2006/1016/EC: Council Decision of 19 December 2006 granting a Community guarantee to the European Investment Bank against losses under loans and loan guarantees for projects outside the Community

• Articles: 12

Article 1 Guarantee and ceilings

1.   The Community shall grant the European Investment Bank (the ‘EIB’) a global guarantee (the ‘Community guarantee’) in respect of payments not received by the EIB, but due to it, in respect of loans and loan guarantees for EIB eligible investment projects carried out in countries covered by this Decision, where the loan financing or guarantee has been granted according to a signed agreement which has neither expired nor been cancelled (‘EIB Financing Operations’) and has been granted in accordance with the EIB’s own rules and procedures and in support of the relevant external policy objectives of the European Union.

2.   The Community guarantee shall be restricted to 65 % of the aggregate amount of credits disbursed and guarantees provided under EIB Financing Operations, less amounts reimbursed, plus all related sums.

3.   The maximum ceiling of the EIB Financing Operations throughout the period referred to in paragraph 6, less amounts cancelled, shall not exceed EUR 27 800 million. This maximum ceiling shall be broken down into two parts:

(a)

a basic ceiling of a fixed maximum amount of EUR 25 800 million, including its regional distribution defined in paragraph 4, to cover the entire period referred to in paragraph 6;

(b)

an optional mandate of EUR 2 000 million. The activation in whole or in part of this optional amount and its regional distribution will be decided by the Council in accordance with the procedure foreseen in Article 181a(2) of the Treaty. The decision will be based on the outcome of the mid-term review set out in Article 9.

4.   The basic ceiling referred to in paragraph 3(a) shall be broken down into the following binding regional ceilings:

(a)

Pre-Accession countries: EUR 8 700 million;

(b)

Neighbourhood and Partnership countries: EUR 12 400 million;

broken down into the following indicative sub-ceilings:

(i)

Mediterranean: EUR 8 700 million;

(ii)

Eastern Europe, Southern Caucasus and Russia: EUR 3 700 million;

(c)

Asia and Latin America: EUR 3 800 million;

broken down into the following indicative sub-ceilings:

(i)

Latin America: EUR 2 800 million;

(ii)

Asia: EUR 1 000 million;

(d)

Republic of South Africa: EUR 900 million.

5.   Within the regional ceilings, the governing bodies of the EIB may decide to reallocate an amount of up to 10 % of the regional ceiling between sub-ceilings.

6.   The Community guarantee shall cover EIB Financing Operations signed during the period beginning on 1 February 2007 and ending on 31 December 2013.

7.   If, on expiry of the period referred to in paragraph 6, the Council has not adopted a decision granting a new Community Guarantee to the EIB for its Financing Operations outside the Community, that period shall be automatically extended by six months.

Article 2 Countries covered

1.   The list of countries eligible or potentially eligible for EIB financing under Community guarantee is laid down in Annex I.

2.   For countries listed in Annex I and marked with ‘*’ and for other countries not listed in Annex I, the eligibility of such country for EIB financing under Community guarantee shall be decided by the Council on a case by case basis in accordance with the procedure provided for in Article 181a(2) of the Treaty.

3.   The Community guarantee shall only cover EIB Financing Operations carried out in countries having concluded a framework agreement with the EIB establishing the legal conditions under which such EIB Financing Operations are to be carried out.

4.   In the event of serious concerns over the political or economic situation in a specific country, the Council may decide to suspend new EIB financing under Community guarantee in that country in accordance with the procedure provided for in Article 181a(2) of the Treaty.

5.   The Community guarantee shall not cover EIB Financing Operations in a specific country when the agreement concerning such EIB Financing Operations has been signed after that country’s accession to the EU.

Article 3 Consistency with policies of the European Union

1.   The consistency of EIB external actions with the external policy objectives of the European Union shall be strengthened with a view to maximising synergies of EIB financing and budgetary resources of the European Union, notably through regular and systematic dialogue and early consultation on:

(a)

strategic documents prepared by the Commission, such as country and regional strategy papers, action plans and pre-accession documents;

(b)

the EIB’s strategic planning documents and project pipelines;

(c)

other policy and operational aspects.

2.   The cooperation shall be carried out on a regionally differentiated basis, taking into consideration the EIB’s role as well as the policies of the European Union in each region.

3.   An EIB Financing Operation will not be included under the cover of the Community guarantee in case the Commission delivers a negative opinion on such operation within the framework of the procedure provided for in Article 21 of the Statutes of the EIB.

4.   The consistency of EIB Financing Operations with the external policy objectives of the European Union shall be monitored in accordance with Article 6.

Article 4 Cooperation with other International Financial Institutions

1.   EIB Financing Operations shall increasingly be carried out, where appropriate, in cooperation between and/or by means of cofinancing by the EIB and other IFIs, or European bilateral institutions, in order to maximise synergies, cooperation and efficiency and to ensure reasonable sharing of risks and coherent project and sector conditionality.

2.   This cooperation shall be facilitated by coordination, carried out notably in the context of Memoranda of Understanding, where appropriate, between the Commission, the EIB and the main IFIs and European bilateral institutions operating in the different regions.

3.   The cooperation with IFIs and other donors shall be assessed at the mid-term review set out in Article 9.

Article 5 Coverage and terms of the Community Guarantee

1.   For EIB Financing Operations entered into with a State, or guaranteed by a State, and for other EIB Financing Operations entered into with regional or local authorities or government-owned and/or government-controlled public enterprises or institutions, where such other EIB Financing Operations have an appropriate EIB credit risk assessment taking into account the credit risk situation of the country concerned, the Community guarantee shall cover all payments not received by the EIB, but due to it (the ‘Comprehensive Guarantee’).

For the purposes of this Article and Article 6(4), the notion of State includes the West Bank and Gaza Strip, as represented by the Palestinian Authority, and Kosovo, as represented by the UN Interim Administration Mission.

2.   For EIB Financing Operations other than those indicated in paragraph 1, the Community guarantee shall cover all payments not received by the EIB, but due to it, where the non-receipt has been caused by the realisation of one of the following political risks (the ‘Political Risk Guarantee’):

(a)

non-transfer of currency;

(b)

expropriation;

(c)

war or civil disturbance;

(d)

denial of justice upon breach of contract.

Article 6 Reporting and accounting

1.   The Commission shall report annually to the European Parliament and the Council on the EIB Financing Operations carried out under this Decision. The report shall include an assessment of impact and effectiveness of EIB Financing Operations at project, sector, country and regional level as well as the contribution of the EIB Financing Operations to the fulfilment of the external policy objectives of the European Union, taking into account the operational objectives of the EIB. It shall also include an assessment of the extent of cooperation between the EIB and the Commission and between the EIB and other IFIs and bilateral donors.

2.   For the purposes of paragraph 1, the EIB shall provide the Commission with yearly reports of EIB Financing Operations carried out under this Decision and of the fulfilment of the external policy objectives of the European Union, including cooperation with other IFIs.

3.   The EIB shall provide the Commission with statistical, financial and accounting data on each of the EIB Financing Operations as necessary to fulfil its reporting duties or requests by the European Court of Auditors as well as with an auditor’s certificate on the outstanding amounts of the EIB Financing Operations.

4.   For the purposes of the Commission’s accounting and reporting of the risks covered by the Comprehensive Guarantee, the EIB shall provide the Commission with the EIB’s risk assessment and grading information concerning EIB Financing Operations with borrowers or guaranteed obligors other than States.

5.   The EIB shall provide the information referred to in paragraphs 2, 3 and 4 at its own expense.

Article 7 Recovery of payments made by the Commission

1.   If the Commission makes any payment under the Community guarantee, the EIB shall, in the name and on behalf of the Commission, pursue the recovery of claims for the amounts paid.

2.   The EIB and the Commission shall enter into an agreement laying down the detailed provisions and procedures relating to recovery of claims no later than the date of conclusion of the agreement referred to in Article 8.

Article 8 Guarantee agreement

The EIB and the Commission shall enter into a guarantee agreement laying down the detailed provisions and procedures relating to the Community guarantee.

Article 9 Review of the Decision

1.   The Commission shall present to the European Parliament and the Council a mid-term report on the application of this Decision by 30 June 2010, accompanied, as appropriate, by a proposal for its amendment, drawing upon an external evaluation whose terms of reference are specified in Annex II of this Decision.

2.   The Commission shall present a final report on the application of this Decision by 31 July 2013.

Article 10 Application

This Decision shall take effect on the third day following its publication in the Official Journal of the European Union .

Schedules & Appendices

ANNEX I

ANNEX I

Regions and countries covered by Article 1

A.   PRE-ACCESSION COUNTRIES

1.

Candidate countries

Croatia, Turkey, the former Yugoslav Republic of Macedonia.

2.

Potential candidate countries

Albania, Bosnia and Herzegovina, Montenegro, Serbia, Kosovo under United Nations Security Council Resolution 1244 (1999).

B.   NEIGHBOURHOOD AND PARTNERSHIP COUNTRIES

1.

Mediterranean

Algeria, Egypt, the West Bank and the Gaza Strip, Israel, Jordan, Lebanon, Libya ( * ), Morocco, Syria, Tunisia.

2.

Eastern Europe, Southern Caucasus and Russia

Eastern Europe: Moldova, Ukraine, Belarus ( * )

Southern Caucasus: Armenia, Azerbaijan, Georgia;

Russia: Russia.

C.   ASIA AND LATIN AMERICA

1.

Latin America

Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, Venezuela.

2.

Asia

Asia (without Central Asia):

Afghanistan ( * ), Bangladesh, Bhutan ( * ), Brunei, Cambodia ( * ), China (including Hong Kong and Macao Special Administrative Regions), India, Indonesia, Iraq ( * ), South Korea, Laos, Malaysia, Maldives, Mongolia, Nepal, Pakistan, the Philippines, Singapore, Sri Lanka, Taiwan ( * ), Thailand, Vietnam, Yemen.

Central Asia:

Kazakhstan ( * ), Kyrgyzstan ( * ), Tajikistan ( * ), Turkmenistan ( * ), Uzbekistan ( * ).

D.   SOUTH AFRICA

South Africa.

ANNEX II

ANNEX II

Mid-term review and terms of reference for the evaluation of the EIB’s external mandate

Mid-term review

A substantive mid-term review of EIB external financing will be conducted by 2010. This review, which will be fully informed by an independent external evaluation to be transmitted to the Council, will provide the basis for a decision by Member States whether and to what extent to release any optional mandate topping-up possible lending in the period following 2010 in a second stage, whether to make other amendments to the mandate, and how to ensure maximum value-added and efficiency in the EIB's operations. The Commission will present the mid-term review to the European Parliament and to the Council by 30 June 2010, as the basis for any proposal for the amendment of the mandate. The Council will decide as appropriate after consulting the European Parliament.

The framework of the evaluation

It will include:

a.

an evaluation of the EIB's external financing activities. Parts of the evaluation will be conducted in cooperation with the EIB's and the Commission's evaluation departments;

b.

an assessment of the wider impact of the EIB's external lending on interaction with other IFIs and other sources of finance.

The evaluation will be supervised and managed by a steering committee comprising several ‘wise persons’ appointed by the EIB Board of Governors, an EIB and a Commission representative. The steering committee will be chaired by one such ‘wise person’. It will convene no later than during the first semester of 2008.

The steering committee will be supported by the EIB's and the Commission's evaluation departments and by external expertise. These external experts will be selected through a Commission tender process. The steering committee will be consulted on the terms of reference and on the criteria for the selection of the external experts. The costs of external experts will then be borne by the Commission and will be covered by the budget line dedicated to the provisioning of the Guarantee Fund.

The final evaluation report submitted by the steering committee will draw clear conclusions, based on the information gathered, to base the decision of the mid-term review on whether to release the optional tranche for the remaining term of the mandate and on the regional distribution of any additional financing.

The scope of the evaluation

The evaluation will cover the previous mandates (2000-2006) and the first years of the 2007-2013 mandate until end 2009. It will examine project financing volumes and disbursements by country as well as technical assistance and risk capital operations. Considering the effects at project, sector, regional and country level, the evaluation will base its conclusions on:

a.

the in-depth evaluation of the relevance, performance (effectiveness, efficiency and sustainability) of EIB operations against their specific regional objectives as originally set within the relevant EU external policies as well as of their value-added (to be conducted in association with the EIB's evaluation unit and Commission services);

b.

the assessment of consistency with the relevant EU external policies and strategies and of the additionality and value-added of EIB operations in the first years of the 2007-2013 mandate in the framework of the specific regional objectives in the 2007-2013 mandate and of the corresponding performance indicators to be set by the EIB (to be conducted in association with the EIB's evaluation unit and Commission services).

In these assessments, value-added of EIB operations will be measured against three elements: support of EU policy objectives, the quality of the projects themselves and alternative sources of financing.

a.

analysis of the financial needs of the beneficiaries, their absorption capacity and the availability of other sources of private or public financing for the relevant investments;

b.

the assessment of the cooperation and coherence of actions between EIB and the Commission;

c.

the assessment of the cooperation and synergies between the EIB and international and bilateral finance institutions and agencies.