Decision No 1080/2011/EU of the European Parliament and of the Council of 25 October 2011 granting an EU guarantee to the European Investment Bank against losses under loans and loan guarantees for projects outside the Union and repealing Decision No 633/2009/EC

27.10.2011

EN

Official Journal of the European Union

L 280/1

(1)

In addition to its core mission of financing investment in the European Union, the European Investment Bank (EIB) has since 1963 undertaken financing operations outside the Union in support of the Union’s external policies. This allows the budget funds of the Union available to the external regions to be complemented by the financial strength of the EIB for the benefit of recipient countries. In undertaking such financing operations, the EIB contributes to the general guiding principles and policy objectives of the Union, including the development of third countries and the prosperity of the Union in the changed global economic circumstances. The EIB financing operations in support of Union external policies should continue to be conducted in accordance with the principles of sound banking practice.

(2)

Article 209(3) of the Treaty on the Functioning of the European Union (TFEU), in conjunction with Article 208 thereof, provides that the EIB is to contribute, under the terms laid down in its Statute, to the implementation of the measures necessary to further the objectives of Union development cooperation policy.

(3)

In accordance with Article 19 of the Statute of the EIB, applications made directly to the EIB for EIB financing operations to be carried out under this Decision are to be submitted to the Commission for an opinion (‘EIB financing application’).

(4)

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 in external regions have benefited from an EU budgetary guarantee (‘EU guarantee’) administered by the Commission.

(5)

The EU guarantee was established for the period 2007-2011 by Decision No 633/2009/EC of the European Parliament and of the Council of 13 July 2009 granting a Community Guarantee to the European Investment Bank against losses under loans and loan guarantees for projects outside the Community (2).

(6)

The Guarantee Fund for external actions (‘Guarantee Fund’), established by Council Regulation (EC, Euratom) No 480/2009 of 25 May 2009 establishing a Guarantee Fund for external actions (3), provides a liquidity cushion for the Union budget against losses incurred on EIB financing operations and other Union external action.

(7)

In accordance with Decision No 633/2009/EC, the Commission and the EIB have prepared a mid-term review of EIB external financing, based on an independent external evaluation supervised by a steering committee of ‘wise persons’, a review by an external consultancy, and specific evaluations produced by the EIB. On 12 February 2010, the steering committee submitted a report to the European Parliament, the Council, the Commission and the EIB containing its conclusions and recommendations.

(8)

In its report the steering committee concluded that the EU guarantee is an efficient and powerful policy instrument with high financial and political leverage and that it should be maintained in order to cover risks of a political or sovereign nature. Some amendments to Decision No 633/2009/EC were proposed in order to ensure maximum added value and efficiency of the EIB’s external operations.

(9)

It is essential to establish a list of countries potentially eligible for EIB financing under the EU guarantee. It is also appropriate to extend the list of countries eligible for EIB financing under the EU guarantee, as currently set out in Annex I to Decision No 633/2009/EC.

(10)

In order to reflect significant policy developments, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of amending Annex III to this Decision. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level. The Commission, when preparing and drawing up delegated acts, should ensure a simultaneous, timely and appropriate transmission of relevant documents to the European Parliament and to the Council.

(11)

The amounts covered by the EU guarantee in each region should continue to represent ceilings for the EIB financing under the EU guarantee and not targets that the EIB is required to meet.

(12)

In the framework of Union support to third countries to cope with the global economic and financial crisis, the EIB frontloaded its external lending activity in 2009 and 2010 mainly in the pre-accession and the neighbourhood and partnership countries under its current mandate. Moreover, the unrest in the southern Mediterranean in early 2011 calls for Union assistance in providing the affected countries with the means to rebuild and modernise their economies. Therefore, for the remaining period of the mandate, the General Mandate ceiling should be reviewed and increased by EUR 1 684 000 000 to better deal with these temporary and exceptional circumstances without prejudging the ceilings under the next multiannual financial framework.

(13)

The EIB financing operations ensuing from the abovementioned increase in the General Mandate ceiling should respond to the political reforms undertaken by individual partner countries as assessed by the Commission with the involvement of the European External Action Service (EEAS) taking into account European Parliament resolutions and Council decisions and conclusions. The review of the European Neighbourhood Policy and the renewed emphasis on differentiation should also be reflected in that assessment. In pre-accession countries, the EIB financing will continue to complement Union assistance.

(14)

In addition to the regional ceilings, the optional mandate of EUR 2 000 000 000 should be activated and allocated as an envelope to support EIB financing operations in the field of climate change mitigation and adaptation across the regions covered by the mandate. The EIB could contribute its expertise and resources, in close cooperation with the Commission, to support public authorities as well as the private sector in order to address the challenge of climate change and to make the best possible use of available financing. For mitigation and adaptation projects, the resources of the EIB should, where possible and appropriate, be complemented with concessional funds available under the Union budget through the efficient and consistent blending of grants and loans for climate change financing in the context of Union external assistance. In this regard, it is appropriate that the Commission’s annual report to the European Parliament and the Council should contain a detailed report on the financial instruments used for financing these projects, identifying the amounts of EIB financing under the optional mandate and the corresponding amounts of grants.

(15)

Eligibility to receive EIB financing for climate-change mitigation under the EU guarantee could be restricted under the Climate Change Mandate for countries that are deemed not to have committed themselves to meeting appropriate climate change-related targets. Any such restriction of eligibility should be based on complex and comprehensive political assessments. Therefore, the Council should have the power to decide, on a proposal from the Commission with the involvement of the EEAS, to restrict the eligibility of a country to receive EIB financing for climate-change mitigation under the EU guarantee. Such restriction should apply only to EIB financing operations for which an EIB financing application is submitted after the entry into force of this Decision and which are signed after 1 January 2012.

(16)

Some flexibility on regional allocation under the Climate Change Mandate should be provided to allow for the fastest and most effective possible uptake of available financing within the three-year period 2011-2013, while striving to ensure a balanced distribution across regions over that period, based on the established priorities for external aid under the General Mandate.

(17)

The mid-term review of the implementation of the EIB external mandate showed that, although the EIB financing operations carried out in the period covered by the evaluation (2000-2009) were generally in line with Union external policies, the link between Union policy objectives and their operational implementation by the EIB should be strengthened and made more explicit and structured.

(18)

In order to enhance the coherence of the mandate and strengthen the focus of the EIB external financing activity on supporting Union policies, and for the maximum benefit of beneficiaries, this Decision should set out horizontal high-level objectives in the mandate for EIB financing operations across all eligible regions and countries, building on the comparative strengths of the EIB in areas where it has a well-proven track record. In the regions covered by this Decision, the EIB should thus finance projects in the areas of climate change mitigation and adaptation (including via the transfer of technologies related to new energy sources), social and economic infrastructure (in particular, in transport, energy including renewable energy, energy security, energy infrastructure, environmental infrastructure including water and sanitation, as well as information and communication technology), and local private sector development, in particular in support of small and medium-sized enterprises (SMEs). It should be recalled that improving access to financing for SMEs can play an essential role in stimulating economic development and in combating unemployment. Within these areas, regional integration among partner countries, including economic integration between pre-accession countries, neighbourhood countries and the Union, should be an underlying objective for EIB financing operations. The EIB should be able to support Union presence in partner countries through foreign direct investment that contributes to promoting technology and knowledge transfer either under the EU guarantee for investments within the aforementioned areas or at its own risk.

(19)

In order to effectively reach out to SMEs, the EIB should cooperate with local financial intermediary institutions in the eligible countries, in particular to ensure that part of the financial benefits is passed on to their clients and provide added value compared to other sources of finance. Where appropriate, through its cooperation agreements with those intermediary institutions, the EIB should request that their clients’ projects be checked against agreed criteria in line with Union development goals so as to provide added value. The financial intermediaries’ activities in support of SMEs should be fully transparent and be reported regularly to the EIB.

(20)

Moreover, EIB financing operations should contribute to the general principles guiding Union external action, as referred to in Article 21 of the Treaty on European Union (TEU), of promoting and consolidating democracy and the rule of law, human rights and fundamental freedoms, and to the implementation of international environmental agreements to which the Union is a party. In particular, in relation to developing countries, as defined in the list of official development assistance (ODA) recipients established by the Organisation for Economic Cooperation and Development (OECD), EIB financing operations should foster the following: their sustainable economic, social and environmental development, particularly in the most disadvantaged amongst them; their smooth and gradual integration into the world economy; the campaign against poverty; as well as compliance with objectives approved by the Union in the context of the United Nations and other competent international organisations.

(21)

While the EIB’s strength remains its distinctiveness as an investment bank, the EIB should, under this Decision, frame the development impact of its external operations in close coordination with the Commission and under the democratic scrutiny of the European Parliament following the principles of the European Consensus on Development and those set out in Article 208 TFEU, as well as the principles of aid effectiveness outlined in the Paris Declaration of 2005 and the Accra Agenda for Action of 2008. This should be implemented through a number of concrete measures, in particular by reinforcing its capacity to appraise environmental, social and development aspects of projects, including human rights and conflict-related risks, and by promoting local consultation with public authorities and civil society. When carrying out due diligence in respect of the project, the EIB should, where appropriate and in line with the Union’s social and environmental principles, require the project promoter to carry out local consultations and disclose their results to the public. Moreover, the EIB should increase its focus on sectors where it has sound expertise from financing operations within the Union and which will further the development of the country in question, such as access to financing for SMEs and micro-entities, environmental infrastructure including water and sanitation, sustainable transportation, and climate change mitigation, particularly in renewable energy. Financing could also include projects in support of health and education infrastructure when there is clear added value.

(22)

The EIB should also progressively strengthen its activity in support of climate change adaptation, where appropriate working in cooperation with other international financial institutions (IFIs) and European bilateral financial institutions (EBFIs). The additional requirements introduced by this Decision would require access to concessional resources and a gradual adjustment in human resources while efficiency, effectiveness and synergies should be pursued and exploited. EIB activity should also be complementary to Union objectives and priorities relating to institution building and sector reforms. Finally, the EIB should define performance indicators which are linked to development and environment aspects of the projects and their results.

(23)

With the entry into force of the Lisbon Treaty, the function of High Representative of the Union for Foreign Affairs and Security Policy (‘High Representative’) has been created with the aim of increasing the impact and coherence of Union external relations.

(24)

There has also been a broadening and strengthening of Union external relations policies in recent years. This has in particular been the case for the Pre-Accession Strategy, the European Neighbourhood Policy, the Union Strategy for Central Asia, the renewed partnerships with Latin America and south-east Asia, and the Union’s Strategic Partnerships with Russia, China and India. It is also the case for Union development cooperation policies, which have now been extended to include all developing countries. Since 2007, Union external relations have also been supported by new financial instruments, namely the Instrument for Pre-Accession Assistance (IPA), the European Neighbourhood and Partnership Instrument (ENPI), the Development Cooperation Instrument (DCI), the European Instrument for Democracy and Human Rights (EIDHR) and the Instrument for Stability.

(25)

In light of the establishment of the EEAS and following the entry into force of this Decision, the Commission and the EIB should amend the memorandum of understanding on cooperation and coordination in the regions referred to in Council Decision 2006/1016/EC 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 (4), and, as appropriate and with the approval of the High Representative, extend the new memorandum of understanding to the EEAS, in particular as regards the regular and systematic dialogue between the Commission and the EIB at the strategic level, which should include the EEAS, and other aspects within the competence of the EEAS.

(26)

While contributing to the implementation of the measures necessary to further the objectives of Union development cooperation policy in accordance with Article 209(3) TFEU, the EIB should strive to support indirectly the achievement of the 2015 Millennium Development Goals in all regions where it is active.

(27)

With a view to enhancing the coherence of overall Union support in the regions concerned, opportunities should be seized to combine EIB financing with Union budgetary resources when and as appropriate, in the form of, for example, guarantees, risk capital and interest rate subsidies, investment co-financing, alongside technical assistance for project preparation and implementation, through the IPA, the ENPI, the DCI, the EIDHR and the Instrument for Stability. Whenever such a combination of EIB financing with other Union budgetary resources occurs, all financing decisions should clearly identify the resources to be employed. The Commission’s annual report to the European Parliament and to the Council on EIB financing operations carried out under this Decision should contain a detailed breakdown of the budgetary resources and financial instruments used in combination with the EIB financing.

(28)

At all levels, from upstream strategic planning to downstream project development, it should be ensured that EIB external financing operations comply with and support Union external policies and the high-level objectives set out in this Decision. With a view to increasing the coherence of Union external action, dialogue on policy and strategy should be further strengthened between the Commission, the EEAS and the EIB. To the same end, there should be enhanced cooperation and early mutual exchange of information between the Commission, the EEAS and the EIB at operational level. EIB offices outside the Union should primarily be located within Union delegations in order to foster such cooperation while sharing operating costs. It is of particular importance to have an early exchange of views between the Commission, the EEAS and the EIB, as appropriate, in the process of preparing programming documents in order to maximise synergies between the activities of these three Union bodies.

(29)

The practical measures for linking the General Mandate objectives and their implementation are to be set out in regional technical operational guidelines. Such guidelines should be consistent with the wider Union regional policy framework set out in this Decision. These guidelines should reflect Union country strategies and aim to ensure that EIB financing is complementary to corresponding Union assistance policies, programmes and instruments in the different regions.

(30)

The EIB should, in consultation with the Commission, prepare an indicative multiannual programme of the planned volume of signatures of EIB financing operations, so as to ensure appropriate budgetary planning for provisioning the Guarantee Fund and to ensure compatibility of the EIB’s forecast financing with the ceilings established in this Decision. The Commission should take account of this forecast in its regular budget programming transmitted to the budgetary authority.

(31)

The development of a Union platform for cooperation and development should be studied with a view to optimising the functioning of mechanisms for the blending of grants and loans in the external regions. For this purpose, the Commission should create a group of experts of Member States, the EEAS and the EIB which would assess the costs and benefits of such a platform. In its reflections, that group should consult other relevant actors, including European multilateral and bilateral finance institutions. Such a platform would continue to promote synergies and mutual reliance arrangements based on the comparative advantage of the different institutions while respecting the role and prerogatives of the Commission and of the EIB in implementing respectively the Union budget and EIB loans. Based on the findings of that group of experts, the Commission should report to the European Parliament and to the Council by mid-2012 and, if appropriate, make a proposal for the platform.

(32)

The EIB should be encouraged to increase its operations and to diversify its financial instruments outside the Union without recourse to the EU guarantee so that use of the guarantee can be encouraged for countries and projects with poor access to the market, taking into account debt sustainability considerations, and where the guarantee therefore provides greater added value. Consequently, and always with the aim of supporting the objectives of the Union external relations policy, the EIB, while taking into account its own risk absorption capacity, should be encouraged to increase the amounts it lends at its own risk, including through the support of Union economic interests, particularly in pre-accession countries and neighbourhood countries and in investment grade countries in other regions, but also in sub-investment grade countries when the EIB has the appropriate third party guarantees. In consultation with the Commission, the EIB should develop a policy for deciding between the allocation of projects to either the mandate under EU guarantee or to EIB own-risk financing. Such a policy would in particular take into account the creditworthiness of the countries and projects concerned.

(33)

The EIB should consider increasing its financing operations to be carried out under this Decision for sub-sovereign public entities, where such operations have an appropriate EIB credit risk assessment.

(34)

The EIB should expand the range of new and innovative financing instruments it offers, including by focusing more on developing guarantee instruments in so far as is possible, taking account of the EIB’s risk policies. Moreover, the EIB should be encouraged to provide loans in local currencies and issue bonds in local markets, provided that partner countries put in place the necessary structural reforms, in particular in the financial sector, as well as other measures to facilitate EIB activities.

(35)

In order to ensure that the EIB meets the requirements of the mandate across regions and sub-regions, sufficient human and financial resources should, over time, be allocated to its external activities. This should in particular include having sufficient capacity to support Union development cooperation objectives, to increase focus on ex-ante appraisal of the environmental, social and development aspects of its activities, and to effectively monitor projects during implementation. Opportunities to further enhance efficiency and effectiveness should be exploited, and synergies should be actively pursued.

(36)

In its financing operations outside the Union that fall within the scope of this Decision, the EIB should endeavour further to enhance coordination and cooperation with IFIs and EBFIs, including, where appropriate, cooperation on sector conditionality and mutual reliance on procedures, use of joint co-financing and participation in global initiatives, such as those promoting aid coordination and effectiveness. Such coordination and cooperation should strive to minimise possible duplication of costs and unnecessary overlap. These efforts are to be based on reciprocity. The principles set out in this Decision should also be applied when EIB financing is implemented through cooperation agreements with other IFIs and EBFIs.

(37)

In particular, in the countries of common intervention outside the Union, the EIB should improve its cooperation with the other European financial institutions through agreements such as the tripartite memorandum of understanding between the Commission, the EIB Group and the European Bank for Reconstruction and Development (EBRD), in respect of cooperation outside the Union and through allowing the EIB Group and the EBRD to act in a complementary way by relying on their respective comparative advantages.

(38)

The reporting and transmission of information by the EIB to the Commission should be strengthened in order to allow the Commission to enhance its annual report to the European Parliament and to the Council on the EIB financing operations carried out under this Decision. The additional reporting requirements mentioned in this recital should apply only to EIB financing operations for which the EIB financing application is submitted after the date of entry into force of this Decision and which are signed after 1 January 2012. The report should in particular assess the compliance of EIB financing operations with this Decision, taking into account the regional technical operational guidelines, and should include sections on the following: EIB added value, such as support to Union external policies; mandate requirements; the quality of financed operations; the transfer of financial benefits to clients; and sections on cooperation, including co-financing, with the Commission and with other IFIs and bilateral donors. The report should also assess the extent to which the EIB has taken into account economic, financial, environmental and social sustainability in the design and monitoring of the projects financed. It should also contain a specific section devoted to a detailed evaluation of the measures taken by the EIB to comply with the current mandate as established by Decision No 633/2009/EC, paying particular attention to the EIB financing operations using financial vehicles situated in non-cooperative jurisdictions. In its financing operations the EIB should adequately implement its policies towards weakly regulated or non-cooperative jurisdictions to contribute to the international fight against tax fraud and tax evasion. The report should also include an appraisal of social and development-related aspects of projects. It should be made public, thus allowing civil society and recipient countries to express their views. Where necessary, the report should include references to significant changes in circumstances that would justify further amendments to the mandate before the end thereof. The report should in particular include a breakdown of EIB financing under this Decision in combination with all Union financial resources and other donors, thus giving an overview of the financial exposure of financing operations.

(39)

EIB financing operations should continue to be managed in accordance with the EIB’s own rules and procedures, including appropriate control measures and measures taken to avoid tax evasion, as well as with the relevant rules and procedures concerning the Court of Auditors and the European Anti-Fraud Office (OLAF).

(40)

When submitting the proposal on the EU guarantee under the next multiannual financial framework, the Commission should be invited in particular to examine, in close cooperation with the EIB and taking into account the implications of the provisioning of the Guarantee Fund, the ceilings covered by the EU guarantee, the list of potentially eligible countries and the possibility for the EIB to provide micro-credit financing and other types of instruments. The Commission and the EIB should also examine the possibilities of enhancing, in the future, synergy between the financing through the IPA, the ENPI, the DCI, the EIDHR and the Instrument for Stability and the external mandate of the EIB.

(41)

This Decision should be without prejudice to any negotiations and decisions on the next multiannual financial framework.

(42)

Therefore, and for the reasons of legal certainty and clarity, Decision No 633/2009/EC should be repealed,

(a)

a General Mandate of EUR 27 484 000 000;

(b)

a Climate Change Mandate of EUR 2 000 000 000.

(a)

local private sector development, in particular support to SMEs;

(b)

development of social and economic infrastructure, including transport, energy, environmental infrastructure, and information and communication technology;

(c)

climate change mitigation and adaptation, as referred to in Article 2(4).

(a)

strategic documents prepared by the Commission and/or the EEAS as appropriate, such as country and regional strategy papers, indicative programmes, action plans and pre-accession documents;

(b)

the EIB’s strategic planning documents and project pipelines;

(c)

other policy and operational aspects.

(a)

non-transfer of currency;

(b)

expropriation;

(c)

war or civil disturbance;

(d)

denial of justice upon breach of contract.