Commission report to the budgetary authority on guarantees covered by the general budget - Situation at 31 December 1996
COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, 05. 06. 1997 COM(97) 273 final COMMISSION REPORT TO THE BUDGETARY AUTHORITY ON GUARANTEES COVERED BY THE GENERAL BUDGET - SITUATION AT 31 DECEMBER 1996 i1 «•) 1/. '"'Vi1' 1 " ' 11" <£ REPORT ON GUARANTEES COVERED BY THE GENERAL BUDGET SITUATION AT 31 DECEMBER 1996 This report describes the situation as regards budget guarantees at 31 December 1996. It is in response to the statement made by the Commission, when the vote was taken on supplementary and amending budget No 1/91, that it would report to the budgetary authority twice a year on budget guarantees and the corresponding risks. This report is presented in accordance with Article 134(g) of the Financial Regulation applicable to the general budget of the European Communities. The Commission has already presented eleven reports to the budgetary authority. The report is in two parts with an annex: 1) Events since the last report, the risk situation and the activation of budget guarantees. 2) Evaluation of potential risks. Economic and financial situation of non-Community countries benefiting from the most important operations. ^ CONTENTS PART ONE: EVENTS SINCE THE REPORT AT 30 JUNE 1996, THE RISK SITUATION AND ACTIVATION OF BUDGET GUARANTEES I. INTRODUCTION: TYPES OF OPERATION. I. A OPERATIONS WITH MACROECONOMIC OBJECTIVES , LB OPERATIONS WITH MICROECONOMIC OBJECTIVES. II. EVENTS SINCE THE REPORT AT 30 JUNE 1996 IL A BULGARIA II II. B UKRAINE II II. C MOLDOVA II II. D LOANS GRANTED BY THE EUROPEAN INVESTMENT BANK IN THE OTHER NON-MEMBER COUNTRIES (DEVELOPING COUNTRIES OF ASIA AND LATIN AMERICA) WITH WHICH THE COMMUNITY HAS CONCLUDED COOPERATION AGREEMENTS III. RISK SITUATION III. A AMOUNT OUTSTANDING AT 31 DECEMBER 1996 (TABLE 1) III. B MAXIMUM ANNUAL RISK BORNE BY THE COMMUNITY BUDGET: OPERATIONS DISBURSED AT 31 DECEMBER 1996 (SEE TABLE 2) III. C MAXIMUM THEORETICAL ANNUAL RISK BORNE BY THE COMMUNITY BUDGET (SEE TABLE 3) IV. ACTIVATION OF BUDGET GUARANTEES IV-. AEIB LOANS TO NON-MEMBER COUNTRIES IV. B BORROWING/LENDING OPERATIONS OR LOAN GUARANTEES FOR NON-MEMBER COUNTRIES V. ANALYSIS OF THE COMMUNITY'S THEORETICAL LENDING AND GUARANTEE CAPACITY IN RESPECT OF NON-MEMBER COUNTRIES VI. RELATIVE SOLIDITY OF THE GUARANTEE FUND 2 2 2 2 3 4 5 9 9 9 10 11 PART TWO: EVALUATION OF POTENTIAL RISKS: ECONOMIC AND FINANCIAL COUNTRIES SITUATION OF THE NON-MEMBER BENEFITING FROM THE MOST IMPORTANT LOAN OPERATIONS L INTRODUCTION II. CENTRAL AND EAST EUROPEAN COUNTRIES III. NEWLY INDEPENDENT STATES IV. MEDITERRANEAN COUNTRIES ANNEX I. EXPLANATORY NOTES ON THE SITUATION OF RISKS COVERED BY THE COMMUNITY BUDGET I. A TABLES 1 TO 3 LB LOAN OPERATIONS COVERED BY A BUDGET GUARANTEE I. C EXPECTED SIGNATURE AND DISBURSEMENT OF EIB LOANS I. D PAYMENT OF THE BUDGET GUARANTEE 13 13 16 19 22 22 24 29 30 <J-L II. METHODOLOGICAL NOTE ON THE ANALYSIS OF THE COMMUNITY'S ESTIMATED LENDING CAPACITY IN RESPECT OF NON-MEMBER COUNTRIES OVER THE PERIOD 31 1997-99 UNDER THE GUARANTEE FUND MECHANISM 31 II. A RESERVE FOR LOAN GUARANTEES TO NON-MEMBER COUNTRIES (1) 31 II. B BASES FOR THE CALCULATION OF THE PROVISIONING OF THE GUARANTEE FUND (2) II. C BASIS FOR THE PROVISIONING OF THE FUND IN THE EVENT OF A PART GUARANTEE 32 II. D PROVISIONING OF THE GUARANTEE FUND (3) ILE MARGIN REMAINING IN THE GUARANTEE RESERVE (4) II. F RESIDUAL LENDING CAPACITY (5) 32 33 33 III. TABLES: COUNTRY-RISK INDICATORS 34 PART ONE: EVENTS SINCE THE REPORT AT 30 JUNE 1996, THE RISK SITUATION AND ACTIVATION OF BUDGET GUARANTEES I. INTRODUCTION: TYPES OF OPERATION The risks covered by the Community budget derive from a variety of lending and guarantee operations which can be divided into two categories: loans with macroeconomic objectives and loans with microeconomic objectives. LA Operations with macroeconomic objectives The first of these are the balance of payments loans for Member States or non-member countries, normally carrying strict economic conditions and undertakings. This category includes the loan of ECU 1 250 million to finance imports of agricultural products and foodstuffs into the former Soviet Union, since the risk involved in this operation depends to a large extent on macroeconomic and political developments in the recipient countries. LB Operations with microeconomic objectives These are loans to finance projects which are usually repaid over the long term from funds which these projects are expected to generate; as a rule, they are granted to companies, financial institutions or non-member countries and, in addition to the Community guarantee, are covered by the usual guarantees demanded by banks. This covers Euratom and NCI loans in Member States and the Euratom and EEB loans outside the Community (Mediterranean, Central and Eastern Europe, certain non-member countries - developing countries of Asia and Latin America and South Africa). IL EVENTS SINCE THE REPORT AT 30 JUNE 1996 The main events in the second half of 1996 were as follows: II. A Bulgaria II As part of G-24's new aid for 1992 and 1993, the Commission, on behalf of the Community, was empowered to borrow ECU 110 million in two tranches for a maximum period of seven years. The proceeds of this operation were to be on-lent to Bulgaria. Because of delays in the process of economic reform in Bulgaria, implementation of this operation was deferred until December 1994 when the first tranche of ECU 70 million was finally paid. The second tranche of ECU 40 million was paid in August 1996. It will be repaid in one instalment on 29 August 2003 and the interest, which is at variable rates, is payable half-yearly. -2 ILB Ukraine II As part of an overall aid programme for Ukraine, the Council Decision of 23 October 1995 empowered the Commission, on behalf of the Community, to borrow ECU 200 million for a maximum period often years. The proceeds of this operation are to be on-lent to Ukraine in two tranches. Half of the first tranche, i. e. ECU 50 million of the ECU 100 million provided, was paid on 29 August 1996. The loan is to be repaid in five equal annual instalments from the sixth year onwards. The full loan will have been repaid by 29 August 2006. The other half of the first tranche, i. e. ECU 50 million of the ECU 100 million provided, was paid on 30 October 1996. The loan is to be repaid in five equal annual instalments from the sixth year onwards. The full loan will have been repaid by 30 October 2006. The interest, which is at variable rates, is payable half-yearly. II. C Moldova H As part of an overall aid programme for Moldova, the Council Decision of 25 March 1996 empowered the Commission, on behalf of the Community, to borrow ECU 15 million for a maximum period often years. The proceeds of this operation are to be on-lent to Moldova. The loan was paid in one tranche on 30 December 1996. The loan is to be repaid in five equal annual instalments from the sixth year onwards. The full loan will have been repaid by 30 October 2006. The interest, which is at variable rates, is payable half-yearly. ILD Loans granted by the European Investment Bank in the other non~member countries (developing countries of Asia and Latin America) with which the Community has concluded cooperation agreements On 12 December 1996 the Council granted the EIB a 100% Community guarantee for loans to projects of mutual interest in certain non-member countries {developing<pcountries of Asia and Latin America) with which the Community has concluded cooperation agreements. This guarantee is restricted to an overall loan ceiling of ECU 275 million to be granted in 1996. If, on 31 December 1996, the loans granted by the EIB have not attained the overall amount of ECU 275 million, the period during which this Decision remains applicable will be automatically extended by six months. ffl. RISK SITUATION There are two possible methods for evaluating the risks borne by the Community budget: - - the method, often used by bankers, of the total amount of capital outstanding for the operations concerned on a given date; the more budgetary approach of calculating the maximum amount which the Community could have to pay out in each financial year. The second approach itself has been applied in two different ways: - by reference only to actual disbursements at 31 December 1996, giving the minimum level of risk to the Community assuming that there are no early repayments (see Table 2 below); - on a more forward-looking basis, by reference to a!l the operations decided by the Council or proposed by the Commission in order to estimate the impact on future budgets, giving the maximum risk borne by the Community assuming that the Commission's proposals are accepted (see Table 3 below). The latter exercise gives some idea about the future level of risks connected with the proposals made. However, a number of assumptions have to be made about dates of disbursement and terms of repayment (details are given in the annex) as well as interest1 and exchange rates. 2 The results are shown in Tables 1 to 3 which assess the risk relating to countries inside the Community and countries outside the Community. The overall figures quoted cover risks of different types; loans to one country in the case of macrofinancial assistance and loans for projects guaranteed by the borrowers in the case of NCI and ED3 operations, for example. The following analysis distinguishes between total risk, the risk in respect of Member States and the risk in respect of non-member countries. III. A Amount outstanding at 31 December 1996 (Table 1) total risk at 31 December 1996 came The ECU 11 705 million at 30 June 1996, an increase of ECU 171 million. 3 to • ECU 11 876 million as against 1 2 3 An average interest rate of 10% is assumed. The exchange rate used for loans in currencies other than ecus are those of 31 December 1996. In the case of loans in currencies other than the ecu, part of the change over the past six months is due to exchange rate differences. 4- Table 1 shows the operations which have had an effect on the amount outstanding since the last report. Amount outstanding at 30 June 1996 Loan repayments Euratom NCI EIB Exchange rate differences between ecu and other currencies Loans disbursed NCI Bulgaria Moldova Ukraine EIB Amount outstanding at 31 December 1996 in Mio ECU 11. 705 123 187,5 81 -48,5 0,01 40 15 100 456 11. 876 The capital outstanding in respect of operations in the Member States was ECU 5 564 million at 31 December 1996, a fall of 7. 03% compared with 30 June 1996. This fall is mainly due to the repayment of ECU 310,5 million in Euratom and NCI loans The amount outstanding from other operations in the Member States has remained stable. The capital outstanding from non-member countries at 31 December 1996 was ECU 6 312 million, an increase of 10. 35% compared with 30 June 1996. III. B Maximum annual risk borne by the Community budget: operations disbursed at 31 December 1996 (see Table 2) The total risk, which comes to ECU 3 095 million in 1997, will steadily increase to around ECU 3 546 million in 2t)00, although the situation in 1999 is special in that there will be no capital repayments for the balance-of-payments loans to the Member States and in that capital repayments on loans to Hungary, the Czech and Slovak Republics and the ECU 290 million loan to Bulgaria end in 1998. The risk for 1997 in respect of the Member States comes to ECU 1 429 million. 5- This figure changes two years) on balance-of-payment loans to Greece and Italy. The maximum risk is highest in the even years up to 2000 when it will reach ECU 2 757 million. the capital repayments (every in line with The risk for 1997 in respect of non-member countries comes to ECU 1 666 million as the following capital payments fall due: - ECU 80 million from Hungary; - ECU 127 million from the Czech Republic; - ECU 63 million from the Slovak Republic; - ECU 140 million from Bulgaria; - ECU 250 million from Algeria; ~ ECU 160 million from Israel. - ECU 143 million from the Republics of the former Soviet Union. The risk will then drop to ECU 1 275 million in 1998 and to ECU 806 million in 1999. ÎII. C Maximum theoretical annual risk borne by the Community budget (see Table 3) This risk comes to ECU 3 381 million in 1997 and will increase regularly until 2000 (except in 1999 when it will total ECU 2 072 million). The trend in the maximum risk in respect of the Member States is much the same as in Table 2 up to 2000 when the risk will amount to ECJJ 3 154 million. It will fall to ECU 2 366 million in 2003 and ECU 2 188 million in 2004. The risk in respect of non-member countries will rise from ECU 1 781 million in 1997 to ECU 1 396 million in 1999. The risk will increase from 2000 until 2004 when it will reach ECU 3 370 million. CAPITAL OUTSTANDING IN RESPECT OF OPERATIONS DISBURSED TABLE 1 Operation MEMBER STATES A. Balance of payments 1. Greece 2. Italy B. Others 3. Euratom 4. NCI and NCI earthquakes 5. EIB Mediterranean, Spain, Greece, Port. M E M B ER S T A T ES - T O T AL THIRD COUNTRIES A. Financial assistance 1. Hungary 2. Czech Republic 3. Slovak Republic 4. Bulgaria 5. Romania 6. Algeria 7. Israel 8. Baltic States 9. Moldova 10. Ukraine 1 1. Belarus 12. Former Soviet Union B. Other 13. EIB Mediterranean 14. EIB Central & E. Europe I 15. EIB Central & E. Europe II 16. EIB Asia, Latin America 17. EIB South Africa (ECU million) Authorized ceiling Capital outstanding 30. 06. 96 Capital outstanding 31. 12. 96 Remainder to be disbursed 31. 12. 96 2200 8000 14000 4000 6830 1500 26330 1050 250 125 400 580 600 160 220 60 285 55 1250 6362 1700 3000 1025 300 500 3512 695,2 931,8 345,9 5985 180 250 125 360 510 500 160 135 45 85 30 143 1981 884 141 191 5 00 3479 572,48 748 265 1200 4 0 00 0 0 0 5564 5200 180 250 125 400 510 500 160 135 60 185 30 144 2092 971 335 204 32 260 0 0 0 70 100 0 85 0 100 25 0 2497 6 02 2645 443 69 T H I RD C O U N T R I ES - T O T AL 17422 5720 6312 6896 G R A ND T O T AL 43752 11705 11876 12096 1) No disbursement is planned. 2) The third and fourth tranches had still not been paid at 31. 12. 96. So far, the Italian Government has not requested payment. ANNEX TO TABLE 1 SITUATION IN RESPECT OF EIB OPERATIONS (31. 12. 96) Operations Credit line authorized Loans made available, minus cancellations Initial disbursement A m o u nt o u t s t a n d i ng at 31. 12. 1996 EIB Mediterranean, Spain, Greece, Port. Third countries EIB M e d. Central & Eastern Europe I Central & Eastern Europe II Asia, Latin America South Africa 1500 6362 1700 3000 1025 300 1465 5660 1628 2980 647 101 1543 3143 1026 335 204 32 265 2092 971 335 204 32 NB: The fact that the initial disbursement sometimes exceeds the authorized ceiling is due to differences in the ecu rate between the date on which the contracts were signed and 31. 12. 96. - 7- TABLE 2 MAXIMUM ANNUAL RISK BORNE BY THE COMMUNITY BUDGET Estimate in ECU million based on all opérations disbursed at 31. 12. 1996 (E 1997 1998 1999 2000 2001 2002 2003 2004 TOTAL MEMBER STATES CAPITAL A. Balance of payments 1. Greece 2. Italy B. Structural loans 3. Euratom 4. NCI and NCI EQ 5. EIB Med. Old. Prot. Sp. Gr. Port 500 989 92 50 44 453 532 58 Capital - subtotal 1042 1675 2490 12 40 37 2579 16 40 39 95 INTEREST A. Balance of payments 1. Greece 2. Italy B. Structural loans 3. Euratom 4. NCI and NCI EQ 5. EIB Med. Old. Prot. Sp. Gr. Port 48 211 42 63 23 48 211 10 16 18 157 157 3 12 14 1 10 11 Interest - subtotal 386 301 186 178 71 20 92 7 7 14 22 22 21 21 2 5 / 2 3 5 500 3479 572 748 257 5557 95 735 55 113 83 1082 16 15 30 2 2 3 MEMBER STATES - TOTAL 1429 1976 280 2757 106 30 27 34 6638 NON-MEMBER COUNTRIES CAPITAL A. Financial assistance 6. Hungary 7. Czech Republic 8. Slovak Republic 9. Bulgaria 10. Romania 11. Israel 12. Algeria 13. Ex USSR 14. Baltic States 15. Moldova 16. Ukraine 17. Belarus B. Guarantees 18. EIB Mediterranean 19. ElBC+EEur. I+ II 20. EIB Asia Latin America 21. EIB South Africa 100 123 62 150 185 80 127 63 140 160 250 144 190 80 140 50 15 162 78 19 175 104 20 110 5 175 119 22 Capital - subtotal 1169 879 489 511 18 25 13 40 51 16 50 5 14 6 19 3 140 84 11 5 493 10 13 6 26 51 25 0 14 6 19 3 130 81 9 5 392 11 33 25 14 6 19 3 118 76 9 5 312 11 13 25 14 6 19 3 106 69 8 5 273 INTEREST A. Financial assistance 6. Hungary 7. Czech Republic 8. Slovak Republic 9. Bulgaria 10. Romania 11. Israel 12. Algeria 13. Ex USSR 14. Baltic States 15. Moldova 16. Ukraine 17. Belarus B. Guarantees 18. EIB Mediterranean 19. ElBC+EEur. I+ II 20. EIB Asia Latin America 21. EIB South Africa Interest - subtotal NON-MEMBER COUNTRIES - TOTAL GRAND TOTAL (Eastern Europe ) (Other non-member countries) 70 150 9 17 6 167 123 23 32 565 11 6 25 3 5 19 3 94 61 7 5 55 100 25 12 37- 6 162 120 24 40 12 37 6 163 114 8 12 37 6 146 114 9 541 380 324 4 6 10 3 5 17 2 82 53 7 4 3 13 2 71 45 6 2 9 1 59 37 5 180 250 125 400 510 160 500 144 135 50 128 24 1289 821 141 32 4889 28 38 19 107 159 16 160 5 59 40 132 20 800 506 62 24 233 188 144 115 2174 1662 1271 801 784 798 729 524 439 7062 3090 3247 1082 3541 904 758 551 473 13700 880 782 926 345 454 347 448 336 332 466 344 385 277 248 219 220 3879 3183 TABLE 3 MAXIMUM THEORETICAL ANNUAL RISK BORNE BY THE COMMUNITY BUDGET (Estimate in ECU million based on all operations disbursed, adopted and proposed by the Commission) 1997 1998 1999 2000 2001 2002 2003 2004 TOTAL MEMBER STATES CAPITAL A. Balance of payments 1. Greece 2. Italy B. Structural loans 3. Euratom + NCI 4. EIB Sp. Gr. Port Capital - subtotal INTEREST A. Balance of payments 1. Greece 2. Italy B. Structural loans 3. Euratom + NCI 4. EIB Sp. Gr. Port Interest - subtotal 500 989 141 44 985 58 1042 1675 2490 52 37 2579 55 39 95 71 20 92 2000 2000 22 22 21 15 2021 2015 48 383 105 23 559 48 553 25 18 553 553 340 340 340 170 15 14 11 11 7 7 2 5 2 3 2 2 644 582 575 354 347 345 174 3577 500 7479 1305 257 9541 95 3230 169 83 MEMBER STATES - TOTAL 1601 2318 676 3154 446 369 2366 2188 13118 NON-MEMBER COUNTRIES CAPITAL A. Financial assistance 5. Hungary 6. Czech Republic 7. Slovak Republic 8. Bulgaria 9. Romania 10. Israel 11. Algeria 12. Ex USSR 13. Baltic States 14. Moldova 15. Ukraine 16. Belarus 17. Euratom, C+E Eur. B. Guarantees 18. EIB Mediterranean 19. ElBC+EEur. I + II 20. EIB Asia Latin America 21. EIB South Africa 100 123 62 150 185 80 127 63 140 160 250 144 140 50 15 162 78 19 Capital - subtotal 1169 879 INTEREST A. Financial assistance 5. Hungary 6. Czech Republic 7. Slovak Republic 8. Bulgaria 9. Romania 10. Israel 11. Algeria 12. Ex USSR 13. Baltic States 14. Moldova 15. Ukraine 16 Belarus 17. Euratom, C+E Eur. B. Guarantees 18. EIB Mediterranean 19. ElBC+EEur. I + II 20. EIB Asia Latin America 21. EIB South Africa Interest - subtotal 31 25 13 40 55 16 55 5 18 6 24 3 1 173 124 18 6 612 36 12 6 26 58 35 22 6 29 3 6 240 209 34 11 733 190 80 110 5 231 187 34 1 648 26 0 11 21 35 22 6 29 3 34 436 429 93 31 175 104 20 0 489 26 0 11 40 35 22 6 29 3 17 328 310 61 20 907 55 100 25 12 37 6 1 385 365 79 17 40 0 12 57 6 7 500 482 95 28 260 70 100 85 12 57 6 16 558 551 119 39 440 250 125 400 580 160 600 144 220 50 168 24 24 2446 2085 435 125 1082 1227 1873 8276 26 0 4 13 20 11 5 27 2 72 574 571 138 45 26 4 7 10 9 3 23 2 88 594 589 145 49 26 0 7 10 9 2 17 1 101 559 575 141 49 223 37 19 107 212 16 235 5 124 40 205 20 373 3429 3330 752 251 70 150 9 17 6 0 295 268 54 40 909 26 0 11 13 35 11 6 29 3 54 525 523 122 40 1175 1397 1507 1550 1497 9377 NON-MEMBER COUNTRIES - TOTAL 1781 1612 1396 1823 2306 2589 2777 3370 17653 GRAND TOTAL 3381 3930 2072 4977 2751 2958 5142 5559 30770 (Eastern Europe ) (Other non-member countries) 948 833 1111 501 757 639 962 861 1045 1261 1231 1358 1356 1421 1795 1575 9204 8449 IV. ACTIVATION OF BUDGET GUARANTEES IV. A EIB loans to non-member countries On 23 October 1996 the EIB called on the budget guarantee in respect of loans of around ECU 5. 7 million to the Republics of former Yugoslavia (the Former Yugoslav Republic of Macedonia, Bosnia-Herzegovina arid Serbia). The payment was made to the EIB on 28 January 1997. Of the ECU 84. 4 million due but not paid, ECU 24 million was entered in the budget in respect of the amount owed from before 1994 and a total of ECU 60. 4 million was called in from the Guarantee Fund on 11 January 1995 (ECU 5. 3 million), on 30 January 1995 (ECU 14. 3 million), on 24 May 1995 (ECU 6. 08 million), on 11 October 1995 (ECU 8. 6 million), on 26 January 1996 (ECU 5. 2 million), on 11 June 1996 (ECU 6. 4 million), on 4 October 1996 (ECU 8. 9 million) and on 28 January 1997 (ECU 5. 7 million). The Former Yugoslav Republic of Macedonia (FYROM) has repaid some of its arrears (ECU 4. 7 million). IV. B Borrowing/lending operations or loan guarantees for non-member countries IV B. I Payments from cash resources The Commission draws on its cash resources under Article 12 of Council Regulation No 1552/89 of 29 May 1989 implementing Decision 88/376/EEC, Euratom on the system of the Communities' own resources to avoid delays and resulting costs in servicing its borrowing operations when a debtor is late in paying. IV. B. 2 A ct i vat ion of the Guarantee Fund In the event of late payment by a recipient of a loan granted or guaranteed by the Community, the Guarantee Fund is called on to cover the default within three months of the date on which is payment is due. Penalty interest for the time between the date on which cash resources are made available and the date of activation of the Fund is drawn from the Fund and repaid to the cash resources. In the last six months the Fund has been called on to honour guarantees for the following debtor: Country Date Amount (principal + interest) Georgia (loan of ECU 40 million) 15. 10. 1996 855. 862,78 - 1 0- IV. B. 3 Late repayments During the period covered by this report, the following countries repaid debts on which they had defaulted and for which the Guarantee Fund had already been activated. The amounts recovered are repaid to the Fund under Article 2 of Council Regulation (EC, Euratom) No 2728/94 of 31 October 1994 establishing a Guarantee Fund for external action. Country Repayment date Amount (principal + interest) Turkmenistan (loan of ECU 4 5 m i l , i°n) G e o r9 'a Total 13. 8. 1996 9. 10. 1996 13. 12. 1996 10. 10. 1996 11. 386. 081,43 11. 467. 876,61 7. 716. 363,36 710. 997,54 31. 281. 318,94 IV. B. 4 Situation as regards unpaid debts at 31 December 1996 The following amounts had not been paid at 31 December 1996: Country Tajikistan Georgia Armenia Total* ' Amount (principal + interest) 63. 181. 389,89 92. 608. 823,28 57. 601. 313,20 213. 391. 525,37 V. ANALYSIS OF THE COMMUNITY'S THEORETICAL LENDING AND IN RESPECT OF NON-MEMBER CAPACITY GUARANTEE COUNTRIES In practice, the Guarantee Fund and reserve facility limits the Community's lending and guarantee capacity to non-member countries since the appropriations available for provisioning the Fund whenever a new lending decision is adopted (or any annual tranche in the case of guarantees for multiannual operations) are limited by the amount entered for the guarantee reserve in the financial perspective. 5 At any given time, lending capacity corresponds to the margin remaining in the guarantee reserve. This margin is equal to the difference between the reserve and the estimated amount Two repayments totalling ECU 8. 4 million have been made since 31 December 1996: ECU 3. 7 million by Armenia and ECU 4. 7 million by Georgia. ECU 300 million at 1992 prices. -11 needed to provision the Guarantee Fund for operations which have already been adopted and which are in preparation. Table 4 contains an estimate of the Community's lending capacity in respect of non-member countries over the period 1997-99 compatible with the Guarantee Fund mechanism. The method of calculation and references to legal texts are set out in greater detail in the Annex. On the basis of the decisions adopted by the Council and decisions proposed and in preparation (see Table 4), ECU 286 million is expected to be used from the guarantee reserve in 1997, leaving ECU 43 million available at the end of the year. The Guarantee Fund could then amount to around ECU 843 million at the end of the year assuming: - no further defaults requiring activation of the Fund; - no late repayment of arrears by defaulting countries. If account is taken of the effect on the guarantee reserve of the provisioning of the Fund in respect of loans already decided and loans proposed and in preparation for the period 1997- 99, the annual capacity available for loans varies: - - from ECU 213 million to ECU 286 million for loans with a 100% guarantee under the Community budget; from ECU 304 million to ECU 409 million for loans with a 70% guarantee (new EIB loans). VI. RELATIVE SOLIDITY OF THE GUARANTEE FUND The ratio between the amount in the Fund at the end of 1996 (ECU 557 million) and the maximum annual risk for loans to non-member countries (defined as the total amount falling due) shown for 1997 in Table 3 (ECU 1 781 million) comes to 31%. The Fund should then correspond to 8. 5% of the total amount of guaranteed loans outstanding outside the Community. -12- TABLE 4 THE COMMUNITY'S THEORETICAL ESTIMATED LENDING & GUARANTEE CAPACITY IN RESPECT OF NON-MEMBER COUNTRIES OVER THE PERIOD 1997-99 under the Guarantee Fund mechanism* ECU million 1997 1998 1999 Reserve for loan guarantees to non-member countries(l) 329 338 345 Bases for the calculation of the provisioning of the Guarantee Fund(2) - EIB loans - Mediterranean (a) - countries of Central and Eastern Europe (b) - Asia and Latin America (c) - South Africa (d) - EIB loans - total - Euratom loans (e) - Macrofinancial assistance (f) Provisioning of the Gurantee Fund (3) 644 779,25 728 210 87,5 1804,8 787,5 172 125 1728,5 693 752,5 210 105 1760,5 0 200 350 165 25 0 286 302 313 Margin remaining in the guarantee reserve (4) 43 36 32 Residual lending capacity (balance of payments loans, EIB loans and Euratom loans) (5) Maximum if used in full for 100% guarantee (e. g. BP loans) Maximum if used in full for EIB loans (70% guarantee) 286 409 243 347 213 304 (*) Assuming that the target amount is reached after 1999. For example, if the Fund reaches its target amount at 1 January 1999 and the rate of provisioning is cut to 10% after the review provided for in Article 4 of the Regulation establishing the Fund, the Union's lending capacity in respect of non-member countries would be increased by ECU 106 million a year for loans with a 100% guarantee and by ECU 152 million for loans with a 70% guarantee. Description of the loans for which the Fund will be provisioned in the period 1997-99: - EIB a. Mediterranean: - loans decided: 1994-96: ECU 115 million under the Fourth Financial Protocol With Syria 1995-98: ECU 80 million under the Fourth Financial Protocol with Malta and Cyprus. - loans proposed or in preparation: 1996-2000: ECU 750 million for financial cooperation with Turkey and ECU 230 million for financial cooperation with Croatia. 1997-2000: ECU 150 million for financial cooperation with the Former Yugoslav Republic of Macedonia (FYROM). 31. 1. 97- 31. 1. 2000: ECU 2 310 million for the renewal of the EIB mandate, covered by overall 70% guarantee. b. Central and Eastern Europe - loans proposed or in preparation: 31. 1. 97-31. 1. 2000: ECU 3 520 million for the renewal of the EIB mandate, covered by overall 70% guarantee. c. Asia and Latin America: - loans decided: 1993-1996: ECU 750 million - loans proposed or in preparation: 31. 1. 97-31. 1. 2000: ECU 900 million for renewal of the EIB mandate, covered by overall 70% guarantee. d. South Africa: - loans decided: mid-1995 to mid-1997: ECU 300 million - loans proposed or in preparation: 1. 7. 97-1. 7. 2000: ECU 375 million for the renewal of the EIB mandate, covered by overall 70% guarantee e. - Euratom - loans decided: 1994-99: ECU 1 100 million. f. - Financial assistance - loans decided: 1997: ECU 25 million loan to Belarus cancelled; ECU 130 million loan to Slovakia cancelled. - loans proposed or in preparation: 1997: ECU 170 million in loans to the Republics of Georgia, Armenia and Tajikistan, ECU 150 million in loans to Ukraine. 13 PART TWO EVALUATION OF POTENTIAL RISKS: ECONOMIC AND FINANCIAL SITUATION OF THE NON-MEMBER COUNTRIES BENEFITING FROM THE MOST IMPORTANT LOAN OPERATIONS I. INTRODUCTION The figures given in the previous parts provide information on the quantitative aspects of the risks borne by the general budget. However, these data should be weighted in accordance with aspects relating to the quality of the risk,' which depend on the type of operation and the standing of the borrower. Recent events which may influence the portfolio country risk are analysed below. The country risk evaluation presented in this chapter provides a set of extensive country risk indicators for all relevant countries in Central and Eastern Europe, the NIS as well as in the Mediterranean area, in the form of a full-page table per country. As a complement to this, a further textual analysis is provided for those countries where significant new information influencing the risk evaluation has become available since the previous report covering the first six months of 1996. It may be noted that the evaluation in this section does not cover EU exposure in other regions than those mentioned, mainly because this exposure (notably through guarantees of EIB lending) represents only a fraction of total exposure (less than 3 %) and is also well diversified among countries. II. CENTRAL AND EAST EUROPEAN COUNTRIES BULGARIA Since the last report, Bulgaria's situation has worsened significantly and GDP is estimated to have fallen by some 10% in 1996. Year-end inflation was over 300 % and the leva is experiencing a rapid and accelerating depreciation (70 leva/$ at start of 1996, to 250 by November, 500 at end-December, 1000 as of 30 January). In these circumstances, there is a clear risk of hyperinflation in the early months of 1997. The budget deficit has expanded very fast and has been financed in recent months directly by the central bank. At the end of December, internal debt reached BGL 1. 053 trillion, up from BGL 345 billion at the end of 1995. Although privatisation has made some progress, structural reforms remain slow and the banking system continues to pose many problems. Several banks are currently subject to bankruptcy proceedings. During the Autumn, the World Bank and the International Monetary Fund suspended their financial assistance to Bulgaria. In November 1996, the International Monetary Fund proposed the introduction of a currency board as a mechanism to restore macroeconomic stability and confidence among economic agents. Technical discussions with the Bulgarian authorities started in December but negotiations have been delayed by the resignation of the Prime Minister. Political forces, from both the opposition and the ruling party seem, however, to have accepted the idea of a currency board. 14 The crisis has led to a sharp decline in international reserves - from US$ 1. 3 billion at the end of 1995 to US$ 518 million at the end of 1996. Service on foreign debt continues to be very substantial - US$ 300 million in the first quarter of 1997 alone. In these conditions, external viability crucially depends on concluding rapidly an agreement with the IMF and other international creditors. ESTONIA Estonia's risk assessment continues to be among the best in the region although there are signs of possible turbulence ahead. In 1996, for the second consecutive year, real GDP growth was positive, although it appears to have been lower than in 1995 (3%). Construction and trade (wholesale and retail) recorded very positive performances while agricultural and industrial output were lower than in 1995. Trade is now more important than manufacturing. Nearly 20% of total exports are goods processed after being imported and another 13% are reported to be transit trade. Estonia introduced a Currency Board system in 1992 which provides for a strict link between money growth and the level of foreign exchange reserves. The exchange rate is pegged to the DM at a fixed rate. The system has been very successful to stabilise the macroeconomic situation: the general government deficit for 1996 is estimated at 1. 5% of GDP (with revenues higher than planned) and inflation has continued to slow down (23%o vs. 29%o in 1995). Estonian exports have increased by roughly 5% in volume in the first three quarters of 1996, compared to the corresponding period of the previous year, and by 15% in value. However, the gradual appreciation of the currency has led to a surge of imports and a widening of the trade deficit to nearly 30% in the first three quarters of 1996. Also, whereas in the past the net capital inflow was more than sufficient to finance the current account deficit, the situation in the third quarter of 1996 was just about in balance. Other signs of uncertainties are the high relative level of direct investments outflows (superior to inflows in second quarter of 1996), the political situation (calls for the resignation of the Prime Minister) and the implications of Lithuania's wish to abandon its currency board regime. LATVIA Latvia's creditworthiness seems to have improved considerably. The Latvian economy is recovering from the banking crisis in 1995: economic growth is picking up and in the first nine months of 1996 it reached 2. 3%. Foreign reserves and banking assets are back up to pre-crisis levels. Furthermore, inflation and interest rates have come down quite rapidly, the currency is stable, and the budget deficit for 1996 remained below target. For these reasons, and because of the country's relatively low external indebtedness (debt/GDP is below 10%), the international credit ratings agencies have awarded Latvia an investment grade rating in January 1997. However, the imbalances on the external side have increased, with the trade and current account deficits rising to 16% and 7% respectively. Foreign direct investment continues to be only modest. 15 LITHUANIA The Lithuanian economy is still recovering from the banking crisis of December 1995. During 1996, macroeconomic performance remained satisfactory in spite of the financial troubles. Growth accelerated driven by rising exports and by an upturn in domestic demand later in the year. The currency board system was maintained thanks to continued monetary and fiscal discipline. - Inflation fell further. The budget deficit remained moderate although it deteriorated slightly. The balance of payments situation would seem to have remained stable. The banking sector continues to be weak but supervision was strengthened and the government made some progress in sorting out the legacies of the 1995 crisis. Restructuring on the real side of the economy will make important progress if the authorities go ahead with the announced privatisation of large telecommunications and transport enterprises. This could also spark investors' interest and lead to a surge in foreign direct investment which continues to be disappointingly low. Finally, last September, Lithuania was the first former Soviet republic to receive a credit rating when Moody's rated it just below investment grade. ROMANIA Following the formation of a new Government in late 1996, Romania's risk assessment seems to have improved slightly. The new authorities aim at a rapid integration of Romania in the EU and in NATO and are committed to accelerating the pace of reform. On the basis of renewed negotiations with the IMF and the World Bank, the Romanian authorities have announced a comprehensive economic stabilisation and structural adjustment programme. The economic situation worsened significantly however in the last months of 1996, in particular because of a spending spree by the former Government in the run-up to the elections and largely financed by money creation. Inflation soared to 57% at the end of the year. The State budget deficit rose to 6% of GDP, and taking into account the deficit of state-owned companies and hidden subsidies to agriculture, to a higher level still. Very little progress has been achieved on structural reforms. The 1996 current account is estimated to show a US$ 2 billion deficit. Foreign debt has risen further by 30%» in 1996 (to US$ 6. 9 billion or 25. 8% of GDP) after rising 18% in 1995. Debt service for 1997 remains high at around US$ 1 billion. The new Government has already taken some steps towards adjustment and liberalisation of the economy. Monetary policy has been tightened. Fuel prices were raised by 90% at the beginning of January; and, since the beginning of January 1997, the official rate of the leu has been devalued by 41% against the dollar. These measures are necessary steps in order to end prices distortions and bring internal prices in line with international prices. The Government has now agreed in principle with the IMF a programme of adjustment and long-awaited structural reforms which entails very strong upfront measures (e. g. closure of 10 of the large loss-making enterprises in barely 5 weeks, laying off 5% of civil servants in the same period). If properly implemented these measures are expected to enhance confidence and put Romania back on the path of a rapid and successful 16 transition towards a fully fledged market economy. However, the difficult period which lies ahead could undermine support for the Government both among the general public and within the ruling coalition. Furthermore, special interest groups retain a strong influence which could negatively affect the pace of reforms. SLOVAKIA Slovakia country risk remains relatively moderate but the country is increasingly relying on foreign savings. Macroeconomic performance was largely positive during 1996 with high real growth (up 7%), low inflation (5. 9%) and falling unemployment. However, rising household and government consumption led to a sharp deterioration in the current account balancé (swinging from a surplus position of 3. 6%» of GDP in 1995 to a deficit of 7. 8%>) which may put the sustainability of the current policy stance into question. The National Bank sharply raised interest rates in December but may come under pressure to relax its policy in the run-up to the 1998 parliamentary elections. Capital inflows have so far been more than sufficient to finance the current account deterioration and debt service remains low. m. NEWLY INDEPENDENT STATES ARMENIA Armenia remains in the category of high-risk creditors. The economic recovery has continued for a third consecutive year in 1996 with GDP growth expected to have reached some 6%>. However, the slow pace of structural reforms - even if the privatization process started early after independence - has made Armenia largely dependent on external assistance. The external debt is estimated at about US$ 600 million (some 35%> of GDP) by end 1996. The country has been facing difficulties in meeting its external financial obligations towards the Community but an understanding leading to the eventual full clearance of the existing arrears has now been reached with the Armenian authorities. The approval by the IMF Board in February 1996 of a 3-year economic programme may contribute to accelerate the pace of reforms and to improve the general economic situation in the medium-term. On the political side, no progress has been made concerning the Nagorno Karabakh issue. AZERBAIJAN Azerbaijan's risk assessment has improved somewhat in 1996. Economic recovery appears to have started and GDP is estimated to have grown by about 1% during 1996, following a sharp decline of some 40% in 1994-1995. The inflation rate also sharply improved, having declined from 400% in 1995 to some 20%) in 1996, while the fiscal deficit is expected to have declined to less than 3% of GDP. The external debt is rather low at about US$ 560 million (some 16 % of GDP) by end 1996. Concerning structural reform, Azerbaijan is lagging well behind most other NIS. A new economic programme has, however, been adopted, covering the 1996-99 period and designed to be supported by IMF credits. This programme, approved by the IMF Board in December 1996, aims at preparing the country for the prospective oil boom and is addressing the key stmctural reform issues. Azerbaijan's medium-term perspectives are potentially favourable, owing 17 mainly to its huge oil reserves. In the short run however, the combination of a still fragile economic situation, slow structural reforms and the unresolved conflict with Armenia on Nagorno Karabakh implies that the country risk remains high. BELARUS The political developments in. Belarus during 1996 have been preoccupying. In connection with the referendum in November doubts were raised as regards the Belarussian authorities' commitment to democratic principles. The prospect of a future political and/or economic union between Belarus and Russia adds further uncertainty to the picture. With regard to macro-economic developments, Belarus achieved real GDP growth of 2. 6 % in 1996, but several macro-economic developments still raise concerns. Despite a sharp currency depreciation from April 1996, the Belarussian currency remained overvalued at the end of the year and the trade deficit had grown to US$ 1. 7 bn or 14. 1 % of GDP. In absence of restructuring, 20 % of enterprises were still working at a loss, unemployment remained high and hidden, while interentreprise arrears amounted to above 100 % of GDP. Towards the end of 1996, inflation accelerated (8 % monthly) as a result of lax monetary policy in the form of directed credits from the National Bank. The interruption in the structural reform process as well as the uncertainties regarding the political commitment to pursue economic reform were other sources of concern. The Belarussian economy remains unreformed in many areas and the state continues to play a major role in production and distribution. The structure of the economy remains de facto highly monopolistic and prices are to a high degree controlled. Overall risk therefore remains high. GEORGIA The risk assessment for Georgia has remained rather stable throughout 1996. Following the first signs of recovery registered in 1995, GDP growth of some 10% is expected for 1996. The situation in public finances has worsened considerably, however, due to a collapse in revenues, which are far below programme targets. Georgia has accumulated foreign debt, estimated at some US$ 1. 3 billion by end 1996 (27% of GDP), the main part of which represents import related payments arrears. Rescheduling arrangements have been reached with most creditors. Georgia is also in arrears of payments towards the Community but an understanding has now been reached with the Georgian authorities leading to the eventual full clearance of these arrears. The approval by the IMF Board in February 1996 of a 3-year economic programme may contribute to accelerate the pace of reforms and to improve the general economic situation in the medium-term. On the political side, the Abkhazia problem remains unresolved. MOLDOVA Moldova's economic and structural reform performance fell short of expectations in 1996. GDP declined further by some 3 to 5%. Fiscal performance was poor as a result of weak tax collection, although corrective measures were implemented in 1996 to tackle this problem. Moldova's foreign debt was expected to reach some US$ 700 million by end-1996 (some 32% of GDP) and is mainly owed to international financial institutions. Important structural reforms still remain to be undertaken in key sectors such as privatization of agriculture and restructuring of enterprise and energy sectors. TJie 18 approval by the IMF Board in May 1996 of a 3-year economic programme, should contribute to accelerate the pace of reforms and to improve the general economic situation in the medium-term. The newly-elected President and the new government seem committed to reforms and may also give new impetus to the negotiations aiming at solving the issue of the autonomy of the proclaimed Dniestr Republic, part of Moldova's territory. TAJIKISTAN After an escalation of the military confrontation with the Islamic opposition until November 1996, the authorities and the opposition agreed on a ceasefire which appears to be holding. The macro-economic developments since early 1996 have been positive, with rapid reduction of monthly inflation (2. 5 % in November 1996), budgetary performance broadly in line with the IMF programme and satisfactory credit and monetary policies. However, GDP has continued to fall (10%). The liberalization of the forex market, foreign trade and prices is well advanced. The pace of the enterprises privatization and of the land reform, slow until now, is expected to accelerate in 1997. At end 1996, the country had a foreign trade surplus of US$ 111 million, but foreign exchange reserves were still weak. The level of these reserves is expected to increase up to a level of 2 months of imports in 1997. At the end of 1996, the external debt of Tajikistan was equivalent to the country's GDP. Major creditors, however, agreed to reschedule the debt falling due in 1996, while rescheduling of debt service payments falling due in 1997 had begun. The country is in arrears of payments towards the Community but an understanding has now been reached with the Tajik authorities leading to the eventual full clearance of these arrears in the context of a Stand-By arrangement with the IMF expected to be agreed in the coming months. UKRAINE In the second half of 1996, Ukraine's transition to a market economy, which essentially had started in late 1994 after the election of President Kuchma, seems to have gained new momentum. The continuation of a relatively tight monetary policy was a determining factor in further reducing inflation, stabilizing the exchange rate and ensuring the successful introduction of the new national currency in September. The Central Bank Governor responsible for this policy was recently reconfirmed for a second term. The budget deficit was also brought down to some 3%, in line with targets agreed with the IMF, however at the cost of accumulating significant arrears on public wages, salaries and pensions, in the order of some 3. 5% of GDP. The economic situation has remained very difficult, with GDP declining by another 10% in 1996. On the structural side, there was substantial progress in the area of privatization, demonopolization and banking supervision. With a view to continuing and reinforcing stabilization and reform, thereby laying the foundations for growth to resume, the Ukrainian government adopted in November a comprehensive medium-term reform programme. During the last few months however it became clear that it would take considerable time to have this package approved by Parliament, thereby also delaying the expected economic recovery. Once the reform package has been approved, Ukraine can expect financial assistance of US$ 1. 9 bn from the IMF (Extend Financing Facility) and the World Bank to help meet its external - 19 financing needs in 1997. In addition, official bilateral donors, including the Community, are expected to provide complementary financial assistance. Ukraine also plans to launch its first Eurobond issue once the Extended Financing Facility is in place and a credit rating has been obtained, both expected for Spring 1997. Ukraine's debt ratios have declined somewhat during the last two years and therefore remain fairly moderate. With the resumption of payments to Russia and Turkmenistan on previously rescheduled gas arrears, the debt service ratio is expected to rise somewhat in 1997. UZBEKISTAN With the relative military stabilization in Afghanistan, prospects for Uzbek authorities to benefit from political stability in Central Asia are better. With regard to macroeconomic indicators, Uzbek real GDP is expected to have grown slightly (1. 6 %) in 1996. However, annual inflation was picking up at 65 % towards the end of the year, owing to massive budgetary support to the agricultural sector in October and the budget deficit was higher than expected. In 1996, as a result of a big rise in imports, a fall in the price of cotton and bad harvests, the current account showed a deficit which resulted in a decrease of the foreign exchange reserves to the, still however comfortable, level of US$ 1. 8 billion (5 months of imports). With the Som under increasing pressure and the Government reluctant to use its hard currency reserves, Uzbekistan was hit by hard currency shortage on the forex market, while draconian foreign exchange controls were introduced, prompting the international donors to suspend their macro-financial support. Foreign direct investment is however reported to have been high in 1996. With regard to structural reform, the restructuring of enterprises was progressing, whereas some reversals were observed in the liberalization process of the foreign trade and exchange market. IV. MEDITERRANEAN COUNTRIES ALGERIA Although economic indicators have recently improved, Algeria country risk remains high over the medium-term. The macro-economic improvement achieved under the IMF- supported programme implemented since 1994 has recently been strengthened owing in part to good performances in agriculture and the hydrocarbon sector. Output growth, estimated at about 4 percent, continues to recover in 1996-97; inflation decelerated to below 20 percent and the up-swing in oil prices contributed to a budget surplus and external current account surplus of 2. 7 percent of GDP and 0. 3 percent of GDP, respectively. Foreign exchange reserves increased to US$ 4. 2 billion at end-1996, representing more than 4 months of imports. According to the IMF, these trends are expected to continue in 1997. Despite these achievements, the political situation and security problems continue to hinder the medium-term prospects, including the pace of structural reforms and the development of a dynamic private economy. The most sensitive areas for important structural reforms (such as agriculture, public enterprise restructuring, privatization of large public enterprises, deregulation, and property rights) still have to be tackled. In addition, difficult social conditions, including persisting high 20 unemployment (estimated at 28 percent) and housing shortages, could undermine the reform momentum. Finally, Algeria external and domestic financial balances will remain vulnerable to the future vagaries of the oil prices. In particular, the overall external position will remain fragile over the medium-term with no access to the international capital markets, from international financial institutions and reschedulings from the London and Paris Clubs. investment, and continued support limited foreign direct 21 ANNEX I. EXPLANATORY NOTES ON THE SITUATION OF RISKS COVERED BY THE COMMUNITY BUDGET LA TABLES 1 TO 3 LB LOAN OPERATIONS COVERED BY A BUDGET GUARANTEE I. C EXPECTED SIGNATURE AND DISBURSEMENT OF EIB LOANS I. D PAYMENT OF THE BUDGET GUARANTEE ; 22 22 24 29 30 II. METHODOLOGICAL NOTE ON THE ANALYSIS OF THE COMMUNITY'S ESTIMATED LENDING CAPACITY IN RESPECT OF NON-MEMBER COUNTRIES OVER THE PERIOD 1997-99 UNDER THE GUARANTEE FUND MECHANISM II. A RESERVE FOR LOAN GUARANTEES TO NON-MEMBER COUNTRIES (1) II. B BASES FOR THE CALCULATION OF THE PROVISIONING OF THE GUARANTEE FUND (2) II. C BASIS FOR THE PROVISIONING OF THE FUND IN THE EVENT OF A PART GUARANTEE II. D PROVISIONING OF THE GUARANTEE FUND (3) II. E MARGIN REMAINING IN THE GUARANTEE RESERVE (4) II. F RESIDUAL LENDING CAPACITY (5) 32 33 33 31 31 31 32 : III. TABLES: COUNTRY-RISK INDICATORS 34 22 I. EXPLANATORY NOTES ON THE SITUATION OF RISKS COVERED BY THE COMMUNITY BUDGET LA Tables 1 to 3 The purpose of Tables 1 to 3 is to show the outstanding amount of guarantees and annual repayments of capital and interest in respect of borrowing and lending operations for which the risk is covered by the Community budget. The figures show the maximum possible risk for the Community in respect of these operations and must not be read as meaning that these amounts will actually be drawn from the budget. In the case of Table 3, in particular, it is not certain that all the operations described will actually be disbursed. LA. I Authorized ceiling (Table 1) This is the aggregate of the maximum amounts of capital authorized (ceilings) for each operation decided by the Council. In order to relate it to the risk which the budget might have to cover, account should be taken of the following factors which could affect it: Factor increasing the risk: the interest on the loans must be added to the authorized ceiling Factors reducing the risk; • limitation of the guarantee given to the EIB to 75% of the loans signed in the Mediterranean countries; • operations already repaid, since the amounts concerned, except in the case of balance of payments (Member States) support, are the maximum amount of loans granted and not outstanding amounts authorized; • the amounts authorized are not necessarily taken up in full. LA. 2 Capital outstanding ( Table 1) This is the amount of capital still to be repaid on a given date in respect of operations disbursed. Compared with the previous aggregate, the amount outstanding does not include loans which have not yet been disbursed nor the proportion of disbursed loans which have already been repaid. It may be described as the amount of loans which exist on a given date. I. A. 3 Annual risk (Tables 2 and 3) Estimated amount of principal and interest due each financial year: This amount is calculated for: a) disbursements alone (Table 2), in which case the capital to be repaid corresponds to the amount outstanding; 23 b) disbursements, decisions still awaiting disbursement and Commission proposals still awaiting decisions (Table 3), in which case the capital to be repaid corresponds to the ceiling on loans authorized plus, where applicable, the amounts in respect of operations proposed by the Commission and not yet decided. -24 LB Loan operations covered by a budget guarantee TABLE 5a Borrowing and lending operations: Member States Changes in amounts outstanding during six-month period COUNTRY Decision Date of decision Loan term (years) Loan situation • closed (a) • partially disbursed (b) • disbursed in full (c) • not yet disbursed (d) GREECE 91/136/EEC 04. 03. 91 ITALY 93/67/EEC 18. 01. 93 EURATOM NCI TOTAL (3) (3) 77/270-271/Euratom 80/29/Euratom 82/170/Euratom 85/537/Euratom 90/212/Euratom 78/870/EEC 81/19/EEC(1) 81/1013/EEC(2) 82/169/EEC 83/200/EEC 87/182/EEC 29. 03. 77 20. 12. 79 15. 03. 82 05. 12. 85 23. 04. 90 16. 10. 78 20. 01. 81 14. 12. 81 15. 03. 82 19. 04. 83 09. 03. 87 (c) (d) (d) (c) (c) (d) (d) (c) (c) (c) (b)(4) (d)(4) (c) (c) (c) (c) (c) (c) ECU million Amount decided Amount outstanding at 1. 7. 96 Operations in six-month period Amounts disbursed Amounts repaid Amount outstanding at 31. 12. 96 500,00 3. 525,90 500,00 3. 478,57 589,50 24,80 572,48 '•n 1 935,60 0,01 187,50 748,11 2. 200,00 1. 000,00 600,00 600,00 8. 000,00 2. 000,00 2. 000,00 2. 000,00 2. 000,00 4. 000,00 500,00 500,00 1. 000,00 1. 000,00 1. 000,00 6. 830,00 1. 000,00 1. 000,00 80,00 1. 000,00 3. 000,00 750,00 21. 030,00 5. 551,00 0,01 212,30 5. 299,16 (5) (1) Exceptional aid for the reconstruction of areas hit by the earthquake in Italy in 1 9 8 0. (2) Exceptional aid for t he reconstruction of areas hit by the earthquake in Greece in 1 9 8 1. (3) Long-term loans for w h i ch the schedule of repayments depend on the dates of disbursement. (4) By Decision 9 4 / 1 7 9 / E u r a t om of 21 M a r ch 1 9 94 the Council decided to extend Euratom loans to the financing of projects in certain non-member c o u n t r i e s. At 31 December 1 9 96 no loans had y et been granted in non-member countries. (5) Discrepancy caused by change in the rates of the other currencies against the e c u. TABLE 5b (1) Financial assistance to non-member countries Changes in amounts outstanding during six-month period, broken down by countries and tranche COUNTRY Decision Date of decision Loan term (years) Expiry date Loan situation closed (a) > partly disbursed (b) • disbursed in full (c) • not yet disbursed (d) Amount decided Amount outstanding at 1. 7. 96 Operations in six-month period Amounts disbursed Amounts reapid Amount outstanding at 31. 12. 1996 ECU million HUNGARY I 1st tranche 2nd tranche 3ème tranche HUNGARY II 1st tranche 2nd tranche CZECH REPUBLIC 1 st tranche 2nd tranche SLOVAKIA 1st tranche 2nd tranche BULGARIA I 1st tranche 2nd tranche BULGARIA II 1st tranche 2nd tranche ROMANIA I 1st tranche 2nd tranche 90/83/EEC 90/681/EEC 22. 0290 21. 12. 90 91/310/EEC 24. 06. 91 91/106/EEC 25. 02. 91 91/106/EEC 2502. 91 91/311/EEC 24. 06. 91 92/511/EEC 19. 1092 91/384/EEC 22. 07. 91. ROMANIA II ROMANIA III 92/551/EEC 94/369/EC 27. 11 92 20. 06. 94 1 st tranche 2nd tranche BALTIC STATES ESTONIA 1st tranche 2nd tranche 92/542/EEC 23. 11. 92 20. 04. 95 14. 02. 96 18. 03. 98 15. 12. 97 18. 03. 98 15. 12. 97 18. 03. 98 15. 12. 97 18. 03. 98 15. 12. 97 07. 12. 2001 29. 08. 2003 01. 02. 99 18. 03. 98 26. 02. 2000 20. 11. 2002 31. 03. 2000 (a) (a) (d) (c) (c) (c) (c) (c) (c) (c) (c) (c) (c) (c) (d) (c) (d) (c) 870,00 350,00 260,00 260,00 180,00 100,00 80,00 250,00 123,30 126,60 125,00 61. 60 63,30 290,00 150,00 140,00 110,00 70,00 40,00 375,00 190. 00 185,00 80,00 125,00 55,00 70,00 220,00 40,00 20,00 20. 00 0,00 100,00 80,00 123,30 126,60 61,60 63,30 150,00 140,00 70,00 0,00 190,00 185,00 80,00 55,00 0,00 20,00 0,00 40,00 I 0,00 100,00 80,00 185,00 190,00 150,00 140,00 70,00 40,00 190,00 185,00 80,00 0,00 55,00 0,00 20,00 0,00 TABLE 5b (2) Financial assistance to non-member countries Changes in amounts outstanding during six-month period, broken down by countries and tranche COUNTRY Decision Date of decision Loan term (years) Expiry date Loan situation - closed (a) - partly disbursed (b) - disbursed in full (c) - not yet disbursed (d) Amount decided Amount outstanding at 1. 7. 96 Operations in six-month period Amounts disbursed Amounts repaid Amount outstanding at 31. 12. 1996 ECU million LATVIA 1 st tranche 2nd tranche LITHUANIA 1st tranche 2nd tranche MOLDOVA I 1 st tranche 2nd tranEC MOLDOVA II UKRAINE I UKRAINE II 1/2 tranche 1/2 tranche 2nd tranche BELARUS 1st tranche 2nd tranche ALGERIA I 1st tranche 2nd tranche ALGERIA II 1st tranche 2nd tranche ISRAEL REPS. OF FORMER USSR TOTAL 7 7 7 10 10 10 10 10 10 31. 03. 2000 27. 07. 2000 16. 08. 2002 07. 12. 2004 08. 08. 2005 30. 10. 2006 28. 12. 2005 29. 08. 2006 30. 10. 2006 10 28. 12. 2005 5 7 7 5 3 15. 12. 97 17. 08. 2001 27. 11. 202 15. 12. 97 28. 09. 97 94/346/EC 13. 06. 94 96/242/EC 94/940/EC 95/442/EC 25. 03. 96 22. 12. 94 23. 10. 95 95/132/EC 10. 04. 95 91/510/EEC 23. 09. 91 94/933/EC 22. 12. 94 91/408/EEC 91/658/EEC 22. 07. 91 16. 12. 91 (c) (d) (c) (b) (c) (c) (c) (c) (c) (c) (d) (c) (d) (c) (c) (c) (d) (c) 80,00 40,00 40,00 100,00 50,00 50,00 45,00 25,00 20,00 15,00 85,00 200,00 55,00 30,00 25,00 400,00 250,00 150,00 200,00 100,00 100,00 160,00 1. 250,00 40,00 0,00 50,00 25,00 25,00 20,00 0,00 85,00 0,00 0,00 0,00 30,00 0,00 250,00 150,00 100,00 0,00 160,00 143,70 15,00 50,00 50,00 40,00 0,00 50,00 25,00 25,00 20,00 15,00 85,00 50,00 50,00 0,00 30,00 0,00 250,00 150,00 100,00 0,00 160,00 143,70 5. 035,00 2. 523,50 155,00 0,00 2. 678,70 GEOGRAPHICAL AREA Decision LOAN GUARANTEES TO EIB Date of decision Rate of guarantee Loan term (years) Date of guarantee contract Amount decided Loans signed Amount outstanding at 1. 7. 96 during six- month period at 1. 7. 96 at 31. 12. 96 MED. financial protocols (1) 8. 03. 77 75% (2) MED. horizontal cooperation R/1762/92/EEC 29. 06. 92 75% (2) TOTAL MED. Central & Eastern Europe 90/62/EEC(4) 12. 02. 90 91/252/EEC(5) 14. 05. 91 Central & Eastern Europe II 93/696/EC(6) 13. 1293 Asia, Latin America I 93/115/EEC 15. 02. 93 Asia, Latin America II 96/723/EC 12. 12. 96 SOUTH AFRICA 95/207/EC 01 06. 95 100% 100% 100% 100% 100% 100% TOTAL 15 15 15 15 15 15 15 15 30. 10. 78/10. 11. 78 09. 11. 92/18. 11. 92 24. 04. 90/14. 05. 90 19. 01. 93/04. 02. 93 22. 07. 94/12. 08. 94 04. 11. 93/17. 11. 93 18. 03. 97/-. 04. 10. 95/16. 10. 95 6062 1800 7862 1000 700 3000 750 275 300 13887 5196 1397 6593 (3) 947 700 1999 647 101 10987 129 404 533 (3) -20 981 2065 261 2327 559 325 141 191 1494 3543 2057 301 2357 615 356 335 204 32 3898 (1) including ECU 1 500 million for Spain, Greece and Portugal. (2) General guarantee of 75% for all credits made available under lending operations under a guarantee contract signed between the Community and the EIB on 30. 10. 78 and 10. 11. 78. By way of exception, a 100% guarantee applies to the emergency aid granted to Portugal in accordance with the Council Decision of 7 October 1975. (3) the Community has guaranteed ECU 5 379. 4 million, of which ECU 141. 5 million is covered by a 100% guarantee for Portugal. (4) Non-member countries: Poland, Hungary. (5) Non-member countries: Czech Republic and Slovak Republic, Bulgaria, Romania. (6) Nori-member countries: Poland, Hungary, Czech Republic and Slovak Republic, Bulgaria, Romania, Baltic States and Albania. - 29- I. C Expected signature and disbursement of EIB loans The EIB has supplied the figures used for calculation of the assumptions made for drawing up Table 3 (EB3 loans to non-member countries from its own resources). Expected signatures Mediterranean countries At 31 December 1996 a total of ECU 250 million was still to be signed in 1977 under current and former mandates (ECU 477 million, less ECU 227 million for the remainder from the first and second protocols with Yugoslavia which will no longer be signed). It is assumed that all the ECU 225 million under the third and fourth protocols with Syria will be signed in 1998; however, this assumption is very uncertain. Central and Eastern Europe At 31 December 1996 a total of ECU 20 million was still awaiting signature under current and former mandates. Asia and Latin America At 31 December 1996 a total of ECU 20 million was still awaiting signature under the first mandate. As the Council decided to grant ECU 275 million on 12 December 1996, the total still to be signed in 1997 comes to ECU 295 million. South Africa At 31 December 1996 a total of ECU 199 million was still to be signed in 1997 under the first mandate. Disbursement forecasts As regards disbursement of the loans still awaiting signature, it is assumed that nothing will be paid in the year of signature, 10% in the second year, 25% a year between the third and fifth years and 15% in the sixth year. At 31 December 1996 ECU 6 256. 3 million still had to be disbursed against loans signed at that date. The total breaks down as follows:6 Mediterranean Central and Eastern Europe Asia and Latin America South Africa ECU 2 497. 3 million ECU 3 247 million ECU 443 million ECU 69 million Based on a working assumption that 25% of the loan will be disbursed every year for four years and that the average term will be fifteen years with a three-year period of grace. 30 I. D Payment of the budget guarantee I. D. I Borrowing/lending operations In this type of operation, the Community borrows on the financial market and on-lends the proceeds (at the same rate and for the same term) to Member States (balance of payments), non-member countries (medium-term financial assistance) or firms (NCI, Euratom). The loan repayments are scheduled to match the repayments of the borrowings due from the Community. If the recipient of the loan is late in making a repayment, the Commission must draw on its resources to repay the borrowing on the due date. The funds needed to pay the budget guarantee in the event of late payment by the recipient of a loan granted by the Community are raised as follows: a) The amount required may be taken provisionally from cash resources in accordance with Article 12 of Council Regulation No 1552/89 of 29 May 1989 implementing Decision 88/376/EEC, Euratom on the system of the Communities' own resources. This method is used so that the Community can immediately repay the borrowing on the date scheduled in the event of late payment by the recipient of the loan. b) If the delay extends to three months after the due date, the Commission draws on the Guarantee Fund to cover the default. The funds obtained are used to replenish the Commission's cash resources. c) The transfer procedure can be used to provide the budget heading with the appropriations needed to cover the default; any margin available in the guarantee reserve is drawn on first. This method is used when there are insufficient appropriations in the Guarantee Fund and must be authorized in advance by the budgetary authority. d) The re-use of amounts repaid by debtors who have defaulted, leading to activation of the Community guarantee, allows payments to be made within a short period of time always providing, of course, that there are recovered funds available. I. D. 2 Guarantees given to third parties The loan guarantee is in respect of loans granted by a financial institution such as the European Investment Bank (EIB). When the recipient of a guaranteed loan fails to make a payment on the due date, the EIB asks the Community to pay the amounts owed by the defaulter in accordance with the contract of guarantee. The guarantee must be paid within tliree months of receiving the EEB's request. The EIB administers the loan with all the care required by banking practice and is obliged to demand the payments due after the guarantee has been activated. Since the entry in force of the Regulation establishing a Guarantee Fund for external action, the provisions of the Agreement between the Community and the EIB on management of the Fund state that, after the EIB calls in the guarantee in the event of a default, the Commission must authorize the Bank to withdraw the corresponding amounts from the Guarantee Fund within three months. 31 - If there are insufficient resources in the Fund, the procedure used for activating the guarantee is the same as for borrowing/lending operations. n. METHODOLOGICAL NOTE ON THE ANALYSIS OF THE COMMUNITY'S ESTIMATED LENDING CAPACITY IN RESPECT OF NON-MEMBER COUNTRIES OVER THE PERIOD 1997-99 UNDER THE GUARANTEE FUND MECHANISM n. A Reserve for loan guarantees to non-member countries (1) As agreed at the Edinburgh European Council, the Interinstitutional Agreement of 29 October 1993 on budgetary discipline and improvement of the budgetary procedure provided for the entry of a reserve for loan guarantees to non-member countries as a provision in the general budget of the European Communities. This reserve is intended to cover the requirements of the Guarantee Fund and, where necessary, activated guarantees exceeding the amount available in the Fund, so that these amounts may be charged to the budget. The amount of the guarantee reserve is the same as in the financial perspective, viz. ECU 300 million at 1992 prices. The amount in the reserve comes to ECU 329 million in 1997. The conditions for the entry, use and financing of the guarantee reserve are laid down in the following decisions: • Council Decision 94/729/EC of 31 October 1994 on budgetary discipline • Council Regulation (ECSC, EC, Euratom) No 2730/94 of 31 October 1994 amending the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities • Council Decision 94/728/EC of 31 October 1994 on the system of the Communities' own resources. II. B Bases for the calculation of the provisioning of the Guarantee Fund (2) The bases for the provisioning of the Fund are calculated by applying the appropriate rate of guarantee (75% or 100%): - - to the loan guarantees authorized by the Council and to the loan guarantees proposed or being prepared by the Commission on the basis of the estimates of loan signatures contained in the financial statements (EIB and Euratom loans); to the loans (for financial assistance) authorized by the Council and to the loans proposed or being prepared by the Commission. The annex to Council Regulation (EC, Euratom) No 2728/94 of 31 October 1994 establishing a Guarantee Fund for external actions, which relates to the arrangements for payments into the Guarantee Fund, states that, in the case of borrowing/lending operations or guarantees to financial bodies under a framework facility spread over a number of years and with a microeconomic and structural purpose, payments into the Fund will be made in annual \ - 3 2- tranches calculated on the basis of the annual amounts indicated in the financial statement attached to the Commission proposal, adapted where appropriate in the light of the Council decision. For other Community borrowing/lending operations, such as loans for the balance of payments of third countries, whether made in one or more than one tranche, payments into the Fund are calculated on the basis of the total amount for the operation decided on by the Council. The annex to the Regulation establishing the Guarantee Fund states that, as from the second year (in the case of operations spread over a number of years), the amounts to be paid into the Fund will be corrected by the difference recorded on 31 December of the previous year between the estimates that were taken as a basis for the previous payment and the actual figure for the loans signed during that year. Any difference relating to the previous year will give rise to a payment in the following year. The annex states that, when it starts a payment procedure, the Commission will check the situation with regard to the performance of the operations which were the subject of previous payments and, where the commitment deadlines originally laid down have not been met, will propose that this will be taken into account in calculating the first payment to be made at the start of the following financial year for operations already under way. In the second half of 1996 the budgetary authority therefore adopted transfers 42/96 and 52/96 to provision the Guarantee Fund in respect of the lending operations with non-member countries (loans to Moldova and EIB loans to Asian and Latin American developing countries with which the Community has concluded cooperation agreements). II. C Basis for the provisioning of the Fund in the event of a part guarantee For EIB loans covered by an aggregate 75% guarantee, the Fund is provisioned on the basis of 100%) of the annual forecast of signatures up to a level of 75%» of the total amount of operations authorized. II. D Provisioning of the Guarantee Fund (3) The amounts paid into the Fund are obtained by applying the appropriate rate of provisioning (15%) or 14%) to the calculation base set out above. The 15%) provisioning rate is applied to loans granted after guarantees under the Fund have been activated and until the amount involved in the default has been repaid to the Fund. Article 5 of the Regulation establishing the Guarantee Fund states, "If, as a result of the activation of guarantees following default, resources in the Fund stand below 75%> of the target amount, the rate of provisioning on new operations shall be raised to 15%> until the target amount has once more been reached or, if the default occurs before the target amount is reached, until the amount drawn under the activation of the guarantee has been fully restored". As the amounts drawn under the activation of the guarantee have not been restored, the rate of provisioning applied to the new operations is 15%). 33 A 14% provisioning rate is applied to the EIB loans granted before defaults were covered by the Fund if the financial statements provide for the signature of part of the loans in 1997. (Pursuant to Articles 2 and 4 of the Regulation establishing the Guarantee Fund, the Fund is endowed by payments from the general budget equivalent to 14%> of the capital value of the operations until it reaches the target amount. ) n. E Margin remaining in the guarantee reserve (4) The margin remaining in the guarantee reserve is equivalent to the difference between the reserve (1) and the heading for the provisioning of the Guarantee Fund (3). II. F Residual lending capacity (5) The residual lending capacity is the loan equivalent of the margin left in the reserve, allowing for the guarantee rates in force. 34 in. TABLES: COUNTRY-RISK INDICATORS -35 Country-risk indicators Country: Bulgaria footnotes 1994 1995 Real GDP growth rate (in %) Industrial production ( % change) Unemployment rate Inflation rate Exchange rate (Leva per USD) (end of1 period) (end of period) (end of period) 1. 8 7,8 12,8 121,9 66,0 2,5 8,6 11. 6 32,8 70,7 (12) 1996 (10) -10,0 -1,1 12,5 311,0 496,0 General government balance (as % of GDP) -5,8 -5,7 -11,0 Balance of payments Exports of G&S (in bn USD) Current account balance (in % of GDP) Net inflow of foreign direct investment (in mio USD) Official reserves, including gold (end of period) in bn USD in months of imports of G&S External debt External debt (In convertible currencies, in bn USD, end of period. ) Convertible debt service (in bn USD) principal interest External debt/GDP (%) External debt/exports of G&S (%) Debt service/exports of G&S (%) Arrears (on both interest and principal, in bn USD) Debt relief agreements and rescheduling Indicators of EU exposures EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of G & S (%) IMF arrangements Type/no (Date / - ) On track/off track ( - / Date) Indicators of market's perceived creditworthiness Moody's long-term foreign currency rating (end of period) S&P long-term foreign currency rating (end of period) Euromoney Position in the ranking (number of countries) The Institutional Investor Position in the ranking (number of countries) Credit rating ' 5,3 -2,0 105 1,3 3,0 10,3 0,9 0,5 0,5 118,9 219,8 18,4 17,6 (4) 6,8 4,6 8,9 7,0 -0,4 90 1,5 2,8 9,4 0,8 0,2 0,6 80,9 155,1 11,4 (9) (9) 7,3 5,7 7,7 (09/96) 4,4 -0,1 61 0,5 (11) 9,9 (09/96) 1,1 0,5 0,6 280,0 221,0 (11) (9) (9) (09/96) 8,1 6,5 14,6 (09/96) (5)+(6) (3/94-3/95) (7) (09/94) - - (8) (8) 03/94 09/94 88 98 (167) (167) 03/94 09/94 91 95 (135) (135) 19. 8 20. 8 (8) (8) 03/95 09/95 90 90 (187) (181) 03/95 09/95 93 94 (135) (135) 21. 9 222 (8) (8) 03/96 09/96 99 92 (178) (178) 03/96 09/96 92 93 (135) (135) 23 1 23. 5 (D (2) (2) (3) (1) Only EIB and BOP loans (outstanding disbursements) to CEEC, NIS and MED (2) The higher the ranking number, the lower the creditworthiness of the country. (3) Countries are rated on a scale of zero to 100, with 100 representing the least chance of default. A given country may improve its rating and still fall in the ranking if also the average global rating for all rated countries improves. (4) London Club DDSR (July) Paris club resched. (Apr) (5) SBA (6) STF (7) SBA suspended (8) Not rated (9) No (10) Preliminary (11) Not available (12) Latest data or estimates (E) (in sheet * is being used) - 3 6- Country-risk indicators - Country: Czech Republic footnotes 1994 1995 Real GDP growth rate (in %) Industrial production ( % change) Unemployment (% of labour force) Inflation rate Exchange rate (CK's per USD) (end of period) (Dec/Dec) (end of period) 2,6 2. 1 3,3 10,2 28,2 4,8 9,2 3,0 7,9 26,3 General government balance (as % of GDP) -0,3 -0,8 Balance of payments Exports of G&S (in mio USD) Current account balance (in % of GDP) Net inflow of foreign direct investment (in mio USD) Official FX reserves (end of period) in bn USD in months of imports of G&S External debt (end of period) External debt (In convertible currencies, in bn USD, end of period. ) Convertible debt service (in bn USD) principal interest External debt/GDP (%) External debt/exports of G&S (%) Debt service/exports of G&S (%) Arrears (on both interest and principal, in mio USD) Debt relief agreements and rescheduling Indicators of EU exposures EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of G & S (%) (1) 14295 -0,1 762 6,2 4,2 10,7 2,5 2,0 0,5 29,7 56,6 12,6 (4) 5,2 3,4 2,5 17054 -3,0 2547 14,0 7,9 16,5 2,6 1,5 1,1 35,8 56,5 ' 15,2 (4) (4) 5,8 2,6 2,5 1996 (7) 4,8 7,9 3,0 9,0 27,0 -0,6 29920 -6,5 875 12,4 5,3 16,1 3,8 3,0 0,8 30,6 53,8 12,7 (4) (4) 7,3 3,6 1,9 IMF arrangements Type/no (Date / - ) On track/off track ( - / Date) (5) (3/93-3/94) (6) - - Indicators of market's perceived creditworthiness Moody's long-term foreign currency rating (end of period) S&P long-term foreign currency rating (end of period) Euromoney Position in the ranking (number of countries) The Institutional Investor Position in the ranking (number of countries) Credit rating Baa2 (06/94) BBB+ (07/94) 03/94 09/94 40 39 (167) (167) 03/94 09/94 40 39 (135) (135) 49. 7 52. 8 Baal (09/95) A 03/95 09/95 35 41 (187) (181) 03/95 09/95 33 30 (135) (135) 55. 8 58. 4 Baal A 03/96 09/96 36 35 (178) (178) 03/95 09/95 30 29 (135) (135) 60. 1 62. 0 (2) (2) (3) (1 ) Only EIB and BOP loans (outstanding disbursements) to CEEC, NIS and MED (2) The higher the ranking number, the lower the creditworthiness of the country. (3) Countries are rated on a scale of zero to 100. with 100 representing the least chance of default. A given country may improve its rating and still fall in the ranking if also the average global rating for all rated countries improves. (4) No (5) SBA (6) On-track. All debts to IMF paid ahead of schedule. (7) Projections (unless otherwise stated) - 3 7. Country-risk indicators Country: Estonia footnotes 1994 1995 Real GDP growth rate (in %) Industrial production ( % change) Unemployment rate Inflation rate Exchange rate (Kroons per USD) (end of period) (end of period) (end of period) General government balance (as % of GDP) Financial balance Fiscal balance Balance of payments -0,1 3,5 4,5 41,6 13,0 (1) (1) 2,9 1,3 Merchandise exports (in mio USD) Current account balance (in % of GDP) (excl. official transfers) Net inflow of foreign direct investment (in mio USD) Official FX reserves (end of period) in mio USD in months of goods imports 1329 -12,3 212 447 3,2 3,2 1,4 4,1 28,8 11,5 -0,4 -0,8 1861 -8,2 202 583 2,7 1996 (10) 3,1 -0. 7 4,3 23,1 12,4 (11) -1,5 1980 (11) 42 605 2,3 (12) (09/96) (09/96) (09/96) External debt External debt (incl. to IMF) (in convertible currencies, in mio USD, end of period) Convertible debt service (in mio USD) principal interest +charges to IMF External debt/GDP (%) External debt/merchandise exports (%) Debt service/merchandise exports (%) Arrears (on both interest and principal, in mio USD) Debt relief agreements and rescheduling Indicators of EU exposures EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of G & S (%) (2) IMF arrangements Type/no (Date / - ) On track/off track ( - / Date) 170,3 246,8 294 (10/96) 8,1 3,0 5,1 7,5 12,8 0,6 (5) (5) 0,4 15,7 2,0 12,8 3,5 9,3 7,1 13,3 0,7 (5) (5) 0. 5 16,5 2,2 • * (10/96) 21,4 10,5 10,9 (11) 14. 3 (11) (5) (5) 0,5 13,8 2,1 (6) (10/93-3/95) (7) (9) (4/95-6796) (7) (9) (4/95-6/96) (13) (7) Indicators of market's perceived creditworthiness Moody's long-term foreign currency rating (end of period) S&P long-term foreign currency rating (end of period) Euromoney Position in the ranking (number of countries) The Institutional Investor Position in the ranking (number of countries) Credit rating (8) (8) 03/94 09/94 105 102 (167) (167) 03/94 09/94 88 86 (135) (135) 20. 7 23. 6 (8) (8) 03/95 09/95 66 76 (187) (181) 03/95 09/95 79 79 (135) (135) 254 26. 3 (8) (8) 03/96 09/96 73 71 (178) (178) 03/96 09/96 76 71 (135) (135) 28 9 31. 1 (3) (3) (4) ( 1 ) Financial balance does not take into account government net lending, whereas fiscal balance does. (2) Only EIB and BOP loans (outstanding disbursements) to CEEC, NIS and MED (3) The higher the ranking number, the lower the creditworthiness of the country. (4) Countries are rated on a scale of zero to 100, with 100 representing the least chance of default. A given country may improve its rating and still fall in the ranking if also the average global rating for all rated countries improves. (5) No (6) SBA/STF (7) On-track (8) Not rated (9) SBA (10) Preliminary (11) Not available (12) Latest data or estimates (E) (in sheet * is being used) (13) The SBA (7/96-7/97) is also on track. -38- Country-risk indicators Country: Hungary « Real GDP growth rate (in %) Industrial production ( % change) Unemployment (% of labour force) Inflation rate Exchange rate (forints per USD) (end"of period) (Dec/Dec) (end of period) footnotes 1994 1995 1996 2,9 9,0 10,9 21,2 111,0 1,5 6,0 10,4 28,5 139,5 1,0 2,3 10,5 19,8 164,0 (10) (09/96) (11/96) Consolidated state budget balance (as % of GDP) (GFS definition) -6,3 -6,8 -3,3 ' Balance of payments Exports of G+S (in mio USD) Current account balance (in % of GDP) Net inflow of foreign direct investment (in mio USD) Official reserves (end of period) in bnUSD in months of imports of merchandises External debt External debt (in convertible currencies, in bn USD, end of period) Convertible debt service (in bn USD) principal interest External debt/GDP (%) External debt/Exports of G+S (%) Debt service/Exports of G+S (%) Arrears (on both interest and principal, in mio USD) Debt relief agreements and rescheduling Indicators of EU exposures EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of G & S (%) IMF arrangements Type/no (Date / - ) On track/off track ( - / Date) Indicators of market's perceived creditworthiness Moody's long-term foreign currency rating (end of period) S&P long-term foreign currency rating (end of period) Euromoney Position in the ranking (number of countries) The Institutional Investor Position in the ranking (number of countries) Credit rating 10219 -9,5 1100 6,8 7,2 28,5 6,2 4,2 2,0 68,9 278,9 60,8 (5) (5) 16,5 4,0 11,3 (6) (7) 14667 -5,6 4410 12,0 9,5 31,7 7,7 5,3 2,4 70,8 189,2 52,5 (5) (5) 13,0 3,1 6,6 12788 -3,2 1730 13,8 10,1 (11/96) (8) (11/96) (11/96) (11/96) 26,4 (11/96) (8) (8) 7,4 5,1 2,3 59,1 206,2 43,6 (5) (5) 9,6 2,9 5,9 - (6) (3/96-2/98) (9) Ba1 BB+ 03/94 09/94 44 46 (167) (167) 03/94 09/94 43 44 (135) (135) 46. 1 46. 2 Ba1 BB+ 03/95 09/95 50 44 (187) (181) 03/95 09/95 45 48 (135) (135) 46 4 45. 0 Baa3 BBB- 03/96 09/96 44 44 (178) (178) 03/96 09/96 50 50 (135) (135) 43. 6 44. 7 (1) (2) (3) (3) (4) Including early repayments (1) (2) Only EIB and BOP loans (outstanding disbursements) to CEEC, NIS and MED (3) The higher the ranking number, the lower the creditworthiness of the country. (4) Countries are rated on a scale of zero to 100, with 100 representing the least chance of default. A given country may improve its rating and still fall in the ranking if also the average global rating for all rated countries improves. (5) No (6) SBA (7) First review uncompleted (8) Exports of goods only for 1996 (9) On-track (10) Latest data or estimates (E) (in sheet * is being used) 39- Country-risk indicators Country: Latvia footnotes 1994 1995 1996 (12) Real GDP growth rate (in %) Industrial production ( % change) Unemployment Inflation rate Exchange rate (Lats per USD) (end of-period) (end of period) (end of period) General government balance (as % of GDP) Financial balance Fiscal balance Balance of payments Exports (in mio USD) Current account balance, excl. official transfers (in % of GDP) Net inflow of foreign direct investment (in mio USD) Official FX reserves (end of period) in mio USD in months of imports of G&S (D (D External debt External debt (in convertible currencies, in mio USD, end of period) Convertible debt service (in mio USD) principal interest External debt/GDP (%) External debt/merchandise exports (%) Debt service/merchandise exports (%) Arrears (on both interest and principal, in mio USD) Debt relief agreements and rescheduling 2,0 -2,2 6,5 26 0,55 -1,7 -4,0 997 -3,5 155 545 4,5 359 50,0 (5) (5) 10,0 36,0 5,0 (6) (6) Indicators of EU exposures EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of G & S (%) (2) 0,7 13,3 4,8 -1,6 -6,3 6,1 23,1 0,54 2,5 1,0 7,2 13,1 0,55 -2,7 • -3,3 -1. 2 -1,8 1306 -4,4 165 527 3,2 423 39,0 (5) (5) 9,0 32,4 3,0 (6) (6) 0,7 12,3 4,0 1430 -6,8 200 649 3,5 500 71,0 (5) (5) 9,0 35,0 5,0 (6) (6) 0,7 10,4 3,6 IMF arrangements Type/no (Date / - ) On track/off track ( - / Date) (7) (12/93-3/95) (8) (10) (4/95-4/96) (11) (10) (5/96) (8) Indicators of market's perceived creditworthiness Moody's long-term foreign currency rating (end of period) S&P long-term foreign currency rating (end of period) Euromoney Position in the ranking (number of countries) The Institutional Investor Position in the ranking (number of countries) Credit rating (9) (9) 03/94 09/94 104 125 (167) (167) 03/94 09/94 94 92 (135) (135) 19. 6 21. 3 (9) (9) 03/95 09/95 106 116 (187) (181) 03/95 09/95 91 89 (135) (135) 22. 6 23. 4 Baa3 (01/97) BBB (01/97) 03/96 09/96 89 75 (178) (178) 03/96 09/96 86 88 (135) (135) 24. 7 25. 7 (3) (3) (4) (1) Financial balance does not take into account government net lending, whereas fiscal balance does. (2) Only EIB and 8 0P loans (outstanding disbursements) to CEEC, NIS and MED (3) The higher the ranking number, the lower the creditworthiness of the country. (4) Countries are rated on a scale of zero to 100. with 100 representing the least chance of default. A given country may improve its rating and still fall in the ranking if also the average global rating for all rated countries improves. (5) Not available (6) No (7) SBA/STF (8) On-track (9) Not rated (10) SBA (11) Off-track (12) Latest data or estimates (E) (in sheet * is being used) - 4 0. Country-risk indicators Country: Lithuania • footnotes 1994 1995 Real GDP growth rate (in %) Industrial production ( % change) Unemployment rate Inflation rate Exchange rate (Litas per USD) (end of period) (end of period) (end of period) General government balance (as % of GDP) Financial balance Fiscal balance Balance of payments Exports (in mio USD) Current account balance (in % of GDP), without official transfers Net inflow of foreign direct investment (in mio USD) Official FX reserves (end of period, gross foreign assets) in mio USD in months of imports of G&S External debt External debt (in convertible currencies, in mio USD, end of period) Convertible debt service (in mio USD) principal interest External debt/GDP (%) External debt/exports of G&S (%) Debt service/exports of G&S (%) Arrears (on both interest and principal, in mio USD) Debt relief agreements and rescheduling Indicators of EU exposures EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of G & S (%) IMF arrangements Type/no (Date / - ) On track/off track ( - / Date) Indicators of market's perceived creditworthiness Moody's long-term foreign currency rating (end of period) S&P long-term foreign currency rating (end of period) Euromoney Position in the ranking (number of countries) The Institutional Investor Position in the ranking (number of countries) Credit rating 1,0 -6,7 3,8 45,1 4,3 (1) (D -1,5 -4,2 1930 -4,2 60 587 3,1 448 19 (5) (5) 8,0 ~3,2 1,0 (6) (6) 0,9 13,3 3,1 (2) (3) (3) (4) (09/96) (09/96) (11/96) (09/96) 1996 (11) 3,6 2,4 6,4 13,1 4,0 -1,9 -3,4 3361 -2,7 101 838 2,9 1070 120 (5) (5) 10,4 42,7 4,8 (6) (6) 1,4 10,5 3,3 3,1 0,8 6. 1 35,5 4,0 -1,8 -3,3 2210 -3,2 55 819 3,9 757 69 (5) (5) 9,7 34,3 3,1 (6) (6) 1,4 13,9 4,8 (7) (10/93-3/94) (10) (10/94-11/97) (10) (10/94-10/97) (8) (8) (10) (10/94-10/97) (8) (9) (9) 03/94 09/94 110 121 (167) (167) 03/94 09/94 97 96 (135) (135) 18. 4 20. 0 (9) (9) 03/95 09/95 108 118 (187) (181) 03/95 09/95 95 90 (135) (135) 21. 7 22. 9 Ba2 (9) 03/96 09/96 85 59 (178) (178) 03/96 09/96 89 90 (135) (135) 23. 8 25. 3 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) Financial balance does not take into account government net lending, whereas fiscal balance does. Only EIB and BOP loans (outstanding disbursements) to CEEC, NIS and MED The higher the ranking number, the lower the creditworthiness of the country. Countries are rated on a scale of zero to 100, with 100 representing the least chance of default. A given country may improve its rating and still fall in the ranking if also the average global rating for all rated countries improves. Not available No STF On-track Not rated EFF Projections (unless otherwise stated) -41 - Country-risk indicators Country: Romania footnotes 1994 1995 1996 (11) Real GDP growth rate (in %) Industrial production ( % change) Unemployment rate Inflation rate Exchange rate ( lei per USD) (end of period) ('Dec/Dec; (end of period) 3,9 7,2 10,9 61,7 1767 6. 9 5,2 8,9 27,8 2760 4,4 4,9 6,1 56,9 4100 General government balance (as % of GDP) -1,0 -2,8 -5,7 Balance of payments Exports of G&S (in bn USD) Current account balance (in % of GDP) Net inflow of foreign direct investment (in mio USD) Official FX reserves (end of period) in mio USD in months of imports of G&S External debt External debt (in convertible currencies, in bn USD, end of period) Convertible debt service (in mio USD) principal interest External debt/GDP (%) External debt/exports of G&S (%) Debt service/exports of G&S (%) Arrears (on both interest and principal, in mio USD) Debt relief agreements and rescheduling Indicators of EU exposures EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of G & S (%) IMF arrangements Type/no (Date / - ) On track/off track ( - / Date) Indicators of market's perceived creditworthiness Moody's long-term foreign currency rating (end of period) S&P long-term foreign currency rating (end of period) Euromoney Position in the ranking (number of countries) The Institutional Investor Position in the ranking (number of countries) Credit rating 6,1 -1,4 341 1596 2,2 5,5 589 313 276 18,3 90,1 9,6 (4) (4) 8,4 10,7 9,7 7,5 -3,6 417 1110 1,4 6,6 1038 462 576 18,7 88,0 13,8 (4) (4) 10,2 11,5 10,1 (5) (5/94-12/95) (6) (8) (9) 6,4 -3,4 608 1700 2,3 6,9 1200 477 723 22,0 97,0 13,7 (4) (4) 10,2 11,0 12,5 (10) (7) (7) 03/94 09/94 74 77 (167) (167) 03/94 09/94 76 74 (135) (135) 25. 4 262 (7) (7) 03/95 09/95 68 64 (187) (181) 03/95 09/95 73 71 (135) (135) 28. 1 29. 7 Ba3 BB- 03/96 09/96 67 61 (178) (178) 03/96 09/96 68 72 (135) (135) 30. 9 31. 0 (1) (2) (2) (3) (1) Only EIB and BOP loans (outstanding disbursements) to CEEC, NIS and MED (2) The higher the ranking number, the lower the creditworthiness of the country. (3) Countries are rated on a scale of zero to 100, with 100 representing the least chance of default. A given country may improve its rating and still fall in the ranking if also the average global rating for all rated countries improves. (4) No (5) SBA/STF (6) On-track (7) Not rated (8) SBA extended through 1997 and augmented (9) On-track; Off track in 1996 (10) SBA cancelled New programme to be approved by IMF Board (11) Latest data or estimates (E) (in sheet * is being used) 42- Country-risk indicators Country: Slovak Republic footnotes 1994 1995 1996 Real GDP growth rate (in %) Industrial production ( % change) Unemployment (% of labour force) Inflation rate Exchange rate (SK's per USD) (end of period) (Dec/Dec) (end of period) 4,8 7,0 14,6 11,7 31,3 7,4 9,6 13,1 7,2 29,6 General government balance (as % of GDP) -0,4 0,7 (9) (09/96) (11/96) (09/96) (10/96) (09/96) 7,0 2,6 12,8 5,4 31,9 -1,4 7980 -7,7 189 3473 3,4 6,3 (09/96) (09/96) (09/96) (09/96) (09/96) 820 (4) (4) 33,4 58,8 7,7 (5) (5) 4,5 5,6 4,4 - 8983 6,0 184 1691 2,3 3,9 791 (4) (4) 31,1 43,4 8,8 (5) (5) 2,9 5,3 2,3 10921 3,6 157 3400 4,1 5,8 1045 (4) (4) 39,9 53,1 9,5 (5) (5) 4,1 5,2 2,8 (7) (7/94-3/96) (8) (6) (7/93 -7/94) (7) (7/94-3/96) Baa3 (05/94) BB- (02/94) 03/94 09/94 64 66 (167) (167) 03/94 09/94 59 59 (135) (135) 31. 6 33. 1 Baa3 BB+ 03/95 09/95 53 51 (187) (181) 03/95 09/95 61 59 (135) (135) 33. 2 35. 7 Baa3 BBB- 03/96 09/96 48 49 (178) (178) 03/96 09/96 57 53 (135) (135) 386 41. 2 Balance of payments Exports of G&S (in mio USD) Current account balance (in % of GDP) Net inflow of foreign direct investment (in mio USD) Official FX reserves (end of period) in mio USD in months of imports of G&S External debt External debt (in convertible currencies, in bn USD, end of period) Convertible debt service (in mio USD) principal interest External debt/GDP (%) External debt/exports of G&S (%) Debt service/exports of G&S (%) Arrears (on both interest and principal, in mio USD) Debt relief agreements and rescheduling Indicators of EU exposures EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of G & S (%) IMF arrangements Type/no (Date / - ) On track/off track ( - / Date) Indicators of market's perceived creditworthiness Moody's long-term foreign currency rating (end of period) S&P long-term foreign currency rating (end of period) Euromoney Position in the ranking (number of countries) The Institutional Investor Position in the ranking (number of countries) Credit rating (1) (2) (2) (3) (1 ) Only EIB and BOP loans (outstanding disbursements) to CEEC, NIS and MED (2) The higher the ranking number, the lower the creditworthiness of the country. (3) Countries are rated on a scale of zero to 100, with 100 representing the least chance of default. A given country may improve its rating and still fall in the ranking if also the average global rating for all rated countries improves (4) Not available (5) No (6) STF (7) SBA (8) The mid-term review of the programme, which had been scheduled for February 1995, was not completed (9) Latest data or estimates (E) (in sheet * is being used) f •43 Country-risk indicators Country: Belarus footnotes 1994 1995 Real GDP growth rate (in %) Industrial production ( % change) Unemployment rate Inflation rate Exchange rate ( Rbs per USD) (end of period) (Dec/Dec) (average) General government balance (as % of GDP) Balance of payments. Exports of G & S (in mio USD) Current account balance (in % of GDP) Net inflow of foreign direct investment (in mio USD) Official FX reserves (end of period) » in mio USD in months of imports External debt External debt (in convertible currencies, in mio USD, end of period) Convertible debt service (in mio USD) principal interest External debt/GDP (%) External debt/exports of G & S (%) Debt service/exports of G & S (%) Arrears (on both interest and principal, in bn USD) Debt rescheduling agreement Indicators of EU exposure EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of G & S (%) IMF arrangements Type/no (Date / - ) On track/off track ( - / Date) Indicators of market's perceived creditworthiness Moody's long-term foreign currency rating (end of period) S&P long-term foreign currency rating (end of period) Euromoney Position in the ranking (number of countries) The Institutional Investor Position in the ranking (number of countries) Credit rating (D (2) (2) (3) -12. 2 -19,3 2. 1 1957 3651 -2,6 2641 -12. 4 10 101,0 0,3 -10,2 -11. 5 2. 7 244 11532 -1,9 4621 -2,5 7 377,0 0,7 1251,0 1513,0 123,0 (4) (4) 25,9 47,4 4,3 493,0 (5) 0,9 4,8 2,3 178,0 (4) (4) 14,7 32,7 3,4 460 (9) 0,5 2,6 0,8 1996 (13) 2,6 3,2 3,9 39 (4) -2,0 5264 -14,1 * 6* (4) 0,7* 950,0 163,2 * (4) (4) 8,1 15,4 3,1 (4) (9) 0,5 4,0 0,7 (6) (01/95) 7) (10) (12/95-11/96) (11) (12) (10) (12/95-11/96) (11) (12) (8) (8) 03/94 09/94 145 138 (167) (167) 03/94 09/94 109 109 (135) (125) 15. 5 15. 7 (8) (8) 03/95 09/95 135 134 (187) (181) 03/95 09/95 112 112 (135) (135) 15. 2 15. 5 (8) (8) 03/95 09/95 128 142 (178) (178) 03/95 09/95 116 118 (135) (125) 14. 5 14. 6 (1) (2) (3) Only EIB and BOP loans (outstanding disbursements) to CEEC, NIS and MED The higher the ranking number, the lower the creditworthiness of the country. Countries are rated on a scale of zero to 100, with 100 representing the least chance of default. A given country may improve its rating and still fall in the ranking if also the average global rating for all rated countries improves. Not available (4) (5) With Russia on gas arrears (6) (7) STF IMF 1993 STF programme went off track in early 1994. However, IMF staff considered favourably the government programme adopted in Autumn 1994, which was supported with the second STF tranche by end-January 1995. Not rated Arr. on Rus. gas cancel, agreem. 02/96-08/96 (8) (9) (10) SBA (11) Off track (12) The first quarterly review of the programme, initially scheduled for December 1995, has never been completed. (13) Estimates (E) (in sheet * is being used) - 4 4- Country-risk indicators Country: Moldova footnotes 1994 Real GDP growth rate (in %) Industrial production ( % change) Unemployment (% of labour force) Inflation rate Exchange rate (leu per USD) (end of period) (end of period) (end of period) -31,2 -30,0 1,0 116 4,27 1995 -3,0 -10,0 2,0 24 4,50 (11) (11/96) 1996 (9) -5,0 -17,7 2,0 15 4,65 General government balance (as % of GDP) -8,7 -5,5 -3,4 Balance of payments Merchandise exports (in mio USD) Current account balance (in % of GDP) Net inflow of foreign direct investment (in mio USD) Official FX reserves (end of period) in mio USD in months of imports of merchandises External debt External debt (in convertible currencies, in mio USD, end of period) Convertible debt service (in mio USD) principal interest External debt/GDP (%) External debt/ merchandise exports (%) Debt service/ merchandise exports (%) Arrears (on both interest and principal, in mio USD) Debt relief agreements and rescheduling Indicators of EU exposures EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/merchandise exports (%) IMF arrangements Type/no (Date / - ) On track/off track ( - / Date) Indicators of market's perceived creditworthiness Moody's long-term foreign currency rating (end of period) S&P long-term foreign currency rating (end of period) Euromoney Position in the ranking (number of countries) The Institutional Investor Position in the ranking (number of countries) Credit rating (D (2) (2) (3) 618 -12,9 18,0 179 2,9 741 -6,8 72,0 257 3,2 343,0 675,0 12,3 (4) (4) 30,0 55,5 4,0 (5) (5) 0,9 18,0 10,0 91,0 (4) (4) 38,0 91,1 11,0 (5) (5). 0,8 8,7 7,9 563 -6,8 (4) 292 3,4 700,0 (4) (4) (4) 32,0 124,3 11,0 (5) (5) 1. 0 11,1 13,9 (09/96) (09/96) (09/96) (6) (12/93-3/95) (7) (6) (3/95-3/96) (7) (10) (5/96-5/99) (7) (8) (8) 03/94 09/94 148 155 (167) (167) (8) (8) 03/95 09/95 157 141 (187) (181) (8) (8) 03/96 09/96 134 125 (178) (178) (6) (8) (8) (1) Only EIB and BOP loans (outstanding disbursements) to CEEC, NIS and MED (2) The higher the ranking number, the lower the creditworthiness of the country. (3) Countries are rated on a scale of zero to 100, with 100 representing the least chance of default A given country m3y improve its rating and still fall in the ranking if also the average global rating for all rated countries improves (4) Not available (5) No (6) SBA (7) On-track (8) Not rated (9) Projections (unless otherwise stated) (10) EFF (11) Latest data or estimates (E) (in sheet * is being used) 45- Country-risk indicators Country: Ukraine footnotes 1994 1995 Real GDP growth (% change) Industrial production ( % change) Unemployment rate Inflation rate Exchange rate (Krb per USD) (Hrv per US$ for 1996) (end of period) (Dec/Dec) - auction / interbank - cash (end of period) (end of period) 23,0 -28,5 0,3 401 108196 128000 -11,8 -11,7 0,6 182 179400 186000 1996 (11). -10,0 * -5,1 1. 3 39,7 1. 89 1,89 General government balance (as % of GDP) -8,2 -5,0 -3,2 Balance of payments Exports of G&S (in bn USD) Current account balance (excl. transfers) (in % of GDP) Net inflow of foreign direct investment (in bn USD) Gross official FX reserves in mio USD in weeks of imports of G&S External debt External debt (in convertible currencies, in bn USD, end of period) Convertible debt service paid (in mio USD) principal interest External debt/GDP (%) External debt/exports of G&S (%) Debt service/exports of G&S (%) Arrears (on both interest and principal, in mio USD) Debt relief agreements and rescheduling Indicators of EU exposure EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of G & S (%) IMF arrangements Type/no (Date / - ) On track/off track ( - / Date) Indicators of market's perceived creditworthiness Moody's long-term foreign currency rating (end of period) S&P long-term foreign currency rating (end of period) Euromoney Position in the ranking (number of countries) The Institutional Investor Position in the ranking (number of countries) Credit rating d) (2) (2) (3) 14,8 -6,0 0,09 646 2,3 7,2 1794 (4) (4) 29,2 48,0 12,1 2722 (5) 1,6 1,6 0,8 15. 1 -4,4 0,27 1134 3,7 8,1 1531 986,0 545,0 23,3 53. 6 9,3 236 (5) 1. 5 1. 4 0,7 (6) 10/94 (7) (9) 08/95 (10) 15,6* -3,2* 0,4* 1994 5,3 9,2 1221 716 505 21,2 45,3 6,0 (5) 3,0 2,6 1,5 (9) 5/96 (7) (8) (8) 03/94 09/94 149 147 (167) (167) 03/94 09/94 111 113 (135) (135) 15. 1 14. 5 (8) (8) 03/95 09/95 145 138 (187) (181) 03/95 09/95 109 111 (135) (135) 15. 5 15. 7 (8) (8) 03/95 09/95 136 135 (178) (178) 03/95 09/95 107 111 (135) (135) 16. 7 16. 6 (1) Only EIB and BOP loans (outstanding disbursements) to CEEC, NIS and MED (2) The higher the ranking number, the lower the creditworthiness of the country. (3) Countries are rated on a scale of zero to 100, with 100 representing the least chance of default. A given country may improve its rating and still fall in the ranking if also the average global rating for all rated countries improves. (4) Not available (5) Rescheduling of debt owed to Russia/Turkm. (6) STF (7) On-track (8) Not rated (9) SBA (10) Off track; New SBA approved in May 1996. On track. (11) Estimates (E) (in sheet * is being used) - 4 6- Country-risk indicators Country: Algeria Real GDP growth rate (in %) Hydrocarbon production ( % change) Inflation rate Exchange rate (dinars per USD) ("Dec/Dec) (end of period) General government balance (as % of GDP) Balance of payments Exports of G&S (in bn USD) Current account balance (in % of GDP) Net inflow of foreign direct investment (in mio USD) in bn USD Official FX reserves in months of imports of G&S External debt External debt (in convertible currencies, in bn USD, end of period) Convertible debt service (in bn USD) principal interest External debt/GDP (%) External debt/exports of G&S (%) Debt service/exports of G&S (%) Arrears (on both interest and principal, in mio USD) Debt relief agreements and rescheduling (bin USS) Indicators of EU exposure EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of G & S (%) IMF arrangements Type/no (Date / - ) On track/off track Indicators of market's perceived creditworthiness Moody's long-term foreign currency rating (end of per. ) S&P long-term foreign currency rating (end of period) Euromoney Position in the ranking (number of countries) The Institutional Investor Position in the ranking (number of countries) Credit rating footnotes 1994 1995 1996 -0,9 -2,5 38,6 42,9 -4,4 8,9 -1,8 0,0 2,6 2,9 29,5 8,9 7,1 1,8 70,3 307,5 48,6 (4) 4,5 9,9 2,4 7,8 3,9 4,4 21,9 52. 2 -1,4 10,3 -2,2 0,0 2,1 2,1 32,5 9,4 7,1 2,3 78,4 297,1 42,4 (4) 4,9 12,2 2,8 8,9 4,0 5,4 15,1 56,0 2,6 12,6 0,2 0,2 3,7 3,9 32,7 7,6 5,2 2,4 72,4 230,8 32,7 (4) 3,3 11,6 2,7 7,1 (D (5) (5/94 - 5/95) (6) (5) (5/94 - 5/95) (6)/(8) (5/95 - 5/98) (8) (5/95 - 5/98) (6) (7) (7) 03/94 09/94 92 96 (167) (167) 03/94 09/94 75 78 (135) (135) 26. 3 24. 6 (7) (7) 03/95 09/95 102 107 (187)(181) 03/95 09/95 89 91 (135) (135) 23. 5 22. 8 (7) (7) 03/95 09/95 109 97 (178) (178) 03/95 09/95 95 95 (135) (135) 21. 5 22. 8 (2) (2) (3) (1) Only EIB and BOP loans (outstanding disbursements) to CEEC, NIS and MED (2) (3) The higher the ranking number, the lower the creditworthiness of the country. Countries are rated on a scale of zero to 100, with 100 representing the least chance of default. A given country may improve its rating and still fall in the ranking if also the average global rating for all rated countries improves. SBA (4) No (5) (6) On-track Not rated (7) EFF (8) -47- Country-risk indicators Country: Israel footnotes 1994 1995 Real GDP growth rate (in %) Industrial production ( % change) (at constant 1990 prices) Unemployment rate Consumer Price Index Exchange rate (shekel per USD) (average) (average) (end of period) 6,5 7,2 7. 8 12,3 3,018 7,1 7,9 6,3 10,1 3,135 1996 (7) 4,3 2 , 7* 6,3 11,5 3,244 Central g o v e r n m e nt overall deficit (as % of GDP) -2,4 -4,2 -4,3 Balance of payments Exports of goods (in bn USD) Current account balance (in % of GDP) Net inflow of foreign direct investment (in bn USD) Gross official FX reserves in billions US$ in months of imports of goods External d e bt External debt (gross external liabilities) (in bn USD, end of period) Debt service (in bn USD) principal interest (gross) External debt/GDP (%) External debt/exports of G & S (%) Debt service/exports of G & S (%) Arrears (on both interest and principal, in mio USD) Debt relief agreements and rescheduling Indicators of EU e x p o s u re EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of goods (%) IMF arrangements Type/no (Date / - ) On track/off track ( - / Da'e) Indicators of market's perceived creditworthiness Moody's long-term foreign currency rating (end of period) S&P long-term f cre gn currency rating (end of period) Euronnoney Position in the ranking (number of countries) The Institutional investor Fosition in the ranking (number of countries) Credit rating 16,7 -3,2 -0,2 6,792 3,6 41 4,6 2,2 2,4 54,2 169,4 14,9 (4) (4) 4,4 0,8 1,9 19,0 -4,5 1. 2 8,119 3. 6 46 3. 9 (6) (6) 53,0 170,0 15 (4) (4) 4,4 0,7 1,7 19,9 -5,6 (6) 10,05 4,2 (6) (6) (6) (6) 54 (6) (6) (4) (4) 3. 9 (6) 1,5 (4) (4) (4) (5) BBB+ 03/94 09/94 30 33 (167) (167) 03/94 09/94 46 43 (135) (135) 4 34 46. 5 A3 A- 03/95 09/95 31 31 (187)(181) 03/95 09/95 43 42 (135) (135) 47. 9 49. 2 A3 A- 03/95 09/95 33 32 0 7 8) (178) 03/95 09/95 41 40 (135) (135) 50. 8 52. 2 0) (2) (2) (3) Only EIB and BCP loans (outstanding disbursements) to CEEC, NIS and MED The higher the rarkmg number, the lower the creditworthiness of the country. Countries are rated on a scale of zero to 100 with 100 representing the least chance of default. A given country may improve its rating and still fall in the ranking if. ilso the average global rating for all rated countries improves No Not rated Not availab'e Estimates (E) •. "'• ïhoet * s being used> w ISSN 0254-1475 COM(97) 273 final DOCUMENTS EN 01 09 Catalogue number : CB-CO-97-269-EN-C ISBN 92-78-20846-9 Office for Official Publications of the European Communities [. ,-2985 Luxembourg