REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL ON GUARANTEES COVERED BY THE GENERAL BUDGET Situation at 31 December 2019
Date: 2020-10-28
Institutions: Directorate-General for Budget, European Commission
Subjects: EIB loan, Euratom loan, budgetary reserve (EU), credit guarantee, fund (EU), general budget (EU), investment promotion, macro-financial assistance, sustainable development, third country

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 28.10.2020  COM(2020) 677 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL ON GUARANTEES COVERED BY THE GENERAL BUDGET         Situation at 31 December 2019 {SWD(2020) 241 final}  
 
 
Table of Contents 

1. 

2. 

2.1 

2.2 

2.3 

2.4 

2.5 

2.6 

3. 

3.1 

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

Operations guaranteed by the EU budget and crisis mechanisms of the euro-
area not covered by the EU budget .......................................................................... 3 

Loans granted by the European Union with macroeconomic objectives ..................... 4 

Loans with microeconomic objectives ......................................................................... 4 

European Investment Bank ("EIB") financing of operations in non-Member States 
("EIB external financing") covered by EU guarantees (ELM). ................................... 4 

European Investment Bank ("EIB") and European Investment Fund ("EIF") 
financing of operations in Member States covered by EU guarantees - The European 
Fund for Strategic Investments (EFSI) ........................................................................ 6 

External Investment Plan (EIP) & The European Fund for Sustainable Development 
(EFSD) ......................................................................................................................... 7 

Crisis management mechanisms which are not covered by the EU budget ................. 8 

Evolutions of guaranteed operations ........................................................................ 9 

Operations managed directly by the Commission ..................................................... 10 

3.1.1 

European Financial Stabilisation Mechanism (EFSM) .............................................. 11 

3.1.2  Balance of Payments facility (BOP) .......................................................................... 12 

3.1.3  Macro-Financial Assistance loans (MFA) ................................................................. 12 

3.1.4 

Euratom loans............................................................................................................. 14 

3.2 

4. 

4.1 

4.2 

4.3 

Evolution of the EIB external financing operations ................................................... 14 

Risks covered by the EU budget ............................................................................. 15 

Definition of risk ........................................................................................................ 15 

Total risk composition................................................................................................ 15 

Annual risk covered by the EU budget ...................................................................... 15 

4.3.1  Member State exposure .............................................................................................. 16 

4.3.2 

Third country exposure .............................................................................................. 16 

5. 

5.1 

Activation and payment of guarantees ................................................................... 17 

Debt service not covered by the Guarantee Fund for External Action (Euratom loans 
to Member States, EFSM and BoP) ........................................................................... 17 

5.1.1 

Payments from cash resources ................................................................................... 18 

5.1.2 

Payments from the EU budget ................................................................................... 18 

1 

 
 
5.2 

5.3 

6. 

Calls on the Guarantee Fund for External Actions and recoveries (ELM, MFA and 
Euratom loans to Third countries) .............................................................................. 18 

Evolution of the Guarantee Fund for External Actions in 2019 ................................ 20 

The European Fund for Strategic Investments (EFSI) in 2019  .......................... 21 

6.1.  

Financial Statements of the EFSI Guarantee Fund as at 31 December 2019 ............. 21 

6.2.  

EFSI operations under the EU guarantee ................................................................... 22 

6.3. 

6.4. 

7. 

7.1 

7.2 

Provisioning of the EFSI Guarantee Fund ................................................................. 22 

Calls and use of the EU Guarantee ............................................................................ 22 

European Fund for Sustainable Development (EFSD) in 2019 ........................... 23 

Investment Programmes ............................................................................................. 23 

The EFSD Guarantee Fund ........................................................................................ 24 

2 

 
 
 
 
1. 

INTRODUCTION 

The  objective  of  this  report  is  to  monitor  the  contingent  liabilities  borne  by  the  EU  budget 
resulting  from  the  guarantees  given  for  lending  operations  and  investment  support 
implemented directly by the European Union or indirectly through the EU guarantee. 

This report is submitted pursuant to Article 149 of the previous Financial Regulation. Hence, 
this  report  on  EU  budget  guarantees  and  the  corresponding  risks  for  the  year  2019  is 
submitted  for  the  last  time  and  will  be  replaced  by  the  future  reporting  scheme  foreseen  in 
Article 250 of the new Financial Regulation. 

The  report  is  structured  as  follows:  Section  2  recalls  the  key  features  of  the  operations 
guaranteed by the EU budget; several other additional crisis management mechanisms, which 
do not imply any risk for the EU budget, are also presented. Section 3 lays out the evolution 
of  the  guaranteed  operations  managed  directly  by  the  Commission  and  the  guaranteed  EIB 
external  financing  operations  (excluding  EFSI  and  EFSD  operations  which  are  treated 
independently  in  section  6  and  7).  Section  4  highlights  the  main  risks  covered  by  the  EU 
budget. Section 5 outlines the activation of the guarantees and the evolution of the Guarantee 
Fund for external actions ("the Fund")1, section 6 outlines the evolution of the European Fund 
for Strategic Investments (EFSI)2 and section 7 outlines the evolution of the European Fund 
for Sustainable Development (EFSD)3. 

A  Commission  Staff  Working  Document  (SWD)  complements  this  report  with  a  set  of 
detailed tables and explanatory notes. 

2.  OPERATIONS  GUARANTEED  BY  THE  EU  BUDGET  AND  CRISIS  MECHANISMS  OF  THE 

EURO-AREA NOT COVERED BY THE EU BUDGET 

The risks covered by the EU budget derive from a variety of lending and guarantee operations 
which can be divided into four categories: 

1 

2 

3 

Council  Regulation  (EC,  Euratom)  No  2728/94  of  31  October  1994  establishing  a  Guarantee  Fund  for 
external  actions  (OJ  L  293,  12.11.1994,  p.  1),  and  subsequently  amended  by  Council  Regulation  (EC, 
Euratom) No 480/2009 (OJ L 145, 10.6.2009, p. 10) and Regulation (EU) 2018/409 (OJ L 76, 19.3.2018, p. 
1), the "Guarantee Fund Regulation". 
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.  The  EFSI 
Regulation  was  amended  by  Regulation  (EU)  2017/2396  of  the  European  Parliament  and  Council  of 
13 December 2017 as regards the extension of the duration of the European Fund for Strategic Investments 
as well as the introduction of technical enhancements for that Fund and the European Investment Advisory 
Hub (the "EFSI 2.0 Amendment") OJ L 345, 27.12.2017, p. 34. The EFSI 2.0 Amendment increased, inter 
alia, the size of the EU Guarantee and adjusted the target rate. The agreement on the management of the 
EFSI  and  on  the  granting  of  the  EU  Guarantee  (the  "EFSI  Agreement")  was  signed  by  the  European 
Commission  and  the  European  Investment  Bank  (the  "EIB")  on  22  July  2015  and  was  amended  and 
restated on 21 July 2016, 21 November 2017, 9 March 2018 and December 2018. 
Regulation  (EU)  2017/1601  of  the  European  Parliament  and  of  the  Council  of  26  September  2017 
establishing the European Fund for Sustainable Development (EFSD), the EFSD Guarantee and the EFSD 
Guarantee Fund (OJ L 249, 27.9.2017, p. 1). 

3 

 
                                                 
2.1  Loans granted by the European Union with macroeconomic objectives 

Such  loans  comprise  (1)  Macro-Financial  Assistance4  ("MFA")  loans  to  third  countries,  (2) 
Balance-of-Payments5  ("BOP") 
to  non-euro  Member  States 
loans  granting  support 
experiencing  balance-of-payments  difficulties  and  (3)  loans  under  the  European  Financial 
Stabilisation  Mechanism  ("EFSM")6  granting  support  to  all  Member  States  experiencing  or 
seriously  threatened  with  a  severe  economic  financial  disturbance  caused  by  exceptional 
occurrences beyond their control. They are activated in conjunction with financial support by 
the International Monetary Fund (IMF). 

2.2  Loans with microeconomic objectives 

This heading refers to Euratom loans7. The Euratom loan facility may be used: 

• 

• 

[in Member States]: investments in nuclear power stations and in industrial installations 
in the nuclear fuel cycle 8 and 

[in certain non-member countries]: investments to improve the safety and efficiency of 
nuclear power stations that exist or are under construction, as  well as decommissioning 
projects9. 

2.3  European Investment Bank ("EIB") financing of operations in non-Member States 

("EIB external financing") covered by EU guarantees10 (ELM). 

Under  the  External  Lending  Mandate  (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), 
to  EUR 32.3 billion  of  EIB  operations.  On 
14 March 2018,  the  European  Parliament  and  the  Council  adopted  the  Decision  (EU) 
2018/412 amending Decision No 466/2014/EU in the context of the mid-term review of the 
ELM  notably  increasing  the  maximum  ceiling  for  the  current  ELM  from  EUR 27 billion  to 
EUR 32.3 billion. This review adds a new objective of the long-term economic resilience of 

the  EU  budget  guarantees  up 

4 

5 

6 

7 

8 

9 

10 

MFA may also take the form of grants to third countries (not covered by this report). References to legal 
bases are listed in the Annex of Table A2B of the SWD. 
Council Regulation (EC) N° 332/2002 of 18 February 2002 establishing a facility providing medium-term 
financial assistance for Member States' balances of payments (OJ L 53, 23.2.2002, p.1). 
Council  Regulation  (EU)  No  407/2010  of  11  May  2010  establishing  a  European  financial  stabilisation 
mechanism (OJ L 118, 12.5.2010, p.1). 
Treaty  dated  25  March  1957  establishing  The  European  Atomic  Energy  Community  (Euratom)  as 
amended and supplemented. 
For Member States: Council Decision 77/270/Euratom of 29 March 1977 empowering the Commission to 
issue  Euratom  loans  for  the  purpose  of  contributing  to  the  financing  of  nuclear  power  stations  (Official 
Journal n° L 88 of 6 April 1977, p. 9) as amended and supplemented. 
For  certain  non-Member  States:  Council  Decision  94/179/Euratom  of  21  March  1994  (Official  Journal 
n° L 84 of 29 March 1994) amending Decision 77/270/Euratom, to authorize the Commission to contract 
Euratom borrowings in order to contribute to the financing required for improving the degree of safety and 
efficiency of nuclear power stations in certain non- member countries. 
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 L135 of 8.5.2014, p.1). 

4 

 
                                                 
refugees,  migrants,  host  and  transit  communities,  and  communities  of  origin  as  a  strategic 
response to addressing root causes of migration. 

The  EU  guarantee  to  the  EIB  covers  risks  of  a  sovereign  and  political  nature  in  connection 
with its financing operations carried out outside the Union in support of the Union's external 
policy objectives. In addition, the EIB finances investment operations outside the Union at its 
own risk, as well as activities under specific mandates such as in ACP countries.11 

With  a  view  to  supporting  Union  external  action,  and  in  order  to  enable  the  EIB  to  finance 
investments outside the Union without affecting the credit standing of the EIB, the majority of 
its operations outside the Union benefit from an EU budgetary guarantee. 

Guarantee Fund for External Actions12 

The guaranteed EIB external financing, MFA and Euratom loans to third countries have since 
1994  been  covered  by  the  Guarantee  Fund  for  External  Actions  ("the  Fund"),  while  BOP, 
EFSM and Euratom loans to Member States are directly covered by the EU budget. 

The Fund covers defaults on loans and loan guarantees granted to non-Member States or for 
projects in non-Member States. It was established: 

    to provide a 'liquidity cushion' in order to avoid calling on the EU budget every time 

a default or late payment on a guaranteed loan arises; and 

    to create an instrument of budgetary discipline by laying down a financial framework 
for the development of the EU policy on guarantees for EU and EIB loans to third 
countries13. 

If  third  countries  become  Member  States,  loans  relating  to  such  countries  are  no  longer 
covered  by  the  Fund  and  the  risk  has  to  be  directly  borne  by  the  EU  budget.  The  Fund  is 
provisioned  from  the  EU  budget  and  has  to  be  maintained  at  a  certain  percentage  of  the 
outstanding amount of the loans and loan guarantees covered by the Fund. This percentage, 
known as the target rate, is currently 9%14. If resources of the Fund are not sufficient, the EU 
budget will provide the necessary funds. The assets of the Fund are managed by the EIB. 

11   The  ACP-EU  Partnership  Agreement,  signed  in  Cotonou  on  23  June  2000,  was  concluded  for  a  20-year 
period  from  2000  to  2020.  It  is  the  most  comprehensive  partnership  agreement  between  developing 
countries and the EU. It is not financed by the EU budget. 

12  Council Regulation (EC, Euratom) No 480/2009 establishing a Guarantee Fund for external actions (OJ L 

145, 10.6.2009, p. 10) as amended by Regulation (EU) 2018/409 (OJ L 76, 19.3.2018, p. 1). 

13  Although external risks are covered in fine by the EU budget, the Guarantee Fund acts as an instrument to 
protect the EU budget against the risk of payment defaults. For the latest 2019 annual report on the Fund 
and  its  management  (COM(2020)  327  final)  and  its  Staff  Working  Document  (SWD(2020)  136  final) 
approved on 17.7.2020, they are available on http://eur-lex.europa.eu/homepage.html. 
For a comprehensive report on the functioning of the Fund and the provisioning target rate, see COM(2014) 
214 final of 8.4.2014 and its Staff Working Document (2014) 129 final. 

14 

5 

 
                                                 
2.4  European  Investment  Bank  ("EIB")  and  European  Investment  Fund  ("EIF") 
financing  of  operations  in  Member  States  covered  by  EU  guarantees  -  The 
European Fund for Strategic Investments (EFSI) 

The  European  Fund  for  Strategic  Investments  (EFSI)  is  the  core  of  the  investment  plan  for 
Europe, aimed at boosting long-term economic growth and competitiveness in the European 
Union. 

The EU Guarantee15 covers financing and investment operations signed by the EIB under the 
main  part  of  the  Infrastructure  and  Innovation  Window  ("IIW"),  and  by  the  EIF  under  the 
SME Window ("SMEW") and the SME / MidCap fund investment sub-window of the IIW. 
Part of the overall EFSI operations is covered by the EU Guarantee while a part is carried out 
at the own risk of the EIB Group16. 

The EIB and the EIF are responsible for assessing and monitoring the risk of the individual 
operations and report back to the Commission and the European Court of Auditors. 

Guarantee Fund of the European Fund for Strategic Investments (EFSI GF) 

According  to  Article  12  of  the  EFSI  Regulation,  the  EFSI  GF  shall  constitute  a  liquidity 
cushion  from  which  the  EIB  shall  be  paid  in  the  event  of  a  call  on  the  EU  Guarantee.  In 
accordance with the EFSI Agreement between the EU and the EIB, calls are paid by the EFSI 
GF if their amount is in excess of the funds at the disposal of the EIB on the EFSI Account. 
The EFSI Account, managed by the EIB, has been established for the purposes of collecting 
the  EU  revenues  and  recovered  amounts  resulting  from  EFSI  operations  under  the  EU 
Guarantee and, to the extent of the available balance, for the payment of calls under the EU 
Guarantee. 

The  target  amount  of  the  EFSI  GF  has  been  set  at  35%  of  the  total  EU  Guarantee 
obligations17.  The  risk  assessment  of  the  different  products  supported  by  the  EU  Guarantee 
shows that overall the Union budget would be adequately shielded from potential calls under 
the  EU  Guarantee  with  this  target  rate,  taking  into  consideration  recoveries,  revenues  and 
reflows from EIB operations. 

The EFSI GF is provisioned progressively taking into account the increase in exposure borne 
by the EU Guarantee. 

According  to  Article  12(4),  the  resources  of  the  EFSI  GF  are  directly  managed  by  the 
Commission  and  invested  in  accordance  with  the  principle  of  sound  financial  management 
following appropriate prudential rules. 

For more information about EFSI, please check Section 6 - The European Fund for Strategic 
Investments (EFSI) in 2019. 

15 

16 

The size of the EU Guarantee has been increased from EUR 16 billion to EUR 26 billion by the EFSI 2.0 
Amendment. 
The size of EIB Group Guarantee has been increased from EUR 5 billion to EUR 7.5 billion by the EFSI 
2.0 Amendment. 

17   See Article 12(5) of the EFSI Regulation. 

6 

 
                                                 
2.5  External  Investment  Plan  (EIP)  &  The  European  Fund  for  Sustainable 

Development (EFSD) 

The  European  Commission  proposed  on  14  September  2016  an  External  Investment  Plan 
(EIP)  to  encourage  investment  in  the  EU’s  partner  countries  in  Africa  and  the  EU 
Neighbourhood  region,  to  strengthen  partnerships  and  contribute  to  achieving  Sustainable 
Development Goals, helping to address root causes of migration. 

The  European  Fund  for  Sustainable  Development  (EFSD)  constitues  the  first  pillar  of  the 
External  Investment  Plan  (EIP)  and  provides  an  integrated  financing  package  to  support 
investments by public financial institutions and the private sector. By being open to a range of 
implementing  partners,  the  EFSD  is  able  to  leverage  much  more  public  and  private 
investment in target countries than would otherwise be possible. It comprises: 

- 

- 

a budgetary guarantee and 

blending instruments. 

The EFSD Regulation entered into force on 26 September 2017. 18 

About the EFSD Guarantee 

The EFSD Guarantee is used to reduce the risks for investment in sustainable development in 
partner countries, thus helping mobilise investment, especially from private sources. 

The  guarantee  is  designed  to  mobilise  private  investment  worth  EUR  1.54  billion.  This 
amount has been allocated to 28 proposed investment programmes19, expected to leverage up 
to  EUR  17.5  billion  of  sustainable  investment  in  partner  countries  (much  of  it  from  private 
sources). The guarantee can: 

attract financing for some of the initial capital ('equity' or 'risk capital') a project needs 

- 
to get off the ground; 

serve as a pledge (guarantee) to pay back part of a loan if a borrower incurs losses and 

- 
defaults on it. 

The EFSD Guarantee Fund 

The  EFSD  Guarantee  Fund  constitutes  a  liquidity  cushion  from  which  the  eligible 
counterparts  shall  be  paid  in  the  event  of  a  call  on  the  EFSD  Guarantee  further  to  the 
conclusion  of  Guarantee  Agreements  with  eligible  counterparts  and  in  line  with  the 
corresponding provisions, in accordance with Chapter III of Regulation (EU) No 2017/1601.  

19 

18  Regulation  (EU)  2017/1601  of  the  European  Parliament  and  of  the  Council  of  26  September  2017 
establishing the European Fund for Sustainable Development (EFSD), the EFSD Guarantee and the EFSD 
Guarantee Fund (OJ L 249, 27.9.2017, p. 1). 
Please note that, as part of the COVID-19 crisis response, the EFSD Operational Board of 21 April 2020 
agreed to a revamping of the EFSD guarantee allocations, prioritising and topping-up guarantees providing 
liquidity to Micro, small and medium sized enterprises (MSMEs) and renewable energy projects, increasing 
their flexibility to help address socio-eocnomic impact of COVID-19 pandemic, and giving a one-year fee 
holiday. 

7 

 
                                                 
The  resources  of  the  EFSD  Guarantee  Fund  are  directly  managed  by  the  Commission  and 
invested  in  accordance  with  the  principle  of  sound  financial  management  under  appropriate 
prudential rules. 

The EFSD Guarantee Fund is endowed by contributions from the budget of the Union and the 
European Development Fund (EDF) as well as voluntary contributions from Member States 
and  other  contributors,  and  other  sources  of  endowments,  in  accordance  with  Article  14  of 
Regulation (EU) No 2017/1601. 

The provisioning rate is stablished at 50 % of the total EFSD Guarantee obligations covered 
by the general budget of the Union. 

For more information about EFSD, please check Section 7 in this report – The European Fund 
for Sustainable Development (EFSD) in 2019. 

2.6  Crisis management mechanisms which are not covered by the EU budget 

As part of the response to the crisis, several other mechanisms have been established which, 
however, do not imply any risk to the EU budget and they are only mentioned below for the 
sake of completeness: 

- the Greek Loan Facility (GLF)20 which is financed via bilateral loans from other euro area 
Member States to Greece, centrally administered by the Commission. 

-  European  Financial  Stability  Facility  (EFSF)21:  The  EFSF  was  created  by  the  euro  area 
Member States as a temporary rescue mechanism in June 2010 to provide financial assistance 
to  euro  area  Member  States  within  the  framework  of  a  macroeconomic  adjustment 
programme.  The  Treaty  establishing  a  permanent  rescue  mechanism,  the  European  Stability 
Mechanism  (ESM),  entered  into  force  on  27  September  2012.  Since  1 July  2013, the  EFSF 
continues with its ongoing programmes to Greece (together with the IMF and some Member 
States) as  well as  to  Ireland and Portugal (together  with  the IMF, some Member States  and 
EU/EFSM)22  but  is  no  longer  engaged  in  new  financing  programmes  or  loan  facility 
agreements. 

-  European  Stability  Mechanism  (ESM)23:  The  ESM  is  an  important  component  of  the 
comprehensive EU strategy designed to safeguard financial stability within the euro area by 
providing  financial  assistance  to  euro  area  Member  States  experiencing  or  threatened  by 
financing difficulties. It is an intergovernmental organization under public international law, 
based in Luxembourg, with an effective lending capacity of EUR 500 billion. 

20 
21 
22 

23 

About the GLF: http://ec.europa.eu/economy_finance/assistance_eu_ms/greek_loan_facility/index_en.htm. 
About the EFSF: http://www.efsf.europa.eu. 
The  loans  granted  under  the  EU/EFSM  are  guaranteed  by  the  EU  budget.  For  more  information  about 
EFSM, please see section 3.1.1. 
About the ESM: http://esm.europa.eu. 

8 

 
 
                                                 
3. 

EVOLUTIONS OF GUARANTEED OPERATIONS 

This section sets out the evolution of the guaranteed operations; firstly of those managed 
directly by the Commission and secondly those managed by the EIB. 

Table 1: Total outstanding amounts covered by the EU budget at 31 December 2019 (in EUR million) 

Outstanding 
Capital 

Accrued 
Interest 

Total 

% 

Member States* 

Euratom 

BOP 

EIB 

EFSM 

Sub-total Member 
States** 

Third Countries*** 

MFA 

Euratom 

EIB**** 

 112.8  

 200.0  

 932.6  

 0.3  

 1.1  

 7.0  

 113.2  

0.1% 

 201.1  

0.2% 

 939.6  

1.2% 

 46 800.0  

 594.4  

 47 394.4  

58.5% 

 48 045.4  

 602.9  

 48 648.3  

60.1% 

 4 728.6  

 100.0  

 25.8  

 4 754.4  

5.9% 

 0.5  

 100.5  

0.1% 

 27 324.8  

 138.2  

 27 463.0  

33.9% 

Sub-total third countries 

 32 153.4  

 164.4  

 32 317.8  

39.9% 

Total 

 80 198.8  

 767.3  

 80 966.1  

100% 

* 

** 

risk 

This 
Member State countries prior to their accession to the EU. 

is  directly  covered  by 

the  EU  budget.  This  also 

includes  Euratom  and  EIB 

loans  granted 

to 

This  figures  does  not  include  the  guarantee  exposure  of  the  EU  in  relation  to  disbursed  outstanding  EFSI  operations  which 
amounted to EUR 17.7 billion, as at 31 December 2019. 

***  The risk covered by the Fund is limited to EUR 24.5 billion due to the limitations of the guarantees given to the EIB under each 
one of the external lending mandates (ELM) (see section 2.1.3  - Guarantees given to the EIB of the associated Staff Working 
Document). 

****  Loans  subrogated 

included 
(amount: EUR 426.36 million of outstanding capital). These loans have been fully impaired in the EU Financial Statements of 
2015, 2016, 2017, 2018 and 2019.  

following  Syria  and  Enfidha 

(Tunisia)  defaults  on  EIB 

loans  are 

the  EU 

to 

Tables  A1,  A2a,  A2b  and  A3  of  the  SWD  provide  more  detailed  information  on  these 
outstanding amounts, in particular in terms of ceiling, disbursed amounts or guarantee rates.

9 

 
 
 
 
 
 
 
 
 
 
3.1  Operations managed directly by the Commission  

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 pursued. The consistency of financial support to third countries 
with the overall objectives of the EU external action policy 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). 

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  risk.  Outstanding 
borrowings are matched by outstanding loans. 

Table 1b Operations of the EU in 2019 (in EUR million) 

10 

InstrumentBeneficiary (instalment tranche)Disburs. DateMaturityAmount Issued (EUR million)Amount Issued (EUR million)Jordan II - 2nd instalment03-07-201904-12-2035100Tunisia II - 2nd instalment03-07-201904-12-2035150Moldavia IV  - 1st instalment18-10-201918-04-203420Tunisia II - 3rd instalment13-11-201913-11-2034150TOTALs420MFA420 
 
Table 2: New Borrowing-and-lending operations (guaranteed by the Union budget) planned for 2020 and 2021 
(in EUR million) 

3.1.1 

European Financial Stabilisation Mechanism (EFSM) 

In  its  conclusions  of  9/10  May  2010,  the  ECOFIN  Council  foresaw  a  volume  of  the 
mechanism  of  EUR 60 billion24.  In  addition,  euro-area  Member  States  stood  ready  to 

24 

Cf. Press release on extraordinary Ecofin Council meeting 9/10 May 2010 
(http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/114324.pdf). 

11 

Instrument20202021A. Union and Euratom borrowing-and-lending operations with a Union budget guarantee1. Union macro-financial assistance for third countries (MFA)sOperations decided or scheduled:Georgia III - 2nd instalment20Moldova IV - 2nd instalment20Ukraine MFA IV - 2nd instalment500Omnibus MFA [*]1 5001 500Subtotal MFA 2 0401 5002. Euratom loansOperations decided or scheduled:Energoatom (Ukraine) - 3rd instalment100Energoatom (Ukraine) - 4th instalment100Subtotal Euratom 20003. European Financial Stabilisation Mechanism (EFSM) [**]Operations decided or scheduled:Ireland - 3rd Leghtening3 000Portugal - 3rd Leghtening6 750Subtotal EFSM09 7504. Balance of payments 005. SURE beneficiaries (various EU MS)[***]40 00060 000Subtotal A42 24071 250B. European Investment Bank loans with a Union budget guarantee[****]1. Pre-accession countries8876782. Neighbourhood and partnership countries2 3341 8163. Asia and Latin America5972664. Republic of South Africa6650Subtotal B3 8842 810Grand total46 12474 060[*] The Covid19 related omnibus MFA will be disbursed in two instalments to 10 beneficiary countries; we assume full disbursement of the total approved amount of €3bn, of which the 1st inst. in 2020 and the 2nd in 2021.[**] Maturity lengthening operations for Portugal and Ireland are expected for 2021 with  EUR 9.75 billion of loans coming due in June (EUR 5 bn) and September (EUR 4.75 bn).[***] We assume that the maximum amount of EUR 100 billion available under SURE will be requested by MS, of which €40bn in 2020 and €60bn in 2021. The SURE Regulation provides that loans can be granted until 31/12/2022. [****] Planned annual disbursements. Figures received from EIB the 15.11.2019. 
 
                                                 
complement  such  resources  if  necessary.  Article  2(2)  of  Council  Regulation  No  407/201025 
limits the outstanding amount of loans or credit lines to be granted to Member States to the 
margin available under the own resources ceiling for payment appropriations. 

Following  the  Council  decisions  to  grant  Union  financial  assistance  to  Ireland26  (up  to 
EUR 22.5 billion)  and  Portugal27 
reached 
EUR 22.5 billion to Ireland and EUR 24.3 billion to Portugal (the remaining EUR 1.7 billion 
were not requested by the Portuguese government). Accordingly, the EFSM has a remaining 
capacity of EUR 13.2 billion to provide further assistance, if required. 

to  EUR 26 billion),  disbursements 

(up 

In  April  2013  the  Eurogroup/ECOFIN  decided  to  increase  the  maximum  weighted  average 
maturity  of  EFSM  loans  from  12.5  to  19.5  years,  thus  offering  an  option  to  the  beneficiary 
countries to request a lengthening of loan maturities up to 2026 (tranche by tranche). 

Developments during 2019 

No developments 

3.1.2 

Balance of Payments facility (BOP) 

The EU medium-term financial assistance under the BOP facility was re-activated at the end 
of  2008  to  support  Hungary  and  subsequently  Latvia  and  Romania  to  restore  market 
confidence  for  a  total  commitment  of  EUR 14.6 billion,  of  which  EUR 13.4 billion  were 
disbursed.  

Developments during 2019 

Romania repaid their last tranche of EUR 1 billion in May 2019 and Latvia repaid a tranche of 
EUR 500 million also in May 2019. After these repayments, the outstanding amount of BOP 
loans has thus decreased from EUR 1.7 billion to EUR 200 million in 2019. 

At 31 December 2019, the BOP facility had a remaining capacity of EUR 49.8 billion out of 
an overall ceiling of EUR 50 billion to provide further assistance if required.  

3.1.3  Macro-Financial Assistance loans (MFA) 

As  a  general  rule,  MFA  decisions  are  taken  by  the  European  Parliament  and  the  Council 
(Article 212 of the TFEU). However, the Council may adopt the decision on a proposal from 
the  Commission  when  the  situation  in  a  third  country  requires  urgent  financial  assistance 
(Article 213 of the TFEU). That procedure was used in the second MFA package for Ukraine 
in 2014. 

25 

26 

27 

Council  Regulation  (EU)  No  407/2010  of  11  May  2010  establishing  a  European  financial  stabilisation 
mechanism (OJ L 118, 12.5.2010, p.1). 
Council Implementing Decision 2011/77/EU of 7 December 2010 on granting Union financial assistance 
to Ireland (OJ L 30, 4.2.2011, p. 348). 
Council Implementing Decision 2011/344/EU of 30 May 2011 on granting Union financial assistance to 
Portugal (OJ L 159, 17.6.2011, p. 88); see also corrigendum (OJ L 178, 10.7.2012, p.15). 

12 

 
                                                 
Developments during 2019 

Hashemite Kingdom of Jordan 

Jordan’s second programme (MFA II) 

The  Memorandum  of  Understanding  (MoU)  and  the  Loan  Facility  Agreement  (LFA)  for 
Jordan  II  were  signed  on  the  19th  September  2017.  The  ratification  by  the  Jordanian 
Authorities also took place on the 19th September 2017 and the entry into force of the Loan 
Agreement  on  the  3rd  October  2017.  The  first  tranche  of  EUR 100 million  (out  of  the 
EUR 200 million  decision)  of  Jordan’s  second  programme  (MFA  II)28  was  disbursed  on 
25th October  2017.  The  second  and  last  tranche  of  EUR 100 million  was  disbursed  on 
3rd July 2019. 

Tunisia 

Tunisia’s second programme (MFA II) 

The  Memorandum  of  Understanding  (MoU)  and  the  Loan  Facility  Agreement  (LFA)  for 
Tunisia  II  were  signed  on  the  27th  April  2017.  The  ratification  by  the  Tunisian  Authorities 
took  place  on  the  11th  August  2017  and  the  entry  into  force  of  the  Loan  Agreement  on  the 
8th September  2017.  The  first  tranche  of  EUR 200 million  (out  of  the  EUR 500 million 
decision)  of  Tunisia’s  second  programme  (MFA  II)29  was  disbursed  on  25th  October  2017. 
The second and third last tranches of EUR 150 million each were disbursed on 3rd July 2019 
and 11th November 2019 respectively. 

Republic of Moldova 

On 13 September 2017, the European Parliament and the Council decided to provide further 
macro-financial  assistance  to  the  Republic  of  Moldova  of  EUR 100 million  (up  to 
EUR 60 million  provided  in  the  form  of  loans  and  up  to  EUR 40 million  in  the  form  of 
grants) 30.The first tranche of EUR 20 million was disbursed in October 2019 and the second 
tranche in July 2020. 

Additional information  

Regarding repayments, EUR 52.13 million were repaid by the beneficiary countries: Albania 
(EUR 14 million),  Montenegro 
Bosnia 
(EUR 1.8 million), 
(EUR 0.3 million) and Serbia (EUR 36.03 million). 

Herzegovina 

and 

The outstanding amount of MFA loans has increased from EUR 4.4 billion to EUR 4.7 billion 
between 31 December 2018 and 31 December 2019. Loans to Ukraine represent 70% of the 
total MFA exposure. 

28 

29 

30 

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). 
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)  2017/1565  of  the  European  Parliament  and  of  the  Council  of  13  September  2017  on 
providing macro-financial assistance to the Republic of Moldova (OJ L 242, 20.09.2017, p.14). 

13 

 
                                                 
3.1.4 

Euratom loans 

The Euratom lending to Member States or in certain eligible non-member countries (currently 
Russian Federation, Armenia, Ukraine) has a ceiling of EUR 4 billion of which around 92% 
has  already  been  disbursed.  EUR 326 million  remain  under  the  EUR 4 billion  of  lending 
allowed by Decision 77/270/Euratom31. 

Ukraine 

A  loan  of  EUR 300 million  to  Ukraine  dedicated  to  the  safety  upgrade  of  existing  nuclear 
facilities was granted by Commission Decision of 24/06/201332. The loan is provided in close 
cooperation with the EBRD, which provides another EUR 300 million loan in parallel. 

These loans benefit from State guarantees which cover 100% of the amounts outstanding at 
year  end.  The  first  Euratom  tranche  of  EUR 50 million  was  disbursed  in  May  2017,  the 
second Euratom tranche of EUR 50 million was disbursed in June 2018 and the third Euratom 
tranche of EUR 100 million was disbursed in July 2020. 

Bulgaria and Romania 

A loan of EUR 212.5 million was granted to Bulgaria in the form of a multicurrency facility 
for  the  modernization  of  the  nuclear  power  plant  of  Kozloduy  (Units  5  and  6).  The  loan 
agreement  signed  between  the  European  Atomic  Energy  Community  and  AEZ  “Kozloduy” 
EAD  was  signed  on  29  May  2000.  At  31  December  2019,  the  outstanding  amount  was 
EUR 16.9 million. 

A loan of EUR 223.5 million was granted to Romania in the form of a multicurrency facility 
for  the  completion  of  Unit  2  of  the  nuclear  power  plant  Cernavoda.  The  loan  agreement 
signed  between  the  European  Atomic  Energy  Community  and  Societatea  Nationala 
Nuclearelectrica  S.A.  was  signed  on  11  June  2004.  At  31  December  2018,  the  outstanding 
amount was EUR 95.9 million. 

Since 1 January 2007, when Bulgaria and Romania became Member States , the outstanding 
risk of these operations have  been  directly covered by the EU Budget and no longer by the 
Guarantee Fund for External Actions. 

3.2  Evolution of the EIB external financing operations 

Developments during 2019 

Under  the  EIB  ELM  mandate  covering  the  period  2014-2020,  a  total  amount  of 
EUR 22.44 billion  had  been  signed  at  31  December  2019,  of  which  only  EUR 7.99 billion 
was disbursed at that date, leaving the outstanding capital at EUR 7.03 billion (see Table A3 

31 

32 

77/270/Euratom Council Decision of 29 March 1977 empowering the Commission to issue Euratom loans 
for  the  purpose  of  contributing  to  the  financing  of  nuclear  power  stations,  which  was  amended  by 
94/179/Euratom  Council  Decision  of  21  March  1994  to  authorize  the  Commission  to  contract  Euratom 
borrowings  in  order  to  contribute  to  the  financing  required  for  improving  the  degree  of  safety  and 
efficiency of nuclear power stations in certain non- member countries. 
C(2013) 3496. 

14 

 
 
                                                 
of the SWD). For more information on the countries covered by the EIB mandates, see Tables 
A1, A3 and A4 of the SWD. 

For previous EIB external lending mandates, see Table A3 of the SWD. 

Defaults on interests payments and loan repayments from the Syrian Government continued 
in 2019. The EIB has called on the Guarantee Fund to cover those defaults (see paragraph 5.2 
below). 

Outstanding amounts at 31 December 2019 for the various facilities referred to in this section 
are presented in Table 1. 

4.  RISKS COVERED BY THE EU BUDGET 

4.1  Definition of risk 

The risk borne by the EU budget derives from the outstanding amount of capital and interest 
in respect of guaranteed operations. 

For the purpose of this report, two methods are used for evaluating the risks borne by the EU 
budget (either directly or indirectly via the Fund): 

–  "The total risk covered" is based on the sum of the total amount of capital outstanding for 

the operations concerned on a given date including accrued interest33. 

–  The budgetary approach defined as "the annual risk borne by the EU budget" is based on 
the calculation of the maximum amount of annual payments due which the EU would have 
to  pay  out  in  a  financial  year  assuming  that  all  payments  of  the  guaranteed  loans  are  in 
default34. 

4.2  Total risk composition 

Until  2010  the  maximum  risk  in  terms  of  total  outstanding  amounts  covered  was  mainly 
linked to loans granted to third countries. Since 2011, the financial crisis has heavily affected 
the public finances of the Member States leading to an increase in the lending activity of the 
EU to support sovereign financing needs in Member States. 

As a consequence the composition of risk has changed. At 31 December 2019, 60.1% of the 
total  outstanding  amount35  concerns borrowing operations linked  to  loans to  Member  States 
which are directly covered by the EU budget (compared to 45% at 31.12.2010). 

4.3  Annual risk covered by the EU budget 

With reference to outstanding loans at 31 December 2019 (see Table 1 above) the maximum 
amount which the EU would have to pay out during the year 2020 (directly and via the Fund) 
- assuming that all guaranteed loans would be in default - is EUR 4 509 million. That amount 

33 
34 

35 

See Table 1 of the Report. 

For  the  purpose  of  that  calculation,  it  is  assumed  that  defaulting  loans  are  not  accelerated,  i.e.  only 
payments due are taken into account (see Tables 2 and 3 of the report and Table A4 of the SWD). 
See Table 1. 

15 

 
                                                 
represents  the  capital  and  interest  payments  from  guaranteed  loans  falling  due  during  2020, 
assuming that defaulting loans are not accelerated (for details see Table A4 in SWD). 

4.3.1  Member State exposure 

In 2020, the EU will bear a maximum annual risk related to operations with Member States 
(MS) of EUR 1 374.2 million (30.5% of the total annual risk). That risk concerns: 

(a) EIB lending and/or Euratom loans granted before Member States' accession to the EU; 

(b) the loans granted under the BOP facility, and 

(c) the loans granted under the EFSM scheme. 

Table 2: Ranking of the Member States according to the annual risk borne by the EU budget in 2020 (EUR million) 

Ranking 

Country 

Loans 

Max annual risk 

Weight of the 
country vis-à-vis 
annual risk of 
MS 

Weight of the 
country vis-à-
vis total annual 
risk 2020 (MS 
and non-MS) 

1 

2 

3 

4 

5 

6 

7 

8 

9 

Portugal 

Ireland 

Romania 

Bulgaria 

Croatia 

Poland 

Slovakia 

Czech Republic 

Latvia 

10 

Lithuania 

Total 

c) 

c) 

a) 

a) 

a) 

a) 

a) 

a) 

a+b) 

a) 

 584.25  

 515.63  

 143.10  

 46.52  

 32.63  

 18.07  

 12.98  

 12.07  

 7.17  

 1.83  

42.5% 

37.5% 

10.4% 

3.4% 

2.4% 

1.3% 

0.9% 

0.9% 

0.5% 

0.1% 

13.0% 

11.4% 

3.2% 

1.0% 

0.7% 

0.4% 

0.3% 

0.3% 

0.2% 

0.0% 

1 374.25 

100.0% 

30.5%  

4.3.2 

Third country exposure 

In 2020, the Fund will bear a maximum annual risk related to the exposure to third countries 
of  EUR 3 134.41 million  (69.5%  of  the  total  annual  risk).  The  risk  linked  to  third  countries 
concerns  EIB  lending,  MFA  and  Euratom  loans  (details  are  included  in  Table  A2b  of  the 
SWD). The Fund covers guaranteed loans to third countries with maturities extending up to 
2042. 

The top ten countries (out of 45 non-MS) are ranked below according to the repayments due 
in 2020. They account for EUR 2 716.77 million or 86.7% of the annual risk related to third 
countries borne by the Fund for 2020. 

16 

 
 
 
Table 3: Ranking of the 10 third countries with the highest exposure according to the annual risk borne by the EU budget in 
2020 (EUR million) 

Ranking 

Country 

Max annual 
risk 

Weight of the 
country vis-à-vis 
annual risk of 
third countries 

Weight of the 
country vis-à-vis 
total annual risk 
2020 (MS and 
non-MS) 

1 

2 

3 

4 

5 

6 

7 

8 

9 

Ukraine 

Turkey 

Morocco 

Egypt 

Tunisia 

Serbia 

South Africa 

Bosnia 
Herzegovina 

and 

Lebanon 

10 

Panama 

788.63 

633.31 

296.26 

271.87 

269.76 

148.86 

100.64 

78.11 

71.94 

57.37 

25.2% 

20.2% 

9.5% 

8.7% 

8.6% 

4.7% 

3.2% 

2.5% 

2.3% 

1.8% 

17.5% 

14.0% 

6.6% 

6.0% 

6.0% 

3.3% 

2.2% 

1.7% 

1.6% 

1.3% 

Total (top 10) 

2 716.77 

86.7% 

60.3% 

5.  ACTIVATION AND PAYMENT OF GUARANTEES 

5.1  Debt  service  not  covered  by  the  Guarantee  Fund  for  External  Action  (Euratom 

loans to Member States, EFSM and BoP) 

Article 323 TFEU states that “the financial means are made available to allow the Union to 
fulfil  its  legal  obligations  in  respect  of  third  parties”.  Accordingly,  the  EU  legislative 
framework  and  the  procedures  in  place  ensure  that  Member  States  make  mandatorily 
available  to  the  EU  budget  the  financial  means  necessary  for  the  Union  to  always  fulfil  its 
legal obligations.  

Thus the EU has in place multiple layers of very robust safety mechanisms to ensure that it 
will  always  reimburse  its  own  lenders  timely  and  in  full.  Each  one  of  the  main  safety 
mechanism would per se be enough to ensure reimbursements are made. 

17 

 
 
5.1.1 

Payments from cash resources 

The  EU  budget  provisionally  covers  the  debt  service  at  due  dates  in  case  a  debtor  fails  to 
repay  its  loan  to  the  EU  on  time.  The  Commission  draws  on  its  cash  resources  in  order  to 
avoid delays and any resulting costs in servicing its borrowing operations36. 

Being  mindful  of  most  expenditures  taking  place  during  the  first  quarter  of  each  year,  debt 
redemption is structured for the months thereafter as well as for the beginning of each month 
when cash balances are highest. 

5.1.2 

Payments from the EU budget 

In the event of default by a Member States37 and if the EU’s own resources are insufficient, 
the  Commission  can  use  available  EU  budget  resources  and  prioritise  debt  repayment  over 
other  non-obligatory  expenditures.  According  to  Article  14(4)  of  Council  Regulation  No 
609/2014,  if this proves to  be insufficient,  EU legislation obliges Member  States to provide 
additional contributions necessary to repay the debt and to balance the budget, up to a ceiling 
of 1.20% of EU GNI. 

As  no  default  from  Member  States  occurred  during  the  year  2019,  no  appropriation  was 
requested. 

5.2  Calls on the Guarantee Fund for External Actions and recoveries (ELM, MFA and 

Euratom loans to Third countries) 

In  the  event  of  late  payment  by  the  beneficiary  of  a  loan  to  third  countries  granted  or 
guaranteed  by  the  EU,  the  Guarantee  Fund  is  called  on  to  cover  the  default  within  three 
months of the request. 

For  ELM  loans,  the  amounts  called  by  the  EIB  are  withdrawn  from  the  Guarantee  Fund 
account  after  authorization  by  the  Commission  services.  When  the  EU  makes  a  payment 
under  the  EU  Guarantee,  it  is  subrogated  into  the  rights  and  remedies  of  the  EIB  38.  For 
Euratom  and  MFA  loans,  if  the  payment  delay  reaches  three  months  after  the  due  date,  the 
Commission draws on the Fund to cover the default39 and to replenish its treasury. 

In the context of the ELM, recovery proceedings are undertaken by the EIB on behalf of the 
EU in respect of the subrogated sums40. 

36 

37 
38 

39 

40 

See Article 14 of Council Regulation (EU, Euratom) No 609/2014 of 26 May 2014 on the methods and 
procedure for making available the traditional, VAT and GNI-based own resources and on the measures to 
meet cash requirements (OJ L 168, 7.6.2014, p. 39). 
See Article 14(3) of Regulation (EU, Euratom) No 609/2014. 
See  Article  8.7  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  (OJ  L  135,  8.5.2014,  p.  1),  amended  by 
Decision  (EU)  2018/412  of  the  European  Parliament  and  the  Council  of  14  of  March  2018  amending 
Decision  No  466/2014/EU  granting  an  EU  guarantee  to  the  European  Investment  Bank  against  losses 
under financing operations supporting investment projects outside the Union (OJ L 76, 19.3.2018, p. 30). 
Except for Bulgaria and Romania which were granted Euratom loans before joining the Union. The loans 
(and loans guarantees) to accession countries were covered by the Fund until the date of accession. From 
that  date,  those  that  remained  outstanding  ceased  to  be  external  actions  of  the  Union  and  are  therefore 
covered directly by the EU budget. 
For further information on recovery proceedings, see also the Recovery Agreement signed on 3 October 
2018  between  the  European  Union  and  The  European  Investment  Bank  governing  modalities  and 

18 

 
                                                 
 
EIB loans to projects in Syria 

Starting from December 2011, the EIB has experienced defaults on certain interest payments 
and  loan  repayments  from  the  Syrian  Government.  Since  official  payment  requests  have 
remained  unsuccessful,  the  EIB  started  to  call  on  the  Guarantee  Fund  in  May  2012.  The 
evolution of the calls corresponding to defaulting loans in Syria is presented in Table 4a. 

Table 4a: Calls on the Guarantee Fund due to defaulting loans in Syria (in EUR million) 

Year 
(Withdrawal 
from GF 
account on) 

Number of 
calls paid 

Amount of 
due 
instalments 

Penalties and 
accrued 
interests41 

Amount 
recovered 

Total 

2012 

2013 

2014 

2015 

2016 

2017 

2018 

2019 

Total 

2 

8 

8 

8 

12 

13 

12 

14 

63 

24.0 

59.3 

58.7 

58.7 

103.8 

56.1 

55.7 

54.8 

471.01 

0.0 

1.4 

1.5 

1.5 

2.4 

0.2 

0.1 

0.06 

7.09 

2.1 

0.0 

0.0 

0.0 

0.0 

0.0 

0.0 

0.0 

2.1 

21.8 

60.7 

60.2 

60.2 

106.2 

56.3 

55.7 

54.91 

475.96 

At  31 December 2019,  the  total  capital  outstanding  of  guaranteed  loans  related  to  Syria 
amounted to EUR 555 million of principal42, with the final loan maturity in 2030. 

TAV Tunisie S.A. (Enfidha airport) 

In 2016 the EIB called the EU guarantee under the external lending mandate in relation to a 
loan to TAV Tunisie S.A. (Enfidha airport). 

On 15 January 2018, EUR 0.14 million recovered from Enfidha Airport were credited to the 
Guarantee  Fund  for  External  Actions.  This  amount  had  already  been  recognised  as  an  asset 
(receivable) in the balance sheet of 31 December 2017. 

The calls on the Fund corresponding to the defaulting loan to TAV Tunisie S.A. (Enfidha 
airport) are presented in Table 4b. 

procedures for recovery of payments made by the EU under the guarantees granted by it to the EIB against 
losses under financing operations supporting investment projects outside the EU. 
Penalties  and  accrued  interests  are  claimed  by  the  EIB  only  with  the  second  payment  request  of  each 
individual loan and run from the default date until the payment date by the Guarantee Fund. 
This includes the amount of EUR 394.2 million (principal) already called by the EIB until 31.12.2019. 

41 

42 

19 

 
                                                                                                                                                         
Table 4b: Call on the Guarantee Fund relating to TAV Tunisie S.A. (Enfidha airport) (in EUR million) 

Year of 
withdrawal  

Number of 
calls paid 

Amount called 

Amount 
recovered 

Total 

2016 

2017 

2018 

Total 

1 

3 

0 

4 

4.65 

 30.17  

0.0 

0.00 

0.00 

0.14 

4.65 

 30.17  

-0.14 

 34.8243  

 0.14  

 34.68  

Developments subsequent to 31 December 2019 (until 31 May 2020) 

Enfidha Airport (Tunisia) 

In  January  2020,  the  amount  of  EUR 0.7 million  was  credited  to  the  Guarantee  Fund  bank 
account.  This  was  a  partial  recovery  of  a  loan  for  Enfidha  Airport  (Tunisia)  which  was 
collected by EIB in December 2019. 

Syria 

In  January,  March  and  May  2020,  EUR 12.7 million  in  total  were  paid  in  four  calls  for 
defaulted  payments  of  Syria  (EUR 3.2 million,  EUR 0.5 million,  EUR 7.4 million  and 
EUR 1.7 million including penalties applied by EIB). 

5.3 

Evolution of the Guarantee Fund for External Actions in 2019 

In accordance with the Regulation establishing the Guarantee Fund for External Actions ("the 
Guarantee Fund Regulation")44, the appropriate level of provisioning (target amount) is set at 
9%  of  the  total  outstanding  capital  liabilities  arising  from  each  operation,  plus  accrued 
interest. A provisioning mechanism is in place to ensure the target amount is met. 

On  the  basis  of  the  provisioning  mechanism,  the  EU  budget  paid  EUR 103.2 million  to  the 
Fund  in  February  2019,  while  in  February  2020  the  respective  payment  amounted  to 
EUR 240.2 million. 

The  Guarantee  Fund 
(EUR 2 609 881 747.51 as of 31 December 2018)45. 

totalled  EUR 2 828 738 292.88 

as  of  31 December 2019 

The  total  balance  sheet  value  of  the  Fund  increased  by  about  EUR 218.86 million  in  2019. 
This is mainly explained by the following: 

43 

This amount include a one-off fee of EUR 1 467 504.32 in respect of recovery proceedings undertaken and 
to be undertaken by the EIB for this specific contract in accordance with the Recovery Agreement. 

44  Council Regulation (EC, Euratom) No 480/2009 establishing a Guarantee Fund for external actions (OJ L 

45 

145, 10.6.2009, p. 10) as amended by Regulation (EU) 2018/409 (OJ L 76, 19.3.2018, p. 1). 
These amounts include a receivable from EU budget of EUR 240,152,822.10 in 2019 (paid from the budget 
in 2020; and of EUR 103,222,935.00 in 2018, paid in 2019. 

20 

 
 
 
                                                 
Increases: 

  The  contribution  receivable  from 

the  EU  budget  (provisioning  amount)  of 
EUR 240.15 million  to  adjust  the  Fund  to  its  target  amount  of  9%  of  the  total 
outstanding liabilities;  

  The economic result on financial operations amounted to EUR 25.13 million. 

  The  portfolio  valuation  increased  by  EUR 8.6 million  due  to  the  mark-to-market 

adjustment of its value. 

Decreases: 

 

Interventions  of  the  Fund  to  cover  defaulted  payments  for  a  total  amount  of 
EUR 54.9 million.  

For more information about the Guarantee Fund for External Actions in 2019, please refer to 
the Report  from the Commission to the European Parliament,  the Council  and the Court of 
Auditors on the Management of the Guarantee Fund for External actions at 31.12.2019 and 
the associated staff working document (SWD) 46. 

6. 

THE EUROPEAN FUND FOR STRATEGIC INVESTMENTS (EFSI) IN 2019 

47 

6.1    Financial Statements of the EFSI Guarantee Fund as at 31 December 2019 

The  total  assets  of  the  EFSI  GF  stood  at  EUR 6  688 million  as  at  31 December 2019.  The 
assets  comprised 
investment  securities  portfolio,  classified  as  available-for-sale 
(EUR 6 654 million), an FX forward sale of USD with positive net present value, classified as 
financial assets at fair value through surplus and deficit (EUR 3 million), and cash and cash 
equivalents (EUR 31 million). 

the 

In terms of the 2019 statement of financial performance, the EFSI GF ended the year with an 
economic result of EUR 21.7 million. The main contribution came from a positive net interest 
revenue  of  EUR 18.3 million  and  net  gains  from  sales  of  available-for-sale  securities48 
(EUR 17.1 million).  This  was  offset  by  a  negative  foreign  exchange  revaluation  result  of 

46  COM(2020) 327 and SWD(2020) 136 of 17.07.2020, available on http://eur-lex.europa.eu/homepage.html. 
47 

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"). The EFSI Regulation was amended by 
Regulation (EU) 2017/2396 of the European Parliament and Council of 13 December 2017 as regards the 
extension  of  the  duration  of  the  European  Fund  for  Strategic  Investments  as  well  as  the  introduction  of 
technical  enhancements  for  that  Fund  and  the  European  Investment  Advisory  Hub    (the  "EFSI  2.0 
Amendment"). The EFSI 2.0 Amendment increased, inter alia, the size of the EU Guarantee and adjusted 
the target amount. The agreement on the management of the EFSI and on the granting of the EU Guarantee 
(the "EFSI Agreement") was signed by the European Commission and the European Investment Bank (the 
"EIB")  on  22  July  2015  and  was  amended  and  restated  on  21  July  2016,  21  November  2017,  9  March 
2018, 20 December 2018, 27 March 2020 and 27 April 2020.  
The net figure is composed of gains of EUR 18.5 million and losses of EUR 1.4 million. 

48 

21 

 
                                                 
EUR -13.1 million49. The remaining net expense of EUR -0.6 mainly consisted of custodian 
fees. 

6.2    EFSI operations under the EU guarantee 

The guarantee exposure of the EU in relation to disbursed outstanding EFSI operations by the 
EIB Group amounted to EUR 17.7 billion, as at 31 December 2019, out of the net available 
legal commitment50 of EUR 25.8 billion of EU guarantee. The amount of EUR 17.6 billion is 
recorded as a contingent liability in the notes to the 2019 financial statements of the EU, while 
a provision has been recognised for the remaining amount of 0.1 billion (74 million). 

In  2019,  EFSI  operations  managed  by  the  EIB  under  the  Infrastructure  and  Innovation 
Window  generated  a  net  revenue  of  EUR 299.5 million  for  the  EU51.  Of  this  amount,  a  net 
receivable of the Commission from the EIB as at 31 December 2019 of EUR 50.8 million was 
recorded in the 2019 EU financial statements. 

For the EFSI operations under the SME Window, the EU incurred cost of EUR 109.9 million 
in  201952.  Out  of  this,  EIF  fees  and  costs  of  EUR 37.9 million  recorded  in  the  2019  EU 
financial statements are payable to the EIF after 31 December 2019. 

6.3    Provisioning of the EFSI Guarantee Fund 

A  total  budgetary  appropriation  of  EUR 357 million  was  committed  in  2019  relating  to  the 
provisioning of the EFSI GF. Of this amount, a budgetary appropriation of EUR 167 million 
was  committed  in  through  Commission  Decision  C(2019)87553.  Additional  commitment 
appropriations for an amount of EUR 190 million were committed as assigned revenue. 

A total amount of EUR 1 166 million was effectively paid into the EFSI GF during the year. 
Of this, the bulk came from payment appropriations of the general budget of the EU, while an 
amount of EUR 163 million was recovered as assigned revenue (EUR 136 million from EFSI 
revenues and EUR 27 million from Connecting Europe Facility revenues) and an amount  of 
EUR 3 million  was  transferred  as  additional  payment  appropriations  at  the  end  of  the 
budgetary year. 

6.4   Calls and use of the EU Guarantee 

In  2019,  in  accordance  with  Article  8.1(a)  of  the  EFSI  Agreement,  the  EU  Guarantee  was 
called for an amount of EUR 3.5 million related to one defaulted equity-type operation under 
the  Infrastructure  and  Innovation  Window.  In  addition,  an  amount  of  EUR 1.4 million  was 

51 

49   After hedging the currency risk of the USD-denominated portion of the portfolio. 
50   According to Article 11 of the EFSI 2.0 Amendment, the EU Guarantee shall not, at any time, exceed EUR 
26  billion  and  not  exceed  EUR  16  billion  before  6  July  2018.  Calls  and  uses  of  the  EU  Guarantee,  and 
provisions for portfolio guarantee products under SME Window, are deducted from the maximum amount 
of the EU Guarantee. 
This amount includes EUR 135.0 million of unrealized revenue derived from upward movement of the IIW 
equity portfolios’ fair value at 31 December 2019 compared to 31 December 2018. 
This amount includes EUR 69.5 million of financial provisions in respect of the SMEW debt portfolios, as 
well as EUR 4.3 million of unrealized expenses derived from downward movement of the SMEW equity 
portfolios’ fair value at 31 December 2019 compared to 31 December 2018. 

53  Commission  Decision  of  11.02.2019  on  the  adoption  of  the  annual  work  programme  for  2019  for  the 

52 

Directorate General for Economic and Financial Affairs, serving as a financing decision. 

22 

 
                                                 
called  for  EIB  funding  costs54,  EUR 27.3 million  for  value  adjustments55  and  EUR 0.14  for 
recovery  costs56.  Under  the  SME  Window,  there  was  one  call  for  an  amount  of 
EUR  8.1  million for non-euro hedging. 

All calls have been paid from funds available on the EFSI Account. There were no calls paid 
from the EFSI GF. 

For more information about EFSI and the EFSI Guarantee Fund in 2019, please refer to the 
Report  from  the  Commission  to  the  European  Parliament,  the  Council  and  the  Court  of 
Auditors  on  the  Management  of  the  GF  of  the  EFSI  at  31.12.2019  and  the  associated  staff 
working document (SWD)57. 

7. 

EUROPEAN FUND FOR SUSTAINABLE DEVELOPMENT (EFSD) IN 2019  

7.1 

Investment Programmes 

By  April  2018,  a  number  of  partner  financial  institutions  (FIs)  had  proposed  more  than 
40 investment  programmes  in  excess  of  EUR 3.5 billion  for  cover  by  the  EFSD  Guarantee 
under the five priority areas for investment (investment windows), i.e. a) Sustainable Energy 
and  Connectivity,  b)  Micro,  small  and  medium  sized  enterprises  ('MSME')  Financing,  c) 
Sustainable  Agriculture,  Rural  Entrepreneurs  and  Agribusiness,  d)  Sustainable  Cities  and  e) 
Digital for Development. 

In June and November 2018, based on the FIs’ proposals, the EU allocated EUR 1.54 billion 
for 28 guarantees58. 

As  of  31  December  2019  in  total  three  EFSD  guarantee  agreements  that  amount  to 
EUR 165 million were concluded. 

Nasira 

The  first  EFSD  guarantee  agreement  for  the  amount  of  EUR 75 million  was  signed  on 
18 December 2018 with the triple A-rated Dutch Development Bank FMO for the NASIRA 
Risk-Sharing Facility. The guarantee will allow local banks  to  provide loans  to  groups they 
normally perceive as too risky. By so-called ‘risk-sharing’ NASIRA will reduce the perceived 
and  real risks  of  lending  to  vulnerable  and  underserved  groups  of  the  population  within the 
European  Neighbourhood  and  Sub-Saharan  Africa,  thus  enabling  and  stimulating  financing 
needed for people who want to grow their (micro) business. FMO expects that NASIRA will 
create  and  support  up  to 800 000 jobs  and  benefit  small  and  medium-sized  enterprises 
(SMEs), internally displaced people, refugees, returnees, women and young people. 

54   See Article 8.1(d) of the EFSI Agreement. 
55   See Article 8.1(b) of the EFSI Agreement. 
56   See Articles 8.1(d) and 11.7 of the EFSI Agreement. 
57  COM(2020) 385 and SWD(2020) 162 of 18.08.2020, available on http://eur-lex.europa.eu/homepage.html. 
58 
Please note that, as part of the COVID-19 crisis response, the EFSD Operational Board of 21 April 2020 
agreed to a revamping of the EFSD guarantee allocations, prioritising and topping-up guarantees providing 
liquidity to Micro, small and medium sized enterprises (MSMEs) and renewable energy projects, increasing 
their flexibility to help address socio-eocnomic impact of COVID-19 pandemic, and giving a one-year fee 
holiday. 

23 

 
                                                 
FMO Ventures 

This  EUR 40 million  guarantee  agreement  with  FMO  signed  on  11 November 2019  will 
guarantee venture capital to start-up companies, in particular led by young entrepreneurs. The 
companies  will  use  technology  to  lower  the  costs  of  making  or  supplying  products  and 
services  that  were  previously  unaffordable  to  many  people.  The  guarantee  will  target 
companies  offering  digital  solutions  in  a  wide  range  of  areas,  from  agriculture,  access  to 
energy  and  financial  services to  education,  healthcare, transport  and logistics.  FMO  expects 
that Venture Programme will support up to 125 000 new jobs, directly and indirectly. 

Scale up Renewable Energy Investments 

This  EUR 50 million  guarantee  agreement  with  European  Bank  for  Reconstruction  and 
Development  (EBRD)  signed  on  29 November 2019  will  help  to  scale  up  investment  in 
renewable energy in Ukraine and in the EU Southern Neighbourhood, in particular in Jordan, 
Lebanon and Tunisia. The guarantee aims to substantially boost renewable energy potential. 
EBRD  expects  that  this  guarantee  will  help  to  generate  a  total  investment  of  up  to 
EUR 500 million and will provide 340 MW of additional installed renewable energy capacity. 

7.2  The EFSD Guarantee Fund 

By  end  of  2019,  additional  contributions  to  support  the  EFSD  Guarantee  Fund  include 
USD 50 million  from  the  Bill  and  Melinda  Gates  Foundation,  EUR 9.6 million  from 
Denmark, EUR 300 000 from the Czech Republic and EUR 100 000 from Estonia. 

The  EFSD  Guarantee  Fund  has  been  effectively  established  in  2018.  An  amount  of 
EUR 600.1 million has been paid to the Fund as of 31 December 2019. There were no calls on 
the EFSD Guarantee in 2019. 

For  more  information  about  EFSD  and  the  EFSD  Guarantee  Fund  in 2019,  please  refer to 
the Report  from the Commission to the European Parliament,  the Council  and the Court of 
Auditors  on  the  Management  of  the  Guarantee  Fund  of  the  European  Fund  for  Sustainable 
Development59. 

59 COM(2020) 346 of 31/07/2020, available on http://eur-lex.europa.eu/homepage.html. 

24