REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the evaluation of the application of 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
Date: 2020-03-12
Institutions: Directorate-General for Economic and Financial Affairs, European Commission
Subjects: EIB loan, European Investment Bank, application of EU law, credit guarantee, financial aid, investment abroad, investment project, investment promotion, investment protection, third country

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 12.3.2020  COM(2020) 96 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the evaluation of the application of 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  
 
 
1. 

INTRODUCTION 

This report summarises the Commission’s evaluation of the implementation in 2014-18 of the 
EU budgetary  guarantee to  the European  Investment Bank (‘EIB’) against  losses under EIB 
financing  operations  supporting  investment  projects  outside  the  Union.  The  full  evaluation 
was published in a Commission Staff Working Document in September 2019.1  

The EU’s budgetary guarantee as framed in consecutive decisions of the European Parliament 
and the Council is habitually referred to  as the EIB’s External  Lending Mandate (‘ELM’)  2. 
The  Commission’s  evaluation  has  an  ex-post  character,  covering  the  period  from  mid-2014 
until the end of 2018, the last year for which complete data is available. As requested by the 
European Parliament and the Council, the evaluation aims to provide input for a possible new 
decision on the coverage of the EIB financing operations by the EU guarantee post-2020.3  

In particular, the evaluation aims to help design future EU budgetary guarantees in the context 
of  the  Neighbourhood,  Development  and  International  Cooperation  Instrument  (‘NDICI’), 
proposed  by  the  Commission  in  June  2018.  The  trilogues  on  the  legislative  proposal  have 
recently started.4 The evaluation represents one of the Commission’s inputs to the work of the 
High-Level Group of Wise Persons on the European financial architecture for development.5 

As  from  2021,  the  External  Lending  Mandate  is  envisaged  to  be  replaced  by  a  broader 
instrument,  the  European  Fund  for  Sustainable  Development  Plus  (‘EFSD+’),  making  EU 
budgetary  guarantees  available  to  the  EIB  as  well  as  to  other  International  Financial 
Institutions  (‘IFIs’) or Development  Finance  Institutions (‘DFIs’) in  the context of an ‘open 
financial architecture’.6 

The  evaluation  examined  the  effectiveness,  efficiency,  relevance,  coherence  and  EU  added 
value  of  the  budgetary  guarantee  underpinning  the  current  ELM  against  the  expectations 
originally expressed by the European Parliament and the Council in the ELM Decision.  

External Lending Mandates to the European Investment Bank have been a feature of external 
policy  of  the  European  Economic  Community  and  subsequently  the  European  Union  since 
1977. The basic rationale of the EU budgetary guarantee is that it enhances the risk-bearing 
capacity  of  the  EIB  by  significantly  limiting  the  EIB's  risk  exposure  to  a  profile 
commensurate  with  the rules laid down by EIB’s governing bodies.  In other words, the EU 

1   SWD(2019) 333 final. 
2   The legal basis is Decision No 466/2014/EU (‘the ELM Decision’), as amended by Decision (EU) 2018/412 
following  a  mid-term  review.  The  guarantee  is  provided  through  a  guarantee  agreement  between  the 
Commission and the EIB, the most recent version of which was concluded on 3 October 2018. 

3   Article 20 of the ELM Decision. 
4   COM(2018) 460 final. 
5   The future of the European financial architecture for development: An independent report by the High-Level 
Group  of  Wise  Persons  on  the  European  financial  architecture  for  development,  October  2019, 
https://www.consilium.europa.eu//media/40967/efad-report_final.pdf.  

6   See also Commission communication ‘Towards a more efficient financial architecture for investment outside 

the European Union’, COM(2018) 644 final. 

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guarantee  helps  the  EIB  to  undertake  investment  operations  in  riskier  environments  outside 
the EU based on the EIB’s existing level of capital and reserves, while helping it maintain its 
AAA credit rating.  

The EU guarantee has traditionally been provided to the EIB for a period coinciding with the 
EU’s  Multiannual  Financial  Framework.  The  7-year  character  of  the  External  Lending 
Mandate  has  been  valuable  in  helping  the  EIB  develop  the  human  and  material  capacities 
necessary  for  undertaking  investment  operations  outside  the  EU,  operations  which  usually 
take  more  than  a  year  to  prepare.  In  return  for  the  predictability  and  risk  mitigation  effect 
which  the  EU  guarantee  renders,  the  financing  operations  undertaken  under  the  ELM  are 
expected  to  address  the  objectives  and  fulfil  the  conditions  established  by  the  European 
Parliament and Council.  

The scope of the EU guarantee underpinning the ELM differs depending on the nature of the 
financing  operation:  EIB  financing  operations  with  public  sector  counterparts  (typically  for 
infrastructure development) benefit from a comprehensive guarantee, covering operational as 
well as political risks. EIB loans to banks or corporations benefitting from a state guarantee 
and financing under the Economic Resilience Initiative private mandate, created following the 
mid-term  review  of  the  ELM  in  2018,  are  also  covered  by  the  comprehensive  guarantee.  The 
comprehensive guarantee allows the EIB to waive the risk premium it would otherwise need 
to include in its interest rate7. Consequently, partner countries or their institutions/companies 
have been able to borrow from the EIB at a significantly lower cost. 

By contrast, the EIB’s private sector operations without a state guarantee benefit only from a 
political  risk  guarantee  from  the  EU,  covering  certain  situations  further  defined  in  the 
guarantee  agreement  with  the  EIB:  non-payment  due  to  non-transfer  of  currency, 
expropriation,  war  or  civil  disturbance  or  denial  of  justice  upon  breach  of  contract.  The 
political  risk  guarantee  provided  by  the  EU  does  not  translate  in  a  reduction  of  the  EIB’s 
interest  rate.  However, the  pricing of EIB loans  remains attractive for the clients  due to  the 
EIB’s low costs of borrowing from the financial markets. 

The  EU  guarantee  covers  the  first  65%  of  the  EIB’s  outstanding  exposure  under  ELM 
financing operations at portfolio level. This means that when a borrower defaults on an EIB 
loan and the EIB calls on the EU guarantee to make up for the missing repayment, the EU is 
obliged  to  honour  fully  each  guarantee  call  up  to  the  ceiling  of  65%  of  the  guaranteed 
portfolio. The EIB does not pay fees to the EU for the provision of the budgetary guarantee 
and the EIB does not receive any direct remuneration from the EU for the implementation of 
the mandate. The EIB’s administrative costs in the context of the ELM are covered from the 
mark-up included in the EIB’s interest rate, in line with its standard loan pricing policy. 

7   By  way  of  exception  from  the  above  rules,  private  sector  projects  falling  under  the  Economic  Resilience 
Initiative private mandate, created following the mid-term review of the ELM in 2018, benefit from the EU’s 
comprehensive guarantee. However, the risk premium is not waived, but transferred by the EIB to the EU in 
consideration of the risk taken by the EU. 

2 

 
 
                                                           
The  ELM  is  one  of  the  instruments  used  by  the  EU  to  implement  EU  external  policy 
priorities. The ELM Decision refers to the ‘general EU interest’ and to principles guiding the 
Union’s  external  action  as  defined  in  the  Treaty.  It  also  spells  out  that  ‘in  developing 
countries  […],  the  EIB  financing  operations  shall  contribute  […]  to  the  objectives  of  the 
Union's  development  cooperation  policy,  in  particular  towards  reducing  poverty  through 
inclusive  growth  and  sustainable  economic,  environmental  and  social  development’.  The 
current  ELM  Decision  defines  several  objectives  to  be  supported  by  the  EU  budgetary 
guarantee,  namely  local  private  sector  development  and  development  of  socio-economic 
infrastructure,  both  of  which  can  go  hand  in  hand  with  promoting  the  objectives  of  climate 
change mitigation and adaptation, regional integration, or long-term economic resilience. 

2.  MAIN FINDINGS OF THE EVALUATION 

A key limitation of the Commission’s evaluation is linked to the fact that the implementation 
of  investment  operations  under  the  ELM  takes  a  number  of  years,  especially  as  regards 
infrastructure  projects.  Limited  information  is  therefore  available  to  date  about  the  actual 
results  and  impacts  of  the  operations  financed.  The  EIB  Results  Measurement  Framework 
relies, for the time being, heavily on upfront estimates and data on results achieved arrive with 
a  long  time  lag.  The  Commission’s  evaluation  therefore  worked  mainly  with  currently 
available  data  on  financing  amounts  signed  and  disbursed,  with  the  findings  of  an  external 
study  completed  in  mid-20188  and  with  observations  brought  forward  by  various 
stakeholders. 

In accordance with the ELM Decision, 64 countries outside the EU are currently eligible for 
EIB  financing  operations  under  the  EU  budgetary  guarantee.  The  EIB  has  entered  into 
Framework Agreements with – and is thus currently able to undertake financing operations in 
– 57 of those countries. In the period under evaluation, the EIB signed financing operations 
under the ELM  in  38 countries and under its own-risk facilities9  in  six additional countries. 
The ELM  enables the EIB to  undertake financing operations in  higher-risk countries than it 
could otherwise reach with its own-risk facilities.10  

The overall ceiling of the EU budgetary guarantee for the EIB’s external operations in 2014-
20  is  EUR  32.3  billion.  At  the  end  of  2018,  cumulative  net  signatures  of  EIB  financing 
operations under the ELM 2014-20 amounted to EUR 17.6 billion, i.e. approximately 54% of 
the  overall  guarantee  ceiling  as  revised  during  the  mid-term  review.  By  way  of  comparison 
(albeit  only  approximate  due  to  a  different  market  environment,  geopolitical  and  regulatory 
context), at the end of 2011, i.e. at a similar time point of the previous external mandate, the 

8   Ecorys  and  CEPS,  2018,  ‘Final  Report  for  the  Evaluation  of  the  application  of  the  2014-2020  External 

Lending Mandate’, published together with the Commission’s evaluation. 

9   The  EIB  currently  has  four  Own  Risk  Facilities  in  the  ELM  regions,  namely  the  Pre-Accession  Facility 
(PAF), the Neighbourhood Financing Facility (NFF), the Climate Action and Environment Facility (CAEF) 
and the Strategic Projects Facility (SPF). The latter two facilities also cover African, Caribbean and Pacific 
countries and Overseas Countries and Territories of EU Member States. 

10   Commission  Delegated  Decision  (EU)  2018/1102  of  6  June  2018  added  Iran  to  the  list  of  ELM-eligible 

countries, but no Framework Agreement is in place at this stage. 

3 

 
 
                                                           
utilisation rate was 66%. During 2014-18, 189 operations were financed under the ELM, with 
an average size of approximately EUR 90 million. 

The EIB’s relatively limited utilisation of the ELM 2014-20 guarantee ceilings can be partly 
attributed to developments in Turkey since 2016 and the war in Eastern Ukraine since 2014.11 
Moreover,  the  guarantee  ceilings  allocated  by  the  current  ELM  Decision  to  the  EU 
Neighbourhood (Eastern and Southern) are altogether EUR 6 billion higher than the ceilings 
of the previous mandate, while absorption capacity has been reduced by the war in Syria and 
political  volatility  in  several  other  countries.  Taken  together,  these  external  factors  largely 
explain why the EIB used the available guarantee ceilings by end-2018 to a lesser extent than 
at the same stage of the previous external mandate. 

Another  relevant  quantitative  indication  of  the  effectiveness  of  the  EU  guarantee  can  be 
obtained  from  an  analysis  of  disbursement  rates  under  the  ELM,  i.e.  the  ratio  between 
financing actually paid  out  by the EIB and  amounts signed in  the EIB’s financing  contracts 
with its counterparts (net of amounts subsequently cancelled). Like the analysis of guarantee 
utilisation  rates,  the  analysis  of  disbursements  needs  to  take  into  account  intertemporal 
differences in the market environment and geopolitical and regulatory contexts.  

The EIB disbursed EUR 5.8 billion under the ELM 2014-20 by the end of 2018, representing 
33% of net signatures, whereas at the end of 2011, the EIB had disbursed EUR 8.5 billion or 
44% of the net amounts signed under its external mandate for 2007-13.  

The slower pace of disbursements under the ELM 2014-20 compared to the previous mandate 
appears  to  be  explained  mainly  by  external  factors,  such  as  weak  regulatory  frameworks, 
fragmented  legislation,  government  instability,  low  institutional  capacity,  staff  turnover  and 
slow  and  inefficient  procedures  in  recipient  countries.  Sovereign  and  municipal  loans  are 
particularly vulnerable to such factors given that a number of conditions need to be satisfied 
prior  to  disbursement  of  infrastructure  loans,  e.g.  in  terms  of  technical  preparation  and 
procurement.  Moreover,  in  many  countries,  state  borrowing  from  the  EIB  is  subject  to 
parliamentary ratification, which lengthens the timeline of project implementation.12  

As  for  factors  internal  to  the  ELM’s  design  or  the  EIB’s  implementation,  high  signature 
volumes are easier to communicate and typically receive more attention than disbursements. 
A discussion is also ongoing within the EIB’s governing bodies about the appropriateness of 

11   The  EIB  has  suspended  signature  of  new  financing  operations  in  Russia  upon  request  from  the  European 
Council  on  16  July  2014  in  view  of  the  illegal  annexation  of  Crimea  and  the  military  conflict  in  Eastern 
Ukraine.   

12  In  some  countries  of  the  Neighbourhood,  implementation  capacity  has  somewhat  worsened  in  2014-18 
compared  to  the  previous  mandate  period.  Moreover,  large  amounts  of  EIB  financing  for  Ukraine  were 
signed  during  a  relatively  short  period  of  time  in  2014-16.  In  addition,  lower  disbursement  rates  in  Latin 
America  under  the  ELM  2014-20  can  be  explained  by  a  recent  shift  towards  public  sector  infrastructure 
investments  to  support  climate  action,  which  tend  to  disburse  more  slowly  than  loans  for  private  sector 
development. 

4 

 
 
                                                           
the incentive system within the EIB, including as regards staff remuneration and the relative 
focus on volumes of commitments as opposed to disbursements and qualitative aspects. 

A  majority  of  ELM  operations  consists  of  loans  to  the  public  sector  for  infrastructure 
development.  As  of  end-2018,  these  accounted  for  nearly  EUR  11  billion  of  operations 
signed.  Operations  financing  private  sector  development  but  benefitting  from 
the 
comprehensive guarantee represented approximately one-quarter of signatures under the ELM 
in 2014-18. Finally, operations under the political risk guarantee made up about one-tenth of 
ELM  volumes  signed.  The  latter  operations  provide  financing  to  commercial  banks  or 
corporates and demonstrate relatively fast disbursement rates. 

Thanks  to  the  EU  guarantee,  beneficiaries  enjoy  lower  cost  of  EIB  financing,  provided  for 
longer  periods.  This  is  highly  beneficial  for  public  sector  investments,  but  raises  concerns 
about putting at a disadvantage banks and companies that receive financing elsewhere on less 
favourable terms. The ELM Decision stipulates that financing operations under the ELM must 
have  ‘added  value  on  the  basis  of  the  EIB's  own  assessment’,  but  there  is  no  explicit 
requirement  for  their  additionality  in  the  sense  of  preventing  the  replacement  of  potential 
support and investment from other public or private sources. The latter requirement will apply 
to EIB financing operations covered by EU budgetary guarantee post-2020.13 

The updated ELM Regional  Technical  Operational  Guidelines  issued by the Commission  in 
April 2019 state that ‘in order to avoid as much as possible the risk of market distortion that 
could  be  potentially  caused  by  EIB  intervention  covered  by  EU  budgetary  guarantee,  the 
added  value  of  the  EIB’s  intervention  should  receive  the  EIB’s  careful  attention.  This  is 
particularly important when studying possible operations in sectors and countries where there 
is  strong  competition  and/or  market  or  close-to-market  conditions.’14  The  risk  of  market 
distortion could be addressed notably through greater use of the option for upward modulation 
of EIB interest rates where appropriate in view of market conditions. 

In geographical terms, the ELM’s implementation as of end-2018 varies per region: 

 

 

In the Pre-Accession region, the EIB has utilised about 41% of the guarantee ceiling for 
this region by end-2018. The EU guarantee has been indispensable for the EIB to finance 
operations  in  the  Western  Balkans.  However,  EIB  activities  in  Turkey  have  been  scaled 
down post-2016.  

In the Southern Neighbourhood, the EIB has used about half of the guarantee ceiling by 
end-2018.  It  has  often  relied  on  the  comprehensive  guarantee  even  for  private  sector 
operations (covered by a state guarantee), whereas they would be otherwise only covered 

13   Article 209(2)(b) of Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 
18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) 
No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 
1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation 
(EU, Euratom) No 966/2012, OJ L 193, 30.7.2018, p. 1. 

14   C(2019) 2747 final, pp. 14, 24, 35 and 38. 

5 

 
 
                                                           
by  a  political  risk  guarantee.  Implementation  of  public  infrastructure  projects  in  this 
region has often incurred delays. 

 

In the Eastern Neighbourhood, the EIB has relied almost exclusively on the ELM to cover 
its financing operations, with almost no lending at its own risk. It has utilised most of the 
regional guarantee ceiling (78%), especially to support Ukraine in the context of Russia’s 
illegal  annexation  of  the  Crimean  peninsula  in  2014  and  on-going  destabilising  action. 
However,  the  implementation  of  many  ELM  operations  is  yet  to  start  and  the 
disbursement rate remains very low (23% of net signatures as of end-2018). 

  ELM  implementation  is  most  advanced  in  Latin  America  and  South  Africa,  which 
however account for only one-tenth of the ceiling of the EU budgetary guarantee. For Asia 
and Central Asia, the utilisation rate of the EU guarantee is high, but implementation in 
terms of disbursement levels is rather low. 

The ELM exceeds the targets established by the EU legislator for supporting climate change 
mitigation and adaptation. Climate-related financing signed under the ELM in 2014-18 is at 
34% of all financing volumes signed, above the target of 25%.  

The  efficiency  and  the  added  value  of  the  EU  guarantee  correspond  to  the  legislators’ 
expectations.  Compared  to  the  budgetary  amounts  set  aside  in  the  guarantee  fund,  about  11 
times  more  EIB  financing  is  provided  to  beneficiaries  at  any  given  time,  and  more  than  20 
times  as  much  total  investment  is  mobilised.15  To  date,  no  calls  on  the  EU  budgetary 
guarantee  have  occurred  on  operations  under  the  ELM  2014-20.  As  described  in  the 
Commission’s annual reports, the EIB has called on the EU guarantee in relation to a number 
of operations in Syria since 2012 as well as one operation in Tunisia (Aeroport Enfidha). All 
of these operations fall under previous external mandates and efforts are ongoing to recover 
the  defaulted  amounts.  Amounts  drawn  from  the  Guarantee  Fund  for  External  Action  in 
previous decades have been recovered. 

The  ELM  incentivises  the  EIB  to  undertake  relatively  large  volumes  of  lending  on  its  own 
balance  sheet,  up  to  its  50%  co-financing  limit  per  project,  since  the  EU  guarantee 
underpinning the ELM covers only the EIB and not other co-investors. A different model of 
EU  intervention  was  introduced  in  2017  through  the  European  Fund  for  Sustainable 
Development  (EFSD)  guarantee,  where  the  EU  guarantee  can  take  the  form  of  a  first-  or 
second-loss  piece  that  shields  not  only  the  implementing  financial  institution  but  also  (or 
mainly)  other  co-investors.  The  EFSD  model  requires  a  much  higher  provisioning  rate 
(currently  50%)  because  of  the  expected  higher  financial  risk  of  the  EU  intervention,  also 
targeting  clearly  LDCs,  but  it  may  be  more  suitable  for  the  financing  of  operations  where 
crowding-in private sector investment is an important objective, also linked to the principle of 
remuneration under the EFSD guarantee. 

The ELM plays a relevant role in supporting the EU’s external policy objectives. However, 
most  of  the  ELM  guarantee  is  currently  allocated  in  support  of  operations  in  Upper  Middle 

15   The  provisioning  rate  is  set  at  9%  of  the  amounts  outstanding  under  the  guarantee.  EIB  financing  usually 

covers up to 50% of the project’s total investment costs. 

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Income  Countries,  and  only  few  operations  have  been  financed  by  the  EIB  in  Least 
Developed Countries. This can be perceived as a shortcoming in the ELM’s relevance vis-à-
vis  EU  development  cooperation  policy,  to  be  addressed  in  the  design  of  future  EU 
guarantees, while taking into account limitations in terms of debt sustainability. 

Coherence  and  alignment  of  ELM  operations  with  EU  policy  and  Member  States’ 
interventions could  be improved, including by  ensuring a stronger policy  steer from the EU 
and greater sharing of information between the EIB and Commission services throughout the 
project  cycle.  The  Commission  provides  opinions  on  envisaged  EIB  operations  under  a 
procedure set out in Article 19 of the EIB Statute. A positive opinion from the Commission 
implies that the envisaged operation can be included under the ELM and covered by the EU 
guarantee. However, this consultation is undertaken at a relatively early stage and the level of 
information shared during the Article 19 process is often insufficient.  

Through years of dialogue, non-binding arrangements have been put in place between the EIB 
and Commission services  to  improve, inter alia,  upstream  coordination concerning potential 
financing operations identified by the EIB. In November 2018, the EIB and the Commission’s 
Directorate-General for Neighbourhood and Enlargement Negotiations (DG NEAR) signed a 
joint note expressing mutual commitment to enhance information exchange on potential EIB 
operations  under  the  ELM.  Moreover,  the  Commission  and  the  EEAS  increasingly  provide 
early feedback on indicative overviews of newly identified potential operations that the EIB 
submits to the Commission on a quarterly basis. 

Stakeholder complaints related to ELM operations represent 45% of all complaints registered 
under the EIB Complaints Mechanism over the period 2014-18. This indicates that operations 
in ELM countries represent significant reputational risk for the EIB compared to the less than 
10%  share  they  represent  in  the  EIB’s  overall  business  volume,  although  many  of  these 
complaints  are  found  by  the  EIB  not  to  have  solid  grounds.  A  key  systemic  suggestion 
emerging  from  civil  society  criticisms  of  individual  ELM  operations  is  to  broaden  and 
strengthen  clauses  in  the  EIB’s  financing  contracts  that  enable  to  suspend  disbursements  in 
case  of  breaches  of  human  rights  and  environmental  and  social  standards  throughout  the 
implementation  phase.  Information  sharing  between  the  EIB  and  the  Commission  on  the 
application of such clauses could also be improved. 

3.  CONCLUSIONS AND RECOMMENDATIONS 

In  order  to  maximise  the  additionality  of  EU  budgetary  guarantees  under  the  NDICI 
Regulation post-2020, several lessons can be learned from the ELM 2014-20: 

  For the purpose of policy design, it is useful to distinguish more clearly between the 
desired  impact  of  the  EU  guarantee  on  the  financial  advantage  transferred  to 
beneficiaries (i) in the public sector, and (ii) in the private sector. While there may be 
policy  reasons  to  minimise  the  costs  of  financing  operations  with  certain  types  of 
public sector counterparts, this is not necessarily the case for private sector financing. 

7 

 
 
  Consistent attention to reducing the risks of market distortion is warranted and a more 
explicit  policy  could  be  formulated  for  the  use  of  key  mitigating  measures,  such  as 
upward  modulation  of  interest  rates  in  order  to  reflect  local  market  conditions  in 
private sector financing. 

  The  rationale  for  the  use  of  comprehensive  guarantees  in  the  financing  of  private 

sector development deserves careful scrutiny. 

  Provision of local currency financing could be further encouraged. 

More  broadly,  the  evaluation  has  identified  the  following  key  recommendations  for 
improvements  in  the  implementation  of  the  ELM,  also  relevant  for  the  design  of  post-2020 
EU budgetary guarantees in the context of the NDICI Regulation: 

  To  explore  options  for  timelier  reporting  and  evaluation  of  actual  results  achieved,  and 

greater analysis of actual impacts. 

  For the EIB to share more information with the Commission on the effective application 
of  contractual  clauses  enabling  the  EIB  to  suspend  disbursements  in  cases  of  projects’ 
non-compliance with environmental, social, human rights, tax and transparency standards. 

  For the EIB, Commission services and the EEAS to work better together in defining the 
optimal  sizes  of  envisaged  investment  operations,  tailored  to  the  beneficiary  countries 
(also  to  ensure  debt  sustainability),  and  to  help  beneficiary  countries  make  faster  use  of 
approved ELM financing. 

  To pay consistent attention to minimising the risks of market distortion in the financing of 
private sector  companies.  In particular, to  envisage stricter constraints  for the use of the 
EU  comprehensive  guarantee,  for  instance  by  limiting  its  scope  to  public  sector 
investments  only  and/or  requiring  appropriate  remuneration  of  the  EU  guarantee.  To 
ensure 
the  recently  agreed  Enhanced  Blended 
implementation  of 
Concessional Finance Principles for DFI Private Sector Operations. 

the  effective 

  To  strengthen  alignment  of  ELM  operations  with  EU  policies  through  stronger  policy 
steer  from  the  EU  and  closer  coordination  between  the  EIB,  the  Commission  and  the 
EEAS.  The  latter  includes  early-stage  coordination,  more  substantial  information  to  be 
provided  by  the  EIB  in  ‘Article  19  consultations’  before  financing  operations  are 
approved, and joint monitoring of project implementation. 

  To  adapt  the  geographical  coverage  of  possible  EU  external  investment  windows  post-
2020 and the allocation of the EU guarantee across the various regions based on the EU’s 
external policy priorities post-2020 and the needs of partner countries.  

  To  seek  stronger  synergies  between  the  strengths  of  the  EIB  in  terms  of  low  borrowing 
costs,  and  other  financial  institutions’  strengths  in  terms  of  ground  presence,  sectoral 
expertise and development impact.  

The strengths and weaknesses of the current ELM are relevant for the broader debate on the 
post-2020 European financial architecture for development. High-volume, low-cost financing 
of  public  sector  infrastructure  investments  could  continue  to  be  supported  through  an  EU 
budgetary guarantee dedicated to this specific type of operations but with stronger policy steer 
from  the  EU  institutions.  For  private  sector  financing,  increased  preference  for  attracting 

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private co-investment may warrant a differently designed guarantee, less focused on volumes 
provided directly by the EIB (or other IFI involved), and with pricing closer to market levels. 

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