EU guarantee for European Investment Bank projects outside the EU

 

SUMMARY OF:

Decision No 466/2014/EU granting an EU guarantee to the European Investment Bank against losses under financing operations supporting investment projects outside the EU

WHAT IS THE AIM OF THE DECISION?

It provides the European Investment Bank (EIB) with an EU guarantee for any losses it might incur from financing projects outside the EU.

It was amended by Decision (EU) 2018/412 which increased the EIB’s lending under an EU guarantee by €5.3 billion. Of this amount, €3.7 billion is earmarked for projects in the public (€1.4 billion) and private (€2.3 billion) sectors to address the root causes of migration.

KEY POINTS

The guarantee:

• applies to EIB loans, loan guarantees and debt capital market instruments* for investment projects in eligible countries;
• requires EIB financing activities to adhere to sound banking practices;
• covers EIB operations signed between 1 April 2014 and 31 December 2020. It may be automatically extended a further 6 months if no new guarantee is agreed;
• is limited to 65% of the total finance allocated;
• may not exceed €32.3 billion;
• contains:
  • €3.7 billion for public and private sector projects to address the causes and consequences of migration;
  • at least 25% of total EIB financing operations for climate action activities;
  • ceilings for different geographical regions and countries;
• consists of a ‘comprehensive guarantee’ (covering all non-payments to the EIB) and a ‘political risk guarantee’ (covering non-payments due to non-transfer of currency, expropriation, war or civil disobedience, breach of contract).

To be eligible for the EU guarantee, EIB financing activities must bring added value and support:

• local private sector development, especially small and medium-sized enterprises (SMEs);
• social and economic infrastructure, including transport, energy, the environment and information and communications technology;
• climate change mitigation and adaptation;
• long-term economic resilience of refugees, migrants and their host and transit communities;
• EU general interests, such as its external, environmental and climate action policies;
• regional integration among countries, including in particular economic integration between pre-accession countries and beneficiaries, Neighbourhood and Partnership countries and the EU;
• developing countries to reduce poverty by encouraging inclusive growth and sustainable economic, environmental and social progress;
• principles of gender equality, pay transparency and equal pay.

Annexes identify the non-EU countries which are potentially eligible, and eligible, for EIB financing under the EU guarantee.

The European Commission:

• updates, with the EIB, the existing regional technical guidelines within 1 year of the decision entering into force;
• reports annually to the European Parliament and the Council on the EIB’s financing operations under the decision;
• produces an evaluation report by 30 June 2019. This includes input for a possible extension of the EU guarantee and is followed by a subsequent report by 31 December 2021;
• has the power, since 8 April 2018, to adopt delegated acts.

The EIB:

• cooperates with:
  • the Commission and the European External Action Service to maximise synergy between its financing and the EU’s budgetary resources;
  • other European and international financial institutions to increase efficiency, share risks and avoid possible duplication.
• assesses and monitors investment projects, carrying out due diligence, especially of environmental, social and human rights standards;
• makes publicly available on its website information on all its financing operations;
• rejects projects involving possible money laundering, terrorism financing, tax avoidance, fraud or evasion;
• notifies promptly OLAF, the European Anti-Fraud Office if it suspects potential fraud, corruption, money laundering or other illegal activity.

FROM WHEN DOES THE DECISION APPLY?

It has applied since 11 May 2014.

BACKGROUND

• The EU guarantee allows the EIB to provide long term financing on attractive terms for projects outside the EU which otherwise would not be compatible with the EIB’s risk appetite, while preventing risks from affecting the EIB’s safeguarding of its credit standing. This enables the bank to keep its lending rates as low as possible.
• The guarantee from the EU budget is provided under the external lending mandate (ELM) between the Commission and the EIB. This supports EIB activity in pre-accession countries, the Neighbourhood and Partnership countries, Asia, Latin America and South Africa.
• For the current ELM period, the EU initially guaranteed €27 billion of EIB operations. This was increased in March 2018 by €5.3 billion, of which €3.7 billion is for public and private projects to tackle migration.
• The increase helps implement the EU's External Investment Plan (EIP) which aims to address the root causes of migration and achieve the United Nations’ sustainable development goals.

KEY TERMS

MAIN DOCUMENT

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, pp. 1-20)

Successive amendments to Decision No 466/2014/EU have been incorporated into the original act. This consolidated version is of documentary value only.

RELATED DOCUMENTS

Report from the Commission to the European Parliament and the Council on 2016 EIB external activity with EU budgetary guarantee (COM(2017) 767 final, 15.12.2017)

Commission Staff Working Document accompanying the document Report from the Commission to the European Parliament and the Council on 2016 EIB external activity with EU budgetary guarantee (SWD(2017) 460 final, 15.12.2017)

last update 03.12.2019