This report describes the lending operations for South-Eastern Neighbours (SEN), in the Mediterranean countries (MED), in Asia and Latin America (ALA) and in the Republic of South Africa (RSA). It also gives a brief summary of the borrowing activities undertaken in order to finance the lending activities, of the macro-financial assistance provided by the Community to third countries and of the interest subsidies and guarantees associated with Community loans. In addition, it provides information on Euratom lending activities.

Borrowing activities in 2006: total borrowing by the EC and the EIB decreased in 2006 by 3.8% to EUR 48.1 billion, against EUR 50.0 billion the previous year. More than 99% of this amount has been borrowed by the EIB. The decrease in borrowing activities can be explained by a marginally reduced borrowing activity of EIB following a somewhat slower pattern of loan disbursements and treasury liquidity considerations as well as by the absence of new Decisions concerning Euratom, macrofinancial assistance and the balance of payments loans.

Taking into account repayments, cancellations and exchange-rate fluctuations, the total amount of borrowings outstanding at 31 December 2006 was EUR 248.4 billion, 0.7% down on 2005. The breakdown of borrowings by currency stays at the same level of 37.9% in the share of EUR-denominated borrowings in 2006 of all issues. Issues in other Community currencies decreased from 23.0% to 16.6%. Non-Community currencies took a higher share of borrowing, increasing from 39.5% to 45.4% of the total. Issues in USD were up from 27.9% to 30.4%. In 2006, after swaps, 94.5% of the loans were on a variable rate as compared to 97.3% in 2005.

Lending in non-Member States: financial support for non-member States that have concluded cooperation agreements with the Community generally takes the form of bilateral loans (macro-financial support or balance-of-payments support), where the Community helps to re-establish a country's macro-economic balance. The Commission administers these financial operations under decisions of the Council. In other cases loans are granted by EIB on its own resources either in the form of direct financing for individual projects or of global loans to banks, which then allocate funds to smaller-scale local projects. Some of these loans benefit from a guarantee of the Union budget.

Macro-financial assistance (MFA): the Community’s assistance focuses on neighbouring regions, such as the Western Balkans and the Caucasus. Grants and loans disbursed under this instrument show that in 2006 an amount of EUR 19 million has been disbursed under existing MFA decisions. No new MFA decisions were taken in 2006.

With regard to EIB Lending in 2006 in the South-Eastern Neighbours, the report states that the Bank was active in 2006 in both the acceding and candidate States to help these countries to prepare for accession, in particular by financing investment aimed at integrating their infrastructure with that of the EU and by assisting SMEs. The EIB continued also to support investments in the other countries of the Western Balkans (Albania, Bosnia and Herzegovina, Montenegro and Serbia) with the aim of facilitating their ongoing integration process into the EU. The EIB gives priority to upgrading, modernising and developing the communications and energy sectors, with particular emphasis on Trans-European Networks (TENs) on the basis of the road and rail corridors. Environmental issues related to EIB projects, as well as environmental projects, are given priority in the framework of the gradual adaptation of the legislation of the countries concerned to that of the EU. The EIB also supports private sector development (SMEs), in particular Foreign Direct Investment (FDI), either directly or through its global loan instrument, in particular when involving EU partners.

In the Mediterranean region , the Bank’s lending is carried out under the Facility for Euro-Mediterranean Investment and Partnership (FEMIP) mainly within the framework of the Euro-Mediterranean Partnership. FEMIP focuses its activities on support for the private sector and on creating an investment-friendly environment, mainly by financing enabling infrastructure for economic development. Furthermore, FEMIP supports sustainable energy development, competitiveness and security of supply. In November 2006, the Ecofin Council decided to reinforce FEMIP and marked two specific priority areas: private sector development and reinforcement of partnerships.

In Asia and Latin America , the Bank finances projects that are of interest to both the Community and the countries concerned – co-financing with EU promoters, transfer of technology, cooperation in the fields of energy and environmental protection. The EIB also supported reconstruction efforts in the aftermath of the Tsunami disaster of 2004. In this context, the geographical scope of the ALA mandate was broadened to include the Maldives.

In South Africa , the Bank has been mandated to focus on infrastructure projects of public interest and private sector support, including SMEs. The Bank’s operations have further to be complementary to the Community assistance policies, whose overriding objective is the reduction of poverty and inequality.

Risk sharing : at end-2006 the Bank had achieved a level of 18% of risk-sharing as a proportion of cumulative lending under mandate against the risk-sharing objective of 30%. This figure does not include the Community guarantee coverage under the Pre-Accession and Mediterranean Partnership Facilities. On a regional basis, the risk-sharing objective was met and exceeded in Asia and Latin America , where 72% of loans were signed under the risk-sharing regime. Both in South Eastern Europe and in the Mediterranean , risk-sharing operations represented 11% of lending under mandate. In accordance with the programming procedures of the countries concerned, most projects financed by the EIB under mandate are in the public sector and therefore outside the scope of risk-sharing. In South Africa , 10% of loans were risk-sharing. Under the First General Mandate, a level of 24% of risk-sharing of total lending was reached against a target of 25%. In terms of lending compared to the regional ceilings, the levels were 81% for ALA, 26% for Central and Eastern Europe Countries (CEEC) and 3% for the Mediterranean.

Total EIB lending in the ACP/OCT amounted to EUR 745 million in 2006, of which EUR 167 million from the Bank’s own resources and EUR 578 million funded by the European Development Fund (EDF).

The Community guarantee is restricted to 65% of the aggregate amount of the credits opened, plus all related sums (compared with 70% under the First General Mandate). During 2006 (the seventh year of the Second General Mandate) the EIB signed loan agreements for a total of EUR 2 805 million, bringing total lending under this mandate to EUR 18 280 million corresponding to 96% of the ceiling.

COM(2007)0486
EUR-Lex

SEC(2007)1079
EUR-Lex

Each year the European Commission is obliged, in accordance with the Council Decisions establishing the various lending instruments of the European Communities, to inform both the Council and the European Parliament, on how these instruments are being used. Similarly, the Commission is obliged to annually prepare a report on lending activities outside of the EU through EIB loans guaranteed by the EU budget to: i) the EU’s South Eastern Neighbours; ii) the Mediterranean countries; iii) Latin America and Asia and iv) South Africa.

Not only does this Report describe the operations for each of the areas concerned it also gives a brief summary of the macro-financial assistance provided by the Community to third countries and of the interest subsidies and guarantees associated with Community loans. Additional information is provided on Euratom’s lending activities.

Borrowing activities: total borrowing by the European Communities and by the EIB increased in 2006 by 6% to EUR 52.9 billion as compared to EUR 49.9 billion the previous year. Most of this increase can be attributed to EIB borrowing. The total amount of outstanding borrowing on 31 December 2005 was 15.5 % - higher than in 2004 and stood at EUR 250.1 billion.

The breakdown of borrowings by currency indicate a decrease in the share of EUR-denominated borrowings in 2005 to 37.5% from 44.9% in 2004 of all issues, while issues in other Community currencies increased from 13.0% to 23.0%. Non-Community currencies took a smaller share of borrowing, decreasing from 42.0% to 39.5% of the total. Issues in USD were down from 41.6% to 27.9%. In 2005, after swaps, 97.3% of the loans were on a variable-rate as compared to 100% in 2004.

Lending activities: in both the acceding and the accession States, namely Bulgaria, Romania, Croatia and Turkey (referred to as the EU’s South Eastern Neighbours ) the Bank has been very visible. It has continued to support investment initiatives in the Western Balkans; priority being given to the infrastructure, health, education and SME’s.

Particular attention is given to upgrading, modernising and developing the communications and energy sectors, through the Trans-European Networks (TENs). Funding is based on the road and rail corridors as defined by the Pan-European Conference of Transport Ministers. Other priorities include environmental considerations.

EIB lending was also particularly active in North-Western Russia, Russia, the Ukraine, Moldova and Belarus. The Commission, the EIB and the European Bank for Reconstruction and Development have been working on a tripartite Memorandum of Understanding concerning the next Mandate covering 2007-2013.

In the Mediterranean region , the Bank’s lending mandate takes place mainly through the Euro-Mediterranean Partnership. EIB lending supports both individual investment projects as well as smaller, SME’s programmes. Another important element of lending focuses on strengthening the financial sector of the region as a whole. In order to complement the remaining amount under the existing mandate (EUR 248 million), an interim EIB facility will be launched in the course of 2006, which will allow the Bank to pursue an appropriate level of operations in the Mediterranean countries before the entry into force of a future mandate.

In Asia, as well as in Latin America, the Bank finances projects that are of interest to both the Community and the countries concerned – i.e. technology transfer, energy co-operation and environmental protection programmes. Tsunami reconstruction efforts are also eligible for EIB support.

The Bank’s objectives in the Republic of South Africa are to contribute to the successful implementation of the country’s reconstruction efforts and to its development programmes. The EIB has provided management support to the EU Commission for its Risk Capital Facility.

Total EIB lending in the ACP/OCT countries amounted to EUR 537 million in 2005, of which EUR 151 million is derived from the Bank’s own resources and EUR 386 million from risk capital.

In 2005 (the sixth year of the new mandate) the EIB signed loan agreements totalling EUR 3 618 million. This brings total lending under the new mandate to EUR 17 238 million or corresponding to 89% of the ceiling, with risk-sharing equivalent to 17% of the loans signed.

COM(2006)0597
EUR-Lex

The Council decisions establishing the various lending instruments of the European Communities require the Commission to inform the Council and Parliament each year of the use made of these instruments. As for lending activities outside the Community, the Commission is required to inform the Council and Parliament on an annual basis of the situation regarding European Investment Bank (EIB) loans guaranteed by the Union budget in Central and Eastern Europe, in the Mediterranean countries, in Latin America and Asia and in South Africa.

In order to meet these information requirements, this report describes the operations for each of the areas concerned. To complete the picture of lending activities, it also gives a brief summary of the macro-financial assistance provided by the Community to third countries and of the interest subsidies and guarantees associated with Community loans. In addition, it provides information on Euratom’s lending activities.

Borrowing activities :

One borrowing for macro-financial assistance in 2004 was raised to grant a loan to Bosnia and Herzegovina. There were two borrowings under the Euratom loans instrument to finance loans to a nuclear plant in Bulgaria.

Total borrowing by the European Communities and the EIB increased in 2004 by 18.8% to EUR 49.9 billion, against EUR 42.1 billion the previous year, mainly due to an increase in borrowing by the EIB. Taking into account repayments, cancellations and exchange-rate fluctuations, the total amount of borrowing outstanding at 31 December 2004 was EUR 216.6 billion, 10.3% up on 2003

The breakdown of borrowing by currency shows a decrease in the share of Euro borrowings in 2004 to 44.9% from 54.9% in 2003 of all issues, while issues in other Community currencies decreased from 19.1% to 13.0%. Non-Community currencies took a greater share of borrowing, increasing from 26.0% to 42.0% of the total. Issues in USD were up from 23.0% to 41.6% on strong market demand and supported by very low interest rates and a weakening of the USD/Euro exchange rate.

Lending activities :

In Central and Eastern Europe , the Bank has again been active in 2004 although the number of countries eligible for financing under the pre-Accession agreements diminished following enlargement on May 1 st . After that date, the Bank continued activities in the remaining acceding and candidate States (Bulgaria, Romania, Croatia and Turkey) as well as continuing to support investments in the countries of the Western Balkans in various sectors (infrastructure, SMEs / micro-finance, etc.).

In 2004, the Bank continued operations under the Special Lending action for selected environmental projects in Baltic Sea basin of Russia while continuing to prepare for a new mandate covering operations in Russia and, for the first time, extended to Belarus, Moldova and Ukraine 5 .

The EIB gives priority to upgrading, modernising and developing the communications and energy sectors, with particular emphasis on Trans-European Networks (TENs) on the basis of the road and rail corridors defined by the Pan-European Conference of Transport Ministers as development priorities for the medium term.

Environmental issues related to EIB projects, as well as environmental projects per se, are given priority in the framework of the gradual adaptation of the legislation of the countries concerned to that of the EU. The EIB also supports SMEs and other industrial initiatives, in particular FDI (Foreign Direct Investment), either directly or through its global loan instrument, in particular when involving EU partners.

In the Mediterranean region , the Bank’s lending under mandate is carried out by the Facility for Euro-Mediterranean Investment and Partnership (FEMIP) and takes place mainly within the framework of the Euro-Mediterranean Partnership, in support of the economic development of the countries concerned. EIB lending supports individual investment projects and, through the global loan mechanism, smaller projects and SMEs, while at the same time strengthening the financial sector in the various countries.

In 2004, FEMIP was reinforced by the creation of a special envelope to allow for extended risk-sharing operations and a trust fund, modelled on the special cofinancing funds of other International Financial Institutions (IFIs). Lending continued under the Turkey Special Action Programme and the available funds have now been fully utilised.

In Asia and Latin America , the Bank finances projects that are of interest to both the Community and the countries concerned – cofinancing with EU promoters, transfer of technology and cooperation in the fields of energy and environmental protection.

In the Republic of South Africa , the Bank’s objective is to contribute to the successful implementation of the country’s reconstruction and development programme.

- Total EIB lending in the ACP/OCT amounted to EUR 440 million in 2004, of which EUR 62 million from the Bank’s own resources and EUR 378 million from risk capital.

- During 2004 (the fifth year of the new mandate) the EIB signed loan agreements for a total of EUR 2,844 million, bringing total lending under the new mandate to EUR 13, 620 million corresponding to 70% of the ceiling, with risk-sharing equivalent to 20.8% of the loans signed.

COM(2005)0385
EUR-Lex

SEC(2005)1053
EUR-Lex

This report meets the requirement imposed on the Commission to inform the Council and the European Parliament on an annual basis of the borrowing and lending activities of the Community. The report therefore describes these operations for each of the areas concerned. To complete the picture of lending activities in 2003, it also gives a brief summary of the macro-financial assistance provided by the Community to the countries of Central and Eastern Europe and of the interest subsidies and guarantees associated with Community loans. It also provides information on Euratom’s lending activities.

- Borrowing activities in 2003: given that the New Community Instrument ceilings have been fully used up and the ECSC Treaty expired in 2002, no funds were raised under these instruments in 2003. The borrowing for macro-financial assistance in 2003 was raised to grant loans to Serbia and Montenegro , the former Yugoslav Republic of Macedonia (FYROM) and Romania . There was only one borrowing under the Euratom loans instrument to Bulgaria . Despite these factors, total borrowing by the European Communities and the European Investment Bank (EIB) increased in 2003 by 10.5% to EUR 42.1 billion, against EUR 38.1 billion the previous year, mainly due to an increase in borrowings by the EIB. The total amount of borrowing outstanding as at 31 December 2003 was EUR 196.4 billion, 7.1% up on 2002. The breakdown of borrowing by currency shows a decrease in the share of euro borrowings in 2003 to 54.9% from 59.0% in 2002 of all issues, while issues in other Community currencies increased from 17.7% to 19.1%.

- The Community’s macro-financial assistance in the form of loans: the Community’s action, which is by its very nature exceptional, focuses on neighbouring regions, such as Central and Eastern Europe, the Western Balkans, the Caucasus and the countries of the southern Mediterranean . As the candidate countries have made significant progress towards macro-economic adjustment and 10 of these countries joined the European Union in 2004, macro-financial assistance is gradually being phased out. In contrast, the Western Balkans region has significantly benefited over recent years from Community macro-financial assistance, which also includes a significant grant component. In the Western Balkans, the Council approved in 2003 supplementary macro-financial assistance in the form of a loan of EUR 25 million to Serbia and Montenegro , accompanied by a grant of up to EUR 45 million. Loan disbursements for a total amount of EUR 118 million were completed in 2003 in favour of Serbia and Montenegro (EUR 40 million), the former Yugoslav Republic of Macedonia (EUR 28 million) and Romania (EUR 50 million). Assistance in the form of outright grants totalling EUR 85 million was also paid out in 2003, of which EUR 7 million went to Tajikistan , EUR 25 million to Bosnia and Herzegovina , EUR 35 million to Serbia and Montenegro and EUR 18 million to the former Yugoslav Republic of Macedonia .

- EIB lending in Central and Eastern Europe, the Mediterranean, Asia and Latin America and the Republic of South Africa : in Central and Eastern Europe , the Bank has again been active in the accession countries, helping them to progress with their preparations for accession and European integration. In addition, the Bank has developed a significant level of activity in the countries of the Western Balkans by supporting investment projects in Albania , Croatia , Serbia and Montenegro and the former Yugoslav Republic of Macedonia . In 2003 the Bank made its first investments in the health and education sectors in pursuit of one of its major new objectives. The EIB gave priority to upgrading, modernising and developing the communications and energy sectors, with particular emphasis on Trans-European Networks (TENs). Environmental issues related to EIB projects, as well as environmental projects per se, were given priority during the gradual adaptation of the legislation of the countries concerned to that of the EU.

In the Mediterranean region, the Bank’s lending under mandate takes place mainly within the framework of the Euro-Mediterranean Partnership, in support of the economic development of the countries concerned. EIB lending supported individual investment projects and, through the global loan mechanism, smaller projects and SMEs, while at the same time strengthening the financial sector in the various countries. In addition to its lending under mandate, the Bank has continued with its programme of lending from its own resources, without budgetary guarantee, under its Facility for Euro-Mediterranean Investment and Partnership (FEMIP).

In Asia and Latin America, the Bank finances projects that are of interest to both the Community and the countries concerned – cofinancing with EU promoters, transfer of technology, cooperation in the fields of energy and environmental protection.

In the Republic of South Africa , the Bank’s objective is to contribute to the successful implementation of the country’s reconstruction and development programme.

The report finally notes that the cumulative total for risk-sharing projects since the start of lending activity under the Council Decisions established since 1 February 2000 was EUR 2 068 million at the end of 2003, i.e. 10.6% of the overall lending ceiling for these countries and 19.1% of lending to date.

- Lending activity of the Signatories of the Lomé/Cotonou Conventions: total EIB lending in the ACP/OCT amounted to EUR 463.2 million in 2003, of which EUR 177.6 million was from the Bank’s own resources and EUR 285.6 million from risk capital. This includes the first loans under the Cotonou Agreement which came into force on 1 April 2003.

SEC(2004)1073
EUR-Lex

COM(2002)0685
EUR-Lex

EUR-Lex
COM(2000)0524

Decision 1997/256
OJ L 102 19.04.1997, p. 0033

OJ C 115 14.04.1997, p. 0224-0233
T4-0135/1997

Debate in Parliament

T4-0135/1997

A4-0078/1997
OJ C 115 14.04.1997, p. 0014

A4-0078/1997

EUR-Lex
OJ C 013 14.01.1997, p. 0009
COM(1996)0586

EUR-Lex
COM(1996)0586