REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL ON BORROWING AND LENDING ACTIVITIES OF THE EUROPEAN UNION IN 2016
Date: 2017-11-23
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EIB loan, EU borrowing, Euratom loan, Greece, New Community Instrument, balance-of-payments deficit, economic stabilisation, euro area, financial aid

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 23.11.2017  COM(2017) 682 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL ON BORROWING AND LENDING ACTIVITIES OF THE EUROPEAN UNION IN 2016  
 
 
Table of Contents 

1. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

4. 

4.1. 

4.2. 

5. 

5.1. 

5.2. 

5.3. 

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

Lending activities of the European Union ................................................................... 3 

Balance-of-Payments facility ....................................................................................... 3 

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

Macro-Financial Assistance ......................................................................................... 5 

Euratom facility ............................................................................................................ 6 

Borrowing activities of the European Union ............................................................... 6 

Balance-of-Payments facility ....................................................................................... 6 

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

Macro-Financial Assistance ......................................................................................... 7 

Euratom facility ............................................................................................................ 7 

European Investment Bank .......................................................................................... 7 

EIB lending activities ................................................................................................... 7 

EIB borrowing activities .............................................................................................. 8 

Ensuring financial stability in the euro-area ................................................................ 8 

Greek Loan Facility ...................................................................................................... 9 

European Financial Stability Facility ........................................................................... 9 

European Stabilitity Mechanism .................................................................................. 9 

2 

 
 
 
 
 
1. 

INTRODUCTION 

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

Therefore, the Commission informs every year the European Parliament and the Council on 
the use of the various lending instruments of the European Union (EU). 

This  report  describes  the  lending  operations  for  each  instrument  as  well  as  the  respective 
borrowing activities.  

In  view  of  the  foreseen  changes  to  the  Financial  Regulation,  information  on  borrowing  and 
lending activities will in future be integrated into the financial reporting package provided for 
by the revised Financial Regulation. To avoid duplication, this separate report on borrowing 
and lending will then be discontinued. 

2. 

LENDING ACTIVITIES OF THE EUROPEAN UNION 

Financial support for third countries and Member States in the form of bilateral loans financed 
from the capital markets with the guarantee of the EU budget is provided by the Commission 
under  various  legal  acts  of  the  Council  or  of  the  Council  and  the  European  Parliament, 
depending on the objectives pursued2. The consistency of financial support to third countries 
with the overall objectives of the EU external action is ensured by the Commission and the 
High  Representative  of  the  Union  for  Foreign  Affairs  and  Security  Policy  assisted  by  the 
European External Action Service (EEAS). 

Table 1: Evolution of operations of the EU (outstanding amounts of capital in EUR million)  

2.1. 

Balance-of-Payments facility 

Balance-of-payments (BOP) assistance under Article 143 of the Treaty on the Functioning of 
the European Union (TFEU) and Council Regulation (EC) No 332/2002 of 18 February 2002 
establishing  a  facility  providing  medium-term  financial  assistance  for  Member  States' 

1 

2 

Regulation (EU, Euratom) No 966/2012 of the European Parliament and of the Council of 25 October 
2012  on  the  financial  rules  applicable  to  the  general  budget  of  the  Union  and  repealing  Council 
Regulation (EC, Euratom) No 1605/2002 (OJ L 298, 26.10.2012, p. 1). 
Detailed  presentation  of  the  borrowing  and  lending  activities  of  the  Commission  is  available  at 
http://ec.europa.eu/economy_finance/eu_borrower/index_en.htm. 

3 

YearECSC i.l.(1) (2)Euratom (1)BOPMFAEFSMTotal2011          225           447  11 400        590  28 000  40 662 2012          183           423  11 400        545  43 800  56 351 2013          179           386  11 400        565  43 800  56 330 2014          192           348  8 400  1 829  46 800  57 569 2015          204           300  5 700  3 007  46 800  56 011 2016          175           251  4 200  2 947  46 800  54 373 (1)The conversion rates used are those of 31 December of each year. (2)TheEuropeanCoal&SteelCommunityisinliquidationsince2002.ThelastbondissuedbyECSCmaturesin2019.Theincreaseanddecreaseoftheoutstandingamountisduetotheevolutionofthe exchange rate (GBP vs EUR). 
 
 
 
                                                            
balances of payments3 (BOP Regulation)  takes the form of  medium-term loans provided by 
the Union. It is generally granted in conjunction with financing by the International Monetary 
Fund (IMF) and other multilateral lenders, such as the European Investment Bank (EIB), the 
European Bank for Reconstruction and Development (EBRD) or the World Bank. 

BOP assistance is granted on a case-by-case basis by the Council acting by qualified majority. 
Potential  beneficiaries  are  Member  States  outside  the  euro-area  being  faced  with  serious 
balance-of-payments  difficulties.  It  aims  at  easing  the  recipient  Member  States’  external 
financing  constraints  and  at  restoring  the  viability  of  a  country's  balance-of-payments.  It  is 
released  subject  to  the  fulfilment  of  economic  policy  conditions  decided  by  the  Council  – 
after consultation with  the Economic and Financial  Committee (EFC) on a draft adjustment 
programme – and whose details are agreed by the Commission and the beneficiary Member 
State in a Memorandum of Understanding (MoU) prior to the conclusion of a loan agreement. 
The continued compliance with measures in the adjustment programme is reviewed regularly 
and is a condition for the disbursements of further instalments. The required funds are raised 
on the capital markets by the Commission on behalf of the European Union. 

The Commission reports regularly to the EFC and to the Council on the implementation of the 
BOP Regulation. 

In  April  2016,  Hungary  repaid  its  final  loan  tranche  of  EUR  1.5  billion.  At  31  December 
2016, the total outstanding amount under the BOP program was EUR 4.2 billion4. 

Table 2: BoP assistance up to 31.12.2016 (amounts of capital in EUR billion)  

2.2. 

European Financial Stabilisation Mechanism 

Council  Regulation  (EU)  No  407/2010  of  11  May  20105  set  up  the  European  Financial 
Stabilisation Mechanism (EFSM) based on Article 122(2)6 of the TFEU. The EFSM is fully 
backed by the EU budget and has a total lending capacity of up to EUR 60 billion7.  
The EFSM facility was activated in 2011 for Ireland8 and Portugal9, committing loans amount 
of up to EUR 22.5 billion and EUR 26 billion, respectively. 

3 
4 

5 
6 

7 

8 

9 

OJ L 53, 23.2.2002, p.1. 
Detailed information on BOP operations can be found at: 
http://ec.europa.eu/economy_finance/eu_borrower/balance_of_payments/index_en.htm 
As amended by the Coucil Regulation (EU) 2015/1360 of 4 August 2015  (OJ L 210, 7.8.2015, p.1). 
Article 122(2) of the TFEU provides for financial support for Member States in difficulties caused by 
exceptional circumstances beyond their control. 
Detailed information on EFSM operations can be found at 
http://ec.europa.eu/economy_finance/eu_borrower/efsm/index_en.htm 
Council  Implementing  Decision  No  2011/77/EU  of  7  December  2010  on  granting  Union  financial 
assistance to Ireland (OJ L 30, 4.2.2011, p. 34). 
Council  Implementing  Decision  No  2011/344/EU  of  30  May  2011  on  granting  Union  financial 
assistance to Portugal (OJ L 159, 17.6.2011, p. 88). 

4 

CountryAmount decidedAmount disbursedAmount reimbursedAmount outstandingWeighted average maturity (years)Latvia3.12.92.20.74.2Romania5.05.01.53.51.4Total8.17.93.74.21.9 
 
 
 
 
                                                            
In  2013,  an  extension  of  the  maximum  average  maturity  of  the  disbursed  loans  from  12.5 
years  to  19.5  years  was  decided  for  both  Member  States.  EFSM  beneficiaries  can  request  a 
lengthening and refinancing of all EFSM loans as long as the average maturity of disbursed 
loans (calculated from initial disbursement) does not exceed 19.5 years. 

In this context, a request to lengthen the EFSM loan of EUR 4.75 billion disbursed to Portugal 
in  2011  -  which  was  due  on  3  June  2016  -  was  received.  The  loan  was  refinanced  in  three 
transactions  with  maturities  in  2023  (EUR  1.5  billion),  2031  (EUR  2.25  billion)  and  2036 
(EUR  1  billion).  Following  this  maturity  extension,  the  weighted  average  maturity  of  the 
EFSM loans to Portugal is now 14.9 years. 

The  total  outstanding  amount  of  the  EFSM  facility  is  EUR  46.8  billion  at  the  end  of  2016 
(Ireland: EUR 22.5 billion, Portugal: EUR 24.3 billion). 

2.3.  Macro-Financial Assistance 

Macro-Financial  Assistance  (MFA)10  is  designed  to  address  exceptional  external  financing 
needs  of  countries that are  geographically,  economically  and  politically  close  to  the  EU.  Its 
objective  is  to  restore  macroeconomic  and  financial  stability  in  EU  candidate,  potential 
candidate  and  neighbourhood  countries  (and,  in  exceptional  circumstances,  other  third 
countries),  while  encouraging  the  implementation  of  macroeconomic  adjustment  and 
structural reforms. MFA is provided on an exceptional and temporary basis and is released in 
tranches based on strict economic policy conditionality. MFA complements and is conditional 
on the existence of IMF adjustment programmes. MFA can be provided in the form of loans 
and/or, under certain circumstances, non-reimbursable grants11. 

Should a beneficiary country fail to honour its repayment obligations, the Commission  may 
have  recourse  to  the  Guarantee  Fund  for  External  Actions12  so  that  the  repayment  of  the 
corresponding borrowing by the Commission is done from its funds13. 

The second and final tranche of EUR 10 million of the EUR 15 million loan granted to the 
Kyrgyz Republic14 was disbursed in April 2016. 

On 6 July 2016, the European Parliament and the Council decided to provide further macro-
financial  assistance  to  Tunisia15  of  a  maximum  amount  of  EUR  500  milion  in  the  form  of 
loans (three loan instalments of EUR 200, 150 and 150 million).  

On 14 December 2016, the European Parliament and the Council decided to provide further 
macro-financial assistance to the Hashemite Kingdom of Jordan16 of a maximum amount of 
EUR 200 milion in the form of loans (two loan instalments of EUR 100 million). 

10 
11  

12 

13 

14  

15 

16 

information  on  MFA 

at:  http://ec.europa.eu/economy_finance/eu_borrower/macro-

Art. 212 of The Treaty on the Functioning of the European Union (TFEU), 2012/C 326/142. 
Detailed 
financial_assistance/index_en.htm 
See Council Regulation (EC, Euratom) No 480/2009 establishing a Guarantee Fund for external actions 
(Codified version) (OJ L 145, 10.6.2009, p. 10). No default has been registered so far for MFA loans. 
Although the repayment of the borrowing is covered in fine by the EU budget, the Guarantee Fund acts 
as liquidity buffer protecting the EU budget against the risk of calls resulting from payment defaults. 
For a comprehensive report on the functioning of the Fund, see COM(2014)214 and the accompanying 
Staff Working Document SEC(2014)129.  
Decision 1025/2013/EU of the European Parliament and of the Council of 22 October 2013 providing 
macro-financial assistance to the Kyrgyz Republic (OJ L 283, 25.10.2013, p. 1). 
Decision  (EU)  2016/1112  of  the  European  Parliament  and  of  the  Council  of  6  July  2016  providing 
further macro-financial assistance to Tunisia (OJ L 186, 09.07.2016, p. 1). 
Decision  (EU)  2016/2371  of  the  European  Parliament  and  of  the  Council  of  14  December  2016 
providing  further  macro-financial  assistance  to  the  Hashemite  Kingdom  of  Jordan  (OJ  L  352, 
23.12.2016, p. 18). 

5 

 
 
 
                                                            
Loan  repayments  totalling  EUR  70  million  were  received  as  due  from  the  beneficiary 
countries (Bosnia and Herzegovina EUR 4 million, former Yugolav Republic of Macedonia 
EUR 10 million, Montenegro EUR 1.34 million and Serbia EUR 54.66 million).  

The  outstanding  amount  of  MFA  loans  has  decreased  from  EUR  3,006.6  million  to  EUR 
2,946.6  million  between  31  December  2015  and  31  December  2016.  Loans  to  Ukraine 
represent 75% of the total MFA exposure. 

2.4. 

Euratom facility 

The  Euratom  loan  facility  may  be  used  to  finance  projects  within  Member  States  (Council 
Decision 77/270/Euratom) or in certain third countries17 (Council Decision 94/179/Euratom).  

In 1990, the Council fixed a borrowing limit of EUR 4 billion, of which EUR 3.7 billion have 
been decided and EUR 3.4 billion already disbursed. According to the Council decision on the 
lending ceiling (77/271/Euratom, as amended), the Commission shall inform the Council once 
the signed amount reaches EUR 3.8 billion and, if appropriate, propose a new lending ceiling. 

In  2013,  the  Commission  adopted  Decision  C(2013)  3496  on  granting  an  up  to  EUR  300 
million  Euratom  loan  in  support  of  the  Ukraine  safety  upgrade  program  of  nuclear  power 
units. The Loan Agreement was signed on 7 August 2013. In parallel, a EUR 300 million loan 
agreement was signed in March 2013 by the EBRD. 

While a borrowing decision for a first tranche up to EUR 100 million was adopted on 27 May 
2015, due to delays in the implementation process no disbursements have taken place until the 
end of 2016. The first loan tranche of EUR 50 million has been disbursed in May 2017. 

Repaid  amounts  consisted  of  EUR  22.62  million  from  Bulgaria,  EUR  19  million  from 
Romania and EUR equivalent of 7.1 million from Ukraine18. 

3. 

BORROWING ACTIVITIES OF THE EUROPEAN UNION 

In  order  to  finance  the  lending  activities  decided  by  the  Council,  the  Commission  is 
empowered to borrow funds on the capital markets on behalf of both the European Union and 
Euratom. Borrowing and lending is conducted as back to back operations, which ensures that 
the  EU  budget  does  not  take  any  interest  rate  or  foreign  exchange  risk19.  Outstanding 
borrowings are matched by outstanding loans. 

3.1. 

Balance-of-Payments facility 

In  2016,  under  the  BOP  facility,  no  borrowings  were  raised  in  the  market.  The  total 
outstanding amount raised for BOP is EUR 4.2 billion at the end of 2016. 

3.2. 

European Financial Stabilisation Mechanism 

Following  the  request  of  Portugal  to  extend  the  maturity  of  its  EFSM  loan  due  on  3  June 
2016, in March and April 2016 the EU issued three bonds with maturities in 2023 (EUR 1.5 
billion), 2031 (EUR 2.25 billion) and 2036 (EUR 1 billion) to refinance the expiring bond. 

17 
18 
19 

Currently Ukraine, Russia and Armenia. 
Reimbursements of USD 3,607,665.00 and EUR 3,900,000.00. 
The EFSM Regulation allows resorting to pre-funding as it authorises the Commission "to borrow on 
the  capital  markets  or  from  financial  institutions  at  the  most  appropriate  time  in  between  planned 
disbursements so as to optimise the cost of funding and preserve its reputation as the Union's issuer in 
the markets." However, any resulting cost of carry is borne by the borrower. 

6 

 
 
 
 
 
                                                            
Table 4: EU EFSM borrowing operations during 2016 (in EUR million) 

Country 

Portugal – 1st Tranche 
Portugal – 2nd Tranche* 
Portugal – 3rd Tranche 
Total 
*Together with EUR 10 million for MFA Kyrgyz Republic; (see 3.3 below) 

Issue date 
15/03/2016 
13/04/2016 
19/04/2016 

Maturity Date 
04/04/2036 
04/04/2031 
04/11/2023 

Size 
1 000 
2 250 
1 500 
4 750 

3.3.  Macro-Financial Assistance 

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

Table 5: EU MFA borrowing operations during 2016 (in EUR million) 

Country 
Kyrgyz Republic 
Total 

Issue date 
13/04/2016 

Maturity Date 
04/04/2031 

Size 
10 
10 

3.4. 

Euratom facility 

In 2016, there was no borrowing operation under Euratom. 

4. 

EUROPEAN INVESTMENT BANK  

4.1. 

EIB lending activities 

The  EIB  provides  financing  either  directly  to  individual  investment  projects  or  through 
financial intermediaries to smaller-scale projects undertaken by SMEs or by local authorities 
and  municipalities.  The EIB  also  provides  loan guarantees, technical  assistance  and  venture 
capital. 

In 2016, the EIB signed a total financing volume of EUR 74.6 billion (compared to EUR 77.5 
billion in 2015); Financing of the EIB Group (including the EIF activity) amounted to EUR 
83.8 billion, catalysing almost EUR 280 billion of investment. 

In  addition,  by  the  end  of  2016,  the  EIB  Group  approved  422  Investment  Plan  loans  and 
guarantees that were backed by the EU guarantee under EFSI20. Resources committed totalled 
EUR  30.2  billion  approved  under  EFSI.  The  value  of  the  projects  and  the  investment 
mobilised in total adds up to EUR 163.9 billion. This is 52% of the overall objective of EUR 
315 billion over three years. 

EIB financing activities have an impact on the EU budget when they are accompanied by EU 
guarantees or other EU budget funds. In addition to operations approved under EFSI his is the 
case for: 

20 

Regulation  (EU)  2015/1017  of  the  European  Parliament  and  of  the  Council  of  25  June  2015  on  the 
European  Fund  for  Strategic  Investments,  the  European  Investment  Advisory  Hub  and  the  European 
Investment Project Portal and amending Regulations (EU) No 1291/2013 and (EU) No 1316/2013  — 
the European Fund for Strategic Investments  (the "EFSI Regulation"). OJ L 169, 1.7.2015, p. 1. 

7 

 
 
 
 
 
 
 
 
                                                            
-  EIB  financing  operations  carried  out  under  the  external  lending  mandate  (covering  Pre-
Accession  countries,  Neighbourhood  and  Partnership  countries,  Asia  and  Latin  America, 
South  Africa).  Such  financing  benefits  from  an  EU  budget  guarantee  covering  risks  of 
sovereign or political nature. A separate report on the 2016 EIB external lending activity 
will be issued by the Commission during the second semester 2017. 

-  risk sharing financing facilities involving the use of the EU budget to support EU policies 
(e.g. Risk Sharing Finance Facility for research and development projects and the Project 
Bond Initiative). 

In 2016, EIB's lending operations outside the EU totalled EUR 7.9 billion, of which EUR 6.8 
billion in the regions covered by the External Lending Mandate (ELM). Approximately EUR 
5.9 bn, or 74% of total financing outside EU, was carried out in the Pre-Accession and in the 
Neighbourhood regions. The rest (26%) was signed in Asia, Central Asia and Latin America. 

Of  the  total  EUR  6.8  billion  signed  by  the  EIB  during  2016  in  the  regions  covered  by  the 
ELM, almost EUR 4 billion (58%) was covered by the EU guarantee.  

The Decision granting an EU guarantee for EIB operations outside the EU was adopted on 16 
April  2014 by  the  European  Parliament  and  the  Council  21.  The  size  of  the  overall mandate 
amounts  to  EUR  27  billion  plus  an  additional  optional  amount  of  EUR  3  billion.  The 
activation  in  whole  or  in  part  of  the  optional  amount  shall  be  decided  by  the  European 
Parliament and the Council in accordance with the ordinary legislative procedure and based 
on the results of a mid-term review of the External Lending Mandate. 

European Commission proposed an amendment to the External lending mandate in September 
2016, proposing to raise the ceiling to EUR 32.3 billion, which is currently under discussion 
by the legislators. 

4.2. 

EIB borrowing activities 

The  EIB  has  a  resilient  funding  strategy,  raising  long-term  funds  via  bond  issuance  in 
international capital markets to support its lending operations. With the objectives of attaining 
sufficient  volumes  and  in  maturities  needed  for  asset  and  liability  management,  as  well  as 
optimising the  funding cost on a sustainable basis, the EIB’s funding strategy combines  the 
issuance of large and liquid bonds in core currencies with targeted and tailor-made issuance 
across a number of other currencies. 
In  2016, EIB borrowing activity amounted to EUR 66.4 billion with an average maturity of 
7.1 years. 

5. 

Ensuring financial stability in the euro-area 

In  response  to  the  global  economic  and  financial  crisis,  the  euro-area  Member  States  have 
decided on measures to preserve financial stability in the euro-area and Europe at large. These 
measures are outlined below and are not guaranteed by the EU budget22. 

5.1. 

Greek Loan Facility  

Following the unanimous agreement of the euro-area Finance Ministers on 2 May 201023 to 
support Greece, a three-year joint programme with the IMF involving a financial package of 

21 

22 

Decision No 466/2014/EU of the European Parliament and of the Council of 16 April 2014 granting an 
EU  guarantee  to  the  European  Investment  Bank  against  losses  under  financing  operations  supporting 
investment projects outside the Union (OJ L 135, 8.5.2014, p. 1–20). 
Additional 
http://ec.europa.eu/economy_finance/assistance_eu_ms/index_en.htm 

information 

facilities 

existing 

found 

three 

can 

the 

on 

be 

at: 

8 

 
 
 
                                                            
up  to  EUR 110 billion  to  help  Greece  was  set  up,  accompanied  by  strong  policy 
conditionality24  negotiated  with  the  Greek  authorities  by  the  Commission  and  the  IMF,  in 
liaison with the ECB. The loans disbursed by the euro-area Member States under the Greek 
Loan  Facility  (GLF)  amount  to  EUR 52.9 billion  which  were  disbursed  between  May  2010 
and December 2011.  

5.2. 

European Financial Stability Facility  

The  European  Financial  Stability  Facility  (EFSF)25  was  created  by  the  euro-area  Member 
States  as  a  Luxembourg-registered  company  owned  by  them  and  designed  as  a  temporary 
rescue mechanism for on-lending to euro-area Member States in difficulty by issuing bonds 
guaranteed  by  euro-area  Member  States.  In  October  2010,  it  was  decided  to  create  a 
permanent  rescue  mechanism,  the  European  Stability  Mechanism  (ESM)  which  started  its 
operations on 8 October 2012. 

On 14 March 2012, a Second Economic Adjustment Programme for Greece was approved by 
the  euro-area  finance  ministers  and  the  IMF,  adding  EUR  130  billion  to  the  undisbursed 
amounts of the first programme. This second programme foresees therefore a total financial 
assistance of EUR 164.5 billion, the IMF contribution amounting to EUR 19.8 billion. While 
the first programme (GLF) was set up as an Inter-creditor Agreement of pooled bilateral loans 
from  the  supporting  euro-area  Member  States, with  the  Commission  providing  coordination 
and management, the second one was financed via the EFSF.  

As  of  1  July  2013,  the  EFSF  is  no  longer  engaged  in  the  financing  of  new  financing 
programmes  or  new  loan  facility  agreements.  However,  it  remains  active  in  the  ongoing 
programmes for Greece, Portugal and Ireland where it is a lender (together with the IMF and 
some Member States). 

5.3. 

European Stabilitity Mechanism 

The  European  Stabilitity  Mechanism  (ESM)26  became  as  of  1  July  2013  the  permanent 
mechanism  for  responding  to  new  requests  for  financial  assistance  by  euro  area  Member 
States.  

ESM has a maximum lending capacity of EUR 500 billion. Total subscribed capital amounts 
to  EUR 704.8 billion,  with paid-in  capital by euro-area Member States of EUR  80.5 billion 
and committed callable capital of EUR 624.3 billion.  

23 

24 

25 

26 

The support is provided via bilateral loans from the other euro-area Member States, centrally pooled by 
the Commission, under the conditions set out in their statement of 11 April 2010. 
The  main  elements  of  policy  conditionality  were  enshrined  in  Council  Decision  of  10  May  2010 
addressed to Greece with a view to reinforcing and deepening fiscal surveillance and giving notice to 
Greece to take measures for the deficit reduction judged necessary to remedy the situation of excessive 
deficit (2010/320/EU). The conditionality was further detailed in a MoU concluded between the Greek 
authorities and the Commission on behalf of euro-area Member States. 
The European Financial Stability Facility (EFSF) is a special purpose vehicle financed by members of 
the  eurozone  to  address  the  European  sovereign-debt  crisis.  It  was  agreed  by  the  Council  of  the 
European  Union  on  9  May  2010,  with  the  objective  of  preserving  financial  stability  in  Europe  by 
providing financial assistance to eurozone states in economic difficulty. The Facility's headquarters are 
in Luxembourg City as the EFSF was established as a public limited liability company under the laws of 
the Grand-Duchy of Luxembourg. (Journal Officiel du Grand-Duché de Luxembourg - C — N° 1189    
8 juin 2010). 
On  11  July  2011,  finance  ministers  of  the  17  euro-area  countries  signed  the  Treaty  establishing  the 
European Stability Mechanism (ESM). The Treaty follows  the European Council decision of 25 March 
2011  and  builds  on  an  amendment  of  Article  136  of  the  Treaty  on  the  Functioning  of  the  European 
Union (TFEU). 

9 

 
 
 
                                                                                                                                                                                          
The  ESM  has  provided  financial  assistance  to  Greece  and  Cyprus  (subject  to  a 
macroeconomic adjustment programme), and to Spain for the recapitalisation of the banking 
sector. The programme for Spain expired in December 2013 with a total disbursement of EUR 
41.3 billion and Cyprus concluded its programme on 31 March 2016 with loan disbursements 
totalling EUR 6.3 billion. 

On 8 July 2015, the Greek government submitted a request for financial assistance to ESM. 
The financial assistance to Greece provided by ESM will be up to EUR 86 billion over three 
years. The leaders of euro area countries reached an agreement with Greece on 13 July 2015 
concerning a set of prior actions to be implemented urgently in order to start negotiations on 
an  overarching  reform  agenda,  set  out  in  a  Memorandum  of  Understanding  (MoU).  On 
19 August 2015 the ESM approved the MoU. The MoU focuses on four key areas: restoring 
fiscal  sustainability;  safeguarding  financial  stability;  boosting  growth,  competitiveness  and 
investment; and reforming the public administration. 

At  31  December  2016,  the  total  amount  of  ESM  financial  assistance  for  Greece  reached 
EUR 31.7 billion (which is around 37% of the total programme volume) 

An additional disbursement of EUR 7.7 billion took place on 10 July 2017, leaving the ESM 
Cumulative amount disbursed for Greece in EUR 39.4 billion. 

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