REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL ON 2016 EIB EXTERNAL ACTIVITY WITH EU BUDGETARY GUARANTEE
Date: 2017-12-15
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EIB loan, adaptation to climate change, credit guarantee, development aid, financial aid, financial management, institutional cooperation, investment abroad, investment protection, third country

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 15.12.2017  COM(2017) 767 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL ON 2016 EIB EXTERNAL ACTIVITY WITH EU BUDGETARY GUARANTEE {SWD(2017) 460 final}  
 
 
INTRODUCTION 

1. 
The  External  Lending  Mandate  (ELM)  is  a  longstanding  and  successful  element  in  the 
partnership  between  the  European  Commission  and  the  European  Investment  Bank  (EIB). 
Under  the  ELM,  the  EU  provides  a  guarantee  from  the  EU  budget  to  enable  the  EIB  to 
increase its lending outside the EU in support of EU policies. The ELM supports EIB activity 
in the pre-accession countries, the Eastern and Southern Neighbourhood, Asia, Latin America 
and South Africa. Under the current ELM period (2014-2020), the EU budget guarantees up 
to EUR 27 billion of EIB operations.1 

This report provides an overview of the EIB's activities under the EU guarantee in 2016 and 
the  main  results  and  impacts  achieved,  including  information  on  expected  future  impacts  of 
financing  operations  signed  in  2016  based  on  the  EIB's  Results  Measurement  (ReM) 
Framework.2  The  report  also  provides  a  summary  of  the  operations  carried  out  by  the  EIB 
without the EU guarantee (i.e., on its 'own risk') in order to provide a full picture of its activity 
in these regions. 

More detailed information  and statistical tables on the above activities, including at  project, 
sector,  country  and  regional  level,  are  provided  in  the  accompanying  Staff  Working 
Document. 

2. 

KEY RESULTS 

In  2016,  the  EIB  signed  a  total  of  EUR  6.8  billion  in  the  regions  covered  by  the  External 
Lending Mandate, a slight increase on the previous year (EUR 6.7 billion). Of this total, more 
than  a  half  (58%,  EUR  4  billion)  was  carried  out  under  the  EU's  guarantee.  There  were  54 
new operations for which the first contract was signed last year.3 

All  new  operations  in  these  regions  are  expected  to  make  either  an  'excellent'  or  a  'good' 
contribution to EU and partner country priorities under the EIB's Results Measurement (ReM) 
Framework, now in its fifth year. 

EIB Results Measurement (ReM) Framework 
The EIB uses its Results Measurement (ReM) Framework in its operations outside the EU to 
strengthen  the  project  appraisal  process  and  to  improve  its  ability  to  monitor  and  report  on 
actual results achieved. It shows how EIB operations generate outputs, outcomes and impacts 
over  time  in  line  with  the  ELM  objectives.  For  example,  the  framework  might  track  how  a 
loan  to  a  public  water  utility  (input)  increases  the  supply  of  safe  drinking  water  (output), 

1 In September 2016, the Commission proposed increasing the maximum ceiling for the current ELM to EUR 
32.3 billion (COM(2016) 583). The legislative process is expected to finish with an agreement between 
Parliament and the Council in the second half of 2017. 

2 This report has been prepared in line with the requirements set out in Article 11 of Decision 466/2014/EU of 
the European Parliament and of the Council of 16 April 2014 which establishes the External Lending 
Mandate. 

3 'New' operations are those for which the first financing contract was signed in 2016. These operations represent 

a total approved volume of EUR 7.2 billion. 

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enabling  more households to  access safe water (outcome), leading to  better  public health in 
the community (impact). The intention is to better assess and be able to report on the EIB's 
contribution to mandate objectives by focusing on concrete results. The ReM Framework has 
been in operation since 2012. 

Around  90%  of  new  projects  are  expected  to  achieve  'good'  results  in  terms  of  quality  and 
soundness  of  the  operation,  with  every  new  project  expected  to  achieve  at  the  minimum  an 
'acceptable' level. 

More than 80% of new projects are expected to be associated with either 'high' or 'significant' 
EIB  additionality,  with  every  new  project  expected  to  be  associated  with  at  the  minimum  a 
'moderate' level of EIB additionality. 

Some of the key results expected from new projects in 2016 are: 

  Nearly  10,000  loans  to  micro-enterprises,  SMEs  and  mid-caps,  helping  to  sustain 

around 544,700 jobs 

  1.2 million passengers benefiting daily from improved urban and rail transport 
  1.5 million people benefiting from improved sanitation services 
  Enough energy generated to supply 338,000 households 
  743,200 households connected to the grid  
  469,000 people benefiting from improved waste management 
  150,000 patients treated per year in new or rehabilitated hospitals 
  37,000 additional students enrolled in higher education facilities 
  4 million people benefiting from multisector urban infrastructure projects. 

The EIB also continued to demonstrate its commitment to supporting the EU's climate action 
agenda.  EIB  operations  signed  in  the  regions  covered  by  the  ELM  remain  well  above  the 
threshold of 25% set out in the ELM Decision. In 2016, the EIB signed EUR 1.9 billion of 
loans in the ELM regions  in support of climate action representing 28% of the total. At the 
end of 2016, the cumulative climate action ratio under the mandate period of 2014-2020 stood 
at 34%. Lending in Asia is a major contributor to that target, with climate action as the key 
priority for lending in that region. 

Moreover, in 2016, 27% of the total volume signed in the ELM regions (EUR 1.8 billion) will 
support  the  cross-cutting  regional  integration  objective  through  energy  interconnections, 
transport links, regional equity funds and support to convergence through local private sector 
development.  

3. 

FINANCING OPERATIONS 

3.1. 

OVERVIEW OF NEW EIB FINANCING OPERATIONS BY OBJECTIVE 

The  legislation  underpinning  the  ELM  sets  out  three  main  objectives  for  all  EIB  operations 
covered by the EU budgetary guarantee: 

(i) 

(ii) 

Local  private  sector  development,  in  particular  support  to  small  and  medium-sized 
enterprises ('SMEs') 
Development of social and economic infrastructure 

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(iii)  Climate change mitigation and adaptation 

integration  among  countries, 

Regional 
in  particular  among  pre-accession  countries, 
Neighbourhood  countries  and  the  EU,  is  an  additional  underlying  objective  for  operations 
addressing one or more of the main objectives. 

The Commission's proposal of September 2016 to revise the ELM Decision4 following a mid-
term  review5  introduces  a  new  objective  related  to  addressing  the  root  causes  of  migration. 
Reporting  on  this  new  objective  should  take  place  in  next  year's  annual  report  once  the 
revised legislation has been adopted. 

Of the total signed amount in the ELM regions in 2016, 49% (EUR 3.383 billion) will support 
local private sector development, principally through improving access to finance for SMEs, 
microenterprises  and  mid-cap  companies.  Just  over  half  (51%,  EUR  3.457  billion)  will 
contribute  to  the  development  of  social  and  economic  infrastructure.  All  EIB  operations 
outside the EU support one or both of those objectives. 

Nearly a third of the total volume will contribute to the climate action objective (28%, EUR 
1.921 billion). This support for climate mitigation and adaptation is spread over 50 individual 
projects signed in 2016, taking into account the contribution to this objective made by many 
operations  that  are  focused  on  multiple  sectors  (for  example,  credit  lines  where  a  small 
proportion  of  lending  is  estimated  to  support  investments  in  renewable  energy  or  energy 
efficiency measures by SMEs). 

Similarly,  27%  (EUR  1.824  billion)  will  support  the  cross-cutting  regional  integration 
objective,  both  through  infrastructure  development  and  through  support  for  local  private 
sector access to finance. 

The  contribution  of  EIB  activity  to  the  ELM's  objectives  is  reflected  in  Chart  1  taking  into 
account operations under both the ELM guarantee and the EIB's own risk facilities: 

4 COM(2016) 583 
5 COM(2016) 584 

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Chart 1: Contribution to ELM objectives (in EUR m)

 3.383  

 3.457  

 1.921  

 1.824  

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 3.500

 3.000

 2.500

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Local private sector
development

Econ & Social
Infrastructure

Climate Action

Regional
Integration

Detailed  information  on  financed  projects  are  provided  in  the  accompanying  staff  working 
document. 

Local private sector development, in particular support to SMEs 

The  EIB's  support  for  local  private  sector  development  is  about  creating  the  conditions  to 
allow  people  in  developing  and  emerging  markets  to  develop  and  expand  businesses  and 
thereby create jobs, fulfil needs for goods and services, overcome poverty and food insecurity 
and  raise  living  standards.  Ultimately,  sustainable  social  and  economic  development  cannot 
take place without such private sector development.  

This support takes different forms:  

  extending credit lines to local  financial intermediaries (mainly  banks)  for on-lending 

to SMEs  

  participation  in  private  equity  funds  and  risk  capital  to  high-growth  potential 

companies  

  equity finance for microfinance providers  
  direct loans to larger companies 

Twenty-six  new  projects  signed  in  2016  will  support  local  private  sector  development.  The 
total  approved  EIB  financing  for  those  projects  is  EUR  3.7  billion.  Twenty-two  are  credit 
lines supporting SMEs, and four are loans for private sector-implemented infrastructure and  
R&D projects that will also contribute to local private sector development. 

Supporting rural SMEs in Armenia 

The Armenian economy has seen strong growth and a decline in poverty in recent years, but 
there  is  a  need  to  diversify  the  economy  and  strengthen  the  SME  sector,  particularly  in 
relatively  underdeveloped  rural  areas.  Yet  SMEs  suffer  from  limited  access  to  finance, 
reflecting the fact that local banks themselves do not have direct access to capital markets and 

4 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
are largely reliant on short-term funding sources. 

The Armenia Apex Loan, signed in 2014, has helped to address this situation by providing 
long-term finance for local banks through the Central Bank of Armenia. The loan is covered 
by the EU's guarantee under the External Lending Mandate. This funding was fully allocated 
by  the  end  of  2016,  reaching  113  companies  employing  a  reported  6,357  people  (56 
employees  on  average).  The  companies  are  overwhelmingly  in  the  agriculture,  food 
processing and accommodation  and catering sectors.  With an average maturity  of over five 
years, the loans provided are much more advantageous for financing productive investments 
than the terms typically available for SMEs. It is estimated that these loans may help create 
just over 2,000 additional jobs. 

The  Araks-2  cooperative  employs  around  24  people,  utilising  local  milk  production  to 
manufacture a range of cheeses. They used five-year EIB-funded loans totalling EUR 95,000 
to acquire a new pasteurizer, casting forms and inputs, allowing them to step-up production. 
Looking  forward,  they  plan  to  invest  to  triple  production  capacity  and  expand  the  export 
share of sales to at least 35%.  

Development of social and economic infrastructure 

Developing social and economic infrastructure – everything from roads and energy systems to 
healthcare facilities and broadband internet services – is one of the pillars of the development 
process.  It  is  also  an  area  where  public  financing  is  often  vital,  infrastructure  goods  often 
being public goods that have large positive spill-overs for the economy, the environment and 
human  well-being.  The  EIB  supports  infrastructure  projects  in  a  wide  range  of  sectors  with 
the support of the EU's guarantee under the ELM. 

In 2016 there were 33 new projects that contribute to the development of social and economic 
infrastructure  in  the  ELM  regions  in  2016.  The  total  approved  EIB  financing  for  those 
projects is EUR 3.6 billion.  

The EIB signed 12 new projects in the transport sector, with an increase with respect to the 
previous year in terms of volume of lending (EUR 2.1 billion in 2016). Urban public transport 
and railways accounted for around half of this lending by volume. 

The EIB signed contracts for six new projects in the energy sector in 2016 (EUR 493 million), 
with  this  area  less  of  a  focus  than  last  year.  There  are  fewer  large-scale  energy  generation 
projects and a deeper focus on smaller schemes involving energy generation from renewable 
sources.  The  largest  energy  generation  projects  are  in  Turkey,  with  the  Fina  Enerji  wind 
power project and a credit line with Isbank that will target specifically renewable energy and 
energy  efficiency  schemes  expected  to  generate  enough  energy  to  serve  some  105,000 
households. In total, new projects in 2016 will result in energy generated for the equivalent of 
around 338,000 households.  

Supporting municipal infrastructure and water/sanitation 

The EIB signed two projects in the water and sanitation sector last year involving EUR 129 
million  of  loans  and  a  further  EUR  15  million  targeting  solid  waste  management.  Each  of 
these  operations is  covered by the EU guarantee under the External  Lending  Mandate.  Two 

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wastewater treatment projects in Panama and Tunisia will serve a total population of about 1.5 
million and will contribute to cleaner water in the Panama Bay and the Mediterranean. A new 
project  in  the  sector  will  support  a  number  of  water  supply,  wastewater  treatment  and  solid 
waste management schemes in the Kyrgyz Republic. 

Three  new  projects  support  urban  reconstruction  or  development  schemes  that  will  cover  a 
range  of  different  infrastructure  sectors.  Responding  to  the  terrible  earthquake  that  struck 
western parts of Ecuador in April 2016, one project (EUR 159 million) will finance the repair 
and re-establishment of damaged infrastructure such as roads, water and electricity systems, 
telecommunications  and  municipal  buildings.  Similarly,  EUR  100  million  will  support  the 
repair  of  infrastructure  damaged  by  recent  floods  in  Tbilisi.  A  third  project  will  provide 
support  to  local  authorities  throughout  Georgia  to  upgrade  local  infrastructure  and  improve 
service delivery for local residents. 

Climate change mitigation and adaptation 

As both the cause and effects of climate change are global, extending and expanding climate 
finance  beyond  the  borders  of  the  Member  States  is  a  vital  part  of  the  EU's  external  and 
development policy. The EIB plays a central role in those efforts, particularly after the ground 
breaking global agreement reached in  Paris in  2015 which  came into force at  the UNFCCC 
conference  in  November  2016.  The  EIB  already  has  a  strong  track  record  in  mobilising 
financial  resources,  which  it  offers  to  support  countries  both  inside  and  outside  the  EU, 
supporting  their  Nationally  Determined  Contributions,  national  mitigation  and  adaptation 
plans and strategies, and low carbon energy and transport policies. 

Of the new lending signed for the ELM regions in 2016, EUR 1.9 billion will contribute to the 
climate  change  mitigation  and  adaptation.  This  will  be  achieved  through  a  large  number  of 
projects across almost all sectors. All of these projects also contribute to either local private 
sector development or the development of social and economic infrastructure. 

In many cases, only part of a project contributes to the climate change objective and only a 
proportion  of  that  project’s  lending  total  is  therefore  reported  as  contributing  towards  the 
objective. Analysis of the results of past EIB projects has revealed that many projects make a 
small  contribution  to  action  on  climate  change  even  if  this  is  not  the  main  objective  of  the 
project.  A  typical  example  is  a  credit  line  for  SMEs  in  which  some  investment  projects  by 
beneficiary  businesses  involve  achieving  greater  energy  efficiency  in  buildings  or  installing 
small-scale renewable energy generation capacity, such as solar panels. Accordingly, some 50 
new projects in 2016 contribute to the climate action objective of which 21 are credit lines. 

Overall, by far the largest contribution is from lower carbon transport, accounting for 64% of 
the total volume, with renewable energy and energy efficiency contributing a further 21% of 
new non-EU climate action lending in 2016. Mitigation such as methane avoidance in waste 
and wastewater sector also continues to play an important role, while adaptation contributed 
3.5%. 

Reducing diesel dependence in the Maldives 

Power generation represents a challenge for the Maldives, as an archipelago of 26 atolls. The 
country has relied substantially on old and inefficient diesel generators. As recently as 2012, 

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oil imports made up 35% of GDP. A EUR 45 million EIB loan covered by the EU's guarantee 
under the External Lending Mandate is supporting a project to help change this situation by 
installing at least 50 MW of solar-diesel hybrid energy systems, with about 25 MW of roof-
top and ground mounted solar PV panels and about 27 MW of more efficient diesel generator 
capacity, as well as the rehabilitation of about 430 km of distribution lines and the installation 
of  lithium-ion  batteries  and  control  system  equipment.  This  will  allow  about  37  MW  of 
obsolete diesel generator capacity to be retired. 

The project will supply enough energy to  meet the needs of  about 110,000 households and 
will  enable  some  14,500  new  connections  to  the  network.  It  will  save  the  country  an 
estimated EUR 13.6 million a year in reduced fuel imports and will also have an impact in 
terms  of  lower  emissions  of  CO2  and  other  pollutants.  During  operation,  the  project  will 
result  in  estimated  GHG  emissions  of  76  kt  CO2-eq/year.  However  relative  to  predicted 
emissions without the project, it is expected to result in a reduction of 34 kt CO2-eq/year.  

Regional integration 

The  EIB  signed  15  new  projects  in  2016  that  contribute  to  regional  integration.  The  total 
approved EIB finance for these projects was EUR 1.6 billion. These projects cover transport 
links,  support  to  convergence  through  local  private  sector  development  and  an  energy 
interconnection. Seven projects (EUR 1 billion) were signed for credit lines supporting access 
to long-term finance for SMEs and mid-caps, thereby supporting economic convergence with 
the EU. Six of these are in Turkey and one is in Bosnia and Herzegovina. A further credit line 
specifically targets SMEs in the food and agriculture sector in Georgia. The EIB signed four 
transport projects, which include rail modernisation in Ukraine and Moldova that will expand 
capacity  for  passenger  and  cargo  services  and  help  to  facilitate  trade  across  the  region  and 
with the EU. 

3.2. 

OVERVIEW OF EIB FINANCING BY REGION AND SECTOR 

Table 1 provides an overview of the volume of EIB financing in 2016 in the regions covered 
by  the  ELM,  including  those  with  an  ELM  guarantee  (comprehensive  or  political  risk)  and 
those financed under the EIB's own-risk facilities.  

Table 1: EIB Financing Operations signed in 2016 

7 

Regions of operation(EUR million)Comprehensive guaranteePolitical risk coverTotal ELMPre-Accession582                         -                         582                         2,073                      2,655       Mediterranean1,061                      332                         1,393                      192                         1,585       Eastern Neighbours, Russia1,263                      354                         1,616                      -                         1,616       Asia 45                           -                         45                           200                         245          Central Asia20                           -                         20                           200                         220          Latin America319                         -                         319                         200                         519          South Africa-                         -                         -                         -                         -           Total in Mandate Regions                      3,289                          686                       3,975                       2,865         6,840 Operations under ELM with EU guaranteeEIB own-risk FacilitiesTotal 
 
  
 
 
 
 
 
 
 
 
 
 
The EIB signed EUR 6.8 billion of loans in the regions covered by the ELM in 2016 out of a 
worldwide total of EUR 7.9 billion (including the ACP countries and the Overseas Countries 
and Territories). Approximately EUR 5.9 billion was carried out in the Pre-Accession (total 
EIB exposure in Turkey covered by the EU guarantee currently represents EUR 9.6 billion) 
and in the Neighbourhood regions (both South and East). The rest (26%) was signed in Asia, 
Central Asia and Latin America.  

Compared to 2015, the total volume of EIB financing in ELM regions increased by 2% (EUR 
6.7 billion signed in 2015) resulting from an increase of 54% in financing under the own risk 
facilities  (EUR  1.9  billion  in  2015)  and  a  decrease  by  18%  of  the  use  of  the  EU  guarantee 
(EUR 4.8 billion in 2015). 

Table 2: Net signature per year and cumulative net signatures compared with the current EU Mandate  
ceilings over 2014-2020  

As presented above, the cumulative signatures under the ELM reached EUR 10.7 billion and 
the  cumulative  utilisation  rate  of  the  ELM  in  terms  of  signatures  currently  stands  at  40% 
(some 38% of implementation time elapsed). In relation to the current ELM mandate with a 
ceiling at EUR 27 billion, the utilisation rate in Central Asia has reached 88% of the mandate 
ceiling,  followed  by  the  Eastern  Neighbours  with  85%,  Asia  with  56%,  and  Latin  America 
with 44%. Note that these percentages do not take into account the proposed increase to the 
ELM ceiling currently under discussion by Council and Parliament. 

8 

EUR m2014 (H2)20152016Net signed (EUR m)CeilingNet signed as % of mandate ceilingPre-Accession2009575821,739                8,739              20%Mediterranean380127613933,049                9,606              32%Eastern Neighbours, Russia  1040148115934,114                4,831              85%Asia4543345523                   936                 56%Central Asia707020160                   182                 88%Latin America2194683191,007                2,289              44%South Africa  01500150                   416                 36%Total 1,9544,8353,95210,74127,00040% 
 
 
 
 
 
 
 
 
 
 
 
 
Chart 2: Annual evolution of EIB lending volumes on EIB own resources 

Chart 2 illustrates the evolution of lending under the ELM and the own-risk facilities between 
2014  and  2016.  Over  this  period,  an  average  of  64%  of  EIB  financing  in  these  regions 
benefited from the EU guarantee, with annual fluctuations between 58% and 72%. 
The number of financing projects with contracts signed by the EIB in the regions covered by 
the ELM increased from 55 in 2015 to 71 in 2016. Of these 71 operations, 54 projects  were 
'new' with  a  first EIB finance  contract signed in 2016;  for 17 projects, part  of the total  EIB 
financing had been provided by contracts signed in previous years.  

Table 3: Number of operations signed by region (all resources) in 2016 

In 2016, the EIB significantly increased its lending in the Western Balkans compared to 2015 
(+92%),  where  the  amount  reached  EUR  427  million  and  in  the  Mediterranean  countries 
(+12%),  where  the  amount  signed  reached  EUR  1.6  billion,  in  the  context  of  the 
implementation of the Bank's Economic Resilience Initiative in support of those regions. The 
majority of this amount was for projects focused on providing support to build local private 
sector development, especially credit lines to support SMEs (54% in the Mediterranean  and 
64% in the Western Balkans). 

9 

RegionsThird Party ResourcesUnder EU guaranteeEIB own- riskTotal Pre-Accession 82230 Mediterranean  13215 Eastern Neighbours, Russia  16016 Asia112 Central Asia123 Latin America415 South Africa  000Total in Mandate Regions432871 
 
 
 
 
 
 
 
 
In 2016, credit lines represented 46% of the total lending (37.5% in 2015), while 54% were 
dedicated  to  finance  infrastructure  projects  and  others  (62.5%  in  2015),  in  which  transport 
projects represents half of the volume. 

Lending in the Pre-Accession countries contributed the most to the objective of local private 
sector development with EUR 1.8 billion (52%) followed by the Mediterranean countries with 
960 million (28%). 

The  Eastern  Neighbourhood  is  the  region  that  contributes  the  most  to  the  objective  of 
economic and social infrastructure with 1.2 billion (34%) of the total lending to this objective. 
Finally, the Pre-Accession region also scores higher in the regional integration objective with 
1.3 billion (69%) of all resources lending. 
Table  4:  Sectorial  distribution  of  EIB  financing  operations  signed  in  2016  in  the  regions  covered  by  the 
Decision (all resources) 

3.3. 

IMPACT AND VALUE ADDED OF EIB OPERATIONS 

The  ReM  Framework  provides  an  assessment  of  EIB  financing  operations  throughout  their 
lifecycle. It helps to select sound projects which are in line with EU priorities and where EIB 
involvement will add value. At appraisal stage, results indicators are identified, with baselines 
and  targets  that  capture  expected  economic,  social,  and  environmental  outcomes  of  the 
operation.  Achievement  against  those  specified  performance  benchmarks  is  monitored 
throughout  the  project's  life  and  reported  at  two  major  milestones:  project  completion  and 
three  years  after  project  completion  ('post  completion')  for  direct  operations;  the  end  of  the 
investment  period  and  the  end  of  life  of  private  equity  funds;  and  the  end  of  the  allocation 
period for intermediated lending. 

Projects are rated according to three 'Pillars': 

(i) 

(ii) 

Pillar  1  rates  the  expected  contribution  to  EU  and  partner  countries'  priorities  and 
eligibility under EIB mandate objectives. 
Pillar 2 rates the quality and soundness of the operation, based on the expected results. 

10 

Row LabelsPre-AccessionMediterranean countriesRussia, E.Europe,Sth. CaucasusAsiaCentral AsiaLatin AmericaTotalCredit lines / Banks1,775             849                333                200                3,158         Transport405                398                781                200                41                  1,825         Energy223                47                  41                  45                  200                556            Industry-                 111                111                162                384            Health185                185            Water, sewerage41                  70                  15                  46                  171            Agriculture, fisheries, forestry-                 141                141            Telecommunications-                 100                100            Urban development-                 100                100            Education-                 9                    70                  79              Composite infrastructure-                 75                  75              Services26                  25                  51              Solid waste-                 10                  5                    15              Grand Total2,655             1,585             1,616             245                220                519                6,840          
 
  
 
 
 
 
 
 
 
(iii) 

Pillar 3 rates expected EIB financial and non-financial additionality. 

This  section  reports  expected  results  on  EU  policy  objectives  as  recorded  by  the  ReM 
Framework.  The  scope  of  this  section  with  regard  to  expected  results  is  not  all  contracts 
signed  in  2016,  but  all  projects  for  which  the  first  financing  contract  was  signed  in  2016 
(these  are  referred  to  as  'new  projects').  Within  this  scope,  in  2016,  54  new  projects  were 
signed in the ELM regions. The total approved EIB lending associated with these projects is 
EUR 7.3 billion. 

In  2016,  11  projects  in  the  ELM  regions  that  were  originally  appraised  under  the  ReM 
Framework  reached  completion,  allowing  for  a  more  comprehensive  monitoring  of  results 
achieved. These included six credit lines for SMEs and mid-caps, three infrastructure projects 
and two industry/R&D projects. 

Chart 3: ReM ratings by pillar for 2016 new signed operations 

In 2016, all new projects were rated at least 'good' under Pillar 1, signifying that they are in 
line  with  ELM  objectives  and  make  a  high  contribution  to  either  national  development 
objectives or those of the EU and a moderate contribution to the other. Nineteen projects were 
rated  'excellent'  for  making  a  high  contribution  to  both  EU  priorities  and  national 
development objectives.   

The Pillar 2 rating is based on project soundness, financial and economic sustainability, and 
environmental  and  social  sustainability  in  the  case  of  directly  financed  projects.  For 
intermediated  operations,  the  rating  is  based  on  the  expected  results,  weighted  by  risk 
considerations  as  measured  by  the  soundness  of  the  intermediary  and  the  quality  of  the 
operating  environment.  Fifty  projects  were  rated  'good'  under  Pillar  2,  with  an  average 
economic  rate  of  return  of  10%  to  15%  in  the  case  of  infrastructure  projects.  Four  projects 
received  an  'acceptable'  rating,  often  because  of  high  risk  environments  that  impact  on  the 
probability  of  achieving  planned  results.  These  include  projects  in  Ukraine  and  Kyrgyz 
Republic. 

Under Pillar 3, 7 projects have been rated as 'high' and 39 projects as 'significant'.  

4. 

EIB COOPERATION WITH OTHERS 

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4.1 COOPERATION WITH THE COMMISSION  

Cooperation between the EIB and the Commission on matters related to the External Lending 
Mandate takes place in the context of a broader partnership between the two institutions on a 
whole  range  of  areas  ranging  from  stimulating  investment  in  the  EU  including  via  the 
European Fund for Strategic Investments as well as the blending facilities supporting EIB and 
other IFIs' development activities outside the EU.  

The  ELM  Decision  requires  that  the  Commission,  the  EEAS  and  the  EIB  cooperate  and 
strengthen  the  alignment  of  EIB  external  actions  and  the  EU's  external  policy  objectives  in 
order to maximise synergies between EIB financing and EU budgetary resources. This occurs 
mainly through regular and systematic dialogue and early consultation on policies, strategies 
and  project  pipelines.  The  Memorandum  of  Understanding  (revised  in  2013)  between  the 
Commission,  EEAS  and  the  EIB  in  respect  of  cooperation  and  coordination  in  the  regions 
covered by the ELM continues to be applied, e.g. through exchange of information on project 
pipeline and contact information. 

A  concrete  example  of  this  cooperation  is  the  co-location  of  EIB  offices  within  EU 
Delegations,  with  new  EIB  external  offices  moving  into  local  Delegations.  The  office  in 
Beijing  was  formally  inaugurated  on  30  May  2016  and  covers  China  and  Mongolia.  In 
addition, in the first quarter of 2017, the office in New Delhi was inaugurated. 

The  EU's  blending  mechanisms  offer  a  further  venue  for  structured  cooperation.  Blending 
results in strong co-financing relations with other international financial institutions (IFIs) and 
alignment with  EU policies and priorities in each respective country  context.  Moreover, the 
governance  structure  of  those  facilities  enables  and  requires  close  coordination  and 
cooperation  with  the  Commission,  the  EEAS  and  other  IFIs  before  presenting  a  project  for 
blending of grant resources with EIB lending. 

The EIB continued to actively participate in the regional blending mechanisms in 2016. EUR 
177.32  million of EU  budget-funded contributions (grants, technical  assistance,  risk capital) 
managed by the EIB were approved or signed in 2016 complementing EIB financing in ELM 
regions  (EUR  39  million  of  EU  budget  resources  complementing  EIB  loans  in  the 
Neighbourhood  Investment  Facility,  EUR  53  million  in  the  Western  Balkan  Investment 
Facility,  EUR  18  million  in  the  Latin  America  Investment  Facility,  EUR  18  million  in  the 
Eastern  Europe  Energy  Efficiency  and  Environment  Partnership,  EUR  5.32  million  in  the 
Eastern  partnership  Technical  Assistance  Trust  Fund,  EUR  1.64  million  in  the  FEMIP  and 
EUR  41  million  for  risk  capital).  The  EIB  closely  cooperated  with  the  Commission  in  the 
technical  group  of  experts  of  the  EU  Platform  for  Blending  in  External  Cooperation 
(EUBEC).  The  detailed  list  of  EIB-managed  Union  budget-funded  operations  (TA,  Grants, 
Equity) in 2015 can be found in the accompanying staff working document. 

The Commission continues to actively engage with the EIB in a number of other policy areas, 
including  dealing  with  non-cooperative  tax  jurisdictions.  In  January  2016,  the  Commission 
adopted a new Anti-Tax Avoidance Package, containing a series of initiatives for a stronger 
and  more  coordinated  EU  stance  against  corporate  tax  abuse  within  the  Single  Market  and 
beyond.  The  package  further  expands  on  the  criteria  that  constitute  good  tax  governance, 
including  measures  on  the  fight  against  aggressive  tax  planning.  That  package  reflects 
discussions  in  the  Council,  recommendations  from  the  European  Parliament  as  well  as  the 

12 

 
 
 
 
 
 
  
 
outcomes of the OECD's Base Erosion and Profit Shifting project. In January 2017, the EIB 
presented  its  interim  approach  to  its  policy  towards  weakly  regulated,  non-transparent  and 
uncooperative jurisdictions ('NCJ policy') and tax sensitive jurisdictions.  

The detailed aspects of the inter-institutional cooperation between the EIB, the Commission 
and  the  EEAS  to  support  the  priorities  both  of  the  EU  and  the  partner  countries  in  these 
regions can be found in the accompanying staff working document. 

4.2. COOPERATION WITH THE EUROPEAN OMBUDSMAN 

The Memorandum of Understanding signed between the EIB and the European Ombudsman 
in  2008  sets  the  basis  for  the  two  stages  of  the  EIB  Complaints  Mechanism  -  the  internal 
(EIB-CM)  and  the  external  (the  Ombudsman)  -  approved  by  the  EIB  Board  of  Directors  in 
2010 after extensive public consultation. It achieves a common understanding of purpose and 
consistency of application across its internal and external parts, with a specific focus on: 

• 

• 

• 

The existence of an effective internal Complaints Mechanism (the EIB-CM) that deals 
with complaints lodged by external parties to the EIB across all the business units of 
the EIB; 
Concerning  complaints  related  to  operations  outside  the  EU,  including  the  external 
mandates, the Ombudsman commits to use its own initiative power systematically in 
order to handle complaints when the complainant is not a citizen or resident of the EU; 
The  scope  of  the  Ombudsman's  review,  with  the  recognition  of  the  EIB-CM  as  the 
required prior approach. 

During  2016,  the  Ombudsman  received  no  complaints  related  to  the  EIB  activities  in  the 
External Lending Region.² 

The  current  EIB  Complaints  Mechanism  Policy  stipulates  that  the  EIB  endeavours  to 
periodically  review  the  mechanism.  The  current  review,  including  a  public  consultation,  is 
expected to conclude at the end of 2017.  

4.3. COOPERATION WITH INTERNATIONAL FINANCING INSTITUTIONS  

Cooperation  with  other  IFIs  is  an  integral  part  of  EIB  activities,  ranging  from  dialogue  on 
institutional  matters,  horizontal  topics  and  thematic  issues,  and  mutual  consultation,  to 
enhanced forms of operational co-financing and work sharing. Dialogue between IFIs mostly 
takes place within specialised working groups meeting periodically to share best practices or 
address specific issues. 

Cooperation  between  the  EIB  and  the  European  Bank  for  Reconstruction  and  Development 
(EBRD)  has  continued  under  the  2012  Memorandum  of  Understanding.  A  Steering 
Committee chaired by the Commission took place in June 2016. This focused in particular on 
the Banks’ response to the migration crisis as well as overall cooperation. The EIB and EBRD 
also held two Contact Group meetings to exchange views on their pipelines of operations in 
the  regions  where  they  both  operate.  In  addition,  the  Banks  shared  information  on  their 
response  to  the  migration  crisis  and  on  other  common  topics  of  interest  including  issues 
arising in relation to offshoring and the newly created EU4Business initiative in the Eastern 

13 

 
 
 
 
 
 
 
 
 
 
 
Partnership  region.Twenty-seven  projects  signed  in  2016  were  cofinanced  by  other  IFIs. 
EBRD is the first co-financer (13 projects) with a total of EUR 1.1 billion representing 44% 
of the total volume of cofinancing, followed by World Bank group (7 projects) representing 
32%  of  the  total  volume  of  co-financing.  The  Inter-american  Development  Bank  and  the 
Development  Bank  of  Latin  America  co-financed  2  projects  (4%),  the  Asian  Development 
Bank co-financed 4 projects (22%).² 

Cooperation  between  EIB,  AFD  and  KfW  has  continued  to  intensify  over  the  last  years.  In 
2016, 4 projects were co-financed with AFD in the ELM regions with a total EIB financing of 
EUR 778 million. 3 projects were co-financed with KfW group with a total EIB financing of 
EUR  142  million.  Meanwhile,  a  regular  routine of  meetings  on  policy/coordination  level as 
well  as  on  operational  level  has  been  established  which  has  facilitated  exchange  of 
information and transparency.  

The three institutions also cooperate closely in the context of the Mutual Reliance Initiative 
(MRI).  Launched  in  2013,  the  MRI  is  a  widely  recognised  means  of  implementing  EU 
external cooperation policies. It foresees that the three MRI partners rely on one of them to 
perform  certain  tasks,  e.g.  some  of  the  project  due  diligence  or  procurement  supervision. 
Promoters  appreciate  the  resulting  simplified  processes.  The  management  and  decision-
making  bodies  of  the  MRI  partners  have  become  acquainted  with  documents  prepared  by 
another  institution  which  they  use  for  their  own  decisions.  Talks  continued  during  2016  on 
how to further increase the level of work sharing and delegation and take the MRI to a higher 
level of relevance and effectiveness. 

A  new  and  significant  development  in  2016  was  the  entry  of  three  new  members,  the  Asia 
Infrastructure  Investment  Bank  (AIIB),  the  Islamic  Development  Bank  and  the  New 
Development  Bank  (also  known  as  'BRICS'  Bank).  The  MoU  signed  by  EIB  with  AIIB  in 
May 2016 in Beijing provides the framework to further consolidate the relations between EIB 
and  AIIB  in  the  areas  of  joint  financing  of  eligible  operations,  knowledge  sharing  and  the 
establishment of regular high level meetings. 

In  addition  to  the  multiple  working  groups  and  initiatives  covering  a  broad  range  of  issues 
(climate,  infrastructure,  finance,  risk,  results  measurement,  ex  post  evaluation,  debt 
management etc.), MDB cooperation remains strong at the highest level. In 2016, high-level 
discussions  among  MDBs  focused  on  the  main  topics  of  the  development  agenda,  namely 
how  to  jointly  enhance  MDB  support  for  Climate  Action  and  contribute  to  the  Sustainable 
Development  Goals.  Addressing  the  consequences  of  the  refugee  crisis  and  forced 
displacement  was  another  key  topic  for  MDB  cooperation  in  2016.  A  special  MDB  Task 
Force  was  set  up  to  define  and  measure  mobilisation  and  catalysation  by  MDBs  of  private 
sector finance. Building on recommendations from the G7 and the G20, MDBs also worked 
jointly on ways to optimise their balance sheets and increase their lending capacity in support 
of development objectives. 

The EIB also continued to strengthen its ties with the UN system, following the signature of 
Memoranda  of  Understanding  with  UNIDO,  IFAD  and  FAO.  The  EIB  and  UNDP  signed  a 
Memorandum of Understanding in October 2016. The thematic focuses of this partnership are 
climate  change  response,  responding  to  crisis  and  post-crisis  situations,  the  migration  crisis 
and  promoting  inclusive  markets  and  entrepreneurship.  An  agreement  was  also  signed  in 
April 2016 with UNOPS. This partnership will enable both institutions to overcome ongoing 

14 

 
 
 
 
 
 
  
challenges to sustainable development, most notably in fragile economies, as well as climate 
change and increasing the capacity of the private sector to drive growth and change. 

15