2002  with  the  Strategy  on  Environmental  Integration  in  External 
Policies.  Today,  one  of  the  main  tool  is  the  Green  Diplomacy  Network11.  The  network  focuses  on 
environmental topics that have significant relevance to the EU’s external relations, such as climate 
change, biodiversity, land degradation and renewable energy 

The  external  political  agenda  of  the  EU  faces  the  challenge  of  the  refugee  crisis.  Since  2015,  a 
rising  number  of  refugees  and  migrants  have  arrived  in  the  European  Union  from  areas  such  as 
Middle East, South Asia and Northern Africa, travelling across the Mediterranean Sea, or through 
Southeast  Europe.  In  May  2015,  the  European  Commission  set  the  “European  agenda  on 
migration”12.  The  first  part  of  this  Agenda  responded  to  the  human  tragedy  in  the  whole  of  the 
Mediterranean.  This  includes  search  and  rescue  efforts  in  the  Mediterranean  sea,  fight  against 
criminal smuggling networks, alleviation of the pressure on the asylum systems through temporary 
distribution scheme for asylum-seekers, resettlement, working in partnership with third countries 
to tackle migration upstream and using the EU tools to help frontline Member States. The agenda 
also identifies four levels of structural actions: reduction of the incentives for irregular migration, 
border  management,  development  of  a  strong  common  asylum  policy  and  a  new  policy  on  legal 
migration.  A  large  part  of  the  measures  taken  by  the  EU  relies  on  the  cooperation  with  third 
countries, both entry points in the EU (e.g. EU neighbouring countries) and countries of origin of 
migrants  and  refugees.  In  that  respect,  the  Agenda  states  that  “the  EU  must  continue  engaging 
beyond  its  borders  and  strengthen  cooperation  with  its  global  partners,  address  root  causes,  and 
promote modalities of legal migration that foster circular growth and development in the countries 
of  origin  and  destination”.  This  ambition  may  directly  affect  the  ELM  since  the  ELM  supports 
operations  in  third  countries  including  neighbouring  countries.  On  the  18  March  2016,  the 
Members  of  the  European  Council  met  with  the  representatives  of  the  Republic  of  Turkey  in  the 
framework  of  their  ongoing  discussion  to  address  the  refugee  crisis.  Following  these  discussions, 
the agreement was reached with the aim of stopping the flow of illegal immigration to the EU. The 
agreement specified, in particular, that the EU will speed up the disbursement of the EUR 3 billion 
under the Facility for Refugees in Turkey and, once these resources exhausted mobilise additional 
funding  for  the  Facility  up  to  EUR 3  billion  by  the  end  of  2018.  Even  though,  the  ELM  is  not 
directly concerned by the Agreement, the financial effort towards Turkey and towards the Middle-
Eastern area countries could potentially support the EU political agenda in relation to the refugee 
crisis. Indeed, the EIB has been solicited for contributing to the European response on migration, 
and this objective needs to be accounted for in the future ELM operations. 

Another  topic  of  importance  in  the  current  EU  debate  is  economic  diplomacy  with  ongoing 
discussions  on  the  EU  approach  and  strategy  as  regards  internationalisation  of  European 
businesses. The overall objectives of the economic diplomacy are to support the EU businesses who 
want to do business abroad, to promote common standards for businesses and, in parallel, attract 

10 “The Road from Paris: assessing the implications of the Paris  Agreement and accompanying the proposal for a Council decision on the 
signing,  on  behalf  of  the  European  Union,  of  the  Paris  agreement  adopted  under  the  United  Nations  Framework  Convention  on  Climate 
Change”, 2.3.2016, https://ec.europa.eu/transparency/regdoc/rep/1/2016/EN/1-2016-110-EN-F1-1.PDF  
11 The EU Green Diplomacy Network (GDN) is a innovative tool that works towards a better integration of the EU environment policies into 
external relations practices. 
12  Communication from  the  Commission  to  the  European Parliament,  the  Council,  the  European  Cconomic  and  Social committee  and  the 
Committee of the Regions, a European Agenda on Migration, 13.5.2015. 

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investments  within  the  EU.  At  this  stage  of  the  discussions,  two  mains  axis  have  been  identified. 
First,  there  are  many  policies,  actors  and  instruments  that  already  contribute  to  economic 
diplomacy. Therefore, there is a need for coordination, alignment and streamlining of EU effort in 
this field. Second, access to funding is the key obstacle to the internalization of EU businesses. EU 
economic  diplomacy  should  also  focus  on  the  financing  conditions  to  internationalization  of  EU 
businesses. As part and parcel of the EU set-up, the EIB is expected to be a key player in this field.  

Despite  little  information  published  so  far,  the  development  of  the  EU  economic  diplomacy  is  a 
relevant  topic  when  it  comes  to  assessing  the  alignment  of  the  ELM  with  EU  external  objectives. 
Indeed, as for the ELM, economic diplomacy mainly focuses on actions/operations outside the EU 
and promotes EU economic operators, including SMEs abroad.  

The EU external political agenda has also been shaped by major geopolitical changes in the EU 
partner countries. These changes have defined or redefined EU external priorities that the ELM is 
expected to contribute to. A major topic in this discussion is the evolution of the context in Ukraine 
and  the  redefinition  of  the  relationship  between  the  EU  and  Russia.  In  response  to  the  crisis  in 
Ukraine,  the  EU  has  engaged  a  major  effort  to  support  the  country  recovery.  In  March  2014,  the 
Commission committed to help stabilise the economic and financial situation in the country, assist 
with  the  transition  and  encourage  political  and  economic  reforms.  The  overall  support  reaches 
EUR 11 billion coming from the EU budget and EU-based IFI in addition to funding provided by the 
IMF and the World Bank. In that respect, the EU wants “all elements and instruments to be pulled 
together to ensure an effective and coherent European Union and international response”  13. This 
has been translated into a set of measures to be implemented in the coming years and relying both 
on the financial push and on the structural reforms. The package includes: 

  EUR 3  billion  from  the  EU  budget,  EUR 1.6  billion  in  macro  financial  assistance  loans  (MFA) 

and an assistance package of grants of EUR 1.4 billion; 

  Up  to  EUR 8  billion  from  the  European  Investment  Bank  and  the  European  Bank  for 

Reconstruction and Development; 

  Potential EUR 3.5 billion leveraged through the Neighbourhood Investment Facility; 
  Setting up of a donor coordination platform; 
  Provisional  application  of  the  Deep  and  Comprehensive  Free  Trade  Area  when  Association 

Agreement is signed and, if need be, by autonomous frontloading of trade measures; 

  Organisation of a High Level Investment Forum/Task Force; 
  Modernisation  of  the  Ukraine  Gas  Transit  System  and  work  on  reverse  flows,  notably  via 

Slovakia; 

  Acceleration  of  Visa  Liberalisation  Action  Plan  within  the  established  framework;  Offer  of  a 

Mobility Partnership; 

  Technical  assistance  on  a  number  of  areas  from  constitutional  to  judicial  reform  and 

preparation of elections. 

As underscored in the second measure of the package, the EU intended to make the EIB contribute 
to  the  Ukraine  recovery,  in  particular  through  long-term  investments:  “the  EIB  could  provide 
financing for long-term investments of up to EUR 3 billion for 2014 – 2016 in support of both the 
local private sector and economic and social infrastructure”14. 

On  8  January  2015,  the  European  Commission  indeed  proposed  further  Macro-Financial 
Assistance  to  Ukraine  of  up  to  EUR 1.8  billion  in  medium-term  loans.  It  was  adopted  by  the 
European Parliament  and  the  Council  on  15  April  2015  to  be implemented  in  the course of  2015, 
and in early 2016. 

Ukraine is a telling example of how geopolitical changes may affected the EU external agenda. The 
study will therefore analyse the extent to which these changes have impacted the implementation of 
the ELM. 

In  the  Middle  East,  major  geopolitical  changes  have  also  occurred  over  the  past  few  years.  The 
high  political  instability  and  humanitarian  crisis  in  Iraq  and  Syria  have  become  increasingly 
prevalent  in  the  discussion  on  the  EU  external  policy.  The  EU  is  the  leading  donor  in  the 

13 “European Commission's support to Ukraine” http://europa.eu/rapid/press-release_MEMO-14-159_en.htm  
14 “European Commission's support to Ukraine” http://europa.eu/rapid/press-release_MEMO-14-159_en.htm 

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international response, with over EUR 5 billion from the EU and the Member States collectively in 
humanitarian, development, economic and stabilisation assistance. The latest EU position is stated 
in the Foreign Affairs Council Conclusions of 12 October 2015.  

Finally,  the  EU  external  objectives  are  supported  through  various  instruments  and  programmes 
among which blending mechanisms. First introduced in the Multiannual Financial Framework 
2007-201315,  blending  has  gaining  momentum  to  complement  other  implementation  modalities. 
The mechanism combines EU grants with loans or equity from public  and private financiers. The 
geographical  coverage  of  regional  blending  facilities  has  been  progressively  extended  in  ELM 
countries: 

  Pre-accession: Western Balkans Investment Framework (WBIF); 
  Neighbourhood: Neighbourhood Investment Facility (NIF),  
  Latin America: Latin America Investment Facility (LAIF); 
  Asia: Asia Investment Facility (AIF); 
  Central Asia: Investment Facility for Central Asia (IFCA); 

Among the objectives of the blending mechanism, there is leveraging to enhance the impact of EU 
development  assistance  and  improved  aid  effectiveness  through  greater  donor,  beneficiary  and 
lender coordination, and increasing the access to public services, infrastructure and credit to boost 
socio-economic  development.  Considering  that  they  share  common  geographical  targets, 
instruments  and  objectives,  blending  mechanisms  and  ELM  financing  operations  could 
complement  each  other.  Their  potential  cooperation  within  the  framework  of  the  ELM  will  be 
therefore another element to analyse. 

3.2  Stakeholders analysis  

The stakeholder analysis intended to identify the main stakeholders of the ELM and to analyse their 
role and interactions within the Programme. This contributed to the overall understanding of the 
Mandate.  It  also  guided  the  data  collection  process  and  allowed  identifying  the  stakeholders  who 
served  as  the  main  sources  of  information  for  the  study,  in  particular  during  the  stakeholders’ 
interviews. Different stakeholders have been involved at different levels (strategic, operational, and 
intermediate) and  their  feedback contributed  to  different parts of the study. Figure 6  on  the next 
page presents a stakeholder mapping of the ELM. 

In  addition,  not  all  stakeholders  have  the  same  stake  in  the  ELM  and  in  the  study.  The  table 
presented after the stakeholder mapping provides for each stakeholder identified: 

  Their level of intervention (strategic, operational, intermediaries and beneficiaries); 
  Their role and responsibilities; 
  Their contribution in the study. 

The stakeholder’s analysis was used to target the relevant interviewees and to address the relevant 
topics with each of them. On this basis, we specified for each judgement criteria of the evaluation 
matrix the type of stakeholder interviewed. 

15 Blending operations, https://ec.europa.eu/europeaid/policies/innovative-financial-instruments-blending/blending-operations_en 

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Figure 6: Stakeholders mapping 

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operations outside the European Union 

Stakeholders 

Level of 
intervention 

Role / Responsibilities 

Contribution to the study 

European Parliament  Strategic 

/ 

 Adopting  the  legal  basis  for 

Legal 

the ELM  

Primary stakeholders 

 Ensuring that the Decision is 

enforced 

European  External 
Action 
Service 
(EEAS) 

Strategic 

 Coordinating  with  the  EIB 
external  policy 

on  EU 
objectives and actions 

 Developing 

synergies 

/ 
complementarity 
between 
the  ELM  and  other  EU 
programmes 

 Quality  and  relevance  of  the 
reporting provided by the EC 
on the ELM. 

 Strategic  relevance  of  the 

Decision (and evolutions) 

 Level 

 Quality  and  effectiveness  of 
the cooperation with the EIB  
/ 
between 
EU 

complementarity 
ELM 
and 
programmes. 

synergies 

other 

of 

Council 

Strategic 
Legal 

/ 

 Adopting  the  legal  basis  for 

the ELM  

 Ensuring that the Decision is 

enforced 

 Quality  and  relevance  of  the 
reporting provided by the EC 
on the ELM. 

 Strategic  relevance  of  the 

Decision (and evolutions) 

European 
Commission 

Strategic  (part 
of 
operational) 

 Coordinating  and  preparing 
the  legal  basis  of  the  ELM 
and 
strategic  documents 
(MoU,  RTOGs,  Guarantee 
and Recovery Agreements).   
 Monitoring of the Guarantee 

 Relevance  of  the  Decision 
with 
of 
intervention of the ELM (and 
its evolutions) 

context 

the 

 Consistency  of  the  ELM  with 

EU external objectives 

Fund mechanism 

 Quality of the reporting from 

 Ensuring  the  compliance  of 
the ELM with its legal basis / 
EU external objectives 

 Orienting  ELM 

if  needed 
in  context  / 

(evolutions 
objectives) 

 Overall  monitoring  of  the 
the 

Programme 
through 
reporting from the EIB 

 Ensuring  the  consistency  of 
the  ELM  with  other  EU 
and 
programmes 
instruments 
(develop 
synergies, avoid overlaps) 
 Cooperation with the EIB on 

blending mechanisms 

 Ensuring  the  consistency  of 
the  ELM  with  other  EU 
in  particular  as 
policies, 
economic 
regards 
neighbouring 
diplomacy, 
climate 
countries 
change 

and 

 Submits  to  the  European 
Parliament and the Council a 
mid-term  report  evaluating 
the  application  of 
the 
Decision and a proposal for 
its  potential  amendment 
(Art.19  of 
the  Decision 
466/2014/EU) 

the EIB 

 Cooperation  between  ELM 
and  other  EU  programmes 
and instruments 

 Cooperation with other IFIs 
 Quality  and  effectiveness  of 
the  cooperation  with  the  EIB 
on blending mechanisms 

 Level 

of 

synergies/complementarity 
between  ELM  and  other  EU 
programmes 

 Consistency/contribution  of 

the ELM to EU policies 

upon 

 Cooperation with other IFIs 
 Drawing 

the  
evaluation and contribution 
from  the  EIB  to  produce 
own mid-term report on the 
application  of  the  Decision 
(Art.19), including:  

 

 

 

an  assessment  of  the 
application  of 
the 
allocation policy;  
an assessment of EIB 
and 
reporting 
recommendations on 
how to improve it;  
an  assessment  of  the 
REM, 
including 
performance 

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and 
indicators 
criteria,  and 
their 
contribution  to  the 
achievement  of  the 
objectives  of 
this 
Decision;  

  A detailed account of 
criteria 
the 
for 

the 
considered 
recommendation 
concerning 
the 
potential  activation 
in whole or in part of 
the 
optional 
additional amount. 

 Quality  of  the  project  and  of 

the appraisal process 

 Effectiveness of the allocation 

policy 

 Relevance of the Decision 
 Quality  of  the  project  and  of 

the appraisal process 

 Effectiveness of the allocation 

policy 

European Investment Bank 

Board  of  Directors 
(BoD) 

Strategic 

Management 
Committee (MC) 

Strategic 
operational 

/ 

 Ensuring  the  quality  of  the 
projects  to  be  funded  under 
the  ELM 
the 
structuring of the operation 

and 

of 

 Ensuring  the  quality  of  the 
projects  to  be  funded  under 
the 
the  ELM 
structuring of the operation 

and 

of 

 Coordination 
resources 

of 

human 

 Internal  efficiency 

in 

the 

Directorate 
Operations (OPS) 

for 

Operational 

 Identification  of  potential 

projects 

 Coordinating  the  appraisal 
of  the  projects  (in  particular 
and 
financial 
EIB 
of 
perspectives 
counterpart(s), 
structuring 
of EIB operation) 

analysis 

 Monitoring  of  the  projects  / 

Reporting 

 Coordination  with  other  EU 

/ IFI programmes 

Projects  Directorate 
(PJ) 
including 
Environment Climate 
Office 
Social 
& 
(ECSO) and 
Including PJ/QUAL 

Operational 

 Contributing to the appraisal 
of  the  projects  (technical, 
economic, 
environmental 
and social due diligence) 

 Physical 

monitoring 
economic, 
social 

(technical, 
environmental  and 
aspects) 

 Ensuring  the  compliance  of 
Article 19 between the EIB & 
European Commission 

 Coordinating  and  ensuring 
project 

quality 

the 

of 

implementation of the ELM 
 Quality  and  relevance  of  the 
appraisal  process  (methods 
used in particular) 

and 
the 
(REM, 

 Quality, 

relevance 
effectiveness 
of 
monitoring  system 
etc.) 
 Level 

of 

synergies 

/ 
complementarity 
between 
ELM  and  other  EU/IFI 
programmes 
 Efficiency  of 

internal 

the 

management of the ELM 

 Added-value for beneficiaries 
 Contribution 
climate 

to 
change objectives  

 Communication  efforts  on 

the ELM 

 Quality  and  relevance  of  the 
appraisal  process  (methods 
used in particular) 

 Quality, 

relevance 
of 
system 

and 
the 
effectiveness 
monitoring 
(REM 
indicators, etc. including Env, 
impact 
Social  &  Climate 
indicators)  and 
to 
Climate Strategy (EIB, ELM)  
 Quality  and  effectiveness  of 
the cooperation with the EC 

links 

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operations outside the European Union 

information submitted to the 
EC 

Operational 

 Drafting 

contractual 

 Legal issues of the ELM 

Operational 

documents. 
 Contributing 

to 

the 

monitoring of the projects 

Directorate 

Legal 
(JU) 
Transaction 
Management 
Restructuring 
Directorate (TMR) 

and 

Public  or  private 
intermediaries 

Operational  / 
intermediaries 

Public  or  private 
beneficiaries 

Operational  / 
beneficiaries 

 Using 

the  EIB 

financing 
(with  the  EU  guarantee)  to 
finance project 
 Reporting  on 

the  related 

activities 

 Implementing  projects  with 
indirect 

the 
direct 
financing of the EIB 

or 

 Quality, 

relevance 
effectiveness 
of 
monitoring  system 
etc.) 

and 
the 
(REM, 

 Financing conditions offered 
 Management cost induced by 

the ELM  

 Complementarity of the ELM 
EU/IFI 
other 

with 
programmes 

 Visibility of the EU 
 Added-value 
beneficiaries 

for 

the 

final 

 Awareness  of  EU  objectives 
and consideration for climate 
change 

 Financing conditions offered 
 Management cost induced by 

the ELM  

 Visibility of the EU 
 Added-value of the ELM 
 Consideration 

for 

climate 

Secondary stakeholders 

change 

European  Financial 
Institutions 
(EFI) 
International 
and 
Financial  Institution 
(IFI) 

Strategic 
operational  

/ 

countries 

EIB 
operation 

of 

Strategic 
operational 

/ 

 Coordinating  with  the  EIB 
programmes 

on 
joint 
including the ELM  

 Exchanging  practices  with 
the  EIB  on  the  conduct  of 
the  operation 
(appraisal, 
monitoring, reporting, etc.) 
 Approving the projects  to  be 
conducted in their country 
 Coordinating  with  the  EIB 

on a project basis 

 Level 

 Quality  and  effectiveness  of 
the cooperation with the EIB  
/ 
complementarity 
between 
ELM  and  other  EFI/IFI 
programmes. 

synergies 

of 

 Quality  and  effectiveness  of 
the cooperation with the EIB  
 Relevance  of  the  operation 
with their national strategies 

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3.3  Implementation principles 

3.3.1  ELM project life and processes 

The  projects  under  the  ELM  follow  the  usual  EIB  project  lifecycle.  The  project  lifecycle  of  EIB 
operations is presented below: 

Figure 7: Project cycle and processes for EIB operations 

Source: EIB 

The initiation of a project starts with the identification of a project opportunity through a first 
contact between a loan officer (OPS) and a borrower or a promoter. However, other modalities of 
the identification of the project may occur (e.g. EIB being invited by another IFI to participate in 
the project co-financing). Then preliminary verifications are carried out. The PJ check the project 
eligibility on several criteria: 

  The project is a new investment (no refinancing); 
  It is consistent with the EU policy and the EIB public policy objectives; 
  It is not an “excluded activity”16. 

If requested by OPS, the compliance officer carries out due diligence on the counterpart(s) identity. 
In particular, he ensures that the counterpart(s) is not under sanctions or legal threat.  

Based on these first verifications and analysis, a Preliminary Information Note (PIN) is prepared 
by the project team. The PIN presents the project scope, the counterpart(s), the possible financial 
structure (loan tenor, security) and a due diligence calendar. With the PIN, the loan officer requests 
for  authorisation  to  process  the  project  from  the  Management  Committee.  At  this  stage,  the  EIB 
requests  opinions  on  the  project  from  the  Commission  which  has  two  months  to  answer 
(sometimes  delays  are  longer  due  to  discussions)  and  from  the  host  State.  Normally,  at  the  PIN 
stage the projects are published on the EIB website.  

If  agreed,  the  project  enters  in  the  appraisal  phase.  The  appraisal  mission  is  conducted  on  the 
spot by OPS and PJ: 

16 Activities excluded from EIB lending: ammunition and weapons, military/police equipment or infrastructure, projects which result in limiting 
people's individual, rights and freedom, or violation of human rights; projects in protected areas, critical habitats and heritage sites, without 
adequate  compensation/mitigation,  sex  trade  and  related  infrastructure,  services  and  media;  animal  testing*);  gambling  and  related 
equipment,  hotels  with  in-house  casinos;  tobacco  (production,  manufacturing,  processing,  and  distribution),  activities  prohibited  by  national 
legislation (only where such legislation exists). http://www.eib.org/attachments/documents/excluded_activities_2013_en.pdf  

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  OPS  ensures  the  overall  coordination  of  appraisal,  financial  analysis  and  perspectives  of  EIB 

counterpart(s) and the structuring of the operation; 

  PJ carries out the technical, economic, environmental and social due diligence.  

Throughout  the  appraisal  phase,  the  results  are  analysed  in  internal  reports  (PJ  report)  and 
financing proposal (OPS financial note) which form the Appraisal Fact Sheet (AFS) submitted for 
management decision. The AFS also incorporates the opinions provided by ECON, OCCO, JU and 
RM. 

Legal  requirements  in  terms  of  ex-ante  assessment  of  investment  projects  (art.  9  of 
the Decision) 

The  EIB  shall  carry  out  due  diligence  on  social,  human,  rights,  environmental,  economic  and 
development-related  aspects  of  investment  projects  and  require,  where  appropriate,  project 
promoters to conduct local public consultation on these topics. 

The  EIB  shall  also  obtain  from  project  promoters  the  relevant  information  to  assess  the 
contribution of the project to EU external policy and strategic objectives. 

In addition, the ex-ante assessment shall cover the “relative and absolute greenhouse gas emissions 
related to the EIB financing operation”. 

The  opportunity  of  deploying  technical  assistance  throughout  the  project  cycle  shall  also  be 
considered  by  the  EIB  during  the  appraisal  phase  if  it  contributes  to  reinforcing  the  capacities  of 
beneficiaries. 

Then the project follows a two-steps approval: 

  The  overall  results  of  the  appraisal  are  presented  to  the  Management  Committee  which  is 
requested  to  endorse  submission  of  the  financing  proposal  to  the  Board  of  Directors.  The 
Management Committee considers the various opinions expressed by the different directorates 
involved in the process and potentially provides an authorisation to launch a negotiation of the 
financial contract and approves the Appraisal Fact Sheet (AFS), including the opinion on credit 
risk from the credit risk department; 

  The  Board  report  and  its  annexes  (REM,  ESDS)  are  submitted  to  the  Board  of  Directors  for 

approval; 

  The  project  is  approved  by  the  Board  of  Directors  (Board  report),  which  authorises  the 

signature of the contract(s). 

The  contractual  documents  are  drafted  by  the  Legal  Directorate  (JU)  on  the basis  of  the  relevant 
Management Committee and Board of Directors decisions and incorporating the condition required 
by  the  project  team.  Terms  and  conditions  of  the  EIB  lending  are  negotiated  with  the 
counterpart(s). This is presented in a Contract Summary Note for inter-service validation. It gives 
the authorisation to the Bank to disburse, but disbursements are attached to preconditions that the 
counterpart has to meet before receiving the funds. 

For non-EU operations, the disbursement period is usually longer, in particular the period until 
the fulfilment of conditions preceding the 1st disbursement. Then, several small disbursements are 
provided according to project implementation progress with close monitoring on the funds through 
invoices, proof of payments, etc. 

Monitoring takes place during project implementation and up to one year of operation. It aims to 
ensure  that  the  operation  is  in  line  with  best  banking  practice  in  order  to  protect  EIB  financial 
interest  and  reputation,  and  that  the  project  has  been  implemented  in  line  with  the  Bank’s 
standards  and  that  the  objectives  of  the  financing  are  achieved.  Two  types  of  monitoring  are 
conducted: 

  Contractual/financial  monitoring:  it  monitors  the  respect  of  contractual  terms  (conducted  by 

OPS and TMR); 

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  Physical  monitoring  focuses  on  technical,  economic,  environmental  and  social  aspects. 

(conducted by PJ). 

Legal  requirements  in  terms  of  monitoring  of  investment  projects  (art.  9  of  the 
Decision) 

The Decision states that the EIB shall monitor the implementation of financing operations, but also 
requires the project promoters “to carry out thorough monitoring during project implementation” 
with respect to the economic, development, social, environmental and human rights impact of the 
investment project. 

The EIB shall also “verify on a regular basis the information provided by the project promoters and 
make it publicly available if the project promoter agrees”. 

The  project  cycle  reflects  the  main  challenges  of  the  evaluation,  in  particular  as  regards  internal 
efficiency of the ELM. We can therefore map the evaluation topics on the project cycle: 

  Relevance  of  the  methods  used  by  the  EIB  to  appraise  projects  (in  particular  financial  needs, 
absorption  capacity,  additionality  of  the  EIB)  refers  to  project  initiation  and  project  appraisal 
phase; 

  Relevance of the set of indicators and criteria and the REM refers to appraisal and monitoring 

phase; 

  Capacity to identify barriers to effectiveness and unintended effects refers to monitoring period; 
  Compliance of the EIB reporting through monitoring; 
  Efficiency in the management of the ELM covers the whole project cycle. 

The evaluation team will use this mapping to identify key documents to analyse at project level as 
well as key stakeholders to interview (complemented by the stakeholders mapping). 

3.3.2  Reporting 

As part of the project cycle but also of its obligations under the Decision (article 11), the EIB has to 
provide the European Commission with annual reporting on financing operations under the ELM. 
In  its  annual  reports,  the EIB  should  provide  all  the  elements  –  in  particular  financial,  statistical 
and  accounting  data  –  required  for  the  European  Commission’s  own  reports  to  the  European 
Parliament and the Council or for requests by the Court of Auditors.  

The Commission’s report shall comprise in particular the following elements: 

1)  The assessment of the ELM operations at project, sector, country and regional levels along with 

the assessment of their compliance with respect to the Decision;  

2)  The assessment of the added value, the estimated outputs, outcomes and development impact of 
EIB financing operations, based on the EIB's Results Measurement framework annual report;  
3)  The  assessment  of  the  contribution  of  EIB  financing  operations  to  the  fulfilment  of  the  EU 

external policy and strategic objectives (taking into account the Guidelines);  

4)  The assessment of the financial benefit transferred to beneficiaries;  
5)  The  assessment  of  the  quality  of  EIB  financing  operations,  in  particular,  accounting  for  the 
consideration of the environmental and social sustainability dimensions in the due diligence and 
monitoring of the investment projects financed;  
6)  Detailed information on calls on the guarantee;  
7)  The  information  on  the  climate  change  and  biodiversity  financing  volumes,  the  impact  on 
absolute and relative greenhouse gas emissions and the number of projects assessed against the 
climate risk;  

8)  A  description  of  the  cooperation  with  the  EC  and  other  European  and  international  financial 
institutions,  including  co-financing;  this  must  give  an  overview  of  the  overall  investment 
supported by EIB financing operations carried out under the Decision; 

9)  Information on the follow-up of the functioning of the Memorandum of Understanding (MoU) 
between  the  EIB  and  the  European  Ombudsman  insofar  as  the  MoU  concerns  EIB  financing 
operations covered by the Decision. 

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The Bank is also required to provide: 

10) An auditor's certificate on the outstanding balances of EIB financing operations; 
11) The risk assessment and grading information regarding the ELM operations; 
12) An  indicative  multiannual  programme  of  the  planned  volume  of  signatures  of  EIB  financing 
operations,  in  order  to  align  the  forecasted  financing  with  the  ceilings  established  by  the 
Decision  and  to  enable  the  European  Commission  to  make  appropriate  plans  for  provisioning 
the Guarantee Fund; 

13) All  independent  evaluation  reports,  which  assess  the  results  achieved  by  the  specific  EIB 

activities under the Decision and other external mandates. 

Furthermore,  according  to  the  preamble  of  the  Decision,  “the  EIB  should  establish  a  reporting 
mechanism  to  make  sure  that  the  funds  dedicated  to  SMEs  are  used  for  their  benefit.  A 
consolidated report on SMEs financing under this Decision should be provided by the EIB as part 
of its contribution to the mid-term review.” 

The  reporting  obligations  are  defined  by  the  Decision  and  are  therefore  legally  binding.  The 
evaluation team  will  therefore  assess  the  compliancy  of  the  reporting  documents  provided by  the 
EIB to the Commission on each of these 13 requirements. 

However, reporting obligations impose a cost in terms of time and resources dedicated to it. One of 
the purposes of the evaluation is therefore to  identify possible ways of rationalising the reporting 
modalities. Another  is  to  ensure  that  reporting  mechanisms  produce  relevant  information  for  the 
monitoring and the evaluation of the ELM by the EIB and the follow-up of the Commission. 

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4  Portfolio analysis 

This  section  presents  and  analyses  the  data  on  the  financing  operations  that  have  been  running 
under  the  ELM  from  its  initiation  in  July  2014,  and  draws  some  results.  It  provides  the  overall 
picture of ELM operations as of 31/12/2015. 

4.1  Overview 

Between  01/07/2014  and  31/12/2015,  57  financing  operations  covered  by  the  ELM  were  signed. 
The overall cost of these 57 projects is  EUR 22.93 billion, of which the EIB contributes EUR 8.06 
billion  or  35%  of  the  total  cost  of  projects.  The  following  subsections  describe  and  analyse  the 
distribution of the financing operations. The operations under the ELM for the period 2014-2020 
have been running for around 1.5 years only, so the analysis of the ongoing operations, based on 57 
observations only, is of a preliminary nature. 

4.1.1  Distribution by region and by country: external policy priorities drive the 

allocation of funds 

The following figure shows the number of financing operations, the total project cost and the EIB 
contribution for each of the regions: 

Figure  8:  Regional  distribution  of  financing  operations:  total  project  cost  in  M  EUR,  EIB 
contribution in M EUR, number of financing operations 

Source: EIB, PwC analysis 

The EIB contribution corresponds to the volume of lending approved which is partly of fully signed. 
The first region of intervention of the ELM is Russia, Eastern Europe, South Caucasus with around 
EUR 2.7  billion  (34%  of  the  EIB  contribution  under  the  ELM).  This  is  driven  by  the  investments 
made  in  Ukraine,  which  represent  78%  of  the  total  EIB  contribution  in  this  region  (see  figure 
below).  The  over-representation  of  Ukraine  results  from  the  EU  engagement  in  favour  of  the 
country’s recovery after the conflict of 2014 (see section 5). Mediterranean countries benefit from 
29% of EIB contribution, 85% of which concentrated in Egypt and Morocco.  

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Among  candidate  and  potential  candidate  countries,  which  benefit  from  16%  of  the  total  EIB 
contribution under ELM, there is a similar pattern of domination by a single country with 77% of 
funds  targeted  at  Turkey.  Latin  American  countries  receive  10%  of  the  total  volume  of  EIB 
contribution  under  ELM,  of  which  45%  is  targeted  at  Brazil.  Asian  countries  (excluding  Central 
Asia) receive 7% of the total EIB contribution.  

We  therefore  observe  a  high  level  of  concentration  of  the  EIB  lending  on  one  or  two  countries 
within each of the regions. This is confirmed by the distribution of funds per country as presented 
in the figure below. 

Figure  9:  Distribution  of  financing  operations  by  country:  total  project  cost  in  M  EUR,  EIB 
contribution in M EUR and number of financing operations (right vertical axis). 

Source: EIB, PwC analysis 

In  total,  25  countries  benefit  from  the  EIB  financing  operations  under  the  ELM.  The  number  of 
operations is the highest in Ukraine (8), followed by Morocco (6), Turkey (5), and Egypt (4). Taken 
as a share of the total EIB contribution, the main beneficiaries of ELM operation are Ukraine, Egypt 
and Turkey.  

A  similar  picture  emerges  when  considering  the  allocation  in  percentage  of  the  total  volume  of 
funds committed by the EIB. The following graph shows the distribution of the EIB contribution by 
country in percentage of the total:  

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Figure 10: EIB contribution by country, in% of the total EIB contribution 

Source: EIB, PwC analysis 

The external policy-driven focus is confirmed when considering the distribution of allocated funds 
across  countries.  The  distribution  is  heavily  skewed  in  its  upper  end  thanks  to  three  countries  – 
Ukraine, Egypt and Turkey – covering 57% of funds allocated by the EIB under ELM by the end of 
2015. Outside these three cases, the distribution of funds is relatively low, with very little variation: 
from 1% to 8% of the total allocated funds and from one to three projects funded.   

The political dimension of operations in Ukraine, Egypt and Turkey is clear. Operations conducted 
in Ukraine are part of the EU package announced by the European Commission in March 2014 to 
help stabilise the economic and financial situation in Ukraine, assist with the transition, encourage 
political  and  economic  reforms  in  the  context  of  the  EU-Ukraine  Association  Agreement  and 
against  the  background  of  the  conflict  in  eastern  Ukraine.  The  extension  of  the  credit  line  to 
Ukraine (and the coinciding freezing of operations in Russia) from the spring 2014 is a corollary of 
this conflict. The period elapsed between the political decisions to support Ukraine and the effective 
implementation of lending operations in Ukraine is short, pointing out the reactivity of the EIB in 
Ukraine and a sufficient flexibility of the ELM framework. Thus, the ELM as an instrument and its 
management by the EIB demonstrated sufficient flexibility as to allow the surge in funding targeted 
at the priority country. 

However,  this  surge  in  funding  also  raises  questions  about  the  ability  of  the  recipient  country  to 
absorb  and  efficiently  manage  the  increased  inflow,  and  the  capacity  of  the  EIB  to  track  and 
monitor this process. These questions are addressed in the section 5, in particular through the case 
studies.  

The  importance  of  Egypt  has  also  to  be  considered  from  the  political  perspective.  Following  the 
“Arab  spring”  the  country  faces  major  challenges  to  which  the  EU  intends  to  respond.  The  ELM 
mandate has been one of tools used by the EU through the EIB to promote the stabilization of the 
country.  As  for  Turkey,  the  pre-accession  statute  of  the  country  and  its  potential  role  in  the 
refugee crisis explain the highlight put on the country within the ELM. This shows that the political 
dimension of the ELM is crucial. This point is deeper analysed in the section 5 of the report. 

4.1.2  Distribution across sectors: energy and transport at the top 

The  data  provided  by  the  EIB  and  based  on  the  Serapis  database  also  allows  for  the  analysis  of 
financing operations by sector. However, some financing operations cover several sectors at once. 
For  instance,  framework  loans  are  loan  facilities  provided  to  a  single  stakeholder,  but  covering 
several  projects,  potentially  from  very  different  sectors.  Thus,  the  distinction  of  financing 

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operations by  sector  has  to  be  based  on  the  specific  loans  signed  by  the  EIB  for  each  sub-project 
within  a  financing  operation.  As  an  example,  the  financing  operation  “Ukraine  municipal 
infrastructure programme” involves a framework loan covering sub-projects related to energy, solid 
waste, urban development, water and sewerage. Thus, instead of treating the financing operation as 
a whole, the evaluation team chose to decompose into sub-projects that this loan seeks to finance. 
Sub-projects are defined along the lines of the NACE rev.2 classification. However, for each of the 
sub-projects  the  data  provided  to  the  evaluation  team  comprised  only  the  information  on  the 
signed loans. The  project cost  and the EIB contribution are  defined  at the level  of the framework 
loan without breakdown by specific sub-projects. Hence, the allocation of funds by sector (in% of 
the total) is computed based on the loans signed rather than EIB contributions. The figure  below 
shows the breakdown of the volume of signed loans by sector:  

Figure  11:  Allocation  of  funds  by  sector,  in  M  EUR and  in  percentage  of  the  total  volume  of 
signed loans 

Source: EIB, PwC analysis 

Three  sectors (energy, transport  and  credit  lines17*) account  for 75% of signed loans, with energy 
and  transport  concentrate  respectively  28%  and  24%  of  the  total  volume  of  signed  loans, 
respectively.  While  the  Decision,  the  Regional  technical  operational  guidelines  or  the  Guarantee 
agreement omit any specific breakdown, which the Bank should pursuit in its allocation of funds, 
the  Decision  defines  “development  of  social  and  economic  infrastructure,  including  transport, 
energy (…)” as a funding priority. Thus, the accent put on these sectors is in full alignment with the 
Decision.  Furthermore,  the  credit  lines  are  targeted  at  the  SME  financing,  which  is  one  of  the 
objectives  of  the  Decision  (local  private  sector  development).  Overall,  all  sectors  fall  under  the 
definition of priorities established in the Decision.  

4.1.3  Project cost and EIB contribution: focus on Ukraine, Egypt and Turkey 

The  term  ‘project  cost’  designates  the  overall  investment  (capital  expenditures)  required  to 
complete the project. The operational expenditures are not included in this cost.  

The  ‘EIB  contribution’  refers  to  the  volume  of  funds,  expressed  in  percentage  of  the  cost  of  a 
project, offered by the EIB to finance the project. Based on the EIB policies, the EIB contribution is 
capped  at  50%  of  the  project  total  cost.  This  can  be  extended  to  75%  when  the  project  has  a 
significant impact in terms of climate change mitigation and adaptation.  

The distributions of the projects and EIB contributions are presented below: 

17  The  category  “credit  lines”  refers  to Multi-beneficiary  loans  channeled  through  a  financial  intermediary  –  typically  public  –  which  in  turn 
distributes loans to a variety of corporate actors from one or different sectors. Based on the data provided so far, it was possible to identify the 
specific activities funded for each of the projects only for a part of the credit lines (those that were disbursed). 

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Figure 12: Distribution of financing operations by the total cost of the project (left graph) and 
the EIB contribution (right graph), in M EUR 

Source: EIB, PwC analysis 

The  average  contribution  of  the  EIB  on  individual  project  is  EUR 141  million  (e.g.  an  average  of 
contribution  per  project  of  42%  per  project).  The  maximum  is  EUR 600  million  for  the  project 
Cairo  metro  line  3  (phase  3)  in  Egypt.  The  minimum  is  EUR 10  million  for  the  projects  “North 
Moldova Water” and “Caucasus Transmission Network”.  

We  observe  a  relative  concentration  of  the  total  project  cost  and  the  EIB  contribution  in  few 
projects. Indeed, six operations account for 35% of the total EIB contribution: 

  Cairo metro line 3 (phase 3), investment loan in Egypt: 600 M EUR (7% of the total) 
  Damanhour CCGT power plant, investment loan in Egypt: 538 M EUR (7% of the total) 
  Guarantee for economic development in Ukraine: 466 M EUR (6% of the total) 
  Apex  loan  for  SMES  &  Mid-Cap,  multi-beneficiaries  intermediated  loan  in  Ukraine:  400  M 

EUR (5% of the total) 

  Ukraine municipal infrastructure programme, framework loan : 400 M EUR (5% of the total) 
  Ukraine  agri-food  apex  loan,  multi-beneficiaries  intermediated  loan  in  Ukraine:  400  M 

EUR (5% of the total) 

The same observation can be made for project cost since five projects account for 33% of the total 
project cost. Among these, four are investment loans and one is guarantee in Ukraine. In the case of 
framework  loans  and  multi-beneficiaries  loans,  the  total  project  cost  is  partly misleading  because 
these projects will finance a number of final projects whose cost can vary significantly. Therefore, 
these projects hide a number of sub-projects which will benefit from the EIB financing but which 
do not appear in this analysis.  

The average project cost is presented according to the type of EIB financing in the graph below: 

Table 10: Average project cost and EIB contribution according to the type of EIB financing type, 
in M EUR 

EIB financing type 
Framework loan 
Guarantee18 
Investment Loan 

Multi Beneficiaries Loan 

Source: PwC analysis 

Average Project cost 

Average EIB contribution 

408 

- 

439 

275 

215 

-  

127 

131 

18 The average project cost of the guarantee is not represented since only one guarantee has been signed. 

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4.1.4  Disbursement rate: few operations with funds disbursed 

Among  the  56  operations  (excluding  the  only  operation  involving  the  guarantee),  full  or  partial 
disbursement has been made for 14 projects only (disbursement rate not equal to zero). The table 
below shows the details of the fourteen financing operations where the disbursement has occurred:  

Table 11: List of projects with EIB funds disbursed (non-zero disbursement rate) 

Operation name  Country 

 Project 
cost, M 
EUR 

 EIB 
contribution
, M EUR 

Amount 
signed, 
M EUR 

 Disbursed 
as% of net 
signed  

Disbursed, 
M EUR 

Time between 
the approval 
and the first 
disbursement 
(in month) 

FEMIP 
sustainable energy 
facility 
Europac industrial 
packaging plant in 
Tangier 

Armenia apex loan 
for SMEs 

Accessbank 
Azerbaijan loan 
for SMEs 

Brasil loan for 
SMEs & Mid-Caps 

Morocco 

137 

Morocco 

31 

Armenia 

100 

Azerbaijan 

50 

Brazil 

300 

MHP agri-food 

Ukraine 

172 

Turkey 

270 

30 

15 

50 

25 

150 

85 

100 

5 

100% 

10 

50 

25 

100% 

100% 

100% 

5 

10 

50 

25 

150 

100% 

150 

30 

100% 

30 

100 

100% 

100 

ZIRAAT BANK 
IPARD MBIL 

IDF loan for SMEs 
& priority projects 
ii 

Sao Paulo rolling 
stock 

SBI loan for SMEs 
and mid-caps 

Amen Bank-prets 
PME & ETI 
Ouarzazate ii 
(parabolic) 
Administrative & 
urban 
infrastructure  
Ukraine early 
recovery 

Montenegro 

140 

70 

40 

63% 

Brazil 

765 

India 

Tunisia 

Morocco 

400 

100 

865 

Ecuador 

257 

200 

200 

50 

200 

100 

200 

58% 

145 

50 

100 

100 

55% 

20% 

16% 

11% 

Ukraine 

200 

200 

200 

8% 

25 

115 

80 

10 

14 

12 

15 

9 

1 

3 

1 

4 

12 

-  

3 

6 

12 

3 

12 

12 

12 

Source: EIB, PwC analysis 

As the table shows, there are six financing operations where disbursement occurred in full (100%). 
For the others, the disbursement rate varies widely from 11% to 63%. The average duration between 
the  signature  of  the  operation  and  the  first  disbursement  is  seven  months  with  minimum  of  one 
month  for  the  project  Europac  industrial  packaging  plant  in  Tangier  and  Accessbank  Azerbaijan 
loan for SMEs. The highest duration is observed in 12 months. 

The majority of financial operations where funds were disbursed involve relatively modest amounts 
of EIB contribution (Morocco, Armenia, Montenegro, and Azerbaijan).  

Among the financing operations where disbursement occurred, two involve Ukraine (8% and 100% 
disbursed very recently). This fact partially offsets the speed of provision of the financial support to 
Ukraine  through  the  ELM:  contracts  were  signed,  but  funds  were  not  disbursed.  In  Ukraine,  the 
first  disbursement  for  both  projects  in  the  table  occurred  12  months  after  the  signature  of  the 
operation, which is twice as high as the average duration. However, local stakeholders in Ukraine 
states  that  this  was  not  particularly  long  compared  to  other  IFI  and  that  it  results  from  the  very 
specific situation in Ukraine, as described in the section 5. 

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4.1.5  Type of final beneficiaries: prevalence of SMEs and Mid-Caps. 

The ELM financing operations portfolio comprises five categories of beneficiaries:  

  SMEs and Mid-Caps; 
  Commercial companies (outside SMEs and Mid-Caps); 
  Regional or local authorities; 
  Public sector entities; and 
  Sovereign entities. 

The  following  figure  shows  the  breakdown  of  the  EIB  contribution  under  the  ELM  financing 
operations across these five categories of stakeholders:  

Figure 13: Distribution of EIB contribution under ELM by type of final beneficiaries. 

Source: EIB, PwC analysis 

The main beneficiaries of the ELM are SME/Mid-Caps (27%) followed by public sector entities and 
regional  or  local  authorities  (24%  each).  These  three  categories  account  for  75%  of  EIB 
contribution.  

4.1.6  EIB financing type: mainly investment and multi-beneficiary loans 

The EIB contribution to project funding under the ELM exclusively takes the form of loans with the 
exception of one case where a guarantee product was put in place for the operation in Ukraine.  

There are four financing types used by the EIB for the financing operations under the ELM:  

  Framework  loan:  this  type  of  loan  corresponds  to  a  financing  operation  comprising  one 
(public) beneficiary and several projects, potentially belonging to different areas or sectors. The 
purpose of the loan is to cover various activities in the same geographical area. As an example, 
Ukraine  early  recovery  operation  involving  framework  loan  provides  a  financing  facilities  to 
different  sectors  in  the  regions  of  Ukraine  adjacent  to  the  area  of  conflict.  The  purpose  is  to 
provide  a  well-rounded  economic  support  to  these  regions  rather  than  targeting  a  specific 
industry within the country; 

  Investment  loan:  this  type  of  loan  obeys  the  logic  “one  project=one  beneficiary=one  loan” 
and typically answers to the call for an important investment in one specific sector/project; 

  Multi-beneficiary  intermediated  loan:  this  type  of  loan  is  awarded  to  a  public 
intermediary (e.g. the Central Bank), which then has the task of disseminating the funds among 

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the  national  private  financial  intermediaries  (e.g.  banks)  or,  alternatively,  directly  to  a  set  of 
national  private  financial  intermediaries,  which  in  turn  lends  the  funds  to  multiple  final 
beneficiaries – SMEs, Mid-Caps, other types of commercial companies; 

  Guarantee:  this  type  of  financial  product  was  used  in  one  financing  operation  only,  under 
exceptional circumstances and under special authorisation. The purpose of the operation was to 
enable urgent disbursement of funds to the beneficiary country (Ukraine) and is not susceptible 
of  being  reproduced  under  this  ELM  period  (in  absence  of  comparable  force  majeure 
circumstances).  The  objective  of  the  operation  was  to  release  the  exposure  of  the  IBRD  on 
selected  projects  in  Ukraine,  so  that  IBRD  could  support  gas  purchase,  which  could  not  be 
financed under EIB statute. 

The  following  table  provides  a  breakdown  of  the  EIB  contribution  and  the  number  of  projects  by 
type of financing: 

Table  12:  Distribution  of  ELM  operations  according  to  the  type  of  financing  operation,  in  M 
EUR 

EIB financing type 

Total cost of 
projects 

Total EIB 
contribution 

Total amount 
signed 

Number of 
operations 

Average EIB 
contribution 

Framework loan 

2,043 

Investment Loan 

1,4508 

Multi Beneficiaries 
Intermediated Loan 

Guarantee 

4,827 

1,551 

 Source: EIB, PwC analysis 

1,075 

4,214 

2,507 

466 

1,075 

3,363 

1,894 

458 

5 

33 

18 

1 

215 

128 

121 

466 

The  main  financing  types  used  under  ELM,  both  in  terms  of  number  of  operation  and  total  EIB 
contribution,  are  investment  loans  and  multi-beneficiaries  intermediated  loans.  They  account 
together for 65% of the total EIB contribution. The guarantee product put in place for Ukraine is a 
specific case, uncommon for the ELM, and for which an exception was made. Five other financing 
operations involved framework loans, each of which bears several specific sub-projects. Thus, the 
financing per sub-project may actually be lower than for other categories of loans.  

The  specificity  of  the  ELM  operations  in  comparison  within  the  EIB  operations  resides,  among 
other  features,  in  the  extensive  use  of  the  Multi-beneficiary  loans  (23%).  By  contrast,  investment 
loans – which represented 68% of the loans provided by the EIB in 2015 in general – represent only 
42% of the loans provided under the ELM.  

4.1.7  Appraisal duration: nine months on average. 

The project appraisal starts once the Agreement to Appraise (A2A) is issued. It is a joint decision of 
the  Directorate  for  Operations  (OPS),  the  Projects  Directorate  (PJ),  the  Risk  Management 
Directorate (RM) and the Legal Directorate (JU) of the EIB. 

The project appraisal is conducted by OPS and PJ and is composed of: 

  A financial analysis and perspectives of the counterpart(s); 
  The technical, environmental and economic assessment (including risk assessment), and social 

due diligence; 

  The structuring of EIB operation. 

The appraisal phase ends with the project approval by the Board of Directors, which approves the 
proposed  EIB  financing  operation  and  authorises  the  signature  of  the  corresponding  finance 
contracts.  

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The project appraisal is a critical phase of the project lifecycle because it allows for the assessment 
of  the  quality  of  a  project  and  the  associated  risk  hence  ensuring  the  quality  of  the  investment. 
However,  it  slows  down  the  launching  of  the  project  and  delays  the  disbursement  of  funds.  The 
time  spent  on  the  appraisal  is  therefore  valuable  from  the  EIB  and  the  project  holders’  point  of 
view.  The  analysis  should  assess  the  extent  to  which  the  appraisal  phase  has  been  conducted 
efficiently on the first 57 operations under ELM.  

The present first-hand analysis provides an overall picture of the appraisal duration based on the 
portfolio of 57 financing operations. The appraisal duration is calculated between the A2A and the 
project approval. The overall average duration of an appraisal is 9.2 months (the median is of 8.5 
months)  with  a  maximum  of  29  months  for  the  project  “MHP  Agri-food”  in  Ukraine  and  a 
minimum  of  one  month  experienced  by  two  projects,  “Fruit  garden  of  Moldova”  and  the  project 
“Guarantee for economic development in Ukraine”. 

The time of appraisal is composed of the time of instruction of the project from the EIB side and the 
borrower  side.  From  the  EIB  side,  all  the  appraisal  of  the  project  is  formalised  though  processes 
and  documents  to  be  produced.  The  time  for  each  processes  and  documents  are  binding  for  the 
EIB.  Discrepancies  between  projects  can  result  from  specific  requirements  due  to  the  nature  of  a 
project or due to the nature of the borrower. 

Ideally,  the  appraisal  duration  should  be  considered  alongside  some  key  characteristics  of  the 
projects such as the sectors, the type of beneficiaries or the EIB financing type as presented below. 

Table  13:  Average  duration  of  project  appraisal  by  the  type  of  final  beneficiary  or  the  type  of 
financing, in month 

Type of 
beneficiaries 

Commercial company 

Public sector entity 

Regional or local 
authorities 

SMEs / Mid-Caps 

Sovereign entity 

Average 

EIB financing type  Average 

Investment Loan 

11.5 

Framework loan 

Multi BI Loan 

Guarantee 

6.4 

6.4 

1 

14.5 

12.1 

8 

6.4 

6 

Source: EIB, PwC analysis 

Considering the small size of the current portfolio sample (57 operations), the quantitative analysis 
cannot provide conclusions that could be extrapolated to the whole population from the standpoint 
of the statistical representativeness. Most of the sub-groups present a number of operations too low 
to be considered statistically representative. However, keeping this word of caution in mind, some 
observations can be drawn for the sub-groups where more than five operations has been launched: 

  As regards the distribution by beneficiary, the appraisal duration for the SMEs/Mid-Caps and 
for  regional  or  local  authorities  is  shorter  than  for  the  commercial  companies  and  the  public 
sector entities; 

  As regards the EIB financing type, the appraisal duration of the guarantee is much shorter than 
for all the categories of loans. However, only one financing operation involving the guarantee is 
present in the portfolio, which does not allow drawing any conclusions or making a comparison. 
Moreover,  the  guarantee  has  been  provided  in  Ukraine,  to  WBG  (IBRD)  in  a  very  urgent 
situation, making it a guarantee of an unusual and specific nature. On the contrary, investment 
loans present a longer appraisal duration than for the Framework loan and the multi-beneficiary 
loan.  This  is  explained  by  the  very  nature  of  the  Framework  and  the  multi-beneficiary  loan 
which  set  a  framework  in  which  the  various  financial  operations  will  be  operated  but  without 
focusing on specific investment projects. Therefore, the appraisal and implementation of project 
is  limited  to  this  framework  and  not  extended  to  sub-projects.  Appraisal  of  the  sub-projects, 

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where required, happens after the FL or MBIL signature, which is what dictates the shorter lead 
time to signature of the FL or MBIL, but not necessarily a shorter time overall. The appraisal of 
the  sub-projects  by  the  EIB  is  modulated  depending  on  the  size  of  sub-projects  and 
nature/context  of  the  operation  in  particular  in  ELM  countries.  Such  appraisals  are  typically 
conducted at the time of allocations of sub-projects under the framework loan. 

These observations do not allow for drawing definitive conclusions on the efficiency of the appraisal 
phase, but enable distinguishing the projects with the lowest appraisal duration and those with the 
highest duration.  

4.1.8  Comprehensive vs Political risk guarantee 

As presented in the section 2.1.6, the Decision defines two modalities of the EU guarantee covering 
different types of risks: the Comprehensive guarantee and the Political Risk guarantee. According 
to  the Decision,  Comprehensive  guarantee  is reserved  to  operations where funding is provided to 
public  entities,  while  the  Political  risk  guarantee  shall  cover  operations  involving  private 
counterparts.  

Table 14: Distribution of operations according to the coverage of the EU guarantee, in number 
of operation and total EIB contribution, in M EUR. 

Source: EIB, PwC analysis 

Among the 57 operations of the portfolio, 11 operations (19% of operations) have benefited from the 
Political  risk  guarantee  while  46  operations  (81%  of  operations)  have  benefited  from  the 
Comprehensive guarantee. 

All 11 operations under the Political risk guarantee were awarded to SME/Mid-Caps or commercial 
companies,  which  is  consistent  with  Article  8  §3  of  the  Decision  that  states  the  Political  risk 
guarantee  should  be  provided  when  the  borrower  does  not  belong  to  the  regional  or  local 
authorities, public enterprises or institutions owned or controlled by a State. 

4.1.9  Co-financing and blending 

From the database provided by the EIB, 29 financing operations out of 57 involve co-financing with 
other financial institutions. The figure 13 shows the operations co-financed and the name of the co-
financer for each.  

On  average,  the  projects  that  involve  co-financing  tend  to  have  slightly  higher  project  cost: 
EUR 448 M for the 21 co-financed projects compared to EUR 402 M for the 57 operations overall. 
The average EIB contribution is logically lower for the co-financed projects: 36% (as compared to 
42% for the 57 projects of the database).  

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The  characteristics  of  the projects involve  co-financing  closely  mimic  those  of the  57  projects.  All 
the  types  of  financing  (different  types  of  loans  and  the  guarantee)  are  involved.  The  average 
appraisal  time  is  slightly  higher  for  co-financed  projects  than  for  projects  without  co-financing 
(10.4 months against 9.2). All types of stakeholders and sectors of activity are represented among 
the projects with co-financing (taking into account the limited size of the database, some countries 
are not represented in the pool of projects involving co-financing). 

It is interesting to note that co-financing concerns operations in all the regions but that the share of 
co-financed projects is much higher in regions like Asia (five operations co-financed out of six) or 
Latin America (four operations out of six) than for candidate countries (one operation out of seven) 
for instance. This reflects the level of presence of the EIB in these regions. In Asia, the EIB has no 
local  representation  (Beijing  office  only)  and  has  limited  expertise  of  the  local  context.  It  relies 
therefore on the ADB for the identification and implementation of projects in Asia. On the contrary, 
the EIB is deeply rooted in candidate countries where it can identifies and conduct projects on its 
own.  Co-financing  is  therefore  a  mean  to  conduct  activities  in  regions/countries  where  the  EIB 
activities are less developed, which is also the rationale of the EU guarantee.  

The  added value of the  co-financing  is to share the financial burden and  the  subsequent risks. In 
region  where  the  EIB  is  less  developed  co-financing  allow  the  EIB  to  develop  its  activities  and 
strengthen the EU objectives. In Mediterranean and pre-accession countries, the co-financing allow 
to  leverage  on  the  existing  actions  of  the  EU  and  Member  States  which  are  largely  developed  in 
these countries  For  instance,  we  notice  that  KFW  for  Germany  and  AFD  for  France  are  the  main 
partners  of  the  EIB  for  ELM  operations  with  respectively  nine  and  eight  operations  co-financed 
with  the  EIB  under  the  2014-2020  ELM.  Most  of  these  operations  are  located  in  Mediterranean 
countries (Morocco, Egypt, Jordan)  

The table below presents all the co-financed operations with the name of the co-financer.  

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Figure 14: Projects co-financed by the EIB through the ELM with the name of the co-financing institution 

Project’s name 

MONTENEGRO WATER AND SANITATION 

NEPCO GREEN CORRIDOR 

URENGOY- POMARY- UZHGOROD GAS PIPELINE 

CAIRO METRO LINE 3 (PHASE 3) 

EGYPTIAN POLLUTION ABATEMENT(EPAP) III 

NEPAL GRID DEVELOPMENT PROGRAMME 

ZENATA URBAN DEVELOPMENT PROJECT 

FEMIP SUSTAINABLE ENERGY FACILITY 

TOFAS RDI 

OUARZAZATE II (PARABOLIC) 

OUARZAZATE III (TOWER) 

NORTH MOLDOVA WATER 

CORRIDOR VC POCITELJ - BIJACA 

ADMINISTRATIVE & URBAN INFRASTRUCTURE (ECUADOR) 

REHABILITATION WARSAK HYDROELECTRIC PROJECT 

VIENTIANE SUSTAINABLE URBAN TRANSPORT 

LAKSAM AKHAURA DOUBLE TRACK RAIL PROJECT 

NEPAL POWER SYSTEM EXPANSION PROJECT 

HONDURAS SUSTAINABLE ROADS 

WASTEWATER TREATMENT PROJECT IN GUAYAQUIL 

TAJIK - KYRGYZ POWER INTERCONNECTION 

WADI AL ARAB WATER SYSTEM II PROJECT 

ROUTE 10 RAIL REHABILITATION 

ADB 

AFD  AFDB  BCIE 

EBRD 
BERD 

IADB -
WAS 

IBRD  KFW   OFID 

x 

x 
x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 

x 
x 

x 

x 

x 

x 

x 

x 

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Project’s name 

KUTAISI WASTE WATER 

CAUCASUS TRANSMISSION NETWORK 

NICARAGUA HYDRO DEVELOPMENT AND TRANSMISSION 

DAMANHOUR CCGT POWER PLANT 

YEREVAN SOLID WASTE 

GUARANTEE FOR ECONOMIC DEVELOPMENT IN UKRAINE 

ADB 

AFD  AFDB  BCIE 

EBRD 
BERD 

IADB -
WAS 

IBRD  KFW   OFID 

x 

x 

x 

x 

TOTAL NUMBER OF OPERATIONS 

4 

8 

3 

2 

Source: EIB

x 

x 

7 

x 

5 

1 

9 

1 

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Out  of  29  financing  operations  with  co-financing,  16  involve  blending.  Among  the  latter,  four 
involve technical assistance, nine involve grants and three involve both. The following table shows 
the corresponding financing operations:  

Figure 15: Financing operations with blending - TA and grants 

Financing operations 

MONTENEGRO WATER AND SANITATION 

NEPCO GREEN CORRIDOR 

CAIRO METRO LINE 3 (PHASE 3) 

UKRAINE MUNICIPAL INFRASTRUCTURE PROGRAMME 

EGYPTIAN POLLUTION ABATEMENT(EPAP) III 

NEPAL GRID DEVELOPMENT PROGRAMME 

FEMIP SUSTAINABLE ENERGY FACILITY 

ILLER BANK URBAN TRANSPORT AND ENVIRONMENT 
LOAN 

OUARZAZATE II (PARABOLIC) 

ZIRAAT BANK IPARD MBIL 

OUARZAZATE III (TOWER) 

NORTH MOLDOVA WATER 

CORRIDOR VC POCITELJ - BIJACA 

VIENTIANE SUSTAINABLE URBAN TRANSPORT 

FRUIT GARDEN OF MOLDOVA 

ARMENIA APEX LOAN FOR SMES 

HONDURAS SUSTAINABLE ROADS 

WADI AL ARAB WATER SYSTEM II PROJECT 

KUTAISI WASTE WATER 

CAUCASUS TRANSMISSION NETWORK 

BANK OF GEORGIA LOAN FOR SMES AND MID-CAPS 

YEREVAN SOLID WASTE 

MODERNISATION ROUTIERE II 

UKRAINE AGRI-FOOD APEX LOAN 

UKRAINE EARLY RECOVERY 

Source: EIB 

Technical 
Assistance 
X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

Grant 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 
X 

X 

X 

X 

X 

X 

X 

The purpose of the evaluation as regards the co-financing and blending is to address the optimality 
of the design of such operations through the existence of potential overlaps or complementarities 
between  the  ELM  and  the  co-financing  solutions.  A  very  preliminary  analysis  shows  lower  EIB 
contribution  for  projects  involving  blending,  which  tends  to  point  in  the  direction  of  substitution 
rather than overlap. The rest of the analysis on blending operations is presented in the section 5. 

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4.1.10  Climate change mitigation and adaptation 

The Decision sets EIB financing operations under the ELM in support of climate change mitigation 
and  adaptation  should  represent  at  least  25%  of  total  EIB  financing  operations  under  the  ELM 
(Article 3).  

The table below presents the share of climate-related expenditures in total and for each region. It 
can be noted that once broken down to regions, these are very small datasets and subject to large 
annual variation. For example, if EIB is working on preparation of a Climate Action project for two 
to three years, including project preparation, the actual climate action finance will only be recorded 
in  the  year  of  signature.  To  see  trends  therefore,  a  longer  term  rolling  average  over  a  number  of 
years may be needed. 

Table  15: Climate change related expenditure  in the ELM portfolio (57 operations) per  region 
and in total, in M EUR and in% 

EIB financing 
contribution  

Number of  
operations 

Regions 

Asia (excl. Central Asia) 
Candidate countries 
Mediterranean countries 
Potential 
candidate 
countries 
Latin America 
Russia,  E.Europe,  Sth. 
Caucasus 
South Africa 
Central Asia 
Total 
Source: PwC 

530 
1,147 
2,346 
180 

774 
2,745 

200 
140 
8,062 

6 
7 
15 
2 

6 
18 

1 
2 
57 

Climate Action 
finance  
(EIB finance 
contribution × 
climate action 
indicator) 
385 
762 
1,101 
80 

Climate Action 
indicator%  
(Share of climate 
change mitigation and 
adaptation in the 
project expenditure) 
73% 
66% 
47% 
44% 

329 
519 

4 
0 
3,181 

43% 
19% 

2% 
0% 
39% 

Methodological note on the Climate Change Indicator (CCI) 

The  bank  has  a  set  of  definitions  (originally  approved  in  2010,  and  updated  for  the  2015  Climate  Strategy) 
defined  as  “Climate  Action”:  these  are  the  activities  are  considered  as  contributing  to  climate-change 
adaptation or mitigation. The EIB Climate Strategy defines climate action activities under the following sub-
headings: 

  Energy efficiency (EE); 
  Renewable energy (RE); 
  Nuclear energy; 
  Transport; 
  Solid waste; 
  Urban development; 
  Forestry and land use; 
  Research,  development  and  innovation  in  the  areas  of  energy  efficiency  and  low-carbon  technologies, 

including the deployment of breakthrough innovation; 

  Adaptation; 
  Any other activity in a sector not included, but with demonstrable substantial reductions in GHG emission.  

More  detailed  explanations  exist  for  all  categories,  to  clarify  specific  activities,  processes,  thresholds  for 
inclusion or exclusions. For example, in EE, to be included, the project must be making a significant increase 
in  energy  efficiency  over  and  above  norms  or  standards,  in  line  with  EIB’s  EE  definition.  Then  only  the  EE 
components are counted, rather than the whole project which is made energy efficient. For Adaptation  – the 
analysis is process based and aims to capture only the incremental aspect or activities within the project which 

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are the adaptation activities, although the whole project may be more climate resilient. 

Each  project  financed  by  the  EIB  under  the  ELM  is  screened  and  the  activities  within  this  project  that  are 
related to climate-change adaptation or mitigation as defined above are identified. The project cost is broken 
down into the costs related to the different activities.  

The  CCI  is  computed  as  the  proportion  of  the  climate  action  activities  costs  over  the  total  project  cost. 
Naturally,  if  the  whole  project  is  related  to  climate  action,  the  CCI  might  reach  100%.  The  EIB  also  specify 
climate  change  mitigation  indicator  and  climate  change  adaptation  indication  which  are  a  disaggregation  of 
the CCI. 

This  methodology  is  harmonised  within  the  group  of  MDBs  since  2011  (joint  report  on  the  MDB  climate 
finance 5th report is due for publication summer 2016) and is aligned with EU standards and policies, as well 
as  being  harmonised  with  the  Common  Principles  for  Mitigation  and  Adaptation  tracking  agreed  and 
published by MDBs and the International Development Finance Club (IDFC) prior to COP21.  

This  approach  has  its  caveats:  climate  action  activities  are  assumed  entirely  beneficial  in  terms  of  climate 
change mitigation and the activities are assumed to be conducted in an efficient manner – which can only be 
determined  after  completion.  Another  challenge  –  recognised  by  the  EIB  –  is  related  to  the  threshold 
requirements in the definition of the energy efficiency: how do you capture real energy efficiency?  
The  MDB  terminology  clarifies  “there  has  to  be  a  substantial  increase  in  energy  efficiency”,  i.e.  to  avoid 
counting business as usual – i.e. merely replacing old things with new things which are more efficient.  

The  EIB  has  a  specific  computation  procedure  for  the  Multi-beneficiary  loans,  for  which  the  nature  of  sub-
projects  of  the  final  beneficiaries  (SMEs  and  Mid-Caps)  cannot  be  known  in  advance.  For  MBILs  with  a 
dedicated window or entirely dedicated to Climate Action the% of dedicated window is counted. For standard 
MBILs  the  projects  signed  after  the  1  January  2015,  a  CCI  of  2%  is  applied  by  default  (unless  the  contract 
signed with the financial intermediary specifies a threshold of climate action projects to be financed) based on 
ex-post analysis of three years of allocations from earlier MBILs. The EIB conducted this ex post evaluation of 
a large number of multi-beneficiary loans (global coverage i.e. beyond the ELM). It computed a conservative 
share of activities financed through these loans and compatible with the EIB definition of the climate action 
(as  attested  by  the  NACE  code  type  of  the  activity).  The  evaluation  shown  that  2.4%  of  the  activities  under 
these multi-beneficiary loans match the definition of climate action. Thus, the Bank decided to use this result 
–  applying  2%–  for  the  standard  multi-beneficiary  loans  with  no  dedicated  window  for  climate  action.  This 
approach was applied only for multi-beneficiary loans signed in 2015 and reanalysis for 2016 has reconfirmed 
this approach and the 2% figure for 2016 signatures globally. 

Alternatives to the CCI exist. The Development Assistance Committee (DAC) of the OECD uses for instance the 
“Rio  markers” to  monitor  aid  targeting the objectives  of  the  Rio  Conventions.  Five  statistical policy  markers 
exist  covering  biodiversity  (introduced  in  1998),  climate  change  adaptation  (introduced  in  2010),  climate 
change mitigation (introduced in 1998), and desertification (introduced in 1998). The Rio markers is a grade 
given  to  a  project  to  indicate  the  extent  to  which  climate  change  (for  instance)  is  considered  as  a  policy 
objective. The Rio markers can show three values: “0” for not targeted, meaning the project does not explicitly 
target the Convention objectives; “1” for significant, meaning that the project target climate change objectives 
but as a  secondary objective; and “2” for principal. Projects with a “2” value”  are those for which climate 
change objectives have been fundamental in the design of the project and for which they are explicit objective 
of the project. They may be selected by answering the question “would the activity have been undertaken (or 
designed that way) without this objective?” The Rio Markers allow to rank projects according to the level they 
include climate change related objectives. But they do not allow to quantify the contribution of the projects to 
the climate change mitigation and adaptation, as it is possible with the CCI developed by the EIB. Nevertheless 
for Blending Facility and other reporting, it has been agreed with DG CLIMA that the MDB approach (hence 
EIB’s approach) is compatible and comparable with reporting under Rio Marker 2. 

Overall, the CCI appears as the most transparent, straightforward and pragmatic approach to estimate ex ante 
the impact of the EIB lending in terms of climate change adaptation and mitigation. More complex alternative 
methods  could  be  envisaged,  but  they  would  have  their  own  caveats  while  requiring  much  more  time  and 
considerably more project data (not always available before the launch of the project). 

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In  total,  the  25% target  is  exceeded  since the  climate  related  actions  account  for  39%  of  the  total 
EIB contribution under ELM. This is even in line with the 35% target that the EIB is willing to set 
progressively by 2020. 

Even if the 25% target does not apply at regional level, we observe that only three regions are below 
this target and it has to be noticed that only one operation has been conducted in Central Asia and 
South Africa, so that the figure cannot be considered as representative of the effort in the region. In 
the  other  regions,  the  share  of  climate  related  expenditure  is  between  43%  in  Latin  America  and 
73%  in  Asia  (excluding  Central  Asia).  It  appears  that  the  climate  action  are  not  geographically 
concentrated  but  rather  mainstreamed  throughout  almost  all  the  regions.  Some  regions  are 
nevertheless  more  advanced  in  terms  of  support  to  climate  objectives.  In  Asia  in  particular, 
operations  under  ELM  primarily  focus  on  climate  change  since  four  operations  out  of  six  in  the 
region  have  a  100%  climate  change  indicator  while  the  two  others  operation  have  respectively  a 
30% and 84% climate change indicator. This confirms the priority given to climate change in Asia 
and the high potential of the region in this field.  

Although the climate action is relatively well balanced from the geographical perspective, it appears 
to be concentrated on a relative small set of operations. Thus, one can notice a relative dispersion 
among the 57 operations under ELM: 

  30 operations have a climate change indicator below 10%; 
  9 operations have a climate change indicator between 10% and 50%; 
  4 operations have a climate change indicator comprised between 50% and 99%; 
  14 operations have a 100% climate change indicators. 

There is a high concentration at top and bottom values, which represents 44 operations out of 57. 
This  indicates  that  the  overall  volume  of  climate  action  is  concentrated  and  driven  by  a  relative 
small set of fully contributing projects, while more than half of the operations have a minor climate 
component.  

Overall, the total emission savings of ELM projects over the second half of 2014 and 2015 is  1.35 
Mt  CO2-eq/year  over  a total  of  26  projects  –  23  in  2015  and  3  falling  under  the  second  half  of 
2014. 

The ELM operations largely targeting the climate change mitigation 

The  financial  portfolio  data  shows  that  most  of  the  climate  related  expenditures  under  the  ELM 
target  the  climate  change  mitigation  (92%),  while  only  8%  are  dedicated  to  the  climate  change 
adaptation. This is illustrated on the following figure:  

Figure 16: Contribution of the ELM operations to climate change mitigation and adaptation, in 
amount signed and in EUR M 

 198  

 2.209  

Climate Change Mitigation

Climate Change Adaptation

Source: EIB, PwC analysis 

In total, eight operations are related to climate change adaptation. However, judging by the climate 
change  indicator,  none  of  them  is  100%-dedicated  to  the  climate  change  adaptation.  They  cover 

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agriculture  adaptation,  water  management,  and  adaptation  of  transport  infrastructure  or  the 
erosion  control.  In  two  projects,  climate  change-adaptation  expenditures  reach  a  third  of  the 
amount signed: 

  The Afforestation and Erosion Control project 3 supports adaptation to climate change impacts 
by supporting erosion control measures on a further 155 000ha of degraded land in Turkey (plus 
reforestation of over 80 000 ha and forest rehabilitation of 20 000ha as part of climate change 
mitigation). 

  The  ONEE  -  amelioration  AEP  et  assainissement  project  will  support  the  Office  National  de 
l'Electricité et de l'Eau Potable (ONEE) in providing reliable and high-quality water supply and 
sanitation  services  to  its  customers.  In  a  climate  change  adaptation  dimension,  it  will  support 
the upgrading and rehabilitation of existing infrastructure in water supply. 

Therefore, if ELM operations largely contribute to climate change objectives by exceeding the target 
of 25%, they mostly contribute to climate change mitigation and little to climate change adaptation 
objectives.  These  findings are not surprising,  as it is unusual to  find  a 100% adaptation  project  – 
unless it is a technical assistance or capacity building programme. Most climate change adaptation 
is  an  incremental  component  or  proportion  of  a  project.  Adaptation  being  the  part  addressing 
climate  change.  Hence  for  example  in  project  Wadi  Al  Arab  water  system  II  project  in  Jordan, 
although an important water supply project in a drought challenged region, the adaptation aspects 
were  estimated  at  only  10%  of  the  overall  cost.  Nevertheless,  this  project  supports  greatly  the 
climate resilient water supply and urban development in the city and region. 

Climate objectives are mainly supported through transport and energy 

More than 68% of climate change expenditure concern transport (45%) and energy (24%), which is 
quite logical considering the high potential of those sectors in terms of climate change mitigation. 
Additionally there are a number of types of mitigation activities which are often found to be 100% 
of projects: for example RE investments such as solar or wind power. 

Table 16: Climate change contribution according to the sectors, in EUR M 

Sectors 

Transport 
Energy 
Various (includ. Credit lines) 
Agriculture, fisheries, forestry 
Industry 
Water, sewerage 
Service 
Solid waste 
Urban development 

EIB financing 
contribution 

1,952 
1,829 
3,207 
220 
150 
387 
200 
17 
100 

Climate change 
related 
expenditure 
1,425 
769 
757 
155 
34 
32 
6 
4 
2 

Share of climate 
change related 
expenditure 
45% 
24% 
24% 
5% 
1% 
1% 
0% 
0% 
0% 

The “various” category includes projects targeting various sectors and for which the sectoral split is 
not available due to low disbursement. It also includes credit lines projects.  

Climate objectives are mainly support through investment loans 

More than 70% of climate related expenditures have been deployed through investment loans. As 
indicated in table below, operations in investment loan has a higher level of contribution to climate 
change objectives (55%) than other type of EIB financing, especially multi-beneficiary loans (15%). 

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Table 17: Climate change contribution according to the EIB financing type, in EUR M 

EIB 
financing 
contribution 

Climate change 
related expenditure 
(EIB contribution × 
climate change indicator) 

Share of 
climate change 
related 
expenditure 

Number of 
operations19 

1,075 
466 
4,214 
2,307 

473 
75 
2,292 
342 

44% 
16% 
54% 
15% 

5 
1 
33 
18 

EIB financing type 

Framework loan 
Guarantee 
Investment Loan 
Multi 
Loan 
Source: PwC 

Beneficiaries 

The  relatively  low  level  of  contribution  of  multi-beneficiary  loans  can  be  explained  by  the  very 
nature  of  this  financing  instrument.  Indeed,  the  EIB  relies  on  financial  intermediaries,  which 
allocate the amount of the loan to various sub-projects. These sub-projects get the approval of the 
EIB but are selected by the financial intermediaries itself. Therefore, the level of control of the EIB 
on this type of project is lower than for investment loan for which the EIB can almost freely select 
the  project to  be  financed.  In  the  case  of  multi-beneficiary  loan,  the  control  of the  EIB is  exerted 
through  the  eligibility  criteria  set  for  sub-projects  to  be  financed  and  sometimes  though  specific 
targets attached to the portfolio of sub-projects.  

Out of the 18 multi-beneficiary loans, only five contribute to climate change objectives. These are 
projects for which the EIB has set specific target in terms of climate change or because the targeted 
sectors are considered to contribute to climate change, e.g. energy, agriculture, fisheries or forestry. 
In India, the operation “SBI loan for SMEs and Mid-Caps” includes a target of 30% of sub-projects 
to be financed with the credit lines supporting climate change objective. 

19  All  operations  contribute  to  the  climate  action  to  a  different  extent  (the  multi-beneficiary  loans  by  assumption).  Thus,  the  number  of 
operations contributing to the climate action within a type of financing is simply the number of operations for this type of financing.  

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operations outside the European Union 

5  In-depth  analysis  of  the  ELM  operations  2014-

2015 – case studies 

This section of the report is dedicated to the in-depth analysis of the ELM functioning based on the 
twenty selected case studies.  

The first subsection deals with the design of the intervention. This part assesses the alignment of 
the ELM with the EU external policy agenda and the objectives of the ELM stated in the Decision 
466/2014/EU,  and  addresses  the  relevance  of  the  geographical  distribution  and  of  the  allocation 
policy. 

The second subsection bears on the management and the implementation of the ELM. It covers the 
ELM  operations  lifecycle  and  the  methodology  –  the  Results  Measurement  Framework  (REM)  – 
used  to  select,  monitor  and  evaluate  the  financing  operations.  This  subsection  also  addresses  the 
issue  of  complementarity  and  coordination  of  the  ELM  financing  operations  with  other 
International Financial Institutions (IFI).  

The  third  subsection  identifies  the  added  value  of  the  ELM,  also  shedding  light  on  some  specific 
issues like the management of the exchange rate risk.  

The  fourth  subsection  is  dedicated  to  the  specific  theme  of  climate  change  adaptation  and 
mitigation: the way the financing operations take this objective into account and the measurement 
of the results. 

The fifth subsection deals with the communication issues around the ELM operations and with the 
ELM  contribution  to  the  visibility  of  the  EU  to  the  final  beneficiaries  and,  more  broadly,  in  the 
recipient countries.  

5.1  Design of the intervention 

This subsection covers the evaluation questions EQ1, EQ2 and EQ3.  

  EQ1:  Are  the  objectives  set  out  in  Decision  No  466/2014/EU  still  relevant  considering  the 
changes  in  the  context,  in  particular  with  regard  to  geopolitics,  emerging  post-2015 
development finance  and  climate  framework, and  the EU external  policy agenda, including its 
external blending mechanism? 

  EQ2:  Regarding  the  relevance  of  design,  how  does  the  allocation  policy  contribute  to  the 

effective use of the EU guarantee? 

  EQ3:  Are  the  methods  used  by  the  EIB  relevant  to  analyse  the  financial  needs  of  the 
beneficiaries, their absorption capacity and the availability of other sources of private or public 
financing for the relevant investments? 

5.1.1  Alignment of the ELM with the EU external policy agenda 

As part of the EU institutional set-up contributing to the EU external policy agenda, the EIB is the 
financial  arm  of  EU’s  external  action.  In  this  respect,  the  ELM’s  objectives  and  operations  are 
expected to be aligned with the external policy objectives of the EU.  

ELM has been reactive to changes in EU external priorities 

The  EU  external  policy  agenda  has  been  shaped  by  major  geopolitical  changes  in  the  EU  partner 
countries. These changes have defined or redefined EU external priorities that the ELM is expected 
to contribute to. The analysis consisted in assessing if these major changes have been reflected in 
the ELM. Two examples show how  the ELM adapted to emerging external  policy priorities in the 
EU. 

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ELM and the Ukraine crisis 

Following  the  conflict  in  Ukraine,  the  EU  has  engaged  a  major  effort  to  support  the  country 
recovery. In March 2014, the Commission committed to help stabilise the economic and financial 
situation  in  the country, assist  with the transition  and encourage political  and economic reforms. 
The overall support reaches EUR 11 billion among which the EIB contributes 3 billion, in particular 
through long-term investments: “the EIB could provide financing for long-term investments of up 
to EUR 3 billion for 2014 – 2016 in support of both the local private sector and economic and social 
infrastructure” 20  

Between  October  2014  and  the  end  of  the  year  2015,  the  EIB  had  signed  eight  operations  under 
ELM in Ukraine for more than EUR 2 billion: 

Table 18: List of ELM operations signed in Ukraine under the ELM 2014-2020 

Operations 

Ukraine Agri-food apex loan 

Guarantee for economic development in Ukraine 
Ukraine municipal infrastructure Programme 
Apex loan for SMEs & Mid-Caps  
Ukraine early recovery 
Urengoy- Pomary- Uzhgorod gas pipeline 
MHP Agri-food 
Astarta Agri-food and climate change adaptation 

Source: EIB 

EIB contribution (in EUR M) 
400 

466 
400 
400 
200 
150 
85 
50 

These operations  result  directly  from the EU political  decision  to support  Ukraine  and  have been 
signed  in  a  relative  short  timeframe  which  proves  that  the  EIB  has  been  reactive  in  supporting 
Ukraine  and  the  ELM  in  itself  (its  implementation  processes)  is  adapted  to  quickly  respond  to  a 
geopolitical  change.  The  EU  also  identified  sector  priorities  in  the  country,  e.g.  trade,  energy, 
transport, mobility and education. As regards energy and transport, the EU identifies gas supplies 
as key priorities for the country and for Europe21. Two operations under the ELM refer directly to 
this issue and show that they are aligned with the EU sector priorities: 

  Guarantee  for  economic development  in  Ukraine: the  project  is  an  EIB  guarantee  in  favour  of 
IBRD,  covering  five  IBRD  investment  loans  in  Ukraine  contributing  to  the  development  of 
economic infrastructure. The guarantee will release IBRD exposure to Ukraine, enabling IBRD 
to support emergency gas purchases by Naftogaz, Ukrainian gas import-export company. 

  Urengoy-  Pomary-  Uzhgorod  gas  pipeline:  the  project  consists  of  repair  measures  on  the 
Ukrainian part of the Urengoy - Pomary - Uzhgorod natural gas pipeline. Several sections of a 
total length of some 119 km and two gas compressor units will be replaced. 

The  ELM  has  clearly  contributed  to  the  EU  response  to  the  Ukrainian  crisis  and  has  therefore 
support  the  EU  external  priorities  in  the  country.  In  parallel  of  the  support  to  Ukraine,  the  EU 
decided also sanctions against Russia over Ukraine crisis22. Sanctions include diplomatic measures 
(cancellation  of  the  EU-Russia  summit,  resettlement  of  the  G8  summit),  restrictive  measures  – 
(asset freezes and visa bans), restrictions targeted at the Crimea and Sevastopol (ban on imports of 
goods,  prohibition  of  investments,  no  technical  assistance,  etc.),  and  economic  sanctions  (EU 
nationals  and  companies  shall  not  provide  loans  with  a  maturity  exceeding  30  days  to  some 
entities, prohibition on exports of dual use goods and technology for military use, etc.). Some of the 
measures  taken  refer  to  economic  cooperation.  Thus,  on  16  July  201423,  the  European  Council 
requested the EIB to suspend the signature of new financing operation in Russia, which has been 
complied with since the EIB has signed no operation, including under ELM, in Russia. This should 
be considered as another proof of the ELM alignment with the EU external priorities. 

20 “European Commission's support to Ukraine” http://europa.eu/rapid/press-release_MEMO-14-159_en.htm 
21 “European Commission's support to Ukraine” http://europa.eu/rapid/press-release_MEMO-14-159_en.htm 
22 COUNCIL DECISION 2014/145/CFSP of 17 March 2014 concerning restrictive measures in respect of actions undermining or threatening 
the territorial integrity, sovereignty and independence of Ukraine http://europa.eu/newsroom/highlights/special-coverage/eu_sanctions_en 
23 Conclusions of the special meeting of the European Council of 16 July 2014, General Secretariat of the Council, EUCO 147/14 

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Focus on Ukraine Early Recovery 

The  project  is  a  multi-sector  framework  loan  to  support  priority  investments  in  the  recovery  of 
small-scale  damaged  infrastructure  and  basic  infrastructure  needs  of  internally  displaced 
population (IDPs) to cope with the consequences of the conflict in East Ukraine between March and 
early September 2014. 

The  project  focuses  on  investments  in  the  Government-controlled  areas  of  Donetsk  and  Luhansk 
oblasts  (regions),  as  well  as  the  three  surrounding  oblasts  (Kharkiv,  Dnipropetrovsk  and 
Zaporizhzhia). The  scope of the project  is  mainly  the  infrastructure recovery or adaptation and  is 
limited  to  the  following  sectors:  (i)  water  and  sewerage;  (ii)  energy,  including  electricity,  district 
heating and energy efficiency); (iii) transportation, including damaged or destroyed roads, rail and 
bridges;  (iv)  municipal  infrastructure;  (v)  social  infrastructure,  including  schools,  kindergartens, 
hospitals,  health  and  social  centers;  (vii)  postal  services  providing  financial  services;  and  (vii) 
community  infrastructure  for  sheltering  IDPs.  The  promoter  is  the  Ukrainian  state  through  the 
Ministry  of  Regional  Development,  Construction,  Housing  and  Communal  Services  (MRD).  The 
final  beneficiaries  are  central,  regional  and  municipal  administrations  and  publicly-owned 
enterprises. 

Considering the emergency of the situation in Ukraine and the high financial constraints facing the 
Ukrainian  Government,  the  EIB  covers  100%  of  projects  costs  (in  line  with  the  EIB  funding 
principles  accepted  for  projects  following  natural  disasters).  On  the  whole,  72  sub-projects  have 
been identified so far to be financed under this operation. These projects correspond to the 1st batch 
of projects identified. Other batches with more sub-projects will follow in the future. 

The  project  is  expected  to  contribute  to  the  recovery  of  social  infrastructure  in  Ukraine.  It  is 
therefore  aligned  with  one  of  the  three  general  objectives  of  the  Decision  (article  3),  which  is 
“development  of  social  and  economic  infrastructure,  including  transport,  energy,  environmental 
infrastructure,  and  information  and  communication  technology”.  This  project  is  part  of  the  EU 
response to Ukrainian crisis and is consistent with the priorities of the EU for EIB intervention in 
this country, e.g. economic and social infrastructure. It contributes to the recovery of the country, 
which  is  indispensable  to  keep  on  implementing  the  EU-Ukraine  Association  Agreement  whose 
objective is to gradually integrate Ukraine in the internal market. In addition, the project is in line 
with the Recovery and Peacebuilding Assessment (RPA) conducted by the EU, UN and World Bank 
to  assess  short-term  recovery  needs  and  priorities  in  areas  under  the  Government  control,  with 
particular  focus  on  restoring  basic  social  services,  rehabilitating  key  infrastructure,  creating  an 
enabling  environment  for  population  return  and  socio-economic  recovery  and  supporting  social 
cohesion  and  reconciliation.  Finally,  this  project  is  fully  aligned  with  the  Ukraine  Economic 
Recovery Plan 2014-2017, which defines the assistance to IDP as a key priority. 

Figure 17: Chronology of events in the Ukraine crisis -EU response and ELM operations 

Source: EIB 

The  ELM  has  clearly  been  used  as  a  political  tool  during  the  Ukraine-Russia  crisis  allowing  to 
support EU priorities. 

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ELM and the “Arab spring” 

Egypt is the second beneficiary country of the ELM with more than EUR 1.3 billion committed by 
the EIB under the EU guarantee. The importance of the country has to be considered from a policy 
priority  perspective.  Indeed,  following  the  “Arab  spring”  in  2011  and  the  major  political  and 
economic instability of the following years, an EU-Egypt task Force was created in November 2012 
with the objective of enhancing and structuring the EU’s engagement in the country. The EIB took 
part in the task force and announced potential lending of up to EUR 1 billion per year. The EIB also 
announced  a  new  Task  Force  fund,  which  can  provide  up  to  EUR 60  million  for  countries  in 
transition24.  Under  the  EU  guarantee,  the  EIB  engaged  more  than  EUR 1.3  billion  between 
December 2014 and December 2015 (under ELM 2014-2020). The four operations concern public 
transportation, energy, and private sector development and pollution abatement investments. They 
include: 

  Cairo  metro  line  3  (phase  3):  the  project  consists  in  the  extension  of  Line  3  (Phase  3)  of  the 

Cairo Metro with 17 km to serve the main transportation corridors of urban greater Cairo; 

  Damanhour  CCGT  power  plant:  the  project  consists  in  the  construction  of  high-efficiency 
combined cycle gas turbine (CCGT) on the site of an existing power plant at Damanhour, in the 
Nile Delta; 

  Private  sector  development  and  economic  growth:  the  project  is  a  line  of  credit  to  Egyptian 
banks for the purpose of financing small and medium sized projects in productive and related 
sectors in Egypt; 

  Egyptian  pollution  abatement  (EPAP)  III:  the  project  is  a  line  of credit intermediated  by  local 
commercial banks to finance pollution abatement investments promoted by public and private 
industrial companies. 

In line with the 2012 EU engagement to help stabilising Egypt, the EIB under ELM 2014-2020 has 
put a strong focus on Egypt. This supports the external policy objectives of the EU in the country. 

Similarly,  in  Tunisia,  after  the  2011  revolution,  the  EU  responded  to  the  evolving  economic  and 
political  challenges  by  doubling  the  amount  allocated  to  Tunisia  for  the  period  2011-2013  (from 
EUR 240  million  to  EUR 445  million).  For  the  period  2014-2020,  the  indicative  allocation  could 
range between EUR 725 and EUR 886 million (i.e. an average of EUR 115 million yearly). For the 
year 2015, the annual Action Programme (EU bilateral cooperation) focuses on support to private 
sector,  support  to  the  Security  sector  reform,  decentralisation,  and  support  for  the  cultural  and 
tourism sector. Between December 2014 and December 2015, three operations have been signed in 
Tunisia. They focus on private sector development and transport. The selection of projects funded 
under  the  ELM  tries  to  adapt  as  much  as  possible  to  the  country’s  evolving  needs  in  terms  of 
economic  recovery,  and  especially  by  supporting  the  tourism  sector,  affected  by  the  Jasmine 
Revolution  and  the  several  terrorist  attacks  that  took  place  in  Tunisia  within  the  last  couple  of 
years. 

Furthermore, following EU decision on sanctions against Syria25, the EIB stopped all existing and 
future activity in this country.  

Support to the candidate and pre-candidate countries  

The ELM operations went on ensuring a consistent support to the candidate (Turkey, Montenegro) 
and  pre-candidate  (Bosnia  and  Herzegovina)  countries.  In  the  framework  of  this  support,  and  in 
line  with  the  objectives  stated  in  the  Decision,  five  operations  were  initiated  in  Turkey  for  the 
overall  volume  of  around  EUR 1  billion,  two  in  Montenegro  (EUR 50  million)  and  one  in  Bosnia 
(EUR 100 million). Turkey, in particular, is among the three top beneficiaries of the ELM funds so 
far since July 2014. This commitment is in line with the general strategy of the EU towards Turkey, 
in particular in relation to the Agreement reached between the EU and Turkey in the context of the 
refugee crisis. 

24 EU-EGYPT TASK FORCE Fact Sheet, A 515/12, http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/133513.pdf 
25 COUNCIL DECISION 2013/255/CFSP of 31 May 2013 

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Emerging issues 

One  of  the  highest  priorities  on  the  EU  political  agenda  is  the  refugee  crisis.  In  May  2015,  the 
European Commission set the “European agenda on migration”. The agenda identifies four levels of 
structural  actions:  reduction  of  the  incentives  for  irregular  migration,  border  management, 
development of a strong common asylum policy and a new policy on legal migration. A large part of 
the measures taken by the EU relies on the cooperation with third countries, both entry points in 
the EU (e.g. EU neighbouring countries) and countries of origin of migrants and refugees. In that 
respect, the Agenda states that “the EU must continue engaging beyond its borders and strengthen 
cooperation with its global partners, address root causes, and promote modalities of legal migration 
that  foster  circular  growth  and  development  in  the  countries  of  origin  and  destination”.  On  18 
March  2016,  the  EU-Turkey  summit  resulted  in  the  Agreement  bearing  on  the  prevention  of  the 
illegal  immigration  to  the  EU.  The  EIB  and  European  Commission  are  currently  discussing  the 
EIB’s  support  to  pre-accession  and  Neighbourhood  countries  affected  by  the  refugee  crisis  to 
determine  how  the  EIB  can  provide  support  to  the  refugee  and  host  communities,  including 
through ELM funding. In the short term, the EIB also “converted existing projects to open a special 
eligibility  window  for  expenditures  connected  with  refugees”26.  The  EIB  was  part  of  the  London 
conference  on  Syria  and  the  neighbourhood  to  discuss  the  migration  package  of  measures.  The 
cooperation is close on the migration issues between the EU and the EIB. The project Wadi Al Arab 
Water System II is an  example of the use of the  ELM loans in  response to  the refugee crisis. The 
purpose of the project is to expand the water supply in Jordan to match the increasing needs due to 
a massive inflow of refugees in the country.  

A flexible and reactive instrument to date 

Overall, the ELM funding plays an important role in supporting the EU objectives of the economic 
– and therefore political – stabilisation of several recipient countries, as attested by the importance 
of  funds  allocated  to  Ukraine,  Egypt,  Tunisia  or  to  a  certain  extent  Morocco.  Taken  together 
Ukraine Egypt and Tunisia account for almost half of the ELM funding allocations. Therefore, over 
the  period  2014-2015,  the  ELM  has  been  primarily  a  stabilisation  instrument.  The  ELM  has 
accompanied several policy shifts proving its flexibility and reactivity. 

The other side of the coin is that the more flexible and reactive the ELM had been, the less flexible 
and reactive it can be in the remaining mandate period. Indeed, because of the significance of the 
geopolitical changes evoked above, large volume of investments has been made under ELM. In the 
concerned  regions,  the  regional  ceilings  are  largely  used  (see  section  5.1.2)  so  as  the  capacity  of 
ELM to support EU external priority. It impacts also the capacity of the EIB to intervene in other 
countries  in  these  regions  under  the  ELM.  This  is  particularly  true  in  the  region  Russia,  Eastern 
Europe, South Caucasus where almost two third of the ceiling has been reached (see section 5.1.2), 
with  78%  of  the  funds  concentrated  on  Ukraine  (see  section  4.1.1).  Therefore,  the  capacity  of  the 
ELM to support other external policy objectives in the region in the future is somewhat weakened.  

Alignment with the EU strategies in beneficiary countries 

When  the  EIB  conducts  operations  with  ELM,  they  are  expected  to  align  with  the  EU  strategic 
framework  in  the  country  and  in  the  region.  This  strategic  framework  is  composed  of  the 
Association  Agreement,  the  Association  agenda,  the  country  strategy  paper,  the  sector  strategies, 
the multiannual financial framework 2014-2020 and the regional policy.  

The  main  tool  for  ensuring  the  ELM  operations  are  consistent  with  the  EU  regional  policy 
framework  is  the  Regional  Technical  Operational  Guidelines  (article  5  of  the  Mandate).  This 
describes  for  all  the  regions  covered  by  the  ELM  the  main  priorities  of  the  EU,  e.g.  how  the  EIB 
should work on these regions. It is a valuable tool for the loan officer of the EIB in ensuring that the 
projects being instructed are aligned with EU priorities, including during the pre-appraisal phase. 
The document is also used to identify the field in which  the EIB can prospect the market for new 
projects under the ELM. 

However, the RTOG provides a static picture of the EU regional policy framework. They have been 
written  in May 2015 and are  still relevant in the current  context,  but  the  question of its updating 
will be raised in the coming months. This will allow the RTOG to reflect the latest evolutions of the 

26 External Lending Mandate 2014-2020, annual report 2015, p.37 

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EU priorities and the EIB to align with them.  Article 5 of the mandate stated “the RTOG shall be 
reviewed following the mid-term review”. 

The RTOG document was produced by the EC, together with EIB and approved by the EC (art. 5). 
Considering  that  it  should  reflects  the  EU  external  priorities,  which  involve  a  wide  range  of 
institutions and instruments. A prior discussion on the RTOG with the EEAS could add value to the 
document. 

Alignment with the Sustainable Development Goals 

The  EU  committed to  contribute to  reach  the  Millennium  Development  Goals (MDG’s)  and  since 
2015 the Sustainable Development Goals (SDGs). 2016 ushered in the official launch of the  2030 
Agenda  for  Sustainable  Development  adopted  by  world  leaders  in  September  2015  at  the  United 
Nations.  The  new  Agenda  calls  to  begin  efforts  to  achieve  17  Sustainable  Development  Goals 
(SDGs)  over  the  next  15  years.  The  EIB’s,  and  more  specifically  the  ELM’s,  objectives  and 
operations  are  broadly  aligned  with  the  SDGs  and  are  expected  to  contribute  directly  to  the 
following SDG’s:  

  Clean water and sanitation; 
  Affordable and clean energy; 
  Industry, innovation and infrastructure; 
  Sustainable cities and communities; 
  Climate action; 
  Decent work and economic growth. 

In  addition,  the  ELM  contributes  indirectly  to  the  following  SDGs,  mostly  by  developing 
infrastructures in sectors (Agriculture, Education, etc.) that are expected to have an impact on the 
goals  listed  hereafter:  No  poverty,  Zero  hunger,  Good  health  and  well-being,  Quality  education, 
Gender  Equality,  Reduced  inequalities,  Responsible  consumption  and  production,  Life  below 
water, Peace, Justice and strong institutions and partnerships for the goals. The ELM is expected to 
contribute even more directly to the SDGs than in the past the MDGs27 since the focus tends to shift 
from poverty reduction to sustainable economic development, which is one the three key priorities 
of the ELM.  

Alignment with the Paris Climate Agreement 

With  the  Paris  Climate  Agreement,  195  countries  adopted  the  first  legally  binding  global  climate 
deal.  In  terms  of  climate  change  mitigation,  governments  agreed  to  limit  global  warming  to  well 
below  2°C  above  pre-industrial  levels  and  therefore  to  undertake  rapid  reductions  of  GHG 
emissions with the best available techniques. This includes making finance flows consistent with a 
pathway  towards  low  greenhouse  gas  emissions  and  climate-resilient  development28.  They  also 
committed to strengthen societies’ ability to deal with the impacts of climate change and to support 
developing  countries  in  their  effort  toward  climate  change  adaptation.  In  preparation,  countries 
have  agreed  to  publicly  outline  what  post-2020  climate  actions  they  intend  to  take  under  a  new 
international  agreement,  known  as  their  Intended  Nationally  Determined  Contributions  (INDCs) 
which will define the strategic framework of each country for reaching climate objectives. 

Within this framework, the EU has played a key role and was among the first to submit its intended 
contribution  to  the  new  agreement  in  March  2015  and  is  already  taking  steps  to  implement  its 
target to reduce emissions by at least 40% by 2030. The projects conducted under the ELM are part 
of  this  effort.  As  indicated  in  the  portfolio  analysis,  the  ELM  contributes  significantly  to  climate 
change  objectives with  a  share  of  climate  related  expenditure  of 40%  of  the total  ELM.  However, 
the  ELM  is  mainly  contributing  to  climate  change  mitigation  objectives  since  92%  of  the  climate 
related  expenditure  within  the  ELM  target  mitigation  and  consequently  only  8%  adaptation. 
Therefore,  the  ELM  is  fully  aligned  with  the  ongoing  effort  of  the  EU  and  the  international 
community  towards  climate  change  mitigation  objectives  (reduction  of  GHG  emissions).  Overall, 
the savings in terms of GHG emissions resulting from ELM operations estimated at 1.35 Mt CO2-

27 Eradicate extreme poverty and hunger, achieve universal primary education, promote gender equality and empower women, reduce child 
mortality, improve maternal health, combat HIV/AIDS, malaria and other diseases, ensure environmental sustainability, global partnership for 
development. 
28 Article 2 of the Paris agreement 

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eq/year. Its contribution to climate change adaptation objectives is more limited, although this is 
expected  to  grow  as  the  screening  for  climate  change  impacts  and  the  Bank’s  climate  risk  and 
vulnerability assessment work will take more effect. 

Alignment with the three ELM’s objectives 

The Decision sets three high-level objectives defining the sectors/fields of intervention of the ELM: 

  Local private sector development, in particular support to SMEs; 
  Development of social and economic infrastructure, including transport, energy, environmental 

infrastructure, and information and communication technology; 

  Climate change mitigation and adaptation. 

The table below shows the high-level objectives matched by each of the financing operations among 
the twenty case studies:  

Table 19: Which high-level objectives do the financing operations under the ELM match? 

Financing operation 

Country 

Date of 
signature29 

High-level objectives defined in the Decision 

Local private 

Development of 

Climate change 

sector 

social/economic 

mitigation / 

development 

infrastructure 

adaptation 

Laksam  Akhaura  double  track 

Bangladesh 

15/10/2015 

rail project 

SBI loan for SMEs and Mid-Caps 

Tajik 

- 

Kyrgyz 

power 

India 
Kyrgyzstan30 

28/11/2014 

02/10/2015 

interconnection 

Armenia APEX loan for SMEs 

Armenia 

04/12/2014 

Accessbank  Azerbaijan  loan  for 

Azerbaijan 

07/11/2014 

SMEs 

Kutaisi waste water 

Ukraine early recovery 

Georgia 

Ukraine 

Guarantee 

for 

economic 

Ukraine 

development in Ukraine 

Sao Paulo Rolling Stock 

Brazil 

Brazil loan for SMEs & Mid-Caps  Brazil 

Private  sector  development  & 

Egypt 

economic growth 

15/10/2015 

22/12/2014 

09/10/2015 

20/10/2014 

28/05/2015 

14/03/2015 

Ouarzazate III (Tower) 

Morocco 

EUROPAC  industrial  packaging 

Morocco 

22/12/2014 

15/06/2015 

plant in Tangier 

Partenariat 

BEI-BTK-réseau-

Tunisia 

04/12/2014 

entreprendre 

AMEN Bank-Prêts PME & ETI 

Tunisia 

Wadi  Al  Arab  water  system  II 

Jordan 

17/09/2015 

08/11/2015 

project 

Montenegro 

water 

and 

Montenegro 

25/06/2015 

sanitation 

IDF  loan  for  SMEs  &  priority 

Montenegro 

16/03/2015 

projects II 

Ziraat Bank IPARD MBIL 

Turkey 

22/09/2014 

South  Africa  private 

sector 

South Africa 

23/11/2015 

facility 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

X 

Source: PwC analysis, Decision 466/2014/EU, EIB Serapis database 

29 Formally, it is the credit rating at the date of submission by the EIB of the operation to the Commission under the Article 19 procedure 
which should be taken into account instead of the date of signature. However, the time elapsed between the two is likely to be limited. Thus, 
we use the date of signature as a proxy.  
30 First-time ratings attributed by S&P and Moody’s in December 2015 

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All the 20 operations analysed as case studies are well-positioned to address one of these objectives, 
and in most cases more than one. The consistency of the operation with the ELM objectives is one 
of the first criteria to initiate a project. Then, the contribution of the project to ELM objectives is 
analysed more deeply within the framework of the REM.  

The objectives covered by the 20 operations are well distributed. The support to local private sector 
development  is  sought  in  12  operations  among  the  case  studies,  infrastructure  in  11  and  climate 
change in nine operations. Sometimes a financing operation targets more than one objective.  

Another major ELM objective is regional integration. According to the RTOG, “regional integration 
among  countries,  including  in  particular  economic  integration  between  Pre-Accession  countries, 
Neighbourhood  countries  and  the  Union,  shall  be  an  underlying  objective  for  EIB  financing 
operations within areas covered by the general objectives”31. In its annual report on the ELM 2014-
2020,  the  EIB  clarifies  its  understanding  of  the  meaning  of  this  objective:  “in  practice  this  can 
mean creating physical infrastructure links such as road rail and energy networks. It can also mean 
facilitating trade and financial linkages across regions and the process of convergence in economic 
output and standards of living”. 32 

Among  these  20  operations,  one  includes  regional  integration  objectives  between  a  pre-accession 
country and the Union (based on the REM framework). It is the project “Iller Bank urban transport 
and  environment  loan  in  Turkey”.  The  project  will  support  municipal  investment  schemes  in  the 
public  transport,  water,  waste  water  and  solid  waste  sector  in  Turkey  using  Iller  Bank  as  an 
intermediary. It will contribute to regional integration by supporting the development of transport 
network and bringing municipal services closer to EU standards. 

The  three  overall  objectives  of  the  ELM  as  set  in  the  Decision  are  still  relevant  in  the  present 
context. The climate change mitigation and adaptation objectives are ever more relevant after the 
post-Paris  agreement.  Private  sector  and  infrastructure  development  objectives  are  drivers  of  the 
sustainable and inclusive growth and as such still relevant as key objectives of the ELM. 

Conclusion 1: the ELM operations are aligned with the three objectives defined in the Decision. 
The  latter  are  still  relevant  in  the  present  context  where  post-Paris  agreement  efforts  towards 
climate change mitigation and adaptation objectives and pursuit of the SDGs are contributing to a 
sustainable and inclusive growth. 

Conclusion 2: ELM objectives are broadly aligned with the SDGs and are expected to contribute 
directly to a number of the SDGs. 

Conclusion  3:  the  ELM  has  supported  the  EU  external  policy  agenda,  showing  sufficient 
flexibility  and  reactivity  to  upcoming  challenges.  This  is  exemplified  through  the  case  of  Ukraine 
(the Ukrainian crisis), Egypt and Morocco (“Arab spring”), Syria  and the ongoing discussion over 
the refugee crisis. This includes also alignment with climate objectives as they have been agreed in 
the Paris Agreement. 

Conclusion  4:  the  ELM,  above  all,  has  been  a  tool  contributing  to  the  economic  stabilisation  in 
the  countries  hit  by  a  political  crisis.  Its  agenda  has  been  constrained  by  tough  geopolitical 
challenges, which weigh on the regional ceilings and the future capacity of action under the ELM.  

31 Regional Technical Operational Guidelines for EIB financing operations under Decision 466/2014/EU, p.2 
32 EIB. External Lending Mandate 2014-2020, 2015 annual report 

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5.1.2  Relevance  and  added  value  of  the  geographical  distribution  and  regional 

ceilings 

The distribution of funds across the seven regions covered by the ELM finds its legal basis in the 
Decision  466/2014/EU,  which  establishes  caps  for  the  amount  that  can  be  allocated  to  the  ELM 
financing operations in each region. The following table shows these regional ceilings in EUR and 
in% of the total:  

Table 20: Regional ceilings, in EUR billion and in percentage of the total  

Candidate and 

Pre-candidate 

countries 

Neighbourhood and Partnership 

countries 

Mediterranean 
countries 

Eastern Europe, 
Southern 
Caucasus, Russia 

Asia and Latin America 

Latin 
America 

Asia 

Central 

South 

Asia 

Africa 

TOTAL 

Amount, 

bn EUR 

% total  

8.74 

32% 

9.6 

36% 

4.83 

18% 

2.29 

0.94 

0.18 

0.42 

27 

8% 

3% 

1% 

2% 

100% 

Source: Decision 466/2014/EU, Annex I, figures rounded off  

The  ceilings  are  not  targets  insofar  as  the  Mandate  does  not  specify  a  requirement  to  reach  the 
amount  indicated  by  the  ceiling,  but  rather  the  maximum  EIB  contribution  under  ELM  for  a 
specific region. Yet, the amounts corresponding to each ceiling should broadly reflect the financing 
needs  of  the  stakeholders  from  the  region  and  the  EU  policy  priorities.  In  other  words,  funds 
should  be  allocated  to  where  they  are  the  most  needed  and  to  the  regions  the  EU  considers  of 
utmost  importance  as  regards  its  external  policy.  Considering  the  ceilings  established  by  the 
Decision,  primary  importance  is  given  to  the  Candidate  and  Pre-Candidate  countries,  the 
Mediterranean countries and the Eastern Europe, Caucasus and Russia (respectively 32%, 36% and 
18%  of  the  total  funding  cap  under  the  ELM).  It  is  important  to  mention  that,  according  to  the 
Regional  Technical  Operational  Guidelines  and  the  Decision,  the  EIB  is  authorized,  upon 
consultation  with  the  Commission,  to  reallocate  an  amount  of  up  to  20%  of  the  sub-regional 
ceilings within  regions  and up to  10% of the regional ceilings between regions (within  the overall 
ceiling of the EUR 27 billion).  

The  purpose  of  this  section  is  therefore  to  assess  the  relevance  of  the  regional  ceilings  –  in 
particular,  to  see  if  for  some  regions  they  bind  already  –  and,  more  broadly,  to  consider  the 
adequacy  of  the  geographical  allocation  of  funds,  i.e.  whether  they  are  allocated  where  they  are 
needed the most. 

Are the regional ceilings posing a barrier to further EIB activity under ELM in any region? 

Considering the 57 financing operations signed by the 31.12.2015, the EIB contribution amounted 
to approximately EUR 8.93 billion (amount approved by the EIB board of directors). The volume of 
funds approved, in EUR and in percentage of the total, is shown in the table below: 

Table 21: Amount approved by region as of Dec. 2015, in EUR billion and in% of the total 

Neighbourhood and 

Asia and Latin America 

Candidate 
and Pre-
candidate 
countries 

Partnership countries 
Eastern 
Europe, 
Southern 
Caucasus, 
Russia 

Mediterranean 
countries 

Latin 
America 

Amount bn 

EUR 

% total  

1.32 

15% 

Source: PwC  

2.34 

26% 

2.88 

0.77 

32% 

9% 

Asia 

0.73 

8% 

Central Asia 

South 
Africa 

TOTAL 

0.28 

3% 

0.60 

8.937 

7% 

100% 

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The  comparison  between  the  two  tables  above  indicates  that  for  some  regions,  the  allocation  of 
funds33 has taken a faster pace, in particular the amount approved to the financing operations for 
the  region  “Eastern  Europe,  Southern  Caucasus,  Russia”  represents  32%  of  the  total  amount 
approved  to  the  ELM  financing  operations  as  of  the  31.12.2015.  This  proportion  is  due  to  a  new 
geopolitical  priorities  of  the  EU:  increase  financial  assistance  to  Ukraine  and  provide  it  under 
relatively  short  notice.  Indeed,  the  latter  represents  around  79%  of  the  total  volume  of  funds 
approved  in  the  region  and  26%  of  the  total  EIB  contribution  approved  under  the  ELM  as  of 
31.12.2015.  

The following graph shows the volume of funding approved under the ELM by the end of 2015 in 
percentage of the amount established for each region by the corresponding regional ceiling:  

Figure  18:  Funds  approved  in  each  region  as  a%  of  the  amount  fixed  by  the  ceiling  for  this 
region 

Source: EIB  

We observe significant differences across regions. After 1.5 years of activities under the 2014-2020 
ELM  (approximately  20% of  implementation  time  lapsed),  five  regions  out  of  six  are  beyond  this 
indicative figure of 20%. In three regions, in particular, more than half of the total has already been 
committed (approved). For Central Asia, the amount approved reaches 77% of the regional ceiling; 
for  Asia  (excluding  Central  Asia),  the  amount  approved  represent  78%  of  the  corresponding 
regional ceiling. By contrast, among the candidate and the potential candidate countries, the funds 
approved so far represent only 15% of the ceiling.  

For  the  region  Eastern  Europe,  Southern  Caucasus,  Russia  60%  of  the  total  cap  was 
committed (approved). This commitment covers 19 projects – more than in any other region. This 
allocation pace has been driven by the geopolitical considerations and EU external policy priorities 
of  supporting  Ukraine.  Indeed,  in  March  2014,  the  Commission  committed  to  help  stabilize  the 
economic and financial situation in the country, assist with the transition and encourage political 
and economic reforms. The overall support reaches EUR 11 billion coming from the EU budget and 
EU-based IFI in addition to funding provided by the IMF and the World Bank. Among them, the 
EIB is asked to contribute up to 3 billion. Under the ELM, 2.2 billion has already been approved by 
the  EIB  through  10  operations  accounting  for  79%  of  the  total  volume  of  funds  approved  in  the 
region and 26% of the total EIB contribution committed under the ELM as of 31.12.2015. According 
to  the  EIB,  this  commitment  for  Ukraine  from  the  Bank  corresponds  to  the  frontloading  lending 
based on the assumption that, following the Mid-Term Review of the ELM in 2016, the financing 
capacity of the EIB under the ELM would be re-examined to ensure an adequate level of financing 
for Ukraine and other countries in line with EU priorities34. 

33 Calculated on the amount approved by the board of Directors of the EIB, e.g. the EIB contribution to the project 
34 CA of 14th March 2014 (CA/472/14) 

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The remaining 21% of the amount approved in this region have been deployed in Georgia, Armenia, 
Azerbaijan  and  Moldova. In the region “Eastern  Europe,  Southern Caucasus, Russia”, the pace of 
operation  has  been  strongly  affected  by  an  unexpected  geopolitical  event  that  urge  the  EU  to 
provide a rapid and significant financial support through the ELM. While this outcome has a clear 
political relevance, it raises the question of how to deal with major geopolitical events that distort 
the allocation under the ELM within an almost fixed ceiling. The regional ceiling is not constraining 
the EIB activity in the region so far. However, in the future it could represent a serious constraint to 
continue  supporting  EU  priorities  in  the  region  (notably  those  countries  having  signed  an 
Association Agreement with the EU), a constraint further heightened if new countries (e.g. Belarus) 
were added to the list of eligible countries under the ELM.  

In  Asia,  78%  of  the  ceiling  have  been  already  committed  in  India  (55%  of  the  total  allocation), 
Bangladesh  (18%),  Nepal  (17%),  Pakistan  (7.5%),  and  Laos  (2.5%).  The  ceiling  is  relatively  low 
compared  to  other  regions  such  as  Latin  America  and  compared  with  the  potential  demand  for 
project  financing  which  is  considered  very  high  and  address  also  the  least  developed  countries 
under the mandate and would largely exceed the regional ceiling. Indeed, the EIB has many project 
opportunities  in  Asia,  in  particular  as  regards  climate  change,  and  due  to  the  financial  ceiling 
imposed through the allocation policy has to be very selective. As part of this selection, the EIB puts 
a  high  premium  to  climate  related  project.  This  is  reflected  in  the  level  of  climate  action  in  the 
region (see section 5.4).  

For  central  Asia, the current  volume  of  funding  approved  stands  at  77%  of the  regional  ceiling. 
This  reflects  mainly  the  fact  that  the  regional  ceiling  is  quite  low  (EUR 182  million)  so  that  one 
large  infrastructure  project  of  EUR 140  million  held  in  two  countries  (Tajikistan  and  Kyrgyzstan) 
drives  the  resources  available  for  the  region  to  near-exhaustion.  Two  additional  considerations 
have to be taken into account for this region. The first consideration refers to the importance of the 
financing  needs  identified  in  the  region:  the  current  pipeline  of  projects  represents  a  forecasted 
volume  of  around  than  EUR 330  million  for  the  four  central  Asian  countries  only.  The  second 
consideration refers to the potential inclusion of Kazakhstan. So far, the EIB conducts the financing 
operations  in  Kazakhstan  under  the  own-risk  facilities,  in  line  with  the  Regional  Technical 
Operational  Guidelines,  which  specify  “in  Kazakhstan  the  EIB  should  envisage  to  finance 
operations  exclusively  using  ORF”.  However,  if  the  macroeconomic  situation  of  the  country  – 
falling  oil  prices,  depreciation  of  the  national  currency  –  leads  to  a  downgrading  of  the  country’ 
credit  rating,  Kazakhstan  might  not  be  eligible  any  more  for  financing  under  the  ORF.  If  this 
occurs,  a  case  could  be  made  for  an  extension  of  the  ELM  to  Kazakhstan.  This,  however,  would 
make the regional ceiling an even tougher constraint. 

In Latin America, six operations have been launched so far. 34% of the ceiling has been reached 
through  operations  in  Brazil  (45%),  Ecuador  (25%),  Nicaragua  (19%)  and  Honduras  (11%).  This 
figure indicates that currently the EIB has delivered against the resources dedicated to the region. 
However,  like  in  Asia,  according  to  the  EIB  the  potential  demand  for  project  financing  which  is 
considered  very  high.  In  addition,  the  addition  of  new  countries  to  the  ELM  portfolio 
(Argentinaand Cuba in particular) would put a strain on this ceiling.  

In South Africa, around half of the available funds have been exhausted. The regional ceiling has 
been lowered in comparison to the previous ELM period from EUR 936 million to EUR 416 million. 
The  regional  ceiling  is  not  binding  so  far.  However,  only  1.5  years  elapsed  from  the  start  of  the 
current  ELM  period  and  simply  projecting  the  linear  trend  into  the  coming  period  up  to  2020  – 
assuming the financing needs of the region remain stable – shows that the regional envelope would 
be  exhausted  by  the  second  half  of  2017.  Given  that  the  lowering  of  the  ELM  regional  ceiling 
coincided with the reduction in the direct European Commission assistance to South Africa – from 
EUR 1 billion to EUR 200 million –, the financial presence of the European Union in South Africa 
becomes  much  less  pronounced.  This  leaves  opportunities  for  other  external  policy  interests,  in 
particular from China, the largest trade partner of South Africa and one of the major investors in 
the country. The EIB uses own-risk facilities in South Africa only for strategic FDI of EU companies 
and  renewable  energies,  thus  reduction  in  the  ELM  envelope  limits  its  leeway  for  financing 
operations  in  South  Africa.  Co-financing  of  projects  in  partnership  with  international  financial 
institutions (IFI) can indeed be envisaged, in particular with AFD, KFW, IFC, the World Bank, or 

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Proparco, all of  which work in South Africa on a regular basis.  However, this concerns only  large 
infrastructure  projects.  For  the  loans  to  SMEs,  the  EIB  has  to  rely  exclusively  on  the  financing 
under the EU Guarantee.  

For  the  regions  Potential  candidate  countries  and  candidate  countries  as  well  as  the 
“Mediterranean countries” region, the utilization of the regional ceilings has been according to 
plan  so  far.  For  the  first  region,  the  amount  committed  so  far  represents  15%  of  the  ceiling  even 
though  nine  financing  operations  have  been  active  in  this  region  (around  30%  of  all  the 
operations).  However,  to  finance  its  operations  in  Turkey  in  2014  the  EIB  used  the  financial 
resources remaining from the previous ELM. For the  second region, the aggregate volume for the 
fifteen financing operations launched since July 2014 represents 24% of the ceiling. However, these 
countries  have  particularly  urgent  financing  needs  in  the  refugee  context.  The  European  Council 
has invited the EIB to present to its June meeting a specific initiative aimed at rapidly mobilising 
additional  financing  in  support  of  sustainable  growth,  vital  infrastructure  and  social  cohesion  in 
Southern neighbourhood and Western Balkans countries. In the light of the high political priority 
to provide a substantial support to the countries of the region in the refugee context, the EIB could 
be  called  to  step  up  its  level  of  operation  substantially,  resulting  in  an  early  exhaustion  of  the 
envelope.  This  would  call  for  an  additional  financial  effort  from  the  EU  budget  to  support  public 
sector infrastructure projects at concessional terms, and leveraging guarantee to boost the private 
sector  as  driver  for  growth.  However,  the  analysis  of  details  of  such  an  initiative,  including  the 
implications for the ELM, is outside the scope of the present study and must be tackled separately. 

Overall,  the  regional  ceilings  for  different  specific  regions  reflect  the  policy  priorities  of  the  EU. 
Therefore,  the  judgment  on  the  specific  regional  ceilings  is  not  of  a  technical,  but  of  a  political 
nature.  The  key  issue  lies more  in  the  flexibility  given  to  the  EIB in  reallocating  funds  across  the 
different regions based on the quality of projects in the pipeline.  

Conclusion 5: in some of the regions (Asia; South Africa; Central Asia; Russia, Eastern Europe, 
South  Caucasus),  the  amount  committed  (approved)  after  1.5  years  into  the  Mandate  approaches 
the regional ceiling, which constrains the future operations and significantly reduces the capacity of 
the ELM to respond to potential upcoming challenges or EU priorities in the future.  

Conclusion 6: in other regions (Mediterranean countries; Latin America, Potential candidate and 
candidate countries), the EIB delivers according to the regional ceilings.  

5.1.3  Relevance of the allocation policy and the choice of own-risk financing vs 

financing under the EU guarantee 

This subsection of the report addresses an important issue of soliciting the EU Guarantee for EIB 
external lending operations. The purpose of the subsection is to explore and analyse, based on the 
twenty case  studies, the  selection by the EIB of financing operations for which the EU Guarantee 
coverage is solicited.  

The  Allocation  policy,  specified  in  Annex  V  of  the  ELM  Guarantee  Agreement  between  the 
Commission and the EIB, sets the rules for the EU guarantee coverage of EIB lending outside the 
EU operations under the 2014-2020 external mandate or EIB own risk facilities.  

The  EIB’s  Board  of  Directors  decides  on  the  overall  amount  of  lending,  amount  of  risk  taking 
(under  own  risk  and  under  the  EU  guarantee)  and  the  breakdown  by  region.  For  its  outside 
operations, the EIB decides whether to solicit or not the EU guarantee and informs the European 
Commission accordingly.  

The  main  criteria for soliciting of the  EU guarantee are  the nature  of the  counterparty, the credit 
risk  of  the  country  of  operation  and  the  Bank’s  Credit  Risk  Policy  Guidelines.  It  also  takes  into 
account the risk absorption capacity and the country limits if applicable.  

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The credit rating is the one applied to the country by the rating agencies Standard & Poor’s, Fitch 
and  Moody’s at  the moment  of submission  by  the  EIB of the operation to the Commission  under 
the Article 19 procedure. The following credit risk criteria are defined: 

  Sovereign  lending:  risk  coverage  EU  Guarantee  would  not  be  sought  for  sovereign  loans  to 
countries with an Eligible Country Rating equivalent to Standard & Poor’s / Fitch A– / Moody’s 
A3 or better.  

  Sub-sovereign lending: the EIB shall not solicit the EU Guarantee risk coverage for sovereign 
loans to countries with an Eligible Country Rating equivalent to Standard & Poor’s / Fitch A– / 
Moody’s A3 or better.  

  Private sector lending: the EIB shall not solicit the EU Guarantee risk coverage for sovereign 
loans to countries with an Eligible Country Rating equivalent to Standard & Poor’s / Fitch A– / 
Moody’s A3 or better.  

The  existence  of  the  credit  rating  ceiling  for  the  financing  operations  under  the  EU  Guarantee  is 
sound. EU guarantee has an opportunity cost, as it requires provisioning the guarantee fund from 
the EU budget. This emphasizes the necessity  of selecting projects  for lending outside the  EU. In 
particular, it is sound to focus the EU guarantee on lending in countries for which investing at the 
own-risk would be relatively riskier and therefore damaging to the EIB creditworthiness.  

The Allocation policy does not specify any credit rating “floor” for the ELM operations. However the 
EIB  own  risk  assessment  precludes  own-risk  operations  in  countries  with  sovereign  rating  below 
the  investment  grade  (credit  rating  is  BBB-  or  higher  by  Standard  &  Poor's  and  Fitch  or  Baa3  or 
higher by Moody's).  

Thus, the Allocation  policy and the EIB’s Credit Risk Policy Guidelines taken  together establish a 
“ceiling” and a “floor” in terms of credit risk for soliciting the EU guarantee. It is best represented 
by the following graph: 

Figure 19: When can the EIB solicit the EU Guarantee for lending outside the EU? 

Source: PwC analysis; Credit Risk Policy Guidelines; Annex V Guarantee Agreement 

The figure above indicates the areas where the EU Guarantee under the ELM can be chosen by the 
EIB for its financing operations outside the EU. Above the threshold represented by the S&P and 
Fitch grades of A- and Moody’s A3, area A, the EU Guarantee cannot be solicited. The two areas B 
and  C  below  this  threshold  can  be  covered  the  EU  Guarantee.  The  bottom  area  C,  below  the 
investment grade threshold of BBB- (S&P) or Baa3 (Moody’s), corresponds to countries where the 
EIB cannot lend at own risk.  

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Even though the EIB has the legal option to lend under both modalities in the areas B and C, the 
maximization  of  the  added  value  of  the  ELM  suggests  focusing  on  countries  for  which  own  risk 
lending cannot take place, i.e. use the EU Guarantee where it is the most needed.  

Thus,  the  evaluation  addresses  two  concerns.  The  first  is  to  check  the  compliance  of  the  EIB 
financing operations under the ELM 2014-2020 regarding the Allocation policy35. The second one 
is to assess whether the lending of the EU Guarantee takes indeed place in countries with the credit 
rating below the investment grade.  

The following table shows the sovereign rating of the beneficiary country at the date of signature of 
the loan under the ELM 2014-2020: 

Table 22: Sovereign rating of the beneficiary country at the date of signature of the ELM loan 

Financing operation 

Country 

Date of 
signature36 

Eligible Country Rating at the 
moment of the loan signature37 
Moody’s 

Fitch 

S&P 

Laksam Akhaura double track rail project 

Bangladesh 

15/10/2015 

BB- 

SBI loan for SMEs and Mid-Caps 

Tajik - Kyrgyz power interconnection 

Armenia APEX loan for SMEs 

India 
Kyrgyzstan38 
Armenia 

02/10/2015 

04/12/2014 

28/11/2014 

BBB- 

Accessbank Azerbaijan loan for SMEs 

Azerbaijan 

07/11/2014 

Kutaisi waste water 

Ukraine early recovery 

Georgia 

Ukraine 

Guarantee for economic development in Ukraine 

Ukraine 

Sao Paulo Rolling Stock 

Brazil loan for SMEs & Mid-Caps 

Private sector development & economic growth 

OUARZAZATE III (Tower) 

Brazil 

Brazil 

Egypt 

Morocco 

EUROPAC industrial packaging plant in Tangier 

Morocco 

Partenariat BEI-BTK-réseau-entreprendre 

AMEN Bank-Prêts PME & ETI 

Wadi Al Arab water system II project 

Tunisia 

Tunisia 

Jordan 

15/10/2015 

22/12/2014 

09/10/2015 

20/10/2014 

28/05/2015 

14/03/2015 

22/12/2014 

15/06/2015 

04/12/2014 

17/09/2015 

08/11/2015 

Montenegro water and sanitation 

Montenegro 

25/06/2015 

IDF loan for SMEs & priority projects II 

Montenegro 

16/03/2015 

Ba3 

Baa3 

B2 

Ba2 

Ba3 

Ba3 

Ca 

Caa3 

Baa2 

Baa2 

B3 

Ba1 

Ba1 

Ba3 

Ba3 

B1 

Ba3 

Ba3 

BB- 

BBB- 

- 

BB- 

BBB- 

BB- 

CCC 

CCC 

BB- 

BBB 

B 

BB+ 

BBB- 

BB 

BB- 

- 

- 

- 

B 

- 

BBB- 

BB-/B 

CCC- 

B- 

BBB- 

BBB- 

B- 

BBB- 

BBB- 

BB 

- 

BB- 

B+ 

B+ 

Ziraat Bank IPARD MBIL 

South Africa private sector facility 

Source: PwC analysis 

Turkey 

22/09/2014 

South Africa 

23/11/2015 

BB+ 

BBB- 

Baa3 

Baa2 

BBB- 

BBB 

As  shown  in  the  table,  the  financing  operations  were  conducted  in  full  compliance  with  the 
Allocation policy of the ELM: countries where the EIB operates all fulfil the credit risk criteria set 
by  the  allocation  policy39  as  all  of  them  have  grades  below  the  credit  risk  thresholds  specified 
(Standard & Poor’s/Fitch A-, Moody’s A3 or better).  

The  examination  of  the  table  also  indicates  that  the  own-risk  lending  and  lending  under  the  EU 
Guarantee are largely non-rival: the ELM is used in most cases for financing operations in countries 
with  a  speculative  grade.  The  few  exceptions  concern  countries  with  the  S&P/Fitch  grade  BBB– 
(Moody’s Baa2 or Baa3).  

35 The assessment of the compliance of the own-risk operations with the Credit Risk Policy Guidelines is out of scope of this evaluation. 
36 Formally, it is the credit rating at the date of submission by the EIB of the operation to the Commission under the Article 19 procedure 
which should be taken into account instead of the date of signature. However, the time elapsed between the two is likely to be limited. Thus, 
we use the date of signature as a proxy.  
37 The investment grades are marked in bold/orange.  
38 First-time ratings attributed by S&P and Moody’s in December 2015 
39  Allocation  policy  for  EIB’s  new  financing  operations  outside  the  EU  between  EU  Guarantee  coverage  under  the  2014-2020  external 
mandate or EIB own risk facilities 

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The  three  countries for which the  three  credit  rating agencies unanimously attributed  investment 
grades  are  India,  Brazil  and  South  Africa.  These  are  three  emerging/developing  countries  with 
relatively  wider  access  to  the  world  capital  markets  and  the  EU  Guarantee  is,  a  priori,  not  a 
prerequisite  for  the  EIB  operating  in  these  countries.  While  the  three  countries  are  important 
markets representing a clear interest for the European Union and for the EIB, the relevance of the 
EU Guarantee for these three countries can be subject to discussion. 

Nevertheless,  even  if  formally  it  corresponds  to  the  first  investment  grade,  soliciting  the  EU 
Guarantee  in  these  cases  is  defensible.  Indeed,  the  countries  concerned  are  emerging/developing 
countries, which typically exhibit substantial macroeconomic volatility and are strongly subject to 
external  shocks.  A  deterioration  of  the  terms  of  trade  following  a  relative  price  shock  or  a 
deterioration  in  the  capital  account  can  affect  significantly  the  credit  risk  perspectives  of  the 
country under consideration and lead to the revision of the associated credit rating. In line with this 
argument,  BBB–  rating  indicates  the  potentiality  of  a  negative  evolution  represented  precisely  by 
the “minus”.  

An example of the potentiality of such an outcome is Kazakhstan. The country is out of scope of the 
ELM  and  the  EIB  lends  there  at  its  own  risk.  The  country’s  present  rating  is  BBB  (S&P),  Baa2 
(Moody’s)  and  BBB+.  However,  a  fall  in  the  oil  price  is  leading  to  the  strong  depreciation  of  the 
local  currency  and  the  potential  deterioration  of  the  country’s  sovereign  and  corporate  agents’ 
solvency.  This  increases  the  probability  of  the  credit  rating  agencies  revision  of  the  country’s 
sovereign rating which would push it below the investment grade status. In this case, the EIB would 
not be able to continue operating in the country under the own risk facilities.  

This sovereign credit rating risk effectively materialized for Brazil, with its grades currently being 
BB  (S&P),  Ba2  (Moody’s)  and  BB+  (Fitch)  with  a  negative  outlook.  India  and  South  Africa  have 
kept  the  same  grades  as  at  the  date  of  the  signature  of  the  ELM  loans,  but  macroeconomic 
pressures persist for both countries, especially India.  

Thus,  overall,  the  Allocation  policy  is  strictly  complied  with  –  the  EIB  does  not  use  the  ELM  in 
countries  with  the  credit  rating  higher  than  the  threshold  –  and  the  use  of  the  EU  Guarantee  is 
indeed largely concentrated in countries where the EIB would not be able to operate at its own risk.  

Considering the criteria of the Allocation policy, the list of the eligible countries might be subject to 
revision.  Indeed,  some  of  the  eligible  countries  have  credit  ratings  well  above  the  thresholds 
specified in the Annex V. For instance, as of March 2016, China has a credit rating of AA- (S&P), 
Aa3  (Moody’s)  and  A+  (Fitch).  South  Korea  has  a  credit  rating  of  AA-  (S&P  and  Fitch)  and  Aa2 
(Moody’s). The table below provides a list of countries which are defined eligible in the Decision but 
whose  credit  ratings  are  above  the  threshold  given  in  the  Annex  V  of  the  Guarantee  Agreement 
between the EIB and the European Commission: 

Table  23:  Sovereign  rating  of  the  eligible  countries  with  credit  ratings  above  the  threshold 
defined in the Allocation policy (S&P/Fitch: A-, Moody’s: A3) 

Country 

China 

South Korea 

Mexico 

Chile 

Malaysia 

Peru 

Israel 

Singapore 

Eligible Country Rating 

S&P 

AA- 

AA- 

BBB+ 

AA- 

A- 

BBB+ 

A+ 

AAA 

Moody’s 

Aa3 

Aa2 

A3 

Aa3 

A3 

A3 

A1 

Aaa 

Fitch 

A+ 

AA- 

BBB+ 

A+ 

A- 

BBB+ 

A 

AAA 

Source: PwC analysis 

Based  on  the  credit  ratings  exposed  above,  China,  South  Korea,  Singapore,  Malaysia,  Israel  and 
Chile clearly fall out of the scope of the ELM operations. As for Mexico and Peru, albeit their credit 

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rating exceeds the threshold only for one rating agency, their grade clearly takes them off the list of 
top priorities.  

It  should  be  underlined  that  the  EIB  fully  complies  with  the  Allocation  policy  thresholds  and  no 
operations under the current ELM 2014-2020 have been initiated in the countries mentioned in the 
table. Thus, the recommendation to review the list of eligible countries (Annex III of the Decision 
466/2014/EU)  has  no  immediate  implication  for  the  ongoing  or  planned  financing  operations 
under the ELM.  

An  additional  point  of  concern  related  to  the  design  of  the  EU  Guarantee  was  raised  during  the 
discussion  with  the  EIB  representatives  and  is  related  to  the  scope  of  the  guarantee  cover.  The 
guarantee does not, in particular, cover the political risks related to more complex transactions, as 
the  former  emanate  to  a  large  extent  from  the  governments’  contractual  obligations  under  the 
project  documents  (as  off-taker  or  supplier).  In  fact,  the  Bank  is  only  entitled  to  call  for  the  EU 
guarantee under the Breach of Contract insofar as there is a Denial of Justice. This means that any 
disagreements under the project documents between the sponsor and the lender on the one hand 
and the off-taker/government on the other, must first go to arbitration, which, in turn, must result 
in an arbitral award in favour of the investor and the lender, which the government subsequently 
would  fail  to  enforce  (“denial  of  justice”).  Such  a  cover  has  been  considered  insufficient  by  the 
market  (commercial  banks,  sponsors)  as  it  is  not  Basel  II  compliant.  Thus,  the  Mid-Term  review 
could offer the opportunity to reconsider the extent of the EU guarantee cover so as to include in its 
scope the non-honouring of sovereign financial obligations.  

Conclusion  7:  the  financing  operations  were  conducted  in  full  compliance  with  the  Allocation 
policy of the ELM.  

Conclusion 8: the own-risk lending and lending under the EU guarantee are largely non-rival: the 
ELM is used in most cases for financing operations in countries with a speculative grade. 

Conclusion  9:  in  the  three  countries  with  an  investment  grade  (India,  Brazil  and  South  Africa) 
where the ELM operations have been conducted, the macroeconomic environment is characterized 
by high volatility and uncertainty, which justifies the use of the EU guarantee.  

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5.2  Management of the Programme and implementation of 

the operations 

This subsection covers the evaluation questions EQ4, EQ 5, EQ 6, EQ 7 and EQ 9.  

  EQ4:  How  does  the  EIB  reporting  towards  the  commission  allow  to  assess  the  compliance  of 
EIB  financing  operations  with  the  Decision  No  466/2014/EU  and  what  are  appropriate 
measures  for  improvement  (if  applicable)?  Are  the  reporting  requirements  regarding 
greenhouse gas emissions related to EIB financing operations being fulfilled? 

  EQ5: What is the relevance of the set of indicators and criteria developed by the EIB, the REM 

for the evaluation of the Programme? 

  EQ6:  How  does  the  EIB  monitoring  system  contribute  to  the  identification  of  barriers  to 
effectiveness and  allow overcoming  them and how does the  REM framework contribute to the 
ex-ante assessment of expected project results and enhance the EIB’s ability to report on actual 
results? 

  EQ7:  Is  the  programme  able  to  detect  and  take  into  account  the  unintended  effects  on 

stakeholders? 

  EQ9: To what extent are the desired effects achieved at a reasonable cost in comparison to other 
similar  organisations/Programmes?  What  aspects  of  the  Programme  are  the  most  efficient  or 
inefficient, especially in terms of resources that are mobilised by final beneficiaries, the EIB and 
the Commission during the different phases of the project? 

5.2.1  ELM operations lifecycle 

The  projects  under  the  ELM  follow  the  usual  steps  of  the  EIB  project  lifecycle.  For  the  20  case 
studies, we analysed the various phases of the project lifecycle. 

Project origination: identification of a project opportunity and first checks 

The initiation of a project starts with the identification of a project opportunity by the EIB. This 
can occur in a variety of situations.  

The very rationale of the EU guarantee is to enable the EIB to carry out projects in countries where 
it has no or limited activity and to further work with public sector entities (especially through the 
comprehensive guarantee). In the countries where the EIB has no local presence or “intelligence” of 
the field, the identification of projects relies on cooperation with other IFIs that have a higher 
presence in the country or the region. Therefore, the EIB holds regular discussions with other IFI to 
identify  project  opportunity  (through  co-financing).  A  telling  example  is  the  biannual  meeting 
between the EIB and the ADB to discuss project pipeline and identify opportunity for the EIB to co-
finance projects with the ADB in Asia. This has been observed in Bangladesh – where the EIB has 
no  local  presence  -  for  the  project  “Laksam  Akhaura  double track  rail”  where the  opportunity  for 
the  EIB  to  co-financed  this  project  with  the  ADB  (while  the  ADB  had  already  done  much  of  the 
preparatory work) were identified during such meeting. 

The  identification  of  the  project  may  also  result  from  the  prospection  of  the  local  needs  to 
develop operations with new types of counterparts. For instance, the origination of the project “Sao 
Paulo  rolling  stock”  in  Brazil  resulted  from  the  need  to  refocus  operations  of  the  EIB  on  public 
sector  following  the  change  in  the  mandate  to  have  project  in  environmental  and  social 
infrastructures. Therefore, the EIB has investigated project opportunities with public sector entity 
and  identified this  particular project.  It allowed the EIB to launch its  first project  with  the public 
sector in Brazil and to cover objectives of the ELM other than the support to SME and Midcaps, in 
this case sustainable infrastructure. 

Finally, the identification of some projects may result from the continuous discussion between 
the  EIB  and  a  well-known  counterpart  with  whom  the  EIB  has  already  worked  in  the  past.  This 
situation is notably observed in countries where the EIB also intervenes under others mandates or 
under ORF. This way the Bank can rely on existing clients and its knowledge of the national market. 
This  occurred  for  instance  in  Tunisia, with  the  intermediated  loan  to  BTK  or  Amen  and  in  South 

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Africa with the four financial intermediaries (Firstrand Bank Ltd, Nedbank Ltd, Standard Bank Ltd, 
and Industrial Development Corporation (IDC)) benefiting from a multi-beneficiary intermediated 
loan. In Brazil, the EIB has financed a loan for SME with Banco Santander following the signature 
of  two  operations  with  this  counterpart  outside  the  ELM  in  Mexico  (Global  Loan  for  SMEs  and 
Mid-Caps) and Chile (Climate Change Framework Loan). 

Once  the  first  contact  established,  the  Project  Directorate  checks  the  project  eligibility  on  several 
criteria: 

  The project is a new investment (no refinancing); 
  It is consistent with the EU policy and the EIB public policy objectives; 
  It is not an “excluded activity”40. 

Then,  the  EIB  carries  out  preliminary  checks  whose  results  are  provided  in  three  separate 
documents.  

First,  the  Preliminary  Information  Note  (PIN)  comprises  the  preliminary  opinions  of  OPS 
and  PJ  on  the  opportunity  to  support  the  concerned  project;  ECON  provides  an  opinion  for 
intermediated  lending  operations.  The  PIN  presents  also  the  main  issues  to  be  appraised  during 
appraisal phase and provides  outlining information on  the  project. A first  financial proposition is 
formulated  with  the  mandate/facility  to  be  used,  the  type  of  operation,  the  project  cost  and  the 
maximum  maturity,  grace  and  bullet.  Other  aspects  are  also  considered  such  as  the  sector  of  the 
project,  the  opportunity  to  use  technical  assistance  and  past  experience  with  the  intermediaries. 
Finally,  the  PIN  includes  also  overall  information  on  the  counterpart  characteristics  and  the 
country economic situation.  

Second,  at  this  stage  the  first  pillar  of  the  REM  framework  “Contribution  to  EIB  Mandate 
Objectives & EU Priorities” is completed. It analyses the contribution of the operation to the three 
mandate’s  objectives  and  its  alignment  with  the  EU  and  national  actions  in  this  field.  The 
contribution  of  the  project  to  at  least  one  of  the  three  mandate’s  objectives  is  a  prerequisite  to 
further assess the project, e.g. to obtain the Agreement to appraise. The overall contribution of the 
REM to the appraisal of the project is deeper explained below in the dedicated section on the REM. 

Then, the Opinion for Appraisal (OFA) is an internal PJ document presenting the main issues 
and  risks  to  be  appraised  during  the  appraisal  phase.  The  risks  are  assessed  mainly  along  the 
following  considerations:  the  implementation  risk,  the  investment  costs,  environmental  risks, 
compliance  with  the  Bank’s  requirements  in  terms  of  public  procurement  or  environmental  and 
social  standards,  capability  and  capacity  of  the  intermediary  to  identify  sub-projects,  economic 
relevance of the project, etc. The  OFA provides also basic  information on  the project: description 
and  location,  timetable,  cost,  environmental  and  social  aspects,  procurement,  economic  interest, 
contribution  to  overall  Mandate  Objectives  &  Priorities  and  overall  quality  and  soundness  of  the 
project. In parallel, upon request from OPS, the compliance officer carries out due diligence on the 
counterpart(s)  identity  on  the  basis  of  the  Integrity  Questionnaire.  This  involves,  in  particular, 
ensuring that the counterpart(s) is not under sanctions or a legal threat.  

With  the  PIN,  the  loan  officer  requests  for  authorisation  to  process  the  project  from  the 
Management Committee. With PIN validation, the EIB requests opinions on the project from the 
Commission  (Article  19  -  Statutory  requirement)  which  has  two  months  to  answer  (sometimes 
there  are  delays  due  to  discussions)  and  from  the  host  State.  If  agreed,  the  project  enters  in  the 
appraisal phase.  

The  identification  of  project  opportunities  under  ELM  requires  the  EIB  to  prospect  and  market 
products  towards  new  counterparts  or  to  rely  on  partners  IFIs,  especially,  in  countries  where  the 
EIB has no or limited local presence and knowledge of the market. As from the pre-appraisal stage, 

40 Activities excluded from EIB lending: ammunition and weapons, military/police equipment or infrastructure, projects which result in limiting 
people's individual, rights and freedom, or violation of human rights; projects in protected areas, critical habitats and heritage sites, without 
adequate  compensation/mitigation,  sex  trade  and  related  infrastructure,  services  and  media;  animal  testing*);  gambling  and  related 
equipment,  hotels  with  in-house  casinos;  tobacco  (production,  manufacturing,  processing,  and  distribution),  activities  prohibited  by  national 
legislation (only where such legislation exists). http://www.eib.org/attachments/documents/excluded_activities_2013_en.pdf  

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the  EIB  covers  all  the  topics  that  will  be  deeper  investigated  during  the  appraisal  phase.  The 
insertion  in  the  ELM  objectives  and  the  consistency  with  EU  objectives  in  the  country  are  a  key 
topic during this phase and a prerequisite for a further appraisal of the project.  

Project appraisal: a comprehensive analysis of the project that provides the relevant information 
for assessing the performance and the relevance of the project. 

The  appraisal  of  projects  benefitting  from  the  ELM  does  not  differ  from  the  usual  appraisal  of 
project  conducted  with  other  mandate  or  under  ORF.  Therefore,  the  EIB  implements  its  usual 
appraisal  tools  and  processes.  It  covers  all  operations  and  specifically  some  types  of  operations 
(investment loans, multi-beneficiary loans, etc.) and some sectors. The various analyses provide a 
comprehensive picture of the various aspects of the project and reflect effectively all the main issues 
that may affect the project and all the objectives of the EU with the ELM. 

The  first  step  in  the  ex-ante  evaluation  of  any  project  is  the  assessment  of  the  financing 
needs,  i.e.  the  project  cost  that  starts  in  the  pre-appraisal  phase  and  is  consolidated  in  the 
appraisal phase. This will condition the volume of lending by the EIB (capped at 50% of the total 
cost).  

The  assessment  of  the  financial  needs  of  the  beneficiaries  is  conducted  for  all  operations  but 
following  different  processes  depending  on  the  type  of  the  loan.  For  the  infrastructure  projects, 
covered by the investment loans, the project holder/promoter conducts the project cost assessment. 
The project cost is then re-assessed by the EIB – relying on the sector experts – and potentially by 
the  co-financing  IFIs.  The  re-assessment  by  the  EIB  starts  from  the  hypotheses  laid  out  by  the 
project  holder/promoter  and  reviews  the  underlying  hypotheses.  The  two  types  of  cost  estimates 
might diverge, depending on the assumptions made. As an example, in the Ouarzazate III (Tower) 
project  the  assessment  of  the  needs  for  funds  made  by  the  Moroccan  counterpart  (MASEN) 
estimated the total project cost at EUR 764 M, while the EIB estimated it at EUR 855 M. In some 
cases, when the co-financing IFI assumes most of the project funding, the project cost assessment 
is conducted by the IFI; for instance, in the case of the Laksam Akhaura Double Track Rail Project, 
the Asian Development Bank (ADB) undertook the project cost assessment on the financers’ side. 
The ADB has the local presence and strong intelligence and knowledge of the local market, which 
allows the EIB to rely on the ADB for the project cost assessment. The impact in terms of leverage 
of  private  funds  is  most  often  nil  for the  investment  loans.  Indeed,  the latter  often  correspond  to 
large  infrastructure  projects  most  of  which  would  not  generate  revenues  (and  therefore  does  not 
attract private investors). The example of the Laksam Akhaura Double Track Rail Project illustrates 
this  point  as  the  project  is  expected  to  have  a  very  high  economic  internal  rate  of  return,  but 
without  generating  any  financial  revenue,  which  precludes  any  private  funding  on  a  pecuniary 
basis.  

For  the  multi-beneficiary  loans,  the  financial  intermediaries  (local  banks)  assess  the  financing 
needs  of  the  local  SMEs  and  Mid-caps.  The  financial  intermediaries  then  submit  to  the  EIB  the 
estimation  of  the  project  cost,  i.e.  the  total  volume  of  funding  for  which  they  wish  to  apply.  The 
assessment of the financial needs by the local financial intermediaries is an optimal solution given 
their  comparatively  better  knowledge  of  the  market.  The  additional  volume  of  lending  made 
available for the local  SMEs and  Mid-Caps is composed at  50% of the EIB multi-beneficiary loan 
and  at  50%  of  the  own  funds  of  the  local  banks.  This  sharing  of  total  additional  lending  volume 
ensures that the local financial intermediaries would not tend to overestimate the needs of the final 
beneficiaries (as they participate in the funding and therefore share the credit risks with the EIB). 
The leverage effect for the multi-beneficiary loans is ensured thanks to the participation on parity 
basis from the local banks: for each euro lent by the EIB, an additional euro is raised by the local 
private banks.  

In  addition,  for  all  operations,  the  borrower  economic  and  financial  situation  (market 
position,  business  outlook,  earnings,  balance  sheet  analysis,  asset  quality,  risk  management, 
capitalization,  funding  and  liquidity  and  off-balance  sheet  items,  etc.)  is  assessed.  It  provides 
information on the main strengths and weaknesses of the counterpart. For credit lines operation, 
the  market  position  of  the  counterpart  is  crucial  since  it  conditions  the  way  sub-projects  will  be 
financed  (type  of  projects  in  the  pipeline,  geographical  coverage  of  the  borrower,  competitive 

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advantage,  etc.).  The  EIB  analyses  the  internal  management  system  of  the  borrower  with  a 
focus on the organizational structure, the shareholders structure and the internal risk management 
system. 

For  loans  intermediate  through  the  financial  sector,  a  macroeconomic  and  financial  sector 
assessment  of  the  country  of  operation  is  carried  out  with  a  view  to  evaluating  structural 
bottlenecks,  systemic  risks  and  development  challenges,  with  a  particular  focus  on  the  private 
sector businesses, including and micro enterprises and SMEs. 

For  investment  loans  in  infrastructure,  a  particular  attention  is  paid  to  technical  and 
technological  challenge,  implementation  processes  and  environmental  impacts.  On 
the environmental impact, the borrower is required to provide an ex-ante assessment for which all 
aspects related to social and environmental impacts of the project should be addressed, including 
impact on fauna and flora, consumption of land or resettlement of people. In Bangladesh, for the 
project Laksam Akhaura double track rail, the promoter has undertaken an Environmental Impact 
Assessment (EIA) that covers the main environmental related aspects of the projects. The project 
was expected to generate savings in user time, vehicle operating costs, road accident costs, local air/ 
noise  emissions  as  well  as  a  reduction  in  greenhouse  gas  emissions  as  a  result  of  the  expected 
modal shift of passengers and freight from road to rail. The main residual negative environmental 
and  social  impacts  of  the  project  included:  (i)  permanent  conversion  of  about  60  ha  of  largely 
agricultural  land;  (ii)  cutting  down  of  about  57,000  trees;  (iii)  involuntary  resettlement  of  about 
2,200 households and 60 common property assets; and (iv) use of about 2.2 million m3 of material 
for the construction of embankment and track. In response to these, mitigation measures have been 
taken. They are gathered in an Environmental Management Plan, which is contractually binding on 
the works of the contractor and monitored by independent auditors. 

When the project implies to procure goods or services, the public procurement system in the 
country  is  also  analysed  and  compared  with  the  EIB  guidelines  for  procurement.  For  the  project 
Laksam Akhaura double track rail, the appraisal has focused on the procurement system in place to 
purchase the train sets. Indeed, 65 train sets were procured before the EIB’s involvement. The EIB 
noticed that the tender documents for these 65 EMUs included a margin of local preference of 20%, 
5%  higher  than  the  15%  margin  allowed  by  the  EIB  Guide  to  procurement.  This  level  of  local 
preference  did  not  therefore  fully  comply  with  the  Bank's  Guide  to  procurement.  After  having 
completed  an  ex-post  evaluation  of  this  procurement  process,  the  EIB  considered  that  the  local 
preference  requirements  did  not  have  a  significant  impact  on  the  outcome  of  the  procurement 
process and therefore approved the requested derogation for this procurement. 

The  risk  of  corruption  is  also  assessed.  Prior  to  the  initiation  of  a  project,  the  loan  officer  has  to 
screen its portfolio of potential projects to ensure that they are compliant with the anti-corruption 
standards of the Bank. OCCO department is responsible for such an analysis. Then, once a project 
is  initiated  and  during  its  appraisal,  upon  request  by  OPS,  OCCO  extends  its  investigation  to  the 
corruption issues and the identity of the borrower, both persons and legal entities, the stakeholders 
and potential capitalistic links of the borrower or the sub-contractor. OCCO uses existing databases 
from the IMF or the World Bank to identify suspicious persons or entities and builds upon its own 
information from previous operations and investigations. 

As  part  of  the  ex-ante  assessment  of  the  investment  project,  the  potential  effect  on 
employment  is  estimated  based  on  the  usual  EIB  methodology,  and  takes  into  account  the 
information already available concerning similar projects.  

The  EIB  has  also  to  do  with  unexpected  events  occurring  during  the  appraisal  phase  that 
affected  the  fields  to  investigate  and  the  way  the  operation  were  designed.  For  instance,  for  the 
project  Sao  Paulo  rolling  stock,  the  EIB  has  been  aware  that  investigation  was  conducting  on 
possible  cartels  in  this  sector.  In  response,  the  EIB  included  protective  clause  in  the  finance 
contract in case the borrower would have been concerned by this investigation. For the project in 
Bangladesh, Laksam Akhaura double track rail, the management structure of the project within BR 
has  been  investigated.  Specific  measures  were  foreseen  to  prevent  corruption  (in  particular 
considering past corruption cases for similar project including among railway officials) and ensure 
that  environmental  and  social  requirements  will  be  taken  into  account  throughout  the  project,  in 

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particular as regard the Environmental Management Plan and the environmental clauses contained 
in  the  construction  contract.  In  a  highly  constraining  context  such  as  Ukraine,  the  appraisal 
has  been  accelerated  and  reduced  to  the  core  analysis.  In  Ukraine  due  to  the  emergency  of  the 
situation, the appraisal of the project has been particularly rapid (2 months between the PIN and 
the signature). The assessment included a fully risk assessment of the project especially as regards 
political  risk,  security  environment,  institutional  capacity,  governance  and  corruption,  social 
cohesion and technical capacity. This reflects also a certain flexibility in the appraisal process when 
exceptional circumstances occurred. 

In  addition,  the  EIB  relies  also  on  the  assessments  carried  out  by  other  IFI.  In  Ukraine,  the 
economic  and  financial  situation  of  the  country  have  been  assessed  with  the  support  of  studies 
conducted  by  other  international  organisations.  For  instance,  the  report  of  the  United  Nations 
Office for the Coordination of Humanitarian Affairs (OCHA) on the situation of the IDPs. The EIB 
relied also on a study carried out by the UNDP assessing the impact of the conflict in Luhansk and 
Donetsk oblasts on the social and economic infrastructure. The EIB has also worked with the EU to 
prepare  an  early  recovery  assessment  (RPA)  aiming  at  identifying  basic  needs to  be  covered  with 
the project.  

However,  one  topic  could  be  more  reflected  during  the  appraisal  phase,  e.g.  the  potential 
coordination  /  complementarity  /  overlaps  with  other  European  multilateral  and  Member  States’ 
financial  institutions  or  instruments  and  IFI.  Indeed,  the  contribution  and  the  consistency  of  the 
operation with the EU objectives are assessed during the pre-appraisal phase (1st pillar of the REM 
framework), but mostly at the strategic level, e.g. checking whether the objectives are aligned. The 
complementarity  at  the  operational  level  (with  other  instruments)  is  not  clearly  evoked  later  on. 
The  appraisal  of  the  project  is  logically  focused  on  the  project  in  itself  (performance,  risk  profile, 
etc.).  However  a  deeper  analysis  of  the  existing  instruments/programmes  in  the  field  of 
intervention  of  the  project  could  provide  valuable  information  for  the  potential  cooperation  with 
other European and international financial institutions in line with the article 7 of the Decision. It 
has to be noticed that the 1st pillar of the REM provides some information on existing programmes 
in  related  field  (including  national  ones)  and  that  the  3rd  pillar  dealing  with  EIB  additionality 
provides  information  on  how  EIB  could  potentially  complement  existing  source  of  funding.  Yet, 
these information are quite limited (partly due to the format of the REM) and do not provide the 
comprehensive picture of the funding instruments in the related field.  

Overall,  the  appraisal  of  the  projects  provides  an  accurate  and  comprehensive  picture  of  the 
operation,  which  seem  relevant  to  properly  appraise  the  project  and  decide  whether  it  should  be 
financed or not by the EIB. 

Table  24:  Compliance  with  the  legal  requirements  in  terms  of  ex-ante  assessment  of 
investment projects (art 9 of the Decision) 

Legal  requirements  in  terms  of  ex-ante 
assessment  

Observation  from  the  20  case  studies  / 
compliance 

The  EIB  shall  carry out due  diligence on  social, 
human  rights,  environmental,  economic  and 
investment 
development-related  aspects  of 
projects and require, where appropriate, project 
promoters  to  conduct  local  public  consultation 
on these topics. 

The list of eligible countries is established by the 
European  Parliament  and  by  the  European 
Commission. Thus, it is not a prerogative of the 
EIB  to  assess  the  relevance  of  one  or  another 
country on the list from the human rights point 
of view.  

However,  the  EIB  carries  out  a  comprehensive 
screening  and  monitoring  of  each  individual 
project from the point of view of environmental 
and social implications by PJ. 

Also the compliance with respect to the EU and 
international  regulations  (e.g.  sanctions  list)  as 
well  as  the  potential  misuse  of  funds.  This 

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screening  is  conducted  both  by  the  loan  officer 
and  by  the  OCCO  (Compliance)  department  of 
the  Bank.  The  screening  uses  the  databases 
(IMF,  World  Bank) 
established  by 
alongside  which  OCCO  also  conducts  its  own 
investigation.  
The  output  of  the  compliance  check  activity  is 
the  publicly  available  annual 
in 
provided 
Sustainability Report.  

IFIs 

The EIB shall obtain from project promoters the 
relevant  information  to  assess  the  contribution 
of the project to EU external policy and strategic 
objectives 

The  contribution  of  the  project  to  the  EU 
external policy and strategic objectives is part of 
the  preliminary  checks  on  each  project  (at  pre-
appraisal phase) and composes one of the three 
pillars  of  the  REM  framework.  It  is  indeed  a 
prerequisite  to  pursue  the  appraisal  of  the 
project. 
The  project  promoter 
the 
appraisal of its project. It is sometimes required 
to  carry  out  specific  analysis  (for  instance  on 
environmental  impacts  of  the  project)  and  to 
provide needed information. 

involved 

in 

is 

The ex-ante assessment shall cover the “relative 
and  absolute  greenhouse  gas  emissions  related 
to the EIB financing operation” 

GHG  emissions  are  assessed  ex-ante  for  every 
project  whose  emissions  are  above  a  defined 
threshold (see Section 5.4.4). 

The  opportunity  of  deploying 
assistance should be considered by the EIB 

technical 

The  opportunity  of  deploying 
technical 
assistance  is  considered  by  the  EIB  in  the 
appraisal  phase  but  it  is  poorly  reflected  in  the 
internal  documentation  (Board  report,  etc.).  In 
particular,  the  justification  of  the  use  or  the 
non-use  of 
is  not 
technical 
systematically provided. 

assistance 

Monitoring of the operations 

The  monitoring  of  operations  relies  on  formalized  procedures  set  by  the  EIB  (progress  report, 
financial monitoring by the TMR department, etc.) and specific requirements defined usually in the 
annex 2 of the financial contract. 

The  EIB  monitoring  procedures  on  projects  is  both  intermediated,  e.g.  operated  through  the 
borrower own monitoring, and direct. 

For multi-beneficiary intermediated loan, the EIB requires the borrower to send progress report on 
an annual basis. In addition, prior to the first disbursement the borrower is required to justify the 
utilization  of  the  loan  through  an  allocation  proposal  with  the  final  beneficiary  (type,  ownership, 
financial  data)  and  information  on  the  project  to  be  financed  (description,  cost,  implementation 
period, expected job creation) and information on pricing (fees, interest, reduction on interest rate, 
etc.). At final beneficiary level, the monitoring is ensured by the borrower itself but the EIB may set 
specific  requirements  on  the  borrower  own  monitoring  in  the  finance  contract  For  the  project 
Amen Bank-Prêts PME & ETI for instance, the EIB ask the Amen bank to send some sub-projects 
fiche  to  check  randomly  is  the  information  contained  in  the  fiche  are  compliant  with  the 
information  sent  previously  by  the  borrower  to  the  Bank  (double  check).  For  some  large-scale 
projects,  the  EIB  can  send  external  consultants  to  monitor  and  report  on  the  progresses  of  the 
projects. 

For investment loans, for instance in infrastructure, the operational monitoring is ensured by the 
project  promoter,  which  is  responsible  for  the  effective  delivery  of  the  project  in  terms  of  costs, 
deadlines  and  quality.  The  monitoring  of  the  project  by  the  EIB  relies  on  three  main  elements. 

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First, the EIB ensures that the various conditions set in the finance contract and the side letter prior 
to the first disbursement are applied. Then, it ensures that all information have been given by the 
promoter and that they are compliant with the contractual clauses.  

When the project involves the procurement of goods or services, the EIB monitors the procurement 
processes  used.  Typically,  the  EIB  sends  to  the  borrower  the  procurement  guidelines  that  set  the 
EIB  standards  as  regards  public  procurement  and  then  the  promoter  should  send  the  tendering 
documents that will be used to the EIB and get its approval.  

However,  the  EIB  exerts  also  a  direct  monitoring  through  field  visits  by  the  project  team 
(comprising loan officer and sector specialists) and, if needed, by hiring on-the-spot consultants to 
monitor complex projects or projects implemented in constraining context. In Ukraine, considering 
the significance of the implementation issues (based on the risk assessment), the EIB has increased 
the implementation capacity on the ground by using on-the-spot consultants who are employed to 
monitor  the  implementation  of  the  projects  and  additional  staff  members  located  in  Kyiv  (Task 
Force Ukraine). Some of the on-the-spot consultants are deployed within the Ministries concerned, 
others  directly  within  regional  and  municipal  authorities,  as  part  of  the  technical  assistance 
provided. In Bangladesh, the operational monitoring of the project is assumed by a local consultant 
paid  on  a  man-day  basis  (the  EIB  has  no  local  presence  in  Bangladesh).  He  deals  with  all  the 
administrative  aspects  for  the  EIB.  The  monitoring  of  the  Environment  Management  Plan  is 
ensured  by  independent  auditor.  In  addition,  the  EIB  (through  TMR  department)  exerts  also  a 
financial  monitoring,  follow-up  of  the  maturity,  reimbursement  and  completion  of  the 
conditionalities for disbursement. 

Along  these  procedures  that  prevail  for  all  operations,  the  EIB  defines  also  some  specific 
requirements that are attached to the finance contract (annex 2). It sets the project information to 
be  sent  to  the  EIB  and  the  method  of  transmission.  Four  types  of  information  are  defined  and 
adapted to each individual project: 

  The information on specific subjects related to the project; 
  The information on the project’s implementation; 
  The information on the end of works and first year of operation 
  The information required three years after the project completion 

Table 25: Examples of information requested by the EIB to monitor project implementation 

on 
subjects 

Information 
specific 
related to the project 
Information  on 
project’s 
implementation 

the 

Information  on 
the 
end  of  works  and  first 
year of operation 

Examples  of 
borrower41 
  Evidence  that  the  borrower  has  implemented  the  legal  separation  of 

information  requested  by  the  EIB  to  the 

the management and accounting functions in its business. 

  Update  on  the  date  of  completion  of  each  of  the  main  project's 

components, explaining reasons for any possible delay; 

  Update on the cost of the project, explaining reasons for any possible 

cost increases vs. initial budgeted cost; 

  Update on the Environmental Management Plan implementation; 
  Update on the Resettlement Plan implementation; 
  Update on procurement procedures as relevant;  
  Update on the project's demand or usage and comments; 
  Any  significant  issue  that  has  occurred  and  any  significant  risk  that 

may affect the project's operation; 
  Update on the sector reform process. 
  A  brief  description  of  the  technical  characteristics  of  the  project  as 

completed, explaining the reasons for any significant change; 

  The  final  cost  and  funding  sources  of  the  project,  explaining  reasons 

41 The examples are specific to one particular investment loan. They are extracted from the finance contract. 

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for any possible cost increases vs. initial budgeted cost; 

  The  number  of  new  jobs  created  by  the  project;  both  jobs  during 
implementation  and  permanent  new  jobs  created;  Update  on  the 
results of the Environmental Management Plan implementation; 

  Update on the results of the Resettlement Plan; 
  Update on procurement procedures; 
  Update on the project's demand or usage and comments;  
  Any  significant  issue  that  has  occurred  and  any  significant  risk  that 

may affect the project's operation; 

  Any legal action concerning the project that may be ongoing. 
  Update on the project's demand or usage and comments;  
  Update on the sector reform process. 

Information  required 
three  years  after  the 
project completion 

These  information  reflect  the  main  risks/challenges/objectives  of  the  project  and  allow  to  have  a 
comprehensive picture of the project progresses.  

On  the  20  operations  analysed,  the  monitoring  of  the  EIB  has  been  compliant  with  the  usual 
processes  set  by  the  Bank.  No  major  implementation  problem  has  been  reported  on  these  20 
operations but it has to be noticed that most of the operation are just started. However, examples 
shows  that  the  EIB  is  flexible  and  pragmatic  in  the  way  it  monitors  operations.  Due  to  the 
complexity of some projects or the lack of local presence of the EIB in some countries, the Bank has 
sometimes complemented the usual monitoring processes with on-the-spot consultants or relied on 
the monitoring of other IFIs (in case of co-financing). This reveals that along the core monitoring 
processes  (progress  report,  financial  monitoring  by  the  TMR,  conditionalities  for  disbursement, 
etc.), the EIB has set specific requirements adapted to the nature of the project, the nature of the 
beneficiaries and the country of operation.  

Management cost 

Methodological  note:  Due  to  the  lack  of  aggregated  data,  the  assessment  of  management  cost 
does  not  rely  on  a  quantitative  analysis  of  the  time  spent  and  the  resources  deployed  in  the 
management of the different phases of the ELM. The analysis relies on the perception of the actors 
involved  in  the  management  from  the  EIB  side  (loan  officers,  reporting  team,  and  mandate 
management) and the final beneficiaries’ side (borrower and project promoter met during the field 
visits). 

The  EIB  does  not  mention  additional  cost  resulting  specifically  from  the  ELM.  Operationally 
speaking,  there  is  no  difference  between  managing  projects  under  ELM  and  managing  project 
under  others  mandates  outside  EU  or  at  EIB  own  risk.  The  EIB  does  not  deploy  additional 
resources  except  when  ELM  operations  have  been  conducted  in  countries  where  the  EIB  had  no 
local presence, for instance in Bangladesh or in Ukraine, where the exceptional volume of lending 
implies  to  involve  additional  resources.  In  this  case  and  if  needed,  the  EIB  hires  on-the-spot 
consultant to ensure the monitoring of those projects. 

However, with the ELM, the EIB has increased its activities in some countries (for instance Brazil) 
towards public sector entities whose operating timeframe, including during the appraisal phase  is 
longer than for private entities. This result in longer appraisal and implementation phases.  

From  the  local  stakeholders’  perspective,  the  administrative  burden (in  terms of  time,  paperwork 
and number of procedures required) of the ELM loan financing is among the least heavy compared 
to the other international financial institutions’. This assessment is based mainly on the subjective 
perception of the stakeholders and on a limited number of cases (Ukraine, Turkey and Morocco). 
Nevertheless, these stakeholders have  been involved with several IFIs for each of the projects co-
financed  by  the  EIB,  which  enables  the  comparison.  Furthermore,  there  is  no  adequate  objective 
measurement of the administrative burden, which makes the stakeholder subjective perception the 
best available proxy. 

Overall,  no  major  efficiency  issue  has  been  reported.  The  ELM  uses  the  usual  implementation 
channels of the EIB which appear relatively efficient compared to other IFIs. 

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Reporting 

The reporting requirements related to the ELM, have been clearly stated in the agreement with the 
Commission and are presented in the article 11 of the Decision. The reporting of the EIB to the EU 
is composed of several documents: 

  The reporting on the pipeline of projects; 
  The three-year ELM projections forecast provided to the EC in October; 
  The annual report; 
  The reporting on the calls of guarantee; 
  Semi-annual reporting on the new signatures. 

For  the  ELM,  financial  reports  are  prepared  on  an  annual  basis  by  the  Financial  control 
department,  together  with  the  Operations  department.  In  the  annual  reports,  there  is  a  complete 
overview of the mandate, and then the Commission does its own reporting in the mandate to the 
Parliament.  This  year  new  chapter  on  geographical  outlook  to  provide  the  Commission  with  an 
overview  with  a  narrative  and  the  economic  situation  and  the  cooperation  with  other  IFIs.  The 
External  Lending  Mandate  imposes  external  reporting  requirements.  However,  there  is  no 
difference in the reporting procedures and  processes internally to the EIB. The ELM  –  and  other 
Mandates – are covered by specific internal reports. An internal tracing system (Serapis) enables to 
retrieve the information related to the operations and is provided to the top management.  

At the appraisal phase, the results of the REM are reported to the European Commission, which in 
turn produces its own report to the Parliament. In line with the Article 19 of the Decision 266/EU, 
the  Commission  confirms  the  eligibility  of  the  operation  as  regards  to  the  EU  rules  (and  the 
Decision) before the initiation of the project.  

In case of new situation which has not been foreseen, there is direct contact with the EC to identify 
the best way of doing, and this is usually formalize in the following Guarantee agreement.  

Among the areas of improvement, there is a lack of feedback from the Commission on which data is 
really useful and the way the Commission uses it. In addition, the feedback from the Commission is 
often very formal. For instance, this year, both parties has agreed on better alignment between the 
annual  report  (produced  by  the  EIB)  and  the  ten  pages-report  to  the  Parliament  (made  by  the 
Commission) in terms of structure and presentation of data to get higher consistency. It would be 
time-saving to have the same type of reporting between the EIB which reports to the Commission 
and  the  Commission  which  reports  to  the  Parliament.  An  improvement  could  be  to  agree  in 
advance  of  the  type  of  reporting  to  be  included  in  the  ten  pages-report  to  include  in  the  annual 
report. The EIB could for instance write the ten pages-report in line with the EC requirements for 
this report. 

Another minor point of concern is that the ELM requires the EIB to provide to the Commission an 
indicative  multiannual  Programme  of  the  planned  volume  of  signatures  of  EIB  financing 
operations, in order to align the forecasted financing with the ceilings established by the Decision 
and to enable the European Commission to make appropriate plans for provisioning the Guarantee 
Fund. This three-year forecast is provided to the Commission in October, while the usual EIB COP 
reporting is not finalised until the end of the year. Thus, at the time of providing the information to 
the Commission, the Bank’s overall three-year targets are still under discussion. This requires the 
EIB to make some assumptions about the ELM operations forecasts as of October. Synchronizing 
the reporting time to the common reporting period of December would allow more precise (because 
less relying on assumptions) three-year forecasts for the EIB activities under the ELM.  

In  the  semi-annual  report,  new  signatures  impose  a  lot  of  verification  from  the  EIB  side,  the 
changes related to the contractual modifications have to be reported, while some changes are not 
relevant  to  be  reported.  Reporting  the  financial  changes  in  the  semi-annual  review  on  a 
disaggregate basis is probably inappropriate. The added-value of the reporting from the EIB comes 
mainly from the data reconciliation as some product of data are used for internal notes.  

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In  the  table  below  we  assess  the  compliance  of  the  whole  EIB  reporting  with  the  Decision 
requirements.  We  took  the  year  2015  as  reference  for  the  reporting  documents,  in  particular  the 
annual report. 

Information required to be reported 

Information provided in the EIB reporting 

The  assessment  of  the  ELM  operations  at 
project,  sector,  country  and  regional  levels 
along with the assessment of their compliance 
with respect to the Decision 

The  annual  report  presents  the  distribution  of 
projects according to the region (table 1.3 and 1.5 
of the annual report), the sector (table 1.5) 

The  assessment  of  ELM  operation  at  regional 
levels is also presented in a more analytical way in 
the  section  3.2  onwards.  For  each  region,  the 
report  presents  the  political  and  macroeconomic 
situation as well as the EIB financing activities for 
the year 2015. Within the latter section, operation 
per country are described.  

The  way  ELM  operations  comply  with  the 
Decision, 
is 
presented in the table in the annex 1. 

in  particular  ELM  objectives 

The  assessment  of  the  added  value,  the 
estimated outputs, outcomes and development 
impact  of  EIB  financing  operations,  based  on 
the  EIB's  Results  Measurement  framework 
annual report 

The  assessment  of  the  contribution  of  EIB 
financing  operations  to  the  fulfilment  of  the 
EU  external  policy  and  strategic  objectives 
(taking into account the Guidelines) 

The EIB added value or additionality is presented 
in the section 2.6 of the annual report. It focuses 
on  the  financial  added  value  (tenor  extension, 
funding  in  local  currency,  blending  loans  and 
grants and innovation), the added-value in terms 
of 
technical 
improvement 
contribution.  This  analysis  mainly  rely  on  the 
results of the REM framework. 

standards 

and 

of 

The  contribution  of  the  ELM  operations  to  the 
ELM objectives (local private sector development, 
development 
economic 
social 
infrastructure,  climate  change  mitigation  and 
EIB 
adaptation, 
additionality,  EU 
is 
presented  in  section  2  of  the  report  while  the 
contribution  to  the  EU  external  objectives  and 
actions by region is described in the section 3.  

transversal  policies) 

integration, 

regional 

and 

The  assessment  of 
the 
transferred to beneficiaries 

financial  benefit 

The  financial  benefit  transferred  to  beneficiaries 
is reported through the financial reporting. 

The assessment of the quality of EIB financing 
operations,  in  particular,  accounting  for  the 
consideration  of  the environmental  and social 
sustainability  dimensions  in  the  due  diligence 
and  monitoring  of  the  investment  projects 
financed 

report 

annual 

The 
the 
environmental  and  social  dimensions  are  taken 
into  account  in  the  appraisal  and  monitoring  of 
project (section 2.4 and section 2.7). 

presents 

how 

Detailed information on calls on the guarantee  These  information  are  provided  in  the  call  for 

The  information  on  the  climate  change  and 
biodiversity  financing  volumes,  the  impact  on 
gas 
absolute 
emissions and the number of projects assessed 
against the climate risk 

greenhouse 

relative 

and 

guarantee report. 

The  annual  report  (p.25)  provides  the  financing 
volumes  dedicated  to  climate  change  overall  and 
per sector. It provides also the number of projects 
that  went through the Carbon Footprint  Exercise 
and  the  overall  related  total  absolute  GHG 
emissions and the saved/avoided emissions. 

A  description  of  the  cooperation  with  the  EC  The cooperation with other financing institutions 

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and  other  European  and 
international 
financial  institutions,  including  co-financing; 
this  must  give  an  overview  of  the  overall 
financing 
investment  supported  by  EIB 
operations carried out under the Decision 

follow-up  of 
the 
the  Memorandum 

the 
Information  on 
functioning 
of 
of 
Understanding  (MoU)  between  the  EIB  and 
the European Ombudsman insofar as the MoU 
the 
concerns 
Decision 

the  operations  covered  by 

is  described  in  the  section  4  of  the  report  (p.46 
onwards)  focusing  on  the  topic  of  development 
finance, and climate action. 

Annex  4  presents  a  table  with  the  operation  that 
involve  co-financing  with  other  IFIs  (both 
multilateral and European) 

The  cooperation  between  the  EIB  and  the  EU 
Ombudsman is presented in the section 5.  

Conclusion  10:  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.  The  project  appraisal  is  compliant  with  the  requirements  of  the  Article  9  of  the 
Decision.  

Conclusion  11:  the  EIB  or  the  local  stakeholders  perceive  the  management  cost  induced  by  the 
ELM among the least heavy compared to the other international financial institutions’. 

Conclusion 12: the reporting from the EIB to the Commission is compliant with the Article 11 of 
the Decision and covers effectively the main aspects of the ELM. However, some improvements in 
the  procedure  and  coordination  between  the  EIB  and  the  Commission  could  further  enhance  the 
reporting system. 

5.2.2  Assessment  of  the  needs  and  the  results:  the  Results  Measurement 

Framework (REM) 

This  section  considers  and  assesses  the  methodology  of  the  EIB  to  estimate  the  financing  needs, 
monitor and report on the ongoing projects and evaluate results of the financing operations under 
the ELM. To perform these tasks, the EIB relies on the structured tool – the Results Measurement 
Framework (REM), in  use since 2012. Thus, the purpose  of this section  is to  present  and  analyse 
the quality of the REM. This analysis supposes investigating the relevance of the set of indicators 
and criteria used in the REM, in particular its alignment with the best practices existing at the IFI 
and  the  extent  to  which  these  indicators  match  adequately  all  the  features  related  to  the  ELM 
operational objectives. 

The REM consists of three pillars as illustrated by the following figure:  

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Figure 20: Results Measurement Framework (REM): how it is organised42 

Source: EIB 

The first pillar – Contribution to EIB Mandate Objectives & EU Priorities – considers the extent to 
which  the  project  is  aligned  with  the  general  mandate  objectives,  that  is  the  three  priorities 
underlined in the Decision 466/2014/EU: development of social and economic infrastructure; local 
private  sector  development,  in  particular  support  to  SMEs;  climate  change  mitigation  and 
adaptation. It also considers the contribution to EU priorities and country development objectives, 
i.e.  matching  with  the  sector  priorities  defined  in  the  Decision,  support  to  the  country  own 
development strategy and the EU global objectives (regional integration in particular). 

The  second  pillar  –  Results indicators –  considers the soundness of the project,  measured by  the 
expected deviation in time and cost from the values specified at the appraisal stage. It also covers 
the notions of financial & economic sustainability – measured by the economic rate of return and 
the internal rate of return – as well as the environmental & social sustainability, measured by the e-
rating  (environmental  safeguards  assessment)  and  s-rating  (social  safeguards  assessment).  It 
covers the output and outcome indicators that are sector specific. For financial sector operations, 
different  dimensions  are  considered.  For  intermediated  multi-beneficiary  loans  for  example  this 
covers aspects such as such as the Capacity and soundness of the Intermediary and quality of the 
Operating Environment, the contribution to Increasing access to finance and improving financing 
conditions including for final beneficiaries and the employment sustained by the operation. 

The third pillar – EIB additionality – covers the added value of the EIB intervention with respect to 
the  baseline  situation.  It  identifies  the  extent  to  which  the  EIB  loan  makes  a  difference  for  the 
beneficiary  in  terms  of  maturity  (often  short  in  the  countries  covered  by  the  ELM),  in  terms  of 
economic  life  of  the  project  and  its  feasibility.  These  notions  are  covered  under  the  subtitle 
“Financial  instruments”.  Under  this  pillar  there  is  also  the  assessment  of  whether  the  EIB  would 
provide a valuable technical support and sector knowledge to the beneficiary of the loan (“Technical 
and  sector  contribution”)  at  the  different  stages  of  the  project  cycle.  Finally,  the  pillar  covers  the 
impact  in  terms  of  standards  and  assurance  –  the  demonstration  effect  of  the  EIB  presence,  the 

42  The  Pillar  3  was  revised  in  2015.  The  revised  structure  also  encompasses  three  sub-pillars::  financial  contribution,  financial  facilitation, 
advice. 

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leadership  of  the  Bank  in  structuring  a  viable  project,  the  contribution  to  raise  standards  or  the 
leverage effect43.  

All  three  pillars  are  considered  at  the  beginning  and  at  the  end.  For  certain  operations  like 
investment loans the results are again reviewed also three years after completion. 

The REM is used throughout the project cycle, from the appraisal to monitoring and tracking of the 
results. The following scheme illustrates the different stages where the tool is used:  

Figure 21: Use of the REM throughout the project cycle 

Source: EIB 

At  the  appraisal  stage,  the  loan  officer  and  the  Projects  Directorate  undertake  an  ex-ante 
assessment using the REM with the pillars 1, 2 and 3 filled. According to the representatives of the 
EIB,  there  were  already  projects  rejected  based  on  the  REM,  even  though,  the  Bank  usually  pre-
empts  it.  This  demonstrates  the  effective  ability  of  the  REM  to  enable  distinction  between  sound 
and  low  quality/risky  projects  and  contribute  to  the  selection  of  the  former  and  rejection  of  the 
latter.  

During the project implementation, the REM allows continually monitoring the project  to ensure, 
in particular, that the project is on track.  

For  both  1st  and  2nd  REM  reviews,  the  performance  is  measured  against  benchmarks  set  at  the 
beginning of the project, rated and reported. The comparison between the results ex-ante and ex-
post  is  systematic,  in  order  to  improve  the  REM  in  particular,  but  not  disclosed.  Given  the  short 
period since the launch of the REM, few projects launched under the ELM 2007-2013 were closed 
considering that the REM was introduced in 2012. Thus, a check for a systematic bias in the ex-ante 
estimations  with  respect  to  the  ex-post  results  was  not  possible  for  this  mid-term  review.  Such  a 
check  should,  however,  be  conducted  upon  the  closure  of  this  ELM  period  and  completion  of  a 
sufficient number of the projects (all of these projects had been launched after the introduction of 
the REM).  

Based on the description of the REM above, two specific questions are raised:  

  Whether the REM indicators are aligned with the operational objectives of the EIB in the 

framework of the ELM; 

  Whether the REM indicators and methodology are in line with the best practices existing among 

the international financial institutions. 

43  The  Pillar  3  was  revised  in  2015.  The  revised  structure  also  encompasses  three  sub-pillars::  financial  contribution,  financial  facilitation, 
advice. 

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Alignment with the operational objectives of the EIB in the framework of the ELM 

An  important  issue  is  whether  the  REM  indicators  allow  tracking  the  objectives  stated  in  the 
Decision  and  related  to  the  private  sector  development,  infrastructure  and  climate  change 
adaptation/mitigation. Beyond the question of alignment with the objective stated in the Decision 
(and the Regional Technical Operational Guidelines), the issue bears on the ability of the indicators 
chosen  in  the  REM  to  provide  accurate  and  sufficient  information  to  enable  adequate  decision-
making regarding the projects (at the appraisal stage) and to enable drawing lessons for the future 
(at the completion stage).  

The  first  pillar  of  the  REM  –  contribution  to  mandate  objectives  and  EU  priorities  –  addresses 
precisely the issues of the project alignment with the three objectives of the Decision as well as the 
cross-cutting  objective  of  the  regional  integration  among  partner  countries.  Each  of  the  four 
objectives are assessed based on a qualitative score (from 0 to 100%) attributed by the loan officer 
in the appraisal phase of the project.  

The table below establishes a correspondence between the objectives stated in the Decision and the 
indicators used in the REM: 

Table  26:  Correspondence  between  the  objectives  stated  in  the  Decision  and  the  indicators 
used in the REM 

Decision objectives 
Local 
sector 
private 
development,  in  particular 
support to SMEs 

REM indicators (non-exhaustive) 
  Additional loans to SMEs, micro-, small- medium enterprises, Mid-caps, 

 

other (expected value at the end of allocation) 
Increase  in  the  average  size  of  loans-SMEs,  micro-,  small-  medium 
enterprises, Mid-caps, other (expected value at the end of allocation) 
Increase in average tenor (years maturity) 

 
  Additional total disbursed (EUR) 
  Average cost of projects financed (EUR) 
  Number of first-time borrowers 
  Credit  line  targeted  to  undeserved  market  –  women,  rural,  poor,  … 

(yes/no) 

Improved competition (yes/no) 

  New products put on the local financial market (yes/no) 
 
  Credit to private sector/GDP (%) 
  Employment sustained in final beneficiaries - SMEs, micro-, small- medium 

enterprises, Mid-caps, other (expected value at the end of allocation) 

  Additional fiscal revenues generated (net taxes/fees paid by intermediaries, 

Development  of  social  and 
economic infrastructure 
Climate  change  mitigation 
and adaptation 

 

 

EUR) 
Physical  indicators  (examples:  road  fatalities  saved,  time  savings,  vehicle 
operating cost savings…) 
Intermediary has an environmental and social management system in place 
(yes/no) 

  Energy – efficiencies realized (Energy saved MWh) 
  Carbon footprint – absolute (absolute impact) 
  Carbon footprint – relative (impact vs counterfactual) 

Source: EIB Results Measurement Framework 

The  list  of  REM  indicators  provided  in  the  table  is  not  exhaustive  as  the  indicators  are  tailored 
according  to  the  type  of  operations  and  the  sector  level.  For  instance,  for  the  Multi-beneficiary 
loans, the REM puts the accent on the indicators related to the increased access to finance. For the 
infrastructure loans, the REM uses the physical indicators or the indicators related to the economic 
benefits to the final beneficiaries and to the society as a whole. Overall, the REM ensures a wide and 
exhaustive coverage of the three objectives of the Decision, while ensuring that the indicators are 
specific  enough  to  reflect  the  particularities  of  the  project.  For  decision  makers  these  indicators 
cascade  up  in  more  digestible  parts  that  are  then  rated  at  several  layers  (e.g.  Results  sub  pillar, 
Overall Pillar 2, etc.). 

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Regarding the ex-ante assessment of the results, for the different performance indicators related to 
the  realization  of  the  project  (e.g.  employment),  the  project  promoter  typically  provides  raw  data 
and  estimations. The  promoter usually has the best knowledge  of the project and  therefore is the 
most  suitable  to  provide  ex-ante  estimations  about  the  impact  of  the  project.  Theoretically,  this 
could result in an overestimation of the expected performance, as the promoter would tend to rely 
on  less  conservative  assumptions  to  maximize  the  likelihood  of  being  successful  at  its  request  of 
EIB funds. However, the EIB has the ability  to  mitigate this risk. Indeed, the  sector experts from 
the  EIB  Projects  Directorate  and  ECON  for  intermediate  lending  operations  systematically  check 
the ex-ante estimations provided by the promoter, reconsidering them if needed. For this check, the 
sector experts usually rely on similar projects realized in the same field.  

One major indicator which is frequently (but not always) computed for the REM, in particular for 
the infrastructure projects, is the Economic Rate of Return (ERR)44. The purpose of this indicator is 
to provide the net present value of the project, i.e. the discounted benefits net of discounted costs 
over the lifetime of the project. To conduct the Cost-Benefit Analysis (CBA), the EIB again relies on 
the  financial  data  provided  by  the  promoter  with  the  sector  experts  of  the  Bank  systematically 
checking and challenging the data based on their expertise, on similar projects conducted elsewhere 
and on the date provided by the other IFI (whenever the project is done in co-financing). The EIB 
also uses data from other sources (IMF, European Commission, OECD, etc.) to test macroeconomic 
assumptions  and  more  specialised  sources  to  test  the  other  assumptions.  As  with  the  ex-ante 
impacts assessment, this check of the promoter cash-flows by the EIB sector experts ensures that 
any  bias  related  to  the  promoter’s  incentive  to  maximize  its  costs  (to  obtain  more  funds)  is 
eliminated.  

There  is  a  requirement  (by  the  EIB  internal  rules)  to  re-do  the  ex-ante  analysis  upon  the  project 
completion.  This  allows  comparing  how  the  ex-ante  matches  the  ex-post  in  order  to  correct  for 
potential systematic biases in the forecasting. The EIB has expressed an intention to perform this 
assessment in the future, once the results of the ELM operations come to maturity.  

As a general matter, the REM is an evolving tool, expected to be refined and updated following the 
reception  of  the  first  results  of  the  ELM  operations,  in  particular  following  the  assessment  of  the 
projects that come to term over the years 2015-2016.  

Alignment with the best practices of the IFI 

According  to  the  interview  with  the  EIB  representatives,  the  REM  was  developed  based  on  an 
assessment of indicators and models existing among the international financial institutions. Thus, 
the REM appears as one of the most structured of the tools used among the IFI as it absorbed the 
existing best practices. The IFI Working Group on Development Results Indicators Harmonization 
exists since 2013 by 25 IFI in order to harmonize the indicators used across the IFI, align and share 
the indicators used and exchange best practices. The REM will absorb the results of this work. 

Conclusion 13: the REM indicators are well aligned with the operational objectives of the EIB in 
the framework of the ELM. 

Conclusion 14: the REM was developed based on an assessment of indicators and models existing 
among the IFIs. Therefore, it absorbed the existing best practices. 

5.2.3  Complementarity and coordination with other EU financing facilities and 

International Financial Institutions  

This subsection covers the evaluation question EQ 8 and EQ9.  

The majority of the projects for which the EIB provide loans in the framework of the ELM involve 
in  parallel  the  financing  by  other  IFI  or  through  other  sources  of  financing  from  the  EU,  in 
particular  the  mechanisms  providing  grants.  This  section  therefore  addresses  the  issue  of 

44 Not applicable for financially intermediated operations, microfinance or private equiry. 

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complementarity,  coordination  and,  potentially,  overlaps  with  these  IFI  and  the  sources  of 
financing.  

Blending ELM loans/grants 

The EIB is legally able to cover only up to 50% of the project cost45. Therefore, the projects financed 
under the ELM typically require co-financing by other IFIs or through other EU sources of funding. 
The  latter  refer  to  the  blending  mechanisms  using  EU  budget  resources  to  provide  grants  and 
technical  assistance.  The  EIB  ensures  the  operational  management  of  some  of  these  mechanisms 
on  behalf  of  the  European  Commission.  The  purpose  of  these  mechanisms  is  to  contribute  to 
financing  schemes  for  the  projects  outside  the  EU  (not  necessarily  under  the  ELM).  The 
mechanisms use the budget resources coming from the EU as well as additional resources provided 
by the Member States or non-EU countries on a discretionary basis (as an example, Saudi Arabia 
provided financial resources for the FEMIP Support Fund in order to enable it to finance projects in 
the Maghreb countries under the Deauville agreement).  

There are five mechanisms providing technical assistance and grants on a geographical basis. Four 
others  provide  TA  and  grants  without  distinction  of  geographical  area.  Finally,  four  additional 
mechanisms address the needs of final beneficiaries in terms of risk capital.  

The  European  Commission  established  a  platform,  which  regroups  all  the  potential  co-financers 
and the pool of financing facilities mentioned in the scheme above. The facilities under the blending 
platform  can  provide  additional  funds  for  financing  of  projects  in  the  form  of  equity,  investment 
grants, and subsidized interests. The EIB may request co-financing from these facilities in order to 
complement its loan under the ELM in financing of the project in the recipient country. Other IFIs 
can  also  request  co-financing  from  these  mechanisms.  The  general  scheme  of  how  the  blending 
ELM loans/grants works is illustrated by the figure below:  

Figure 22: Blending mechanism ELM loans/grants 

45 One ad-hoc exception was made for a financing operation in Ukraine in 2014, given the exceptional circumstances. Usually, the EIB can 
finance up to 100% of the cost only in the case of projects serving to meet the consequences of a natural disaster.  

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Source: EIB, PwC 
*the list of co-financing IFIs is illustrative and non-exhaustive 

When a specific financing operation is envisaged by the EIB, the loan officer in charge of the project 
can  request  co-financing  from  one  or  another  mechanism.  Given  that  the  ELM  funding  cannot 
cover more than 50% of the project cost, the search of additional financing through grants is done 
systematically,  provided  the  country  and  the  project  considered  are  eligible  for  funding  from  the 
blending  mechanisms.  If  the  financing  is  awarded,  a  separate  contract  is  established  for  funding 
from each of this financing facilities.  

The issue of blending the ELM loans with grants is key as the ELM could be expected to play a role 
in  least  developed  countries  or  in  post-crisis  area.  During  the  interviews,  the  EIB  representatives 
underlined  the  administrative  burden  of  mobilizing  EU  blending  facilities.  Provision  of  funds 
through  each  of  these  mechanisms  follows  a  project  by  project  approach  requiring  separate 
appraisal, project implementation, monitoring and reporting, distinct from the ELM loan processes 
and procedures. Thus, a discussion between the Commission and the EIB regarding rationalization 
of appraisal and reporting procedures and processes would be welcome. 

Pivotal role of the EU delegation 

The ELM is a specific instrument, with tasks and objectives clearly distinct from other EU financing 
instruments,  such  as,  for  instance,  the  Macro-Financial  Assistance  (MFA)  or  the  Instrument  for 
Pre-Accession  (IPA)  or  bilateral  loans  made  by  Member  States.  Thus,  little  overlap  or 
substitutability  is  expected  between  the  ELM  and  the  other  financing  frameworks.  However,  the 
issue  of  complementarity  and  coordination  between  the  former  and  the  latter  is  central.  In 
operational  terms,  the  complementarity  and  the  coordination  of  the  EU  efforts  towards  the  ELM 
countries is ensured by the EU delegation. In Turkey, in Ukraine and in Morocco, the role of the EU 
delegation in facilitating the prospection of projects, establishment of contacts with relevant local 
stakeholders and ensuring the coordination of the EU communication and efforts in relation to the 
provision of funding has been important, as attested both by the EIB representatives and the local 
stakeholders. Regular meeting with EU delegations were held, which enable the EIB to present the 
ongoing projects and to discuss new project opportunities.  

Coordination with International Financial Institutions (IFI) 

In total, 29 projects out of 57 from the ELM portfolio (and seven out of 20 case studies) covering 
the  period  July  2014-December  2015  were  co-financed  by  other  IFI.  Thus,  the  subject  is  of 
paramount  importance.  From  a  purely  financial  perspective,  financing  by  other  IFI  has  been 
complementary to the financing by ELM as the latter by definition (almost) never covers more than 
50% of the project cost and often covers even less. 

The complementarity with other IFIs is important also on the non-financial side. As mentioned in 
one of the previous sections, the EIB has limited presence in some of the countries covered by the 
ELM. For these cases, the identification and structuring of projects closely relies on the cooperation 
with other IFIs often present on  the ground.  As an example, for its  operations under the ELM  in 
Asia, the EIB relies on the cooperation with the Asian Development Bank. The ADB identified the 
financing opportunity, performed the feasibility study and initiated the collaboration with the EIB 
on the project. A similar pattern of collaboration based on comparative advantage exists with other 
regional  Banks  having  a  specific  focus  on  a  given  region  (e.g.  IaDB  in  the  Caribbean  and  Latin 
America region). 

Another side of collaboration and complementarity is the exchange of data and the alignment of the 
best practices among the IFI and the EIB. The provision of data feeds the economic and financial 
analysis  conducted  by  the  EIB  Operations  Department.  The  co-financing  IFI  also  provide  data  in 
the phase of the project appraisal, which enables the EIB to conduct its own risk assessment and ex 
ante  impact  assessment,  in  particular  through  the  REM.  The  EIB  participates  in  several  working 
groups  with  other  IFI  dedicated  to  the  alignment  and  harmonisation  of  methodologies,  tracking 
approaches  and  indicators.  This  allows  the  Bank  to  contribute  to  and  maintain  the  best  practices 
prevailing among the co-financers.  

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Conclusion  15:  complementarity  and  coordination  with  other  IFI  are  strengthened  through  the 
co-financing  of  projects.  Coordination  occurs  for  the  identification  of  project  opportunities,  the 
appraisal of those projects and the monitoring. 

Conclusion  16:  cooperation  with  other  IFIs  allows  the  EIB  to  leverage  on  their  expertise  of  the 
local markets where EIB has a limited presence, and to structure its own operations. 

Conclusion 17: the role of the EU delegation has been crucial in  several financing operations in 
sharing the knowledge of the local context, coordinating with other IFIs and ensuring a connection 
with the national governments of the beneficiary countries. 

5.3  Added value of the External Lending Mandate 

This subsection covers the evaluation question EQ 10.  

  EQ10:  What  is  the  added  value  of  the  Programme  for  beneficiaries  (ref.  EIB  performance 
indicators,  incl.  qualitative  and  quantitative  effects)  and  in  the  selection  of  specific  lending 
activities, how is the highest added value to beneficiaries ensured? 

One  of  the  major  issues  of  the  ELM  evaluation  is  the  ELM  loan  additionality  for  the  local 
beneficiaries  and  the  non-distortion  of  the  local  capital  market  conditions.  This  subsection  is 
dedicated  to  the  assessment  of  the  added  value  of  the  financing  operations  under  the  External 
Lending  Mandate.  This  assessment  is  conducted  in  line  with  the  evaluation  questions,  judgment 
criteria  and  indicators  specified  in  the  methodology,  and  focuses,  in  particular,  on  the  following 
points:  

  Would the EIB have financed the project in absence of the EU Guarantee (either because of the 

risk criteria or because of any other)? 

  Would the project have been financed/realized without the EIB financing (for instance because 

other IFI or private agents would have covered the corresponding financing need)? 

  What are the financing terms (maturity, interest) attached to the EIB loan as compared to the 
alternative means of financing? Correspondingly, what is the size of the financial advantage (if 
any) for the final beneficiary? 

  Are there any leverage or catalytic effects generated through the EIB loan? 

  Does  the  ELM  promote  financial  best  practices  and  standards  among  the  financial 

intermediaries in the beneficiary countries? 

  Beyond  the  financial  side,  do  the  ELM  operations  contribute  to  spread  good  practices  and 

legislation (e.g. in procurement) in the recipient countries?  

The  subsection  explores  and  analyses  these  points  in  sequence  and  in  detail  in  the  paragraphs 
below. 

Financial added value resulting from the EU guarantee 

The first point to address is whether the EIB would have financed the project in absence of the 
EU Guarantee (either because of the risk criteria or because of any other).  

The analysis of the portfolio and a more specific insight over the twenty case studies revealed that 
the majority of countries covered by the financing operations under the External Lending Mandate 
are not eligible for the EIB own-risk operations, with few exceptions covered in the subsection on 
the Allocation policy. Even if the Allocation policy does not specify any credit rating “floor” for the 
ELM  operations,  the  EIB Credit  Risk Policy  Guidelines preclude own-risk operations in countries 

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with the sovereign rating below the investment grade (BBB- for S&P and Fitch, Baa3 for Moody’s). 
Thus, in absence of the ELM, the EIB would not have financed the projects situated in most of the 
ELM countries due to the relatively high credit risk. Out of twenty case studies, twelve correspond 
to  projects  that  the  EIB  would  not  be  able  to  finance  in  absence  of  the  EU  Guarantee.  The  table 
below shows these projects:  

Table 27: Financing operations in countries with a sovereign rating below the investment grade 
at the date of signature of the ELM loan 

Financing operation 

Country 

Date of 
signature46 

Eligible Country Rating at the 

moment of the loan signature 

Laksam Akhaura double track rail project 

Bangladesh 

15/10/2015 

Tajik - Kyrgyz power interconnection 

Kyrgyzstan 

02/10/2015 

Armenia APEX loan for SMEs 

Kutaisi waste water 

Ukraine early recovery 

Armenia 

Georgia 

Ukraine 

Guarantee for economic development in Ukraine 

Ukraine 

Private sector development & economic growth 

Egypt 

Partenariat BEI-BTK-réseau-entreprendre 

AMEN Bank-Prêts PME & ETI 

Wadi Al Arab water system II project 

Tunisia 

Tunisia 

Jordan 

04/12/2014 

15/10/2015 

22/12/2014 

09/10/2015 

14/03/2015 

04/12/2014 

17/09/2015 

08/11/2015 

Montenegro water and sanitation 

Montenegro 

25/06/2015 

IDF loan for SMEs & priority projects II 

Montenegro 

16/03/2015 

Source: PwC analysis 

S&P 

BB- 

B 

- 

BB-/B 

CCC- 

B- 

B- 

BB 

- 

BB- 

B+ 

B+ 

Moody’s 

Fitch 

Ba3 

B2 

Ba2 

Ba3 

Ca 

Caa3 

B3 

Ba3 

Ba3 

B1 

Ba3 

Ba3 

BB- 

- 

BB- 

BB- 

CCC 

CCC 

B 

BB 

BB- 

- 

- 

- 

In addition, the discussion with the loan officers for several financing operations explored through 
the  case  studies  revealed  that  in  some  countries  (e.g.  Bangladesh)  the  EIB  does  not  possess 
sufficient knowledge and intelligence of the local market to be able to conduct financing operations 
at its own risk. While this shortcoming is compensated through cooperation with other IFIs, it is an 
additional  reason  why  the  EIB  would  not  have  conducted  lending  operations  in  countries  under 
consideration outside the framework of the ELM.  

The  second  point  to  consider  is  the  question  of  whether  the  project  would  have  been  realized 
without  the  EIB  financing.  A  corollary  is,  of  course,  whether  other  public  or  private  agents 
would  have  provided  an alternative source of  funding.  Based on the discussion with the EIB loan 
officers, the most accurate to say is that for the majority of projects, among the twenty case studies, 
IFIs  could  have  potentially  stepped  in  to  fill  the  gap.  However,  other  IFI  face  their  own  budget 
constraints,  so  there  is  a  certain  probability  that  even  a  sound  project  would  not  have  attracted 
financing  in  absence  of  the  ELM.  Another  aspect  of  this  argument  is  more  subtle.  International 
financial  institutions  seek  to  diversify  risks  and  aim  for  risk  sharing  when  engaging  in  project 
financing, in particular in the emerging and developing countries. Thus, in absence of the ELM, the 
other  IFIs  would  probably  scale  down  their  volumes  of  overall  lending  in  proportion  to  the 
reduction in the ELM lending, as the IFI would reduce their risk exposure to some projects where 
the EIB would not be taking part.  

According  to  the  claims  of  the  loan  officers,  four  projects  specifically  could  have  met  financing 
difficulties in absence of the EIB loan: Kutaisi Wastewater Treatment, South Africa Private Sector 
Facility, Montenegro Water and Sanitation, and IDF Loan for SMEs & Priority Projects II.  

Interaction with the relevant EIB loan officer underlined the case of the project in Georgia, Kutaisi 
Waste  Water,  where  the  EIB  loan  was  funding  the  rehabilitation  and  extension  of  the  municipal 
sewerage  system,  and  the  construction  of  a  mechanical-biological  wastewater  treatment  plant  in 
one of the three cities covered by the project: Kutaisi. The Asian Development Bank (ADB) acting as 
a  co-financer  was  funding  the  similar  investment  in  two  other  cities:  Ureki  and  Zugdidi.  The 

46 Formally, it is the credit rating at the date of submission by the EIB of the operation to the Commission under the Article 19 procedure 
which should be taken into account instead of the date of signature. However, the time elapsed between the two is likely to be limited. Thus, 
we use the date of signature as a proxy.  

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hypothesis that without the EIB loan the project would have been confined to Ureki and Zugdidi, 
leaving  Kutaisi  aside  is  unlikely.  Kutaisi  is  a  major  city  in  Georgia  with  a  population  of  over 
200,000 (Ureki for comparison is much smaller, around 1,500) and it is highly unlikely that even in 
the absence of the EIB loan the project would not have covered Kutaisi. The most likely hypothesis 
is  that  the  ADB  would  have  simply  extended  the  size  of  its  own  intervention.  However,  the 
conversation with the loan officer revealed that this investment by ADB would probably have been 
made without the climate-change mitigation component related to the EIB loan.  

Regarding the Montenegro Water and Sanitation project, the first elements of the project have been 
funded  by  the  EIB  long  before  the  current  ELM  period,  starting  under  the  South  Eastern 
Neighbours Mandate 2000-2007 (the borrower being Serbia-Montenegro disbanded in 2006). The 
project has several funding sources under the form of loans and grants – KfW, USAID, commercial 
bank loans, etc. –, and would probably have obtained financing outside the ELM and without the 
EIB.  

Two case studies where the claim of absence of alternative financing has some ground are the 
projects  involving  loans  targeting  the  SMEs  and  Mid-Caps  via  financial  intermediaries  in  South 
Africa and in Montenegro. Both projects involve co-financing only from the financial intermediaries 
(at 50% of the total volume of funding). It is possible, but unlikely that the financial intermediaries 
would have been able and willing to provide funding by themselves in the same volume (i.e. that the 
EIB  loans  simply  induced  windfall  profits  on  their  side).  Indeed,  the  ELM  loan  presented 
favourable borrowing terms for the financial intermediaries. This which enabled the latter, in turn, 
to lend at the interest rate much lower than what they would usually charge, thus expanding their 
own  loan  portfolio  to  SMEs  and  Mid-Caps,  which  would  not  be  willing  to  borrow  at  the  usual 
commercial interest rate or would have been otherwise credit-rationed out of the market.  

In addition to these four specific cases, the financing of the projects “Ukraine early recovery” and 
“Guarantee  for  economic  development  in  Ukraine”  would  also  be  problematic  without  the  ELM, 
given the specifically complex political and economic situation of Ukraine in 2014-2015. This is the 
rationale of the EIB lending extended to 100% of the project (beyond the regular 50% threshold). 
“Ukraine early recovery” is actually the only large-scale IFI operation targeting recovery of Ukraine. 
Overall, the EIB financing appears as critical for most operations in Ukraine and it is unlikely that 
other funding sources would be easily available in the absence of ELM loans.  

The third point is related to the financing terms (maturity, interest) associated to the EIB loan and 
how  it  compares  to  the  alternative  means  of  financing.  The  twenty  financing  operations  under 
consideration  all  provide  loans  at  an  interest  rate  typically  lower  than  the  one  attached  to  loans 
offered on a commercial basis in the recipient countries. Furthermore, the ELM loans are offered 
with a much longer maturity than the one prevailing in the countries under consideration. The size 
of the financial advantage, both in terms of interest rate and of maturity, is deemed considerable by 
the  local  beneficiaries,  the  financial  intermediaries  and  the  EIB  representatives  interviewed.  The 
exact  size  of  the  financial  advantage  is  difficult  to  estimate  quantitatively,  as  the  relevant 
counterfactual – the most likely scenario in the event the ELM loan would not have existed – might 
have been concessional debt offered by other IFIs or borrowing on commercial terms on the capital 
markets.  

The  EIB  does  not  offer  concessional  debt,  thus  the  comparison  with  the  interest  rates  and 
maturities  on  the  loans  of  other  IFIs  would  be  biased.  Thus,  this  evaluation  takes  a  stance  of 
estimating the financial advantage of the loans under the ELM by comparing them to the borrowing 
terms existing on the capital markets.  

To compute the financial advantage, the evaluation team had to choose a relevant counterfactual – 
the most likely scenario, which would have occurred in absence of the ELM. The highest probability 
lies with the scenario where, for each of the projects, the majority of the final beneficiaries are not 
able/willing to implement their projects given the much more constraining borrowing terms. The 
remaining SMEs – those, which implement their projects anyway – would have to borrow without 
any  public  intermediation  and  at  the  conditions  prevailing  on  the  local  capital  market.  The 
evaluation  team  therefore  considers  as  the  most  likely  the  scenario  where  the  remaining  SMEs 

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would take loans in local currency at the interest rate applied on the loans with the longest maturity 
or the same maturity as the one applied to the ELM loan.  

The  table  below  provides  an  indication  of  interest  rates  prevailing  on  the  capital  markets  in  the 
countries under consideration and in the relevant period: 

Table 28: The market interest rate in the beneficiary countries for which there was ELM loan 
disbursement 

Financing operation 

SBI loan for SMEs and Mid-Caps 

Armenia APEX loan for SMEs 

Accessbank Azerbaijan loan for SMEs 

Ukraine early recovery 

Sao Paulo Rolling Stock 

Brazil loan for SMEs & Mid-Caps 

EUROPAC industrial packaging plant in Tangier 

AMEN Bank-Prêts PME & ETI 

IDF loan for SMEs & priority projects II 

Ziraat Bank IPARD MBIL 

Beneficiary 

(public vs private) 

Country 

Year 

Private 

Private 

Private 

Public 

Public 

Private 

Private 

Private 

Private 

Private 

India 

Armenia 

Azerbaijan 

Ukraine 

Brazil 

Brazil 

Morocco 

Tunisia 

Montenegro 

Turkey 

2014 

2014 

2014 

2014 

2014 

2015 

2015 

2015 

2015 

2014 

Interest rate 

(%) 

10.25% 

15.2% 

9.16% 

15.4% 

6% 

22.7% 

5.1% 

4.8% 

8.41% 

12.3% 

Source: PwC analysis 
* The market interest rate indicated in the table is the average interest rate applied to the borrower – public or 
private – in the same year and with the maximum maturity prevailing in the recipient country. All the data for 
the  local  commercial  interest  rates  (labelled  “Market”)  comes  from  the  central  banks  of  the  countries  under 
consideration.  

Comparing the data from the table with the borrowing terms of the EIB ELM loans – not disclosed 
here  for  the  sake  of  confidentiality  –  indicates  that  if  the  ELM  did  not  exist,  the  borrowers,  and 
particularly  the  SMEs  and  Mid-caps  would  have  faced  higher  interest  rates  and  shorter  loan 
maturities. The financial advantage is considerable for all the operations with peak differences for 
the  Ukrainian  regional  authorities  and  the  Armenian  and  Brazilian  SMEs.  The  reason  for  this 
magnitude of the financial advantage resides in the macroeconomic characteristics of the recipient 
countries: the environment of high inflation, volatile exchange rate, scarce capital and strong credit 
rationing  of  the  SMEs.  The  EU  Guarantee  enables  to  the  EIB  not  to  price  the  country  risk  or  the 
political  risk  when  structuring  the  loan,  which  translates  into  lower  interest  rates  for  financial 
intermediaries and, ultimately, the final beneficiaries.  

An  alternative  way  of  presenting  the  financial  advantage  is  the  measure  of  the  risk  pricing  that 
would have been applied to the ELM loans in absence of the EU guarantee. This risk pricing can be 
measured  in  additional  basis  points  added  to  the  interest  rate  on  the  loan.  It  integrates  both  the 
expected loss and the unexpected loss estimates.  

The table below provides an estimate of the additional basis points that would have been applied to 
the loan had the EIB not benefited from the EU guarantee coverage:  

Table 29: Risk pricing without the EU guarantee 

Name of the project 

Type of the 

Guarantee 

Country 

Borrower 

Risk pricing 

without EU 

Guarantee 

(additional basis 

points) 

Laksam  Akhaura  Double  Track 

Rail Project 

Warsak Hydroelectric power 

station rehabilitation 

Comprehensive  Bangladesh 

Comprehensive  Pakistan 

People's 

Republic 

of 

Bangladesh 

Islamic 

Republic 

of 

Pakistan 

73 

139 

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Vientiane sustainable urban 

transport 

Nepal Grid Development 

Programme 

Central Asia South Asia Electricity 

transmission 

Ukraine  municipal  infrastructure 

programme 

Lao  People's 

Comprehensive 

Democratic 

Rep. 

Comprehensive  Nepal 

Lao People's Democratic 

Rep. 

Federal Democratic 

Republic of Nepal 

Comprehensive  Kyrgyzstan 

Kyrgyz Republic 

Comprehensive  Ukraine 

Ukraine 

IBA loan for SMEs and Mid-caps 

Comprehensive  Azerbaijan 

The International Bank of 

Azerbaijan OJSC 

Guarantee for economic 

development in Ukraine 

Procredit 

loan 

for  SME  and 

Priority Projects II GE 

Kutaisi Waste Water 

Comprehensive  Ukraine 

Ukraine 

 Political risk  

Georgia 

JSC Procredit Bank 

Comprehensive  Georgia 

Georgia 

Yerevan solid waste phase I 

Comprehensive  Armenia 

Republic of Armenia 

Ukraine Agri-Food APEX Loan 

Comprehensive  Ukraine 

Ukraine 

Wastewater  treatment  Project  in 

Guayaquil 

Comprehensive  Ecuador 

Empresa municipal de 

Agua potable y 

Alcantarillado de 

Guayaquil ep 

Nicaragua hydro development and 

transmission 

Comprehensive  Nicaragua 

Republica de Nicaragua 

Amen Bank prêts PME et ETI 

Political risk  

Tunisia 

Amen Bank 

ONEE 

amélioration  AEP 

et 

assainissement 

Comprehensive  Morocco 

l’électricité et de l'eau 

Office national de 

Nepco green corridor 

Comprehensive 

Jordan 

Wadi  Al  Arab  water  system  II 

project 

Comprehensive 

Jordan 

potable 

Hashemite Kingdom of 

Jordan  

Hashemite Kingdom of 

Jordan 

Damanhour CCGT power plant 

Comprehensive  Egypt 

Arab Republic of Egypt 

Modernisation routière II 

Comprehensive  Tunisia 

Tunisian Republic 

Cairo metro line 3 Phase 3 - B 

Comprehensive  Egypt 

Arab Republic of Egypt 

Iller  bank  urban  transport  and 

environment loan 

Comprehensive  Turkey 

Iller Bankasi AS 

Route 10 rail rehabilitation 

Comprehensive  Kosovo 

Kosovo 

Istanbul underground rail network  Comprehensive  Turkey 

Istanbul Buyuksehir 

Belediyesi 

Tubitak research promotion II 

Comprehensive  Turkey 

Republic of Turkey 

Afforestation  and  erosion  control 

III 

South  Africa  Private  sector  facility 

Nedbank  

South  Africa  Private  sector  facility 

FNB 

South  Africa  Private  sector  facility  

- IDC 

Source: EIB 

Comprehensive  Turkey 

Republic of Turkey 

 Political risk  

South Africa 

Nedbank LTD 

 Political risk  

South Africa 

Firstrand Bank LTD 

Comprehensive  South Africa 

Corporation of South 

Industrial Development 

Africa LTD 

146 

59 

131 

184 

63 

154 

 61 

73 

59 

164 

90 

135 

 64 

30 

76 

76 

139 

73 

134 

71 

196 

135 

53 

53 

14  

 14 

11 

As  attested  by  the  risk  pricing  measures,  the  majority  of  the  final  beneficiaries  would  have  faced 
higher  interest  rates  in  absence  of  the  EU  Guarantee.  The  range  of  risk  pricing  is  from  0.11 
percentage points for South Africa to two percentage points for Kosovo.  

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Another  major  aspect  of  the  financial  advantage  is  the  extension  of  maturity,  which  is  typically 
much shorter in countries under the ELM. The finding from interviews with the local stakeholders 
and the EIB representatives is that loans are most often unavailable at the maturity offered for the 
ELM loan.  
Beyond the quantitative evidence, the added value of the ELM loans to local beneficiaries shows up 
qualitatively through  the  case  studies. In  Tunisia,  the  multi-beneficiary  intermediated  loan to  the 
Amen Bank has been designed based on the analysis of the financing gap. A Frankfurt School study, 
financed by the FEMIP Trust Fund, on the potential of meso-finance (03/2014) showed clearly that 
the main challenge to the SMEs resides in the poor access to credit. This results mainly from the 
inadequacy  of  the  guarantees  available  and  the  absence  of  a  trust-based  relationship  between 
borrowers  and  lenders.  Therefore,  the  credit  line  is  strongly  focused  on  the  access  to  finance  for 
SMEs and micro-enterprises in the meso-finance segment. The EIB additionality comes specifically 
from expanding the access to credit for the SMEs and MidCaps.  

One of the key aspects of the ELM added value assessment is the question of non-distortion of the 
local banking sector activity. The EIB intervention on the local credit market should not substitute 
to the local banking activities, evicting the local banks thanks to more favourable borrowing terms 
offered  to  the  SMEs  and  Mid-Caps.  However,  the  ELM  multi-beneficiary  loans  are  channelled 
through  the  local  financial  intermediaries,  associating  them  rather  than  evicting:  for  each  euro 
invested  by  the  EIB,  the local  financial  intermediaries  expand  their  credit  portfolio  by  two  euros. 
Furthermore,  the  EIB  is  careful  in  assessing  the  non-rival  positioning  on  the  local  credit  market. 
This argument is better illustrated by the example of the Ziraat bank multi-beneficiary loan.  

Non-financial added value resulting from the EIB standards 

While  it  is  difficult  to  construct  any  qualitative  score  indicating  the  added  value  of  the  EIB 
financing  operations  under  the  ELM,  there  is  a  strong  evidence  of  clear  benefits  for  the  final 
beneficiaries  generated  by  the  EIB  lending  –  in  terms  of  project  realization,  financial  advantage, 
leverage effect  or promotion  of good  financial standards within the  local banking  sector.  The  EIB 
also  provides  both  an  IFI  and  EU  label,  which  improves  the  credibility  and  the  visibility  of  the 
projects with the private investors. An important component of the added value from the technical 
assistance  provided  alongside  the  funds.  In  the  case  of  Ukraine,  for  instance,  the  technical 
assistance component was very important, endowing the local stakeholder with the knowledge and 
expertise  about  the  project  management  and  implementation  as  well  as  pushing  to  adapt  EU 
standards  for  procurement.  This  capacity-building  side  of  the  ELM  loan,  in  particular,  was 
recognized  and  praised  by  the  local  stakeholders  during  the  interview  with  the  evaluation  team. 
Thanks to the EIB involvement, the projects are implemented relatively faster because in particular 
of  the  EIB  providing  significant  financial  capacity  and  technical  expertise  for  the  assessment  of 
viable investments. In addition, through the ELM, the Bank diffuses best practices among the local 
–  public  and  private  –  stakeholders.  For  instance,  the  procurement  practices  of  the  borrower  are 
expected to improve following the implementation of the ELM-funded projects as the promoter has 
to use the standards of the EIB in terms of procurement (“EIB guidelines”) and get the approval of 
the  EIB  on  the  tender  documents  to  be  used.  These  standards  are  systematically  passed  into  the 
national legislation and contribute to the quality of the project.  

Conclusion  18:  without  the  ELM,  the  EIB  would  not  have  financed  most  of  the  projects  under 
consideration (country profiles too risky for own-risk facilities).  

Conclusion 19: in several cases, the project could have been realized thanks to alternative sources 
of financing, mainly from the other IFIs, though not necessarily at the same extent. However, there 
is a probability that some of the projects would not have found financing in absence of the EIB (it is 
unlikely  that  the  other  IFI  would  have  covered  the  entirety  of  the  corresponding  EUR 27  billion 
gap) as they face their own financial constraints. 

Conclusion 20: the added value of the ELM financing operations is substantial compared to the 
commercial  loans  both  in  terms  of  financial  advantage  (interest  rate  much  lower,  maturity  much 
longer than on any regular commercial debt) and availability of funds. 

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Conclusion  21:  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. In addition to other IFIs, the EIB is acting as the 
EU bank, applying EU policies and promoting EU standards and principles.  

5.3.1  Exchange rate risk: a drag on the demand for EIB loans 

The  contractual  arrangements  in  all  the  case  studies  specify  that  the  borrower  has  the  ability  to 
choose,  among  other  items,  the  currency  in  which  they  disburse  loan  tranches  are  disbursed. 
However,  EIB  disbursements  to  the  borrower  are  made  in  EUR or  in  USD47,  and  the  contractual 
agreements foresee that the repayment be made in the same currency that the disbursement.  

Almost all of the countries eligible under the ELM mandate, including all the countries concerned 
by  the  case  studies,  are  the  emerging  or  developing countries  with  volatile  exchange  rates. In  the 
current context, many of these countries are affected by the capital flight, induced by the end of the 
QE in the US, by the sharp fall in the price of oil or other commodities. Both evolutions lead to the 
depreciation of the local currency. In this context, the debt burden in EUR or in USD is increased. 
The financial advantage from the relatively cheap and long-maturity borrowing in the framework of 
the  ELM  would  be,  under  these  circumstances,  eroded  or  partly  offset  by  the  exchange  rate  risk 
materialization. The interviews with the loan officers shed light on the issue: in Morocco, some of 
the  promoters  refrained  from  soliciting  EIB  loans  under  the  ELM,  as  borrowing  in  EUR would 
comprise a serious foreign exchange (FX) risk. The expected cost of an increased FX debt burden is 
an even more serious issue for the SMEs and Mid-Caps than for the sovereign borrowers.  

The  table  below  represents  the  evolution  over  the  last  five  years  of  the  exchange  rate  against  the 
euro of the local currencies of the six countries for which a disbursement has been made under the 
current ELM:  

Figure 23 Nominal exchange rate local currency (LCR) vs euro (EUR), 2010-201548 

Source: PwC analysis, Eurostat 

For  several  countries,  the  national  currency  depreciated  strongly  against  the  euro  over  the 
considered  period:  93%  for  Brazil,  53%  for  Turkey,  145%  for  Ukraine.  From  2014  to  2015  –  the 
period  fully  covered  by  the  current  ELM  –,  the  Brazilian  real  depreciated  by  around  33%,  the 
Turkish lira  – by around 12%, the Ukrainian Hryvna by 36%. While the maturity on all the loans 
made  in  these  countries  under  the  ELM  is  long  enough  to  shield  the  countries  and  the  final 
beneficiaries from all the short-term fluctuations, the existence of the exchange rate risk can be a 
drag on the demand from the local beneficiaries for lending in euros (and in FX in general). Given 
the volatility of the national currency in the beneficiary countries, a following hypothetical situation 
could  well  occur.  The  EIB  offers  a  multi-beneficiary  loan  of,  say,  EUR 200  million  –  expecting  a 
positive effect for the local SMEs –, and yet little demand from the local SMEs is shown for these 
loans,  despite  the  favourable  borrowing  terms,  because  of  the  FX  risk.  The  absorption,  at  least 
partial, of this risk by the financial intermediaries would not solve the problem, if they reflected this 

47 EIB also offers loans in South African Rands and Turkish Liras. 
48 Nominal exchange rate local currency vs the euro, at the 31 December of the indicated year. Montenegro adopted the euro as its’ de facto 
currency. 

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expected cost in their pricing of loans: it would largely offset the positive effect of lower interest rate 
on the EIB loan.  

The importance of the exchange rate risk and its potential negative impact on the demand for loans 
from SMEs and Mid-Caps has been confirmed by the local stakeholders in Ukraine and in Turkey. 
In  Ukraine,  the  representatives  of  the  Ministry  of  Finance  evoked  this  risk  as  one  of  the  major 
issues, which could offset the benefits from the ELM-driven lending. The remark did not apply to 
the  Ukraine  Early  Recovery  project  where  the  borrower  and  the  final  beneficiaries  are  public 
entities, but to other ELM loans where the ultimate beneficiaries and financial intermediaries are 
private. The reality of this problem was also recognized by the representatives of the Ziraat bank, 
which acts as the financial intermediary to disseminate the EIB loan among the small agricultural 
producers. The bank absorbs the risk and mitigates it internally – buying currency swaps – as the 
local borrowers would be reluctant to borrow in foreign currency and unable to cope with this risk 
themselves.  

There  are  no  mitigation  measures  currently  in  place  on  the  EIB  side  for  the  ELM  to  shield  the 
borrowers from the exchange risk. The EIB is currently considering swap instruments, which would 
enable the borrowers to repay in the local currency.  

Naturally,  the  risk  of  borrowers’  insolvency  due  to  currency  depreciation  also  weighs  on  the  EIB 
portfolio, but this risk is fully internalized in the pricing of the loans.  

Conclusion 22: the existence of the FX risk drags on the demand for the ELM loans (in USD or in 
EUR) and partially offsets the financial added value of the ELM.  

5.4  Climate change mitigation and adaptation 

This subsection covers the evaluation question EQ 11.  

  EQ11: What is the volume of climate change lending against the target of 25% and what is the 
result of the new system to ex-ante assess greenhouse gas emission of projects supported by the 
EU  guarantee?  How  does  the  EIB  reinforce  the  climate  resilience  for  all  relevant  financing 
operations, and integrate carbon pricing in economic cost benefit analysis? 

5.4.1  ELM strategic framework as regards climate action 

Climate action is one of the three general objectives, and the only objective for which a dedicated 
strategic document is requested by the Mandate Decision. This strategy has been updated on 28th 
December 2015 to reflect the recent developments of climate framework in particular as regards the 
transition to low carbon and climate resilient development, the SDGs, which link economic, social 
and environmental dimensions within a common framework and the engagement taken during the 
international United Nations Framework Convention on Climate Change (UNFCCC) negotiations. 
Mandate  for the  2014-2020  period  reinforces  support  to  EU  Climate  action,  by  setting  an  overall 
quantitative  target  of  at  least  25%  of  total  EIB  financing  operations  covering  climate  change 
adaptation and mitigation.  

The ELM Climate Strategy 2014-2020 sets three overarching objectives: 

1)  Implementing EIB Climate Action Strategy in non-EU operations; 
2)  Delivering on the Mandate Requirements; 
3)  Using new channels and instruments to increase impact, in particular financial instruments and 

Green Climate Funds. 

These three objectives are specified through sub-objectives and potential levers for action. 

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Through the first objective, the EIB intends to reinforce the impact of its climate financing. To do 
so,  the  EIB  wants  to  focus  on  the  projects  with  the  highest  impact  in  terms  of  climate  change 
mitigation  and  adaptation  by  developing  financial  products  in  grade  of  mobilizing  additional 
climate  finance  and  overcome  investments  barriers  for  this  type  of  projects.  These  projects  are 
defined as “projects that (i) bring significant mitigation or adaptation gains; and/or (ii) catalyse and 
mobilise additional climate finance from a range of sources; and/or (iii) reduce financial and non-
financial barriers to the investments needed for the transition to a low-carbon resilient economy”49. 
The technical and financial advisory services will be also mobilized to build a consistent pipeline of 
climate-related  projects.  This  is  expected  to  be  aligned  with  the  national  priorities  in  this  field  in 
particular  by  supporting  projects  identified  and  listed  in  the  national  Intended  Nationally 
Determined  Contributions  (INDC).  In  addition,  a  focus  will  be  also  put  on  climate  change 
adaptation  by  looking  to  build  specific  adaptation  measures  in  investments  projects  with  other 
objectives  and  also  by  targeting  adaptation  projects.  In  terms  of  reporting  on  impacts,  further 
improving tools and metrics for climate change reporting will be taken into account for example by 
considering  the  possibility  to  extend  the  Carbon  Footprint  Exercise  to  include  construction 
emissions and to include intermediated lending. 

The second objective presents how the EIB intends to contribute to climate change mitigation and 
adaptation within the framework of the ELM requirements set in the Decision. Thus, although the 
ELM  Decision  sets  a  target  of  at  least  25%  climate  action  for  all  operations  falling  under  the 
Decision, the EIB wants to go further with an increase of the climate action lending target to 35% of 
all external lending in developing countries by 2020. The EIB will build a climate action portfolio 
with  a  focus  on  high  impact  climate  action  projects.  This  portfolio  will  be  developed  with  the 
introduction of climate risk screening and vulnerability assessment elements for new investments. 
In  order  to  increase  the  climate  adaptation  projects  in  the  portfolio,  the  EIB  will  also  invest  in 
activities such as land and  water resource management. In addition,  the EIB wants  to  pay a high 
attention  to  promote  climate  change  objectives  through  smaller-scale  projects,  for  instance  by 
fragmenting high impact investments in large numbers of small projects. Climate change objectives 
will be also pursued through blending mechanisms, which represented nearly a third of the EIB’s 
total  commitment  under  the  ELM  in  2014.  The  EIB  intends  also  to  strengthen  the  existing 
greenhouse  gas  (GHG)  emissions  assessment  by  exploring  new  approaches  to  assess  the  overall 
footprint of operations. 

With the third objectives, the EIB foresees potential new channels for climate actions. This includes 
the  cooperation  with  the  Green  Climate  Fund  (GCF)  and  the  use  of  financial  instruments  for 
climate action (equity, debt funds, guarantees, subordinated loans, etc.). 

Examples include the Global Energy Efficiency and Renewable Energy Fund (“GEEREF”). This is a 
fund of funds, which provides global risk capital to unlock private investments in renewable energy 
and energy efficiency projects in developing countries and economies in transition. 

In  the  past,  the  EIB  did  not  have  access  to  grants  from  similar  climate  change  financing 
mechanisms (e.g. Climate Investment Funds - CIF and Global Environment Facility - GEF), but was 
accredited to GCF in early 2016 and will engage in a deep cooperation with the GCF in consultation 
with the European Commission. 

Then,  the  strategy  identifies  priority  sectors  to  support  climate  related  projects.  They  includes 
renewable  energy  and  energy  efficiency,  transport,  water  and  sanitation,  municipal  solid  waste, 
urban development, forestry and land use and adaptation. This strategy has started to be reflected 
in the ELM operations as described below. 

5.4.2  Contribution of the 20 case studies to climate change objectives 

Among  the  20  case  studies,  eight  contribute  to  climate  change  objectives  (e.g.  climate  change 
indicator above 2%), two of which fully contribute to climate change objectives (e.g. climate change 
indicator equal to 100%). seven operations out of this eight contribute to climate change mitigation 

49 External lending Mandate Climate Strategy, 

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for  a  total  amount  of  EUR 518  million.  Only  one  operation  contributes  to  climate  change 
adaptation, “Wadi al Arab water system ii project” in Jordan but for only EUR 5 million. 

Table  30:  Contribution  of  the  20  operations  (case  studies)  to  climate  change  mitigation  and 
adaptation 

Name of the project 

EIB 

contribution 

to the project 

Climate Change 

Climate Change 

Climate Change 

indicator 

indicator - Mitigation 

indicator - Adaptation 

(EUR M) 

(%) 

(EUR M) 

(%) 

(EUR M) 

(%) 

(EUR M) 

Montenegro water and 
sanitation 
Sao Paulo rolling stock 

Private sector 
development and 
economic growth 
Ziraat bank IPARD MBIL 

Ouarzazate iii (tower) 

Europac industrial 
packaging plant in Tangier 
Laksam Akhaura double 
track rail project 
Armenia apex loan for 
SMEs 
Accessbank Azerbaijan 
loan for SMEs 
Tajik - Kyrgyz power 
interconnection 
SBI loan for SMEs and 
Mid-Caps 
Wadi al Arab water system 
ii project 
Kutaisi waste water 

Partenariat BEI-BTK-
reseau entreprendre 
Brasil loan for SMEs & 
Mid-Caps 
Ukraine early recovery 

IDF loan for SMEs & 
priority projects ii 
South Africa private sector 
facility 
Amen bank-prets PMEs & 
ETI 
Guarantee for economic 
development in Ukraine 

10 

200 

120 

100 

50 

10 

135 

50 

25 

70 

45 

50 

100 

20 

150 

200 

40 

50 

50 

- 

- 

- 

- 

100 

200 

2 

2.4 

35 

100 

- 

35 

50 

- 

100 

100 

100 

100 

- 

200 

2.4 

35 

50 

- 

100 

135 

100 

135 

- 

- 

- 

30 

10 

4 

- 

2 

- 

2 

2 

2 

- 

- 

- 

- 

- 

- 

- 

- 

- 

13.5 

100 

13.5 

5 

4 

- 

3 

- 

- 

100 

- 

100 

- 

- 

4 

- 

3 

- 

0.8 

100 

0.8 

1 

1 

100 

100 

1 

1 

458 

16 

73 

100 

73 

Total 

1932 

- 

523 

- 

518 

Source: PwC 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

100 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

5 

- 

- 

- 

- 

- 

- 

- 

- 

5 

Among  the  nine  credit  lines  projects  in  the  case  studies,  only  one  has  a  climate  change  indicator 
above 2%, e.g. 30% for the project “SBI loan for SMEs and Mid-Caps” in India. Indeed 30% of the 
sub-projects  are  required  to  target  final  beneficiaries  of  any  size  for  investments  in  the  fields  of 
climate  change  mitigation  and  adaptation  but  without  being  contractually  binding.  However,  the 

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other  credit  lines  projects  do  not  include  such  a  target  and  has  therefore  a  2%  climate  change 
indicator.  

The  opportunity  to  use  more  often  targets  in  credit  lines  is  being  followed  up  proactively  by  EIB 
and discussions on pilot cases with certain FIs are ongoing. It is hoped this will lead to a number of 
MBILs  with  dedicated  Climate  Action  windows  –  where  necessary,  supported  by  TA  for  the  FI. 
There is significant potential, provided that the demand for climate change projects by SME does 
form a realistic pipeline, in order not to affect the disbursement of the loan. 

5.4.3  ELM contribution to GHG emissions reduction 

Ex-ante assessment of GHG emissions 

The  Decision  states  that  an  analysis  of  the  carbon  footprint  “ought  to  be  included  in  the 
environmental  assessment  procedure  to  determine  whether  project  proposals  optimise  energy-
efficiency  improvements”  (Article  3).  The  EIB  Carbon  Footprint  Exercise  (CFE)  estimates  at  the 
appraisal  stage  GHG  emissions  for  all  projects  with  significant  emissions,  e.g.  where,  in  one 
standard year of operations: 

  Absolute emissions (actual emissions from the project) exceed 100 000 t Co2-eq/year and/or; 
  Relative  emissions  (estimated  emissions  increases  or  avoidance  compared  to  the  expected 

alternative) exceed 20 000 t CO2-eq/year. 

These  thresholds  are  in  line  with  those  of  other  financial  institutions  and  are  estimated  to  cover 
approximately 95% of the absolute and relative GHG emissions from projects50. The EIB calculates 
and reports on 100% of the project’s emissions in the Environmental and Social Data Sheet (ESDS) 
which is published on EIB’s Public Register, even if the Bank is only contributing a portion of the 
total  project  investment  cost.  For  the  annual  aggregated  CFE  reporting  only  the  GHG  emissions 
prorated to EIB financing are reported, to avoid double count with other financiers. 

The Carbon Footprint Exercise is only conducted for direct investment loans and large framework 
loans. Intermediated lending does not go through this exercise for the moment due to the limited 
information  available  for  sub-projects,  in  particular  at  the  time  of  the  appraisal  (the  portfolio  of 
projects may not be finalised at the time of the appraisal of the project). 

The  methodology  used  by  the  EIB  to  calculate  absolute  and  relative  emissions  is  based  on  the 
Intergovernmental Panel on Climate Change (IPCC) Guidelines and the World Resources Institute 
(WRI) GHG Protocol. These two provide methods and tools to calculate GHG emissions, which are 
used by a large range of corporate and non-corporate actors in the world. 

The overall methodology simplified and described in four steps. 

Step 1: Definition of the project boundary 

The  project  boundaries  serve  to  determine  what  should  be  included  in  the  calculation.  Typically, 
the  EIB  methodology  distinguishes  three  different  scopes  referring  to  the  WRI  GHG  Protocol 
“Corporate Accounting and Reporting Standard”. 

50 Methologies for the Assessment of Project GHG Emissions and Emission Variations, EIB, version 10.1 

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Scope 1: Direct GHG 
emissions 
Emissions that occur 
within the project 
boundaries  

Scope 3: Other 
indirect GHG 
emissions 
Emissions that are 
a consequence of 
the activities of the 
project but that 
occur from sources 
not operated by the 
project 

Scope 2: Indirect 
GHG emissions 
Emissions that 
occur outside the 
project boundaries 
but on which the 
project may have 
an impact  

The carbon footprint exercise only includes the emissions from the scope 1 and scope 2. This was 
decided based on a six-month pilot exercise and through the meetings with other IFIs dedicated to 
the harmonisation of different carbon footprint computation approaches. 

Step 2: Quantification of absolute emissions 

The  absolute  emissions  of  the  project  (scope  1  and  2)  are  estimated  by  multiplying  activity  data, 
such  as  the  volume  of  fuel  used  by  a  project-specific  or  an  industry  –specific  default  emissions51 
factor.  The  emissions  factors  derived  from  the  WRI  GHG  Protocol  and  IPCC  Guidelines  for 
National GHG Inventories. 

Step 3: Quantification of Baseline emissions 

The baseline emissions refer to the emissions that would have been produced without the project 
(“without project” scenario). It gives the counterfactual to which the absolute project emissions can 
be compared. The “without project” scenario is defined as “the expected alternative means to meet 
the  output  supplied  by  the  proposed  project”52.  Therefore,  the  scenario  should  be  credible  in 
technical  terms,  but  also  in  terms  of  socio-economic  effects,  compliance  with  legal  requirements, 
and use of existing assets beyond their economic life. 

Step 4: Calculation of the relative emissions 

The relative emissions are defined as:  

Relative emissions= Absolute emissions – Baseline Emissions 

The relative emissions give the overall impact (negative or positive) of the project in terms of GHG 
emissions. 

The  methodology  used  by  the  EIB  to  estimate  GHG  emissions  is  fully  aligned  with  the  existing 
international  best  practices,  especially  the  methods  developed through  the  IPPCC  Guidelines  and 
the WRI GHG Protocol. It is still too early to assess the extent to which the financial intermediaries 
have integrated ex-ante assessment of climate related aspects into their own practices, including for 
operations not covered by an ELM operations. However, local stakeholders report that the EIB pays 
more  attention  to  climate and  environmental aspects than  most of the others IFIs. This  has been 
stated  for  the  Ukraine  operation  (Guarantee)  and  in  Tunisia.  In  Tunisia,  representative  from  the 
financial intermediaries (Amen Bank) considers that their collaboration with the EIB allowed them 
to reinforce the way they appraise environmental and climate related aspects in projects. 

51 In case where the project-specific data are not available, the EIB use default factors based on sector specific activity data and through the 
application of documented emission factors. 
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The total emission savings (equivalent to the relative emissions) of ELM projects over the second 
half  of  2014  and  2015  is  1.35  Mt  CO2-eq/year  over  a  total  of  26  projects  –  23  in  2015  and  3 
falling under the second half of 2014. 

The figure for the ELM covering the whole period July 2014-December 2015 is as follows: 
.  

Total absolute emissions 
Total relative emissions 

1.44 Mt/CO2-eq/yr 
-1.35 Mt/CO2-eq/yr 

Among the 20 case studies, three projects highly contribute to climate change objectives: 

  Sao Paulo rolling stock: the project has a 100% climate change indicator and is fully dedicated 
to  the  climate  change  mitigation.  An  Environmental  Impact  Assessment  has  been  conducted 
before  the  implementation  of  the  project.  The  improved  services  are  expected  to  increase  the 
number  of  passengers  using  trains  rather  than  car  or  bus,  reducing  pollution,  noise  and  CO2 
emissions from road vehicles. The potential GHG emissions of the project would result from the 
electric consumption of the railway line. Overall, this project is expected to save 16.032 kt of 
CO2-eq/year. 

  Laksam  Akhaura  double  track  rail:  with  a  climate  change  indicator  of  100%  the  project  is 
considered to be fully focused on the climate change mitigation. The promoter has undertaken 
an Environmental Impact Assessment (EIA). The project is expected to generate savings in user 
time,  vehicle  operating  costs,  road  accident  costs,  local  air/  noise  emissions  as  well  as  a 
reduction  in  greenhouse  gas  emissions  because  of  the  expected  modal  shift  of  passengers  and 
freight  from  road  to  rail.  The  main  residual  negative  environmental  and  social  impacts  of  the 
project include: (i) permanent conversion of about 60 ha of largely agricultural land; (ii) cutting 
down  of  about  57,000  trees;  (iii)  involuntary  resettlement  of  about  2,200  households  and  60 
common property assets; and (iv) use of about 2.2 million m3 of material for the construction of 
embankment  and  track.  In  response  to  these,  mitigation  measures  have  been  taken.  They  are 
gathered in an Environmental Management Plan, which is contractually binding on the works of 
the contractor and monitored by independent auditors. The impact on GHG emissions has not 
been  used  directly  in  the  selection  of  the  project  but  in  its  design.  The  use  of  double  track 
railways is indeed motivated by the higher modal shift allowed by this system and therefore the 
higher  impact  on  GHG  emissions  reduction.  The  decrease  in  GHG  emissions  is  estimated  to 
64kt CO2-eq/year. 

  Ouarzazate  III  (tower):  the  project  will  contribute  to  meet  growing  electricity  demand  in 
Morocco using solar energy. Overall, this project is expected to save 266 kt of CO2-eq/year. 

This provides examples of how ELM operations can contribute to climate objectives. In the other 
operations within the case studies, climate change mitigation and adaptation are either a secondary 
objective (for four operations whose climate change indicator is between 10% and 35%) or not an 
objective in itself (climate change indication below 2%).  

Conclusion 23: the ELM largely contributes to the climate change-related objectives, especially in 
terms of mitigation. It largely exceeds the quantitative target of 25% and even the future target of 
35%,  as  the  climate  change-related  actions  account  for  39%  of  the  total  EIB  contribution53.  The 
total  emission  savings  of  ELM  projects  over  the  second  half  of  2014  and  2015  is  1.35  Mt  CO2-
eq/year. 

53 Current ELM climate action (at end March 2016) stands at 34% in terms of signatures (down from 35% at end 2015). The report refers to 
the proportion in terms of volume approved and partly or fully signed which stood at 39% at end 2015. The cumulative proportion is, however, 
not constantly increasing, it may evolve downwards too. 

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5.5  The  communication  and  the  ELM  contribution  to  the 

visibility of the EU 

This subsection covers the evaluation question EQ 12. 

  EQ12: What is the effectiveness of communication efforts of the EIB on the visibility* of the EU, 

including at project level? 

The  RTOG  stipulates  that  the  EIB  financing  operations  under  ELM  should  “strengthen  EU 
communication  and  visibility”.  Assessing  this  objective  raises  several  challenges.  First,  the  short 
operating timeframe of the ELM 2014-2020 operations limits the possibility to observe effects on 
visibility.  In  addition,  assessing  visibility  requires  a  specific  methodology,  which  goes  beyond  the 
scope of this mid-term review. 

In  this  section,  the  evaluation  therefore  analyses  the  question  of  visibility  through  two  specific 
approaches: on the one hand, we will assess whether the conditions to ensure the visibility of the 
EU are in place, on the other hand we will rely on the perception of the stakeholders, in particular 
at final beneficiaries level. 

The  requirements  in  terms  of  communication  and  visibility  of  the  EIB  and  the  EU  are  set  in  the 
finance  contracts.  The  side  letter  attached  to  the  finance  contract  indicates  that  the  “borrower 
commits  to  inform  each  Final  Beneficiary  of  the  EIB  support  and  of  the  Financial  Advantage 
stemming from Bank involvement”. This can be done in two ways. First, by labelling a product from 
the borrower, either the name of the product or the product documentation should clearly refer to 
the Bank. Second, a letter or electronic means should be sent to each Final Beneficiary indicating 
that the respective financing has benefited from EIB support and state the difference in terms and 
conditions stemming from this support. 

In addition, when the operation deals with SME financing, the borrower should be ready to insert 
on their website dedicated to SME and medium and long term financing products, an information 
page on the Bank’s activity in favour of SMEs and Mid-Caps. 

The  signature  of  the  finance  contract  may  also  be  a  mean  of  communication,  especially  when  it 
involves Ministries or high level officials. The visibility of the EU is also likely to be reinforced by 
the operations conducted with new counterpart, in particular as regards public sector entities. For 
instance,  in  Brazil,  the  project  with  Sao  Paulo State  was  the  first  project of  the  EIB  with  a public 
sector entity in Brazil. This could bring others projects with such entity in other State of Brazil and 
therefore reinforce the presence of the EIB in the country and the overall visibility of the EU among 
public actors in the country. 

When  the  EIB  co-financed  operations  with  other  IFI,  the  visibility  is  agreed  in  advance  in  the 
partnership  agreement,  even  when  the  EIB  is  a  minority  co-financer,  it  seems  that  EIB  and  EU 
effort has been put forward. In Bangladesh, the ADB, which is the main co-financer of the project, 
is  considered  by  the  EIB  as  really  respectful of  the  visibility  of  the  partner by  paying  attention  to 
make a joint visibility impact.  

In  specific  situation,  such  as  in  Ukraine,  the  operations  conducted  under  ELM  are  considered  to 
attract substantial  political visibility  as part of the EU’s broader efforts to  support  the short-term 
recovery of Ukraine and the medium/long-term development of affected regions.  

This has been confirmed by local stakeholders, which consider that the visibility of EIB operations 
under  the  EU  guarantee  is  ensured  at  the  final  beneficiaries’  level  with  attempt  to  promote  the 
operation  in  mass  media.  In  Turkey,  as  attested  by  the  interview  with  the  representatives  of  the 
financial intermediaries, the name of the EIB has a demonstration effect of marking the loans easily 
marketable.  However,  the  Moroccan  case  demonstrate  that  the  ultimate  beneficiaries  are  not 
necessarily aware that the EIB benefited from an EU guarantee to fund the operation. Indeed, the 
interviews  conducted  during  the  field  visit  showed  that  the  beneficiary  of  the  Ouarzazate  III 
(Tower) project was not aware that the project benefited from the ELM’s guarantee mechanism.  

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Overall, the communication and visibility impact of the operation have been taken into account in a 
formal  way,  e.g.  as  an  operational  requirement  for  the  borrower,  but  no  as  a  strategy  in  itself.  A 
potential  for  leverage  on  communication  actions  within  the  framework  of  a  true  communication 
campaign is high and could benefit from the support of local stakeholders.  

Conclusion 24: Communication efforts to date have ensured the borrower is informed of the EU 
support.  However,  it  does  not  ensure  that  the  visibility  of  the  EU  is  sufficiently  enhanced  at  the 
final  beneficiary  level.  Communication  and  visibility  objective  should  be  further  promoted  and 
supported within the ELM.  

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6  Conclusions and recommendations 

6.1.1  Main conclusions by themes  

The  formulation  of  the  recommendations  has  been  based  on  the  analysis  conducted  over  the 
portfolio of the operations conducted by the EIB under the ELM for the period July 2014-January 
2015. The results of this Mid-Term review sought to identify the potential areas of improvement in 
the design and management of the ELM and provide the criteria for the decision on the extension of 
the EU guarantee by EUR 3 billion.  

This  section  summarizes  the  findings  of  the  evaluation  and  presents  the  conclusions  across  five 
main themes: the design of the ELM, its management, added value, role in terms of climate-change 
mitigation and adaptation and contribution to the visibility of the EU.  

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 (C1). These three objectives themselves are aligned with 
the Sustainable Development Goals as defined by the United Nations (C2). Moreover, the ELM has 
supported  the  EU  external  policy  agenda,  showing  sufficient  flexibility  and  reactivity  to  the 
geopolitical challenges as demonstrated through the cases of Syria,  Ukraine (the Ukrainian crisis), 
Egypt and Morocco (“Arab spring”) and Jordan (the refugee crisis) (C3). The ELM has played a role 
in the economic and political stabilisation of these countries hit by a political crisis (C4).  

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 (C5).  

Overall,  the  financing  operations  were  conducted  in  full  compliance  with  the  Allocation  policy  of 
the  ELM  (C7-8).  Lending  under  the  EIB  own-risk  and  lending  under  the  EU  guarantee  proved 
largely non-rival, as the EU guarantee has usually been solicited for operations in countries with a 
speculative  grade.  Even  though,  three  countries  (India,  Brazil  and  South  Africa)  where  the  ELM 
operations  have  been  conducted  had  an  investment  grade  at  the  date  of  signature,  their 
macroeconomic environment is highly unstable, which justifies the use of the EU guarantee (C9). 

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 (C10). Key part of the appraisal, the REM 
framework is well adapted to  the operational  objectives of the EIB in  the framework of the ELM. 
The REM was developed based on an assessment of indicators and models existing among the IFIs. 
Therefore, it absorbed the existing best practices (C13 and C14). 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. However, some improvements in the procedure and coordination between the 
EIB and the EU could further enhance the reporting system (C12). 

Overall, the EIB or the local stakeholders do not perceive the management cost induced by the ELM 
higher than the management cost of other comparable operations (C11). 

Coordination and complementarity with other stakeholder such as the EU delegations, other IFIs or 
blending mechanisms has been crucial in several operations prospecting the beneficiaries, sharing 
the  knowledge  of  the  local  context,  coordinating  and  ensuring  a  connection  with  the  national 
governments  of  the  beneficiary  countries  (C15  and  C16).  Some  rationalisation  of  the  blending 
process  could  be  envisaged  in  order  to  address  urgent  needs  (e.g.  loans  targeting  refugee  crisis-
related issues).  

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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 (C18). In several cases – with important exceptions –, the 
project could technically have been realized in the absence of the EIB involvement, as the borrower 
may  potentially  have  found  an  alternative  source  of  financing,  mainly  from  the  other  IFIs  (C19). 
However,  the  other  IFIs  face  their  own  budget  constraints  and  seek  to  diversify  risks:  thus  in 
absence of the ELM, they would not have been able to fill the gap entirely. 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  (C20).  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 (C21). However, the existence of the FX risk drags on the demand for the ELM loans (in 
USD or in EUR) and partially offsets the financial added value of the ELM (C22 

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  (C23).  In 
addition,  the  ELM  operations  have  allowed  to  save  an  estimated  1.35  Mt  CO2-eq/year  of  GHG 
emissions through the operations signed between July 2014 and December 2015.  

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

The  communication  efforts  allowed  informing  the  borrower  of  the  EU  support.  However,  it  does 
not  ensure  that  the  visibility  of  the  EU  is  sufficiently  enhanced  at  the  final  beneficiary  level. 
Communication and visibility objective should be further promoted and supported within the ELM 
(C25).   

The results of this Mid-Term review, as presented through the conclusions above, are meant to be 
used to define the criteria for the potential extension of the EU guarantee by EUR 3 billion.  

In line with the scope of the evaluation, these criteria could be summarized as follows:  

  Is  the  design  of  the  ELM  relevant  from  the  point  of  view  of  the  EU  external  policy  objectives, 
that  is,  would  the  additional  funds  address  relevant  needs?  The  conclusions  of  the  Mid-Term 
review allow answering positively to this criterion; 

  Is the current management of the ELM by the EIB sound, that is would the Bank be able to use 
the  additional  funds  in  a  confident  and  efficient  manner?  The  conclusions  of  the  Mid-Term 
review point that, in spite of some minor inefficiencies, the overall management of the Mandate 
by the EIB is sound and in line with the existing best practices; 

  To  what  extent  do  the  ELM  loans  bring  added  value  to  the  final  beneficiaries,  that  is  would 
additional funds be expected to generate significant benefits – financial and non-financial – to 
the  local  stakeholders?  The  Mid-Term  review  clearly  points  out  that  the  ELM  operations 
generate high added value for the final beneficiaries; 

  Do the current regional ceilings and the overall envelope restrict the EIB activities in a way that 
could be detrimental to the fulfilment of its objectives? The answer from the Mid-Term review is 
contrasting  depending  on  the  specific  regions:  in  some  of  them,  the  volume  of  lending 
committed  is  proportionally  more  significant,  sometimes  moving  quite  close  to  the  actual 
regional ceiling defined in the Decision.  

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6.1.2  Recommendations 

This  section  draws  on  the  results  of  the  analysis  and  the  conclusions  presented  before  and 
formulates  the  recommendations  for  the  future  of  the  Mandate.  These  recommendations  are 
preliminary. The finalised recommendations will be presented in the final report. 

1.  Consider  the  review  of  the  eligible  countries  list  specified  in  the  Decision  466/2014/EU 
according to the country risk profile 

The list of eligible regions and countries presented in the Annex III of the Decision includes some 
countries  whose  credit  rating  puts  them  well  above  the  threshold  specified  in  the  Annex  V  of  the 
Guarantee  Agreement. For instance, as of May 2016, China has a credit rating of AA-  (S&P),  Aa3 
(Moody’s)  and  A+  (Fitch).  South  Korea  has  a  credit  rating  of  AA-  (S&P  and  Fitch)  and  Aa2 
(Moody’s). Singapore has a credit rating of AAA (S&P), Aaa (Moody’s) and AAA (Fitch). Chile – a 
credit  rating  of  AA-  (S&P),  Aa3  (Moody’s)  and  A+  (Fitch).  While  the  EIB  conducts no  operations 
under the ELM in these countries, their presence on the eligible countries list may be questioned.  

2.  Better  target  the  External  Lending  Mandate  on  the  EU  priorities  in  order  to  improve  the 
response to external policy objectives 

Alongside  the  policy  objectives  stated  in  the  Decision,  the  current  ELM  period  saw  a  rise  of  new 
external  policy  priorities  across  several  dimensions:  economic  diplomacy,  new  climate  change 
adaptation/mitigation  requirements,  political  and  economic  support  of  neighbouring  countries  in 
distress (Ukraine), the indispensable response to the refugee crisis. These challenges call for more 
flexibility  over  the  definition  and  organisation  of  the  EIB  ELM  in  order  to  optimise  its  potential 
impact.  

  In  countries  where  there  is  a  possibility  to  lend  through  ORF,  this  lending 
opportunity  may  remain  the  preferred  one  As  a  general  rule,  the  EIB  solicits  the  EU 
Guarantee for operations in countries with the credit rating below the threshold BBB- (S&P and 
Fitch)  and  Baa3  (Moody’s),  i.e.  for  which  the  EIB  cannot  lend  under  the  own-risk.  However, 
some  of  the  operations  under  the  ELM  were  undertaken  in  countries  with  the  risk  profile 
exceeding  this  threshold.  The  operations  are  expected  to  generate  the  highest  added  value  in 
countries  with  lower  credit  rating,  as  private  and  public  stakeholders  in  these  countries  face 
relatively tougher credit conditions and relatively more limited access to finance. Thus, in order 
to concentrate the lending under the ELM on higher risk profiles, the operations under the ELM 
could  be  restricted  to  countries  with  the  credit  rating  corresponding  to  the  speculative  grade 
(below BBB- (S&P and Fitch) and Baa3 (Moody’s).  

  The extension of the EU guarantee should be granted in order to support the ELM 
objectives  beyond  the  current  Mandate  (operations  in  new  eligible  countries, 
support of the EU response to the refugee crisis) to allow the EIB delivering on the 
EU  priorities.  According  to  the  Bank,  the  pipeline  of  current  projects  would  bring  the  some 
regional  envelope  to  full  exhaustion  from  2017,  three  years  short  of  the  2020  deadline.  This 
would  call  for  the  extension  of  the  total  envelope,  considering  the  soundness  of  the  mandate 
management and relevance of its objectives. However, the extension of the EU Guarantee would 
come  at  an  opportunity  cost,  as  a  corresponding  volume  would  have  to  be  provisioned  in  the 
Guarantee  Fund.  Thus,  considering  the  abovementioned  aspects and  the  opportunity  cost,  the 
evaluation team suggest that the optional additional amount of EUR 3 billion should be reserved 
to the new EU priorities: the financing of the ELM operations in the new countries that could be 
added to the list of the eligible countries under the ELM (Iran, Cuba, Belarus, etc.), the support 
of  new  policy  priorities  put  forward  by  the  European  Commission,  European  Council  or 
European  Parliament,  such  as  the  increased  support  to  the  refugee  crisis  response  in  Pre-
Accession and Mediterranean countries. The latter may also require a qualitative change in the 
type of guarantee coverage provided, because the private sector is assigned a key role to promote 
economic  resilience  and  create  jobs  benefiting  refugees  and  host  communities,  but  often 
presents  high  level  of  residual  commercial  risks.  The  clarification  of  the  use  of  the  Guarantee 
between EIB and the Commission would also enhance efficiency in the use of the instrument.  

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Better targeting of the ELM operations on the existing and the emerging EU priorities would allow 
higher  and  stronger  responsiveness  to  the  current  and  upcoming  external  policy  challenges.  It 
would  also  leave  the  EIB  with  higher  leeway  in  pursuing  the  different  policy  objectives  currently 
formulated  in  the  Decision,  appeared  through  the  current  ELM  period  or  forthcoming  in  the 
foreseeable future. The adaptation of the ELM and the re-definition of the EU Guarantee – with the 
subsequent changes introduced in the legal basis – will trace the path for the future design of a new 
instrument.  

3. In terms of communication, the ELM would have more impact if there were a consistent joint 
EC-EIB strategy communicating on all projects in a country taken together 

The  current  communication  framework  for  the  ELM  operations  relies  largely  on  the  formal 
contractual  clause,  which  requires  informing  the  final  beneficiary  of  the  EU  origin  of  funds 
provided. However, this formal requirement is insufficient to ensure the full-fledged visibility of the 
instrument  and,  more  importantly,  of  the  EU  support.  In  addition,  it  fails  to  communicate  in  a 
consistent manner on the overall EU strategy in the country. Thus, in order to empower the EIB to 
communicate effectively to the local beneficiaries the extent and the impact of the EU support, this 
evaluation  suggests  putting  in  place  a  “cooperation  package”  between  the  EIB,  the  Commission, 
EEAS and other entities of the EU working in the country under consideration. This  “cooperation 
package” could include, in particular, joint visits from Commission, EIB and EEAS to the countries, 
joint  communication  strategies  between  EU  delegation  and  EIB  local  offices,  joint  press  releases 
putting the accent on the EU involvement in the country. At the operational level, this “cooperation 
package”  would  involve  aligning  the  calendar  of  relevant  events  in  the  country  and  systematize 
knowledge sharing between the Commission, the EIB and EEAS so that the representatives of each 
institution  would  perform conduct joint  visits. The use of both the EU and the  EIB logo could  be 
envisaged for joint projects, including blending operations involving grants. The EU delegation role 
could also be given the prerogative of communicating on the EIB action in the country once a year 
in  a  specific  report.  The  EIB  could  also  ensure  inclusion  of  specific  communication  and  visibility 
plan  in  proposals  for  new  initiatives  involving  EU  grants  and/or  ELM  coverage.  This  evolution 
would allow the EIB, the Commission and EEAS to align messages towards the beneficiary country, 
while ensuring the completeness and up-to-date character of the information about this country for 
both institutions. It would also maximize the impact of the ELM operations in terms of the visibility 
of the EU support to the main stakeholders and the public in the recipient countries. 

4.  EEAS  should  be  better  associated  to  the  elaboration  of  the  Regional  Technical  Operational 
Guidelines 

The  task  of  elaborating  the  RTOG  is  devolved  to  the  Commission,  which  coordinates  the 
preparation with EEAS and EIB. Given the leading role of the EEAS in the operational formulation 
of  the  EU  external  policy,  it  is  recommended  to  enhance  the  role  of  the  EEAS  in  elaborating  the 
RTOG. This would enable clear definition of the EU external priorities in each of the regions. 

5.  Consider  a  consolidated  reporting  approach  in  order  to  get  a  more  consistent  and  more 
comprehensive picture of the ELM and the use of the blending mechanisms 

While current reporting procedures of the EIB under the ELM are globally sound, there is scope for 
rationalisation comprising 1) the reporting on projects, which involve blending of grants and ELM 
loans,  and  2)  the  reporting  and  provision  of  data  by  the  EIB  to  the  Commission.  While  these 
reporting  procedures  have  different  legal  basis,  it  is  possible  to  adapt  it  from  the  current  ELM 
period.  In  both  of  these  items,  streamlining  the  reporting  procedures  could  improve  the  overall 
quality  of  the  reporting,  which  would  make  it  more  consistent  and  comprehensive  and  therefore 
enable  better  decision-making  at  the  policy  level.  The  two  points  below  present  the  two  specific 
measures addressing this theme.  

  For projects where ELM loans are blended with grants or technical assistance, the 
EIB and the EC should open discussion on the opportunities for rationalising the 
processes for each, including as regards reporting. 

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  The  Commission  could  define  beforehand  the  type  of  information  it  needs  from 
the EIB to prepare its own report to the Parliament: it would improve the quality 
of the reporting, while cutting costs and saving time. Currently, the Bank reports to the 
Commission  on  its  activities  under  the ELM.  The  Commission,  in  turn,  prepares  the  report to 
the Parliament regarding the ELM. However, a significant share of information provided by the 
EIB to the Commission  is subsequently unused  in the report to the Parliament.  The collection 
and preparation of this information imposes an important administrative burden on the Bank. 
Thus, if the Commission provided a better definition of the type of information it would need for 
the  report  to  the  Parliament,  it  would  allow  the  EIB  to  focus  on  providing  more  specific  and 
useful information. This would result in the significant reduction of the administrative burden, 
while  providing  a  more  consistent  and  comprehensive  picture  of  the  EIB  activities  under  the 
ELM.  

This  streamlined  reporting  approach  would  enable  better  decision-making  on  the  side  of  policy-
makers. In turn, the ELM would be more efficient in its alignment with the EU external policies if it 
were made more flexible along several dimensions.   

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Appendices 

Annex 1: List of persons interviewed 

This  table  presents  the  list  of  persons  interviewed  at  the  different  institutions:  the 
European Commission, the EIB, the EEAS and the persons interviewed in the process 
of  the  local  stakeholder  consultation.  The  specific  persons  to  be  interviewed  were 
identified with the assistance of the EIB and the European Commission:  

Institution 

Role 

Name 
Georg Weiers 
Barbara Marchitto 

Timo Valila 
Marcel Gounot 
Nina Kallio 
Gwenael Robert 
Carl Gobbi 
Maximilien Abt  
Georgiana Buturiu 
Nancy Saich 
Esther Badiola 
Martin Berg 
Rasmus Lauridsen 
Lloyd Jones 
David 
Garcia 
Thomas Van Gilst 

Gonzales 

(Monty) 

Eugene 
Howard 
Ramon Ynaraja 

SG/Econ 
SG/ECON 

PJ/SQM/Impact 
OPS/OSD 
OPS/OSD 
FC/FRA 
TMR 
RM/CRD 
RM/CRD 
PJ/SQM/ECSO 
PJ/SQM/ECSO 
OPS/NPST 
PJ/SQM/ECSO 
PJ/SQM/Impact 
PJ 
Project 
PJ  –  Wadi  Al  Arab 
project 
PJ/Energy 

–  Ouazazate 

Loan officer, EIB 

Sunita Lukkhoo 
Umberto Del Panta 
Tereziya Babych 
Maciej Czura 
Marion Hoenicke 

Loan officer, EIB 
Loan officer, EIB 
Loan officer, EIB 
Loan officer, EIB 
Loan officer, EIB 

Georgia Koutsiana 
Olesja Muratova 

Loan officer, EIB 
Loan officer, EIB 

Alexandre Varela 

Loan officer, EIB 

Tomas Tamosauskas  Loan officer, EIB 

Hervé Guénassia 
Gratianne Dascon 

Loan officer, EIB 
Loan officer, EIB 

Laurent Nicolai 

Loan officer, EIB 

Catherine Barberis 
Wolfgang Spieles 

Loan officer, EIB 
Loan officer, EIB 

REM 
Sovereign  and  banking  industry  risk; 
financial sector operations.  
REM 
Reporting 
Reporting 
Reporting 
Reporting 
Reporting 
Reporting 
Climate issues/Climate reporting 
Climate issues/Climate Strategy 
Climate issues 
Climate issues 
Climate issues 
Climate issues, REM 

Reporting, REM 

Reporting, Climate issues, REM 

Laksam  Akhaura  double  track  Rail 
Project 
SBI Loan for SMEs and Mid-Caps 
Tajik - Kyrgyz Power Interconnection  
Tajik - Kyrgyz Power Interconnection 
Armenia APEX Loan for SMEs 
ACCESSBANK  Azerbaijan  Loan  for 
SMEs 
Kutaisi Waste Water 
Ukraine Early Recovery 
Guarantee for Economic Development 
in Ukraine 
Sao Paulo Rolling Stock 
Brasil loan for SMEs & Mid-Caps 
Private  Sector  Development  and 
Economic Growth 
OUARZAZATE III (Tower) 
Europac  Industria  Packaging  Plant  in 
Tangier 
Partenariat 
Entreprendre 
AMEN Bank-Prêts PME & ETI 
Wadi Al Arab Water System II Project 
Montenegro Water and Sanitation 

BEI-BTK-Réseau 

 
 
 
 
 
 
 
 
 
 
Final Report for the External evaluation of the application of the European Union Guarantee for the EIB 
lending operations outside the European Union 

Massimo D’Eufemia 
Peter Zajc 
Nadia Taobane 

Gülsüm Duru 

Loan officer, EIB 
Loan officer, EIB 
Director 
Structuration, 
MASEN 
Ziraat 
representative 
Amen Bank 

Bank 

DG ECFIN 
DG CLIMA 
DG BUDGET 
DG GROW 

Boutheyna  Bouhlel 
Hammami 
Benjamin Angel 
Eero Saue 
Johan Bendz 
Philippe  Taxis  de 
Poët 
DG ECFIN 
Sarah Jurreit 
DG NEAR 
Paulo Martins 
Pierre Deusy 
EEAS 
Francesca Raimondi  EEAS 
EEAS 
Angelos Pangratis 
DG DEVCO 
Joan-Carles.Gomez-
Masquef 
Torsten Ewerbeck 

DG DEVCO 

IDF Loan for SMEs & Priority Projects 
II 
Ziraat Bank IPARD MBIL 
South Africa Private Sector Facility 
OUARZAZATE III (Tower) 

Ziraat Bank IPARD MBIL 

des 

Direction 
Internationales Amen Bank 
ELM overall 
ELM overall 
ELM overall 
ELM overall 

Relations 

ELM overall 
ELM overall 
ELM overall 
ELM overall 
ELM overall 
ELM overall 

ELM overall 

Artem Shevalev 

Roman 
Chuprynenko 

Walter Tretton 

Eric Baulard  

Mokhtar Chemaou 

Mohmed Sahri 

Gerhard Krause 

Philip Mikos 

Field visit in Ukraine 

Ukraine Early Recovery 

Ukraine Early Recovery 

Ukraine Early Recovery 

Ministry  of  Finance 
of  Ukraine,  Deputy 
Minister  
Ministry  of  Regional 
Development 
of 
Ukraine, 
Deputy 
Minister 
in 
EU  delegation 
Ukraine,  Head  of 
Operation  Section  - 
Energy, 
Transport 
and Environment 

Field visit in Morocco 

Agence  Française  de 
Développement, 
Director 
Agence  Française  de 
Développement, 
Project manager 
Moroccan Agency for 
Energy 
Solar 
Project 
(MASEN), 
manager 
and 
structuring 
EU  delegation 
in 
Morocco, Head of the 
economic 
reform 
support department 
EU  delegation 
in 
Morocco,  Head  of 
cooperation 

OUARZAZATE III (Tower) 

OUARZAZATE III (Tower) 

OUARZAZATE III (Tower) 

OUARZAZATE III (Tower) 

OUARZAZATE III (Tower) 

 
 
 
 
 
 
 
 
 
Final Report for the External evaluation of the application of the European Union Guarantee for the EIB 
lending operations outside the European Union 

Annex 2: List of documents consulted 

  Decision  no  466/2014/EU  of  the  European  parliament  and  of  the  Council  of  16 

April 2014  

  External Lending Mandate 2014-2020, EIB 2015 annual report; 
  Regional  Technical  Operational  Guidelines  for  EIB  financing  operations  under 

Decision 466/2014/EU 

  External lending Mandate Climate Strategy; 
  COUNCIL  DECISION  2014/145/CFSP  of  17  March  2014  concerning  restrictive 
measures in respect of actions undermining or threatening the territorial integrity, 
sovereignty and independence of Ukraine 

  EU Platform for Blending in External Cooperation (EUBEC) between EC, EIB and 

third parties (Decision No. 1080/2011/EU)54; 

  Several  sector  specific  MoUs  between  IFIs  for  example:  MoU  between  EIB  and 

EBRD for agriculture and rural development (2014); 

  MoU between EC, EIB and EBRD (2006) on cooperation in Eastern Europe and the 

Southern Caucasus in Russia and in Central Asia (replaced by the 2011 MoU); 

  Accord  in  respect  of  Cooperation  in  Turkey  2009  (replaced  by  the  2011 

MoU);Mutual reliance initiative (EIB-KfW-AFD); 

  EU-EGYPT TASK FORCE Fact Sheet; 
  Methodologies  for  the  Assessment  of  Project  GHG  Emissions  and  Emission 

Variations, EIB, version 10.1; 

  All  project  documents  for  the  20  case  studies  (pre-appraisal  and  appraisal 
document, internal reporting, contractual documents and monitoring documents). 

54 Available at: http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32011D1080&from=EN. 

 
 
 
 
 
 
 
 
 
 
 
                                                             
Final Report for the External evaluation of the application of the European Union Guarantee for the EIB 
lending operations outside the European Union 

Annex 3: Tables and figures  

Figures 

Figure 1: External Lending Mandate: geographical coverage  ______________________ 8 
Figure 2: The External Lending Mandate under the EU guarantee: how it works ________ 10 
Figure 3: Intervention logic for the External Lending Mandate operations  ____________ 12 
Figure 4: Breakdown of the assignment work phases ___________________________ 27 
Figure 5: Financial database: a snapshot ___________________________________ 29 
Figure 6: Stakeholders mapping  _________________________________________ 36 
Figure 7: Project cycle and processes for EIB operations _________________________ 40 
Figure 8: Regional distribution of financing operations: total project cost in M EUR, EIB 
contribution in M EUR, number of financing operations _________________________ 44 
Figure 9: Distribution of financing operations by country: total project cost in M EUR, EIB 
contribution in M EUR and number of financing operations (right vertical axis). ________ 45 
Figure 10: EIB contribution by country, in% of the total EIB contribution _____________ 46 
Figure 11: Allocation of funds by sector, in M EUR and in percentage of the total volume of 
signed loans  _______________________________________________________ 47 
Figure 12: Distribution of financing operations by the total cost of the project (left graph) and 
the EIB contribution (right graph), in M EUR  ________________________________ 48 
Figure 13: Distribution of EIB contribution under ELM by type of final beneficiaries. _____ 50 
Figure 14: Projects cofinanced by the EIB through the ELM with the name of the co-financing 
institution _________________________________________________________ 55 
Figure 15: Financing operations with blending - TA and grants ____________________ 57 
Figure 16: Chronology of events in the Ukraine crisis -EU response and ELM operations  __ 60 
Figure 17: Funds allocated in each region as a% of the amount fixed by the ceiling for this 
region  ___________________________________________________________ 66 
Figure 18: When can the EIB solicit the EU Guarantee for lending outside the EU? _______ 69 
Figure 19: Results Measurement Framework (REM): how it is organised _____________ 84 
Figure 20: Use of the REM throughout the project cycle  _________________________ 85 
Figure 21: Blending mechanism ELM loans/grants  ____________________________ 88 
Figure 22 Nominal exchange rate local currency (LCR) vs euro (EUR), 2010-2015 _______ 96 

Tables 

Table 1: Regional ceilings, in EUR billion and in percentage of the total  _______________ 9 
Table 2: Our proposed approach to analyse the potential for ELM to achieve its objectives  _  15 
Table 3: Evaluation questions with regard to the legal basis of the Programme _________  17 
Table 4: Evaluation questions with regard to the selection of the operations and the reporting
 ________________________________________________________________ 19 
Table 5: Evaluation questions with regard to the monitoring and evaluation of the Programme
 ________________________________________________________________ 20 
Table 6: Evaluation questions with regard to the complementarity of the Programme with 
other EU programmes ________________________________________________ 21 
Table 7: Evaluation questions with regard to the management of the Programme  _______ 22 
Table 8: Evaluation questions with regard to the added value of the Programme ________ 23 
Table 9: Evaluation questions with regard to climate change objectives and visibility of the EU
 ________________________________________________________________ 24 
Table 10: Average project cost and EIB contribution according to the type of EIB financing 
type, in M EUR  _____________________________________________________ 48 
Table 11: List of projects with EIB funds disbursed (non-zero disbursement rate) ________ 49 
Table 12: Distribution of ELM operations according to the type of financing operation, in M 
EUR_____________________________________________________________  51 
Table 13: Average duration of project appraisal by the type of final beneficiary or the type of 
financing, in month __________________________________________________ 52 
Table 14: Distribution of operations according to the coverage of the EU guarantee, in number 
of operation and total EIB contribution, in M EUR.  ____________________________ 53 

 
 
 
 
 
 
 
 
 
 
Final Report for the External evaluation of the application of the European Union Guarantee for the EIB 
lending operations outside the European Union 

Table 15: List of ELM operations signed in Ukraine under the ELM 2014-2020  _________ 59 
Table 16: Which high-level objectives do the financing operations under the ELM match? __ 63 
Table 17: Regional ceilings, in EUR billion and in percentage of the total  _____________ 65 
Table 18: Amount approved by region as of Dec. 2015, in EUR billion and in% of the total __ 66 
Table 19: Sovereign rating of the beneficiary country at the date of signature of the ELM loan
 ________________________________________________________________ 70 
Table 20: Sovereign rating of the eligible countries with credit ratings above the threshold 
defined in the Allocation policy (S&P/Fitch: A-, Moody’s: A3)  _____________________  71 
Table 21: Compliance with the legal requirements in terms of ex-ante assessment of investment 
projects (art 9 of the Decision) ___________________________________________ 77 
Table 22: Examples of information requested by the EIB to monitor project implementation  79 
Table 23: Correspondence between the objectives stated in the Decision and the indicators used 
in the REM ________________________________________________________ 85 
Table 24: Financing operations in countries with a sovereign rating below the investment 
grade at the date of signature of the ELM loan  _______________________________ 91 
Table 25: The market interest rate in the beneficiary countries for which there was ELM loan 
disbursement  ______________________________________________________ 93 
Table 26: Risk pricing without the EU guarantee ______________________________ 93 
Table 27: Climate change related expenditure per region and in total, in M EUR and in% __ 99 
Table 28: Climate change contribution according to the EIB financing type, in EUR M ___  102 

 
 
 
 
 
 
 
 
 
 
 
Final Report for the External evaluation of the application of the European Union Guarantee for the EIB 
lending operations outside the European Union 

Annexe  4:  Minutes  of  the  workshop  with  NGOs  – 

PwC evaluation team 
  Fabio D’Aversa 
 
Iouri Marounov 
  Aurélien Cane 

10/05/2016 

List of participants 

Steering Group 

  DG ECFIN 
  DG ECFIN 
  DG NEAR 
  DG DEVCO 
  DG CLIMA 
  EIB 
 

International Partnership for Human Right 
(IPHR) 

  European Centre for Development Policy 

Management (ECDPM)  

  European Political Strategy Centre (EPSC) 
  ActionAid 
  Actalliance 
  World Wide Fund (WWF) 
  Oxfam 
  Counter Balance 
  Eurodad 
  CANE 

1. Introduction 

  Short introduction by DG ECFIN; 
  PwC presentation: update on the work progress, presentation of the main 

conclusions and recommendations. 

2. Open discussion with NGOs 

Key points of the discussion: 

  SDGs: how the consistency with SDGs has been assessed? Question for the EIB: 

how the EIB wants to move forward in the context of post COP 21? To what extent 
the ELM is consistent with the approach initiated with the SDGs? 

  Case studies: demand for information on the selection criteria of the case studies; 
  Definition: clarification of the difference between public entities and sovereign 

entities; 

  Development focus of the operations: fight against poverty should be added to the 

overall objectives of the operations; 

  Communication / visibility: the problem of the visibility of the EIB should be 
stressed especially because it affects the way final beneficiaries can complain 
(through the EIB complain mechanisms); 

  Need for higher transparency requirement on the financial intermediaries that 

channel funds to final beneficiaries; 

  Impact of EIB project on taxation, the evaluation should have addressed the 

question of taxation the EIB should go beyond its tax policy / the question of the 
ownership of intermediaries -> need for disclosure of ownership; 

  Publicity of the mid-term review report; 
 
  Transparency on the article 19 procedure, in particular projects rejected on the 

information are disclosed on the basis of the REM; 

basis of the Article 19; 

 
 
 
 
 
 
 
 
 
 
 
Final Report for the External evaluation of the application of the European Union Guarantee for the EIB 
lending operations outside the European Union 

  To what extent exit strategy is considered by the EIB? 
  Consideration for gender in ELM operation.