Commission report to the Budgetary Authority on guarantees covered by the general budget - Situation at 30 June 1997
COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, 25. 09. 1997 COM(97) 464 final COMMISSION REPORT TO THE BUDGETARY AUTHORITY ON GUARANTEES COVERED BY THE GENERAL BUDGET - SITUATION AT 30 JUNE 1997 This report describes the situation as regards budget guarantees at 30 June 1997. 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 twelve 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. 3- CONTENTS II. EVENTS SINCE THE REPORT AT 31 DECEMBER 1996 LA Operations with macroeconomic objectives LB Operations with microeconomic objectives PART ONE: EVENTS SINCE THE REPORT AT 31 DECEMBER 1996, THE RISK SITUATION 4 AND ACTIVATION OF BUDGET GUARANTEES 4 I. INTRODUCTION: TYPES OF OPERATION 4 4 4 11. A Community guarantee to the European Investment Bank against losses under loans for projects outside the Community (Central and Eastern Europe countries, Mediterranean countries, Latin American and Asian countries and South Africa) IL. B Former Yugoslav Republic of Macedonia (FYROM) LLC Bulgaria LL. D Georgia, Armenia, Tajikistan III. RISK SITUATION LIL. A Amount outstanding at 30 June 1997 (Table 1) ILLS Maximum annual risk borne by the Community budget: operations disbursed at 30 June 1997 (see Table 2) III. C Maximum theoretical annual risk borne by the Community budget (see Table 3) IV. ACTIVATION OF BUDGET GUARANTEES LV. A Payments from cash resources. IV. B Activation of the Guarantee Fund IV. CLate repayments IV. D Situation as regards unpaid debts at 30 June 1997 V. ANALYSIS OF THE COMMUNITY'S THEORETICAL LENDING AND GUARANTEE CAPACITY IN RESPECT OF NON-MEMBER COUNTRIES VI. RELATIVE SOLIDITY OF THE GUARANTEE FUND PART TWO EVALUATION OF POTENTIAL RISKS: ECONOMIC AND FINANCIAL SITUATION OF THE NON-MEMBER COUNTRIES BENEFITING FROM THE MOST IMPORTANT LOAN OPERATIONS I. 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 LA Tables 1 to 3 L. B Loan operations covered by a budget guarantee L. C Expected signature and disbursement of ELB loans I. D Payment of the budget guarantee 13 14 16 16 16 19 22 24 25 25 27 32 33 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 (I) IL B Bases for the calculation of the provisioning of the Guarantee Fund (2) IL C Basis for the provisioning of the Fund in the event of a part guarantee IL D Provisioning of the Guarantee Fund (3) II. E Margin remaining in the guarantee reserve (4) II. FResidual lending capacity (5) III. TABLES: COUNTRY-RISK INDICATORS 4 5 5 5 6 6 7 8 12 12 12 12 13 34 34 34 35 35 36 36 37 PART ONE: EVENTS SINCE THE REPORT AT 31 DECEMBER 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. I. A 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 EIB loans outside the Community (Mediterranean, Central and Eastern Europe, certain non-member countries - developing countries of Asia and Latin America and South Africa). II. EVENTS SINCE THE REPORT AT 31 DECEMBER 1996 The main events in the first half of 1997 were as follows: II. A Community guarantee to the European Investment Bank against losses under loans for projects outside the Community (Central and Eastern Europe countries, Mediterranean countries, Latin American and Asian countries and South Africa) On 14 April 1997 the Council granted a global Community guarantee to the EEB on loans for investment projects carried out in the Central and Eastern European countries, in the Mediterranean countries, in the Latin American and Asian countries and in the Republic of South Africa. This guarantee is restricted to 70% of the aggregate amount of the credits opened, plus all related sums. The overall ceiling of the credits opened is equivalent to ECU 7 105 million, broken down as follows: 5- - Central and Eastern European countries: ECU 3 520 million - Mediterranean countries: ECU 2 310 million - Latin American and Asian countries: ECU 900 million - Republic of South Africa: ECU 375 million, and covers a period of three years beginning on 31 January 1997 for Central and Eastern European, Mediterranean and Latin American and Asian countries and on 1 July 1997 for the Republic of South Africa. If, on expiry of this period, the loans granted by the EIB have not attained the overall amounts referred to above, the period will be automatically extended by six months. The European Investment Bank is invited to aim to cover the commercial risk on 25%) of its lending from non-sovereign guarantees. H. B Former Yugoslav Republic of Macedonia (FYROM) As part of an overall aid programme for the former Yugoslav Republic of Macedonia, on 22 May 1997 the Commission presented a proposal for a Council Decision providing macro- financial assistance of ECU 40 million to FYROM with a maximum maturity of fifteen years. The loan was authorised by the Council Decision of 22 July 1997. H. C Bulgaria As part of an overall aid programme for Bulgaria, on 22 May 1997 the Commission presented a proposal for a Council Decision providing macro-financial assistance of ECU 250 million to Bulgaria with a maximum maturity of ten years. The loan was authorised by the Council Decision of 22 July 1997. II. D Georgia, Armenia, Tajikistan Georgia, Armenia and Tajikistan were severely hit by the economic collapse resulting from the breaking up of the command economy and the disintegration of the Soviet Union. Owing to the exceptionally harsh conditions presently faced by Armenia, Georgia and Tajikistan, the Commission considered that exceptional assistance was required to support the implementation of the stabilisation and structural reform programmes agreed with the IMF. On 3 February 1997 the Commission therefore presented a proposal for a Council Decision providing exceptional financial assistance of ECU 170 million in the form of a loan with a maximum maturity of fifteen years and of ECU 50 million in the form of grants to Armenia, Georgia and, if appropriate, Tajikistan. On 7 February 1997 the Council (Economic and financial affairs) took the decision, in principle, to change this figure to ECU 95 million. - 6- III. 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 30 June 1997, 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 all 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 EIB 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 30 June 1997 (Table 1) The total risk at 30 June 1997 came to ECU 11 720 million as against ECU 11 876 million at 31 December 1996, a fall of ECU 156 million. 3 The following table shows the operations which have had an effect on the amount outstanding since the last report. 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 30 June 1997. In the case of loans in currencies other than the ecu, pari of the change over the past six months is due to exchange rate differences. Amount outstanding at 31 December 1996 Loan repayments Euratom NCI Former Soviet Union EIB Exchange rate differences between ecu and other currencies Loans disbursed EIB Amount outstanding at 30 June 1997 11 876 -476 -416 -34. 1 -112. 48 -59. 62 +942. 2 11 720 The capital outstanding in respect of operations in the Member States was ECU 4 648 million at 30 June 1997, a fall of 16. 46% compared with 31 December 1996. This fall is mainly due to the repayment of ECU 873 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 30 June 1997 was ECU 7 072 million, an increase of 12. 04% compared with 31 December 1996. IH. B Maximum annual risk borne by the Community budget: operations disbursed at 30 June 19974 (see Table 2) The total risk, which comes to ECU 3 096 million in 1997, will steadily increase to around ECU 3 635 million in 2000, 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. This figure changes in line with the capital repayments (every 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 2 739 million. - The risk for 1997 in respect of non-member countries comes to ECU 1 667 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; At 30 June 1997, after taking account of repayments in the first half of the year, the residual risk for 1997 in Table 2 is ECU 2 057 million. - 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. - ECU 205 million from EIB loans. The amount of capital repayments on borrowing and lending operations will then fall in 1998 and 1999. The risk in respect of non-member countries will thus drop to ECU 1 345 million in 1998 and to ECU 895 million in 1999. III. C Maximum theoretical annual risk borne by the Community budget5 (see Table 3) This risk comes to ECU 3 196 million in 1997 and will increase regularly until 2000 (except in 1999 when it will total ECU 1 726 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 ECU 2 739 million. - The risk in respect of non-member countries will rise from ECU 1 768 million in 1997 to ECU 1 445 million in 1999. The risk will increase from 2000 until 2004 when it will reach ECU 3 185 million. At 30 June 1997, after taking account of repayments in the first half of the year, the residual risk for 1997 in Table 3 is ECU 2 342 million. - 9- TABLE 1 CAPITAL OUTSTANDING IN RESPECT OF OPERATIONS DISBURSED (ECU million) Operation Authorised ceiling Capital outstanding 31. 12. 96 Capital outstanding 30. 06. 97 Remainder to be disbursed 30. 06. 97 MEMBER STATES A. Balance of payments 1. Greece 2. Italy B. Others 3. Euratom 4. NIC and NCI earthquake 5. EIB Mediterranean Spain, Greece, Portugal. 14000 4000 6830 1500 500 3479 572 748 265 500 3455 120 327 246 MEMBER STATES - TOTAL 26330 5564 4648 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 11. Belarus 12. Former Soviet Union B. Other 13. EIB Mediterranean 14. EIB Central and Eastern Europe 15. EIB Asia, Latin America 16. EIB South Africa 1050 250 125 400 580 600 160 220 60 285 55 1250 8672 8220 1925 675 THIRD COUNTRIES - TOTAL 24527 180 250 125 400 510 500 160 135 60 185 30 144 2092 1306 204 32 6312 0 0 0 0 0 0 0 0 0 0 70 100 0 85 0 100 25 0 2197 3135 411 125 180 250 125 400 510 500 160 135 60 185 30 110 2541 1531 301 56 7072 6247 GRAND TOTAL 50857 11876 11720 6247 ANNEX TO TABLE 1 SITUATION IN RESPECT OF EIB OPERATIONS (30. 06. 97) Operations Credit line authorised Loans made available minus cancellations Amounts disbursed Amounts outstanding at 30. 06. 97 1465 1603 1500 6362 1700 3000 750 275 300 Mediterranean Member States Third countries, old mandates Mediterranean Protocols Central and Eastern Europe I Central and Eastern Europe II Asia, Latin America I Asia, Latin America II South Africa Third countries, new mandates(*): Mediterranean Central and Eastern Europe Asia, Latin America South Africa Total (*) Council Decision of 14 April 1997 NB: As the loans are disbursed in national currencies, the loan ceiling may be exceeded when the amounts disbursed up to the date ot the report are converted into ecus. 5720 1628 3000 647 50 176 3703 1128 487 258 51 56 2310 3520 900 375 20992 12761 7285 75 246 2541 1044 486 250 51 56 4674 10 TABLE 2 MAXIMUM ANNUAL RISK BORNE BY THE COMMUNITY BUDGET Estimate in ECU million based on all operations disbursed at 30. 06. 97) 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 500 983 91 49 46 453 532 58 Capital - subtotal 1042 1669 2472 12 40 38 2562 15 40 41 96 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 48 209 10 16 18 156 156 3 12 14 1 10 11 Interest - subtotal 386 300 185 177 71 21 92 7 7 15 23 23 22 22 2 6 7 2 3 5 500 3455 571 749 263 5538 95 731 55 114 84 1080 17 15 32 2 2 4 MEMBER STATES - TOTAL 1429 1969 281 2739 107 30 27 36 6617 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. E l B C + E E u r. I + II 20. EIB Asia Latin America 21 EIB South Africa 80 127 63 140 160 250 144 140 50 15 100 123 62 150 185 190 80 110 5 201 145 32 172 85 21 195 120 26 Capital - subtotal 1169 898 530 572 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. EIB C+E Eur. I + II 20. EIB Asia Latin America 21. EIB South Africa Interest - subtotal NON-MEMBER COUNTRIES - TOTAL 18 25 13 40 51 16 50 5 14 6 19 3 140 84 11 5 498 10 13 6 26 51 25 0 14 6 19 3 159 95 13 8 446 11 33 25 14 6 19 3 146 89 12 8 365 11 13 25 14 6 19 3 133 81 11 8 324 70 150 9 17 6 202 149 33 36 672 11 6 25 3 5 19 3 119 72 10 8 281 55 100 25 12 37 6 199 145 34 20 632 4 6 10 3 5 17 2 105 62 9 3 226 40 12 37 6 200 137 40 12 37 6 184 135 12 180 250 125 400 510 160 500 144 135 50 128 24 1495 964 212 56 472 386 5333 4 3 13 2 92 53 8 2 9 1 78 44 8 28 38 19 107 159 16 160 5 59 40 132 20 972 579 83 42 176 143 2458 1667 1345 895 896 953 858 647 529 7791 GRAND TOTAL 3096 3314 1176 3635 1060 888 674 565 14409 (Eastern Europe ) (Other non-member countries) 880 787 946 399 483 413 485 411 369 585 378 480 307 340 247 282 4095 3696 -11 - TABLE 3 MAXIMUM THEORETICAL ANNUAL RISK BORNE BY THE COMMUNITY BUDGET (Estimation 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 and NCI 4. EIB Spain, Greece, Portugal 985 58 500 983 140 46 Capital - subtotal 1042 1669 2472 52 38 2562 55 41 96 INTEREST A. Balance of payments 1 Greece 2. Italy B. Structural loans 3. Euratom and NCI 4. EIB, Spain, Greece, Portugal Interest - subtotal 48 211 105 23 386 48 209 25 18 156 156 15 14 11 11 300 185 178 71 21 92 7 7 15 23 23 22 22 2 6 7 2 3 5 500 3455 1320 263 5537 95 731 169 84 1080 17 15 32 2 2 4 MEMBER STATES - TOTAL 1428 1969 281 2739 107 30 27 36 6617 100 123 62 150 185 80 127 63 140 160 250 144 190 80 THIRD COUNTRIES CAPITAL A. Financial assistance 5. Hungary 6. Czech Republic 7. Slovak Republic 8. Bulgaria 9. Roumania 10. Israel 11. Algeria 12. FYROM 13. Ex-URSS 14. Baltic States 15. Moldova 16. Ukraine 17. Belarus 18. Euratom C+E Europe B. Guarantees 19. EIB Mediterranean 20. EIB C+E Europe 21. EIB Asia, Latin America 22. EIB South Africa 140 50 15 172 85 21 195 120 26 Capital - subtotal 1169 898 531 INTEREST A. Financial assistance 5. Hungary 6. Czech Republic 7. Slovak Republic 8. Bulgaria 9. Romania 10. Israel 11. Algeria 12. FYROM 13. Ex-URSS 14. Baltic States 15. Moldova 16. Ukraine 17. Belarus 18. Euratom C+E Europe B. Guarantees 19 EIB Mediterranean 20. BEI C+E Europe 21. EIB Asia, Latain America 22. EIB South Africa Interest - subtotal 18 25 13 40 55 16 55 5 18 6 24 3 1 173 124 18 6 599 10 12 6 39 58 35 3 22 6 29 3 6 252 218 35 16 749 36 40 35 4 22 6 29 3 17 325 318 54 26 70 150 9 17 6 309 290 59 45 55 100 25 12 37 6 1 389 385 79 40 65 12 57 6 7 493 499 111 38 50 70 100 85 12 57 6 16 547 568 105 58 180 250 125 475 580 160 600 144 220 50 168 24 24 2494 2207 458 184 955 1129 1288 1674 8343 36 13 35 4 11 6 29 3 54 497 529 106 61 29 13 20 4 11 5 27 2 72 545 576 124 75 29 7 10 4 9 3 23 2 88 566 591 134 86 13 7 10 4 9 2 17 1 101 541 579 135 92 28 37 19 257 212 16 235 27 5 124 40 205 20 373 3318 3371 686 405 110 5 249 210 42 3 699 36 21 35 4 22 6 29 3 34 419 436 80 43 914 1167 1383 1502 1553 1511 9377 THIRD COUNTRIES - TOTAL 1768 1647 1445 1866 2338 2631 2841 3185 17720 GRAND TOTAL 3196 3616 1726 4605 2444 2661 2868 3220 24337 (Eastern Europe) (other non-member countries) 935 833 1113 534 780 665 991 875 1072 1266 1255 1376 1399 1442 1593 1592 9137 8583 - 12- IV. ACTIVATION OF BUDGET GUARANTEES IV. A 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. LV. B Activation 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 Georgia (loan of ECU 40 million) Former Yugoslavia Date 15. 04. 97 23. 05. 97 Amount (principal + interest) 34 894 595. 09 6 292 486. 81 IV. C Late repayments During the period covered by this report, the following non-member 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. The former Yugoslav Republic of Macedonia (FYROM) repaid ECU 7. 6 million of its arrears for which the Fund had already contributed ECU 1. 4 million. Country Repayment date Amount (principal + interest) Armenia Georgia FYROM Total 13. 2. 97 18. 4. 97 29. 5. 97 * 3 680 702. 65 4 689 948. 53 1446 515. 51 9 817 166. 69 - 13- IV. D Situation as regards unpaid debts at 30 June 1997 The following amounts had not been paid at 30 June 1997: Country Tajikistan Georgia Armenia Former Yugoslavia Total Amount (principal + interest) 63 181 389. 89 122 817 507. 50 53920 610. 55 87 831143. 77 327 750 651. 71 V. ANALYSIS OF THE COMMUNITY'S THEORETICAL LENDING AND GUARANTEE CAPACITY IN RESPECT OF NON-MEMBER 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. 6 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 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 307 million is expected to be used from the guarantee reserve in 19,97, leaving ECU 22 million available at the end of the year. The Guarantee Fund could then amount to around ECU 864 million at the end of the year assuming: - no further defaults requiring activation of the Fund; - no late repayment of arrears by defaulting countries. ECU 300 million at 1992 prices. -14 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 146 million to ECU 243 million for loans with a 100% guarantee under the Community budget; - from ECU 209 million ta ECU 347 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 538 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 1 768 million) comes to 30%. The Fund should then correspond to 7. 4%» of the total amount of guaranteed loans outstanding outside the Community. -15 TABLE 4 THE COMMUNITY'S THEORETICAL ESTIMATED LENDING & GUARANTEE CAPACITY IN RESPECT OF NON-MEMBER COUNTRIES OVER THE PERIOD 1997-1999 under the Guarantee Fund mechanismf) ECU million 19971998 1999] Reserve for loan guarantees to non-member countries (1) 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, Latin America (c) • South Africa (d) - EIB loans - Total 693 850,5 60 125 1728,5 744,25 763 210 87,5 1804,75 623 710,5 322 105 1760,5 • EURATOM loans (e) 0 200 350 - Macro-financial assistance (f) 305 25 0 Provisioning of the Guarantee Fund (3) 307 302 313 Margin remaining in the guarantee reserve (4) 22 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) 146 209 243 347 213 304 (*) 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 1997-1999: -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 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: 1994-1999: ECU 1100 million f. - Financial assistance - loans decided: 1997: ECU 25 million loan to Belarus cancelled; ECU 130 million loan to Slovakia cancelled. ECU 250 million loan to Bulgaria; ECU 40 million loan to the Former Yugoslav Republic of Macedonia (FYROM). - loans proposed or in preparation: 1997: ECU 170 million in loans to the Republics of Georgia, Armenia and Tajikistan. 16 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 country risk indicators for all countries that have been recipients of macro-financial assistance in Central and Eastern Europe, the NIS and the Mediterranean area, in the form of a full- page table per country. To complement this, textual analysis is provided for those countries where significant new information influencing the risk evaluation has become available since the previous report covering the last six months of 1996. Brief textual analysis is also provided for the countries which have still to repay loans outstanding in the context of the ECU 1250 million commercial credits made available to the then Soviet Union in 1991. The evaluation in this section does not deal with other regions than those mentioned, mainly because Community exposure elsewhere (notably through guarantees of EIB lending) represents only a small 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 improved. Inflation has been brought under control. The national currency, the lev, recovered some of the value it lost in 1996 and early 1997, before the exchange rate was fixed at 1000 leva per deutschemark under a currency board arrangement which took effect on 1 July. The budget deficit should meet in 1997 the target of 6. 2% of GDP agreed with the IMF and has been mainly financed so far through sales of government paper to the commercial banks. There has been some acceleration of structural reform. Prices of all but a handful of basic foodstuffs have been liberalized. Some large state enterprises have been sold to foreign investors. Although many banks are still the subject of bankruptcy proceedings, the health of those which continue to operate has improved. The approval by the IMF of a stand-by arrangement in April and the adoption of the currency board arrangement helped to restore some economic confidence and stability. This was reflected in the strong recovery in the level of the central bank's international 17 reserves, which by mid-year had recovered most of the losses incurred in 1996. Nevertheless, service on foreign debt continues to be substantial, at close to US$1 billion per year. A manageable external situation remains dependent on a sustained reform effort, which will ensure continued support from the IMF and other international institutions, and encourage larger flows of foreign direct investment. CZECH REPUBLIC The overall picture in the Czech Republic has deteriorated since the last report: economic growth has slowed, the budget and trade deficits are both large, and there has been some political instability. This deterioration was reflected in nervousness on the foreign exchange markets about the Czech crown; throughout late April and May, strong downward pressure on the Czech crown developed, and on 27 May forced the Czech National Bank to abandon its currency peg and allow the Czech crown to float. GDP statistics for the first quarter of 1997 show a slowdown in economic growth: preliminary estimates indicate that year-on-year growth was only 1. 5%, compared to 4. 4%> in 1996. The government is also facing a problem of a growing budget deficit, which in 1996 was kept to a low level only by sharp spending cuts at the end of the year. However, it is the external position which* continues to be of the greatest concern: because of a combination of declining exports and increasing imports, the trade deficit, which had reached 11% of GDP in 1996, rose further in the first quarter of 1997. In April 1997, the government introduced a package of measures aimed at boosting growth and tackling the growing budget and trade deficits. Most notably the measures included budget cuts, limits on public sector wage growth, and the introduction of an import deposit scheme. However, foreign exchange traders remained concerned at the large current account deficit, and nervousness was aggravated by the domestic political uncertainty that followed the announcing of the package. Several weeks of sustained attack on the currency forced the Czech National Bank to abandon its policy of pegging the Czech crown to a basket of the US$ and the DM, but not before an estimated $3bn (approximately one quarter) of foreign exchange reserves had been used to defend the currency. The Czech crown will now be subject to a managed float. The abandoning of the pegged exchange rate allowed the currency to depreciate by some 20%> against the dollar and over 7% against the DM compared with its levels at the end of 1996. In the weeks after the abandonment of the previous currency regime the currency looked relatively stable, but interest rates remained high. At the beginning of June, the Czech National Bank successfully negotiated a loan to replenish its foreign exchange reserves. In May, the government announced a further package of economic measures, including further cuts in the state budget for 1997. The government also narrowly won a confidence vote in the Parliament on 11 June. However, it seems that both the political and the economic situation will remain fragile in the short term. ESTONIA Estonia's risk assessment continues to be among the best in the region, but new sources of uncertainty associated with the rapid growth of the economy have appeared. The economy is expanding strongly (real GDP growth reached 7. 3% on a year-on-year basis in the fourth quarter of 1996), and inflation has fallen dramatically in recent months (a yearly inflation of 10. 8% was registered in May, compared to 26. 7% in April 1996). Foreign debt remains small as a proportion of GDP. In April, the country received a BBB- sovereign risk rating from Thomson BankWatch, recently upgraded to BBB+. This is the highest rating given by the agency to a country of the former Soviet Union. Estonia has requested a rating from Moody's, which is expected to be released at the end of the year. However, there are signs that the economy is close to overheating: in 1996, consumption increased as a percentage of GDP, while investment declined; the trade and current account deficits reached 24. 5% and 10. 2% of GDP, respectively; foreign investment declined, and banks' borrowings abroad grew very fast, fuelling a strong expansion of domestic credit. These developments are a source of new macroeconomic risks. LITHUANIA During the first half of 1997, growth accelerated further while both inflation and unemployment continued to fall. Budget developments appear relatively satisfactory, as new fiscal measures seem to have reversed the downward trend in public revenues. The balance-of-payments situation remains satisfactory, even though imports are rising rapidly as the recovery picks up. The prudent strategy for abandoning the currency board seems to have calmed investors' initial fears about the policy intentions of the new coalition government. The banking sector continues its slow recovery as the authorities strengthen regulation and take a tougher stance against the weakest banks. Preparations for the privatization of state banks and large telecommunications and transport enterprises continue. In June, the improving macroeconomic situation and the acceleration in structural reforms led Standard & Poor's to award Lithuania an investment grade rating. ROMANIA Romania's country risk, while remaining one of eastern Europe' highest, improved during the first half of 1997, as a result of a radical change in course of the country's economic policy. Prices were liberalized, which caused monthly inflation to jump to 30. 5%) in March. Monthly inflation rates decreased sharply afterwards. At the same time, the authorities allowed a sharp nominal depreciation of the currency, aimed at reversing the deterioration in the external accounts that took place in 1996. Measures to restore public finances and limit inflationary pressures should lead to slower growth of GDP in 1997, estimated at 3-4%, after 4. 1% in 1996. Already in the first quarter, the balance of payments improved significantly, with the surplus on the capital account more than compensating for the (shrinking) deficit on the current account. Foreign direct investment has picked up, and residents have repatriated large amounts of hard currencies, indications of restored confidence. Important advances in structural reforms have been made in 1997. Between February and May, 800 firms were privatized. Reform of agriculture has begun, with effective privatization of a few large loss-making pig and poultry farms. A law on foreign ownership of land has been passed, and amendments to the law on foreign investments 19- have been introduced, which set clear rules for portfolio investment and profit repatriation. Trade policy has been liberalized, notably by a significant cut in agricultural tariffs. Although debt ratios worsened in 1996 and are set to deteriorate further in 1997, the central bank was able to increase its foreign exchange reserves from $850 million in March to $1. 49 billion in May. Romania's new economic programme is strongly supported by the IMF, which approved on 22 April a 13-month, $430 million new stand by arrangement; by the World Bank, which approved on 3 June $550 million of new credits and the release of the $80 million second tranche of the FESAL loan frozen in 1996; and by the EC, which will reactivate its macro-financial assistance, of which the balance amounts to ECU 70 million. At the end of June, despite the severe contraction of the purchasing power of wages, the government continued to enjoy considerable popular support. SLOVAKIA Slovakia's country risk remains moderate, but external balances are deteriorating and foreign debt is increasing rapidly. The fast economic growth - some 7%> - registered in 1995 and 1996 has led to an overheating of the economy. Inflation has started to edge up after three years of uninterrupted decline. In response, monetary policy was gradually tightened and became very restrictive in May and June 1997. Following the sharp deterioration of the current account in 1996 - a deficit of 10% of GDP was registered, compared to a small surplus in 1995 - and the rapid increase of the external debt to finance it, the external situation in the first months of 1997 deteriorated further. Up till the middle of May, the rising trade deficit could be financed without much difficulty, and foreign reserves remained approximately stable compared to the end of 1996. However, as a result of pressure on the currency in the second half of May, reserves dropped by 20%. So far, the National Bank of Slovakia has managed to stabilize the exchange rate close to its central rate. However, this could only be achieved at the cost of a sharp monetary contraction, a loss in foreign reserves, and very high interest rates. Clearly, such a situation cannot be maintained for a prolonged period. III. NEWLY INDEPENDENT STATES ARMENIA GDP growth similar to the 5. 8%» registered in 1996 is expected for 1997. Annual inflation, which was 5. 7 %> in December 1996, is set to rise to 9. 5 % this year. Weak tax collection continues to undermine the fiscal position. Armenia's current account deficit, which was around 27 % of GDP (16 % including official transfers) in 1996, partly because of the blockade imposed on the country in connection with the Nagorno Karabakh issue, is expected to decline to 19. 5 % in 1997. Over the medium term, however, external sustainability could become a crucial issue. The external debt was estimated at about 30 % of GDP at end-1996. Net international reserves are still low (about US$ 50 million). Progress with structural reform is limited: much remains to be done in large enterprise restructuring and in the banking sector. In June, the IMF 20 approved the second year (US$ 47 million) of an ESAF arrangement. Meanwhile, recent armaments purchases and the nomination of a new Prime Minister have raised political tensions, and peace is more fragile than six months ago. In view of both economic and political uncertainties, Armenia remains in the category of high-risk debtors. AZERBAIJAN Economic recovery, which appears to have begun in 1996, should accelerate in 1997, with a projected 5% growth in GDP. The annual average inflation rate should decline to some 9 % by the end of 1997, and the budget deficit to 2 % of GDP. The current account deficit, which is expected to decrease to 16 % of GDP in 1997, will continue to be financed by growing foreign direct investment deriving from oil contracts (US$ 345 million in 1996) and by official assistance. The level of foreign exchange reserves is expected to increase to 3 months' imports in 1997. The external debt was quite low, at about 16 % of GDP, at end-1996, and the debt service comfortable, at 9 % of exports. Azerbaijan has generally adhered very closely to the IMF ESAF programme performance criteria, and structural reforms have accelerated and are broadly on track. However, since May, the arrears in pension payments, as well as the pace of privatization and reform of the banking sector, have been causing concern. These factors, together with the unresolved conflict with Armenia over Nagorno Karabakh, imply that the country risk remains high. BELARUS Current economic and political developments in Belarus remain a matter of grave concern. The moderate progress made towards stabilization in the past is in jeopardy. Since the second half of 1996, state interference in the economy has intensified. The positive economic growth officially recorded in 1996 and in the first half of 1997 appears to be mostly the result of state orders, which were financed by cheap credit from the banking system and have led to a major surge of stocks. After a period of relative stability, inflation has accelerated significantly since the last quarter of 1996. Consumer prices increased at an annual average of 65% during the first five months of 1997. The external sector remains particularly fragile. Furthermore, there is a serious lack of progress with structural reforms, especially privatization. The overall risk is high and increasing. GEORGIA GDP growth of 9%, close to the 10. 5% registered in 1996, is expected for 1997. The budget deficit, which fell to 4. 5 % in 1996, is expected to decrease further in 1997, while annual inflation, which fell dramatically to 14 % in 1996, should decrease further to 11 % in 1997. The current account deficit (excluding official transfers) was equivalent to 10. 5 % of GDP in 1996, but is expected to narrow in 1997. Foreign direct investment is still low. Foreign exchange reserves (2. 6 months' imports in 1996) are expected to remain stable. Since its independence, Georgia has accumulated a foreign debt which amounted to some 30 % of GDP at end-1996, but has reached agreements with most of its creditors, in particular an understanding leading to clearance of its arrears towards the Community. In March 1997, the IMF Board approved a second annual ESAF arrangement (US$ 76 million). However, in May, it expressed concern about the pace of -21 privatization, enforcement of tax collection, corruption and the repayment of debt to Turkmenistan. Political difficulties continue: the Abkhazian problem is further than ever from being resolved. The country risk remains high. MOLDOVA Following three years of substantial progress in macroeconomic stabilization, serious problems have appeared in Moldova since the middle of 1996: a widening budget deficit, wage and pension arrears, lack of substantial progress in structural reform, all this in a context of almost continuous output decline. These negative phenomena persisted and even intensified in the first half of 1997. In particular, increasing reliance on external financing has contributed to a steady increase in the country's external debt, which by the end of May 1997 reached 51% of GDP. More than one-third of the debt is short-term, i. e. with maturities below 5 years. The overall risk deteriorated in the first half of 1997, as it seems that the political will which made for significant progress in the reform effort in the past few years has begun to weaken. Indeed, there are signs which suggest that the process of economic transformation may be slowing down. TAJIKISTAN Following the end of the civil war in December 1996 and the signing, in June 1997, of a peace agreement between conflicting parties, economic output is expected to expand by 5 % in 1997, after the sharp decline - 16. 7% - registered in 1996, Annual average inflation, which fell dramatically to 65 % in 1996, as a result of tight credit and monetary policies, is expected to decrease only slightly to 50 % in 1997, because of policy shifts following the inclusion of new parties in a coalition government and wage arrears that are due to be paid. The trade balance, which was in surplus (US$ 75 million or 7 % of GDP) in 1996, is expected to deteriorate slightly in 1997. Foreign exchange reserves, which were very low in December 1996, are expected to increase in 1997, mainly as a result of expected disbursements of external assistance. 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. Rescheduling of debt-service payments falling due in 1997 has begun. The liberalization of the foreign exchange market, foreign trade and prices is well advanced. The transformation into joint ventures of all remaining medium-sized and large enterprises is expected by end-year, while the agricultural sector and banking system have begun to be reformed. The conclusion of an IMF agreement is expected in the coming months. The risk assessment remains cautiously optimistic. UKRAINE Financial stabilization made further progress in Ukraine in the first half of 1997, mainly because of a decline in the financing needs of the budget deficit, which led to a further reduction in broad money growth and in the inflation rate. The exchange rate has remained stable, and the central bank announced a 10% trading band for the hryvnia in April 1997. Both the current account deficit and the foreign debt remain at manageable levels. The authorities have announced the current account convertibility of the hryvnia, with effect from September 1997. However, structural reform has practically stagnated 22 in recent months. The 1997 budget and the accompanying package of laws, including a comprehensive tax reform and further deregulation of the economy, have not yet been adopted, and it is becoming increasingly clear that they will be approved only in a revised and diluted form. Real economic performance continues to be disappointing. GDP fell by 8%o in the first quarter of 1997, compared to the same period of last year. The recently signed Friendship Treaty with Russia settles a series of potentially explosive issues relating to the Black Sea fleet. However, since economic stabilization in Ukraine remains fragile because of a significant slow-down in the reform process, the overall assessment is that Ukraine represents a moderate risk. UZBEKISTAN GDP growth similar to the 1. 6% registered in 1996 is expected for 1997. So far in 1997, the authorities have been implementing a stricter fiscal policy, so that the budget deficit has been kept within the target of 3 % of GDP. However, inflation remains high (5-6 % monthly), real interest rates are negative, while official exchange rates for the som are less and less realistic. In 1996, the current account balance showed a deficit of US$ 1. 0 billion (8 % of GDP), while the gross foreign exchange reserves were still high at US$ 1. 9 billion (4. 8 months' imports). The deficit is expected to stabilize or even to decline in 1997. Uzbekistan will continue to finance its deficit mainly through borrowing, although an upturn in foreign investment is expected. The country's external debt, which was US$ 2. 3 bn or 17 % of GDP at the end of 1996, is projected to remain moderate in 1997. With regard to structural reform, draconian foreign exchange controls and import restrictions have been reintroduced. The restructuring of the agricultural sector and of large enterprises is proceeding slowly, while the banking sector is in a poor condition. The IMF stand-by arrangement remains suspended. The risk assessment is still unfavourable. IV. MEDITERRANEAN COUNTRIES ALGERIA Although macro-economic indicators have continued to improve, Algeria's country risk remains high owing to doubts about medium-term economic prospects and the continued difficult security situation. The macro-economic performance achieved under the IMF-supported programme has recently improved further. Economic growth is projected to accelerate from 4% in 1996 to 4. 5%o in 1997. Inflation declined from 15. 1%o in December 1996 (12 months) to 6. 9%) in April 1997. The current account and fiscal balances remained in surplus during the first quarter of 1997 and are currently projected at 0. 3%) and 1. 3% of GDP, respectively, for the year as a whole. Gross foreign exchange reserves, which doubled to US$ 4. 2 billion in 1996 (4. 5 months' imports), increased further to US$ 5. 3 billion at end-March 1997. They are currently projected to reach US$ 5. 5 billion by the end of the year. Algeria's outstanding external debt declined slightly to 74. 2% of GDP at end-1996, while the outstanding domestic debt was halved during the period 1993-96 to 22. 2% of GDP. -23 Despite these achievements, the economy remains poorly diversified and particularly vulnerable to the vagaries of world energy prices and weather conditions. Because of limited foreign direct investment and lack of access to international capital markets, a sound balance of payments continues to rely on sizeable concessional external financing from the Bretton Woods institutions, the Paris and London clubs, and other multilateral and bilateral creditors. In addition, the political situation and security problems continue to hinder economic progress, in particular structural reforms and the development of a dynamic private economy. Growing unemployment (estimated at 28. 3%> in 1996) and mounting social difficulties could also jeopardize the reform momentum. 24 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 25 25 27 32 33 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) LL. B Bases for the calculation of the provisioning of the Guarantee Fund (2) IL C Basis for the provisioning of the Fund in the event of apart guarantee II. D Provisioning of the Guarantee Fund (3) ILE Margin remaining in the guarantee reserve (4) II. FResidual lending capacity (5) III. TABLES: COUNTRY-RISK INDICATORS 34 34 34 35 35 36 36 37 25 I. EXPLANATORY NOTES ON THE SITUATION OF RISKS COVERED BY THE COMMUNITY BUDGET I. A 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. I. A. J A uthorised ceiling (Table 1) This is the aggregate of the maximum amounts of capital authorised (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 authorised ceiling Factors reducing the risk: - - limitation of the guarantee given to the EIB to 75%> of the loans signed in the Mediterranean countries; limitation of the guarantee given to the EIB to 70% of the loans signed as part of lending operations with certain non-member countries authorised by the Council Decision of 14 April 1997 and a sharing or risk between the Community and the EIB as the budget guarantee covers only political risks in some cases; - operations already repaid, since the amounts concerned, except in the case of balance of payments support (Member States), are the maximum amount of loans granted and not outstanding amounts authorised; - the amounts authorised are not necessarily taken up in full. I. A. 2 Capital outstanding ( Table I) 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. - 2 6- 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; 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 authorised plus, where applicable, the amounts in respect of operations proposed by the Commission and not yet decided. 27 I. B Loan operations covered by a budget guarantee 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 0 3 77 20 12. 79 15. 03. 82 05. 12. 85 23. 04. 90 16. 10. 78 2001. 81 14. 12. 81 1503. 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) Amount decided Amount outstanding at 1. 1. 97 Operations in six-month period Amounts disbursed Amounts repaid Amount outstanding at 30. 06. 97 500,00 3. 478,57 500,00 3. 454,50 572,48 476,00 119,60 748,11 416,00 327,30 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. 299,16 0,00 892,00 4. 401,40 (5) (1 ) Exceptional aid for the reconstruction of areas hit by the earthquake in Italy in 1 980. (2) Exceptional aid for the reconstruction of areas hit by the earthquake in Greece in 1981. (3) Long-term loans for which the schedule of repayments depend on the dates of disbursement. (4) By Decision 94/1 79/Euratom of 21 March 1 994 the Council decided to extend Euratom loans to the financing of projects in certain non-member countries. At 31 December 1 996 no loans had yet been granted in non-member countries. (5) Discrepancy caused by change in the rates of the other currencies against the ecu. 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. 01. 97 Operations in six-month period Amounts disbursed Amounts reapid Amount outstanding at 30. 06. 97 ECU million HUNGARY I 1st tranche 2nd tranche 3ème tranche HUNGARY II 1 st tranche 2nd tranche CZECH REPUBLIC 1st tranche 2nd tranche SLOVAKIA 1st tranche 2nd tranche BULGARIA I 1 st tranche 2nd tranche BULGARIA II 1st tranche 2nd tranche ROMANIA I 1st tranche 2nd tranche 90/83/EEC 90/681/EEC 22. 02. 90 21. 12. 90 91/310/EEC 24. 06. 91 91/106/EEC 25. 0291 91/106/EEC 25. 0291 91/311/EEC 24. 06. 91 92/511/EEC 19. 10. 92 91/384/EEC 22. 07. 91 ROMANIA II ROMANIA III 92/551/EEC 94/369/EC 27. 11 92 20. 06. 94 1st 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) 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 40,00 190,00 185,00 80,00 55,00 0,00 20,00 0,00 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 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) E x p i ry date L o an s i t u a t i on - c l o s ed (a) - p a r t ly d i s b u r s ed (b) - d i s b u r s ed in f u ll (c) - n ot y et d i s b u r s ed (d) A m o u nt d e c i d ed A m o u nt o u t s t a n d i ng at 1. 01. 97 O p e r a t i o ns in s i x - m o n th p e r i od A m o u n ts d i s b u r s ed A m o u n ts repaid A m o u nt o u t s t a n d i ng at 30. 06. 97 ECU million LATVIA 1 st t r a n c he 2 nd t r a n c he LITHUANIA 1st t r a n c he 2 nd tranche MOLDOVA I 1 st t r a n c he 2 nd tranEC MOLDOVA II UKRAINE I UKRAINE II 1/2 tranche 1/2 tranche 2 nd tranche BELARUS 1st t r a n c he 2 nd tranche ALGERIA I 1st t r a n c he 2 nd t r a n c he ALGERIA II 1 st t r a n c he 2nd t r a n c he 94/346/EC 13. 06. 94 96/242/EC 94/940/EC 95/442/EC 25. 03. 96 2 2 1 2. 94 2 3. 1 0 95 95/132/EC 1 0 0 4. 95 91/510/EEC 23. 09. 91 94/938/EC 2 2. 1 2 94 ISRAEL REPS. OF FORMER USSR 91/408/EEC 91/658/EEC 22. 07. 91 16. 12. 91 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 (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 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 i OJ O 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 0,00 160,00 109,60 34,10 TOTAL 5. 035,00 2. 678,50 0,00 34,10 2. 644,60 GEOGRAPHICAL AREA Decision Date of decision Rate of guarantee Loan term (years) Date of guarantee contract Amount decided TABLE 6 LOAN GUARANTEES TO EIB Loans signed Amount outstanding at 1. 01. 97 during six-month period at 1. 01. 97 at 30. 06. 97 MED. financial protocols(l) 8. 03. 77 75% (2) MED. horizontal coop. R/1762/92/CEE 29. 06. 92 75% (2) TOTAL MED. C and E Europe 1 90/62/CEE(4) 12. 02. 90 91/252/CEE(5) 14. 05. 91 C and E Europe II 93/696/CE(6) 1312. 93 Asia, Latin America 1 93/115/CEE 15. 02. 93 Asia, Latin America II 96/723/CE 12. 1296 South Africa 95/207/CE 01. 06. 95 100% 100% 100% 100% 100% 100% New mandates 97/256/CE(7) 14. 04. 97 70% TOTAL 15 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 25. 07. 97/29. 07. 97 6062 1800 7862 1000 700 3000 750 275 300 7105 20992 5325 1800 7125 (3) 928 700 2980 647 101 60 0 60 (3) 0 20 0 50 75 2057 301 2357 615 356 335 204 32 2321 466 2787 664 380 486 250 51 56 12481 205 3898 4674 I (1) Including ECU 1 500 million for Spain, Greece and Portugal. (2) General gurantee 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% gurantee 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) Non-member countries: Poland, Hungary, Czech Republic and Slovak Republic, Bulgaria, Romania, Baltic States and Albania. (7) Non-member countries: Central and Eastern Europe, Mediterranean, Asia and Latin America, South Africa. 32 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 (EIB loans to non-member countries from its own resources). Expected signatures Mediterranean countries At 30 June 1997 a total of ECU 190 million was still to be signed in 1997 under current and former mandates (ECU 642 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. Asia and Latin America At 30 June 1997 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 comes to ECU 225 million. The total still to be signed in 1997 therefore comes to ECU 245 million. South Africa At 30 June 1997 a total of ECU 124 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 30 June 1997 ECU 5 868 million still had to be disbursed against loans signed at that date. The total breaks down as follows:7 Mediterranean Central and Eastern Europe Asia and Latin America South Africa ECU 2 197 million ECU 3135 million ECU 411 million ECU 125 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. - 3 3- I. D Payment of the budget guarantee ID. 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 authorised 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. /. 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 three months of receiving the EIB'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 authorise the Bank to withdraw the corresponding amounts from the Guarantee Fund within three months. 34 If there are insufficient resources in the Fund, the procedure used for activating the guarantee is the same as for borrowing/lending operations. 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) 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 (70%, 75% or 100%): - - to the loan guarantees authorised 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) authorised 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 -35 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 first half of 1997 the budgetary authority therefore adopted transfer 9/97 so that, as at the start of every financial year, the amounts paid into the Funds could be adjusted and the annual tranche provided for in the financial statements for EIB loans to non-member countries (Central and Eastern Europe, Mediterranean countries, Asia and Latin America and South Africa) could be paid. II. C Basis for the provisioning of the Fund in the event of a part guarantee For EBB 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 authorised. The guarantee on the EIB loans authorised by the Council on 14 April 1997 is limited to 70%» of the total amount of credits opened. The basis for provisioning is 70% of the annual forecast of signatures. II. D Provisioning of the Guarantee Fund (3) The amounts paid into, the Fund are obtained by applying the appropriate rate of provisioning (15%o 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 - 3 6- 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%. 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. ) ILE 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. 37 III. TABLES: COUNTRY-RISK INDICATORS 38 Country-risk indicators Country: Bulgaria footnotes 1994 1995 Real GDP growth rate (%) Industrial production ( % change) Unemployment Inflation rate Exchange rate (Leva per USD) (end of period) (Dec/Dec) (end of period) 1. 8 7,8 12,8 121,9 66,0 2,1 8,6 11,6 32,8 70,7 1996 prelim. -10,9 -8,3 12,5 310,8 487,4 General government balance (as % of GDP) -5,8 -5,7 -11,0 Balance of payments Exports of goods and services (bn USD) Current account balance (% of GDP) Net inflow of foreign direct investment (m USD) Official reserves, including gold (end of period) bnUSD months' imports of goods and services External debt Convertible currency external debt (bn USD, end of period. ) Convertible debt service (bn USD) principal interest External debt/GDP (%) External debt/exports of goods and services (%) Debt service/exports of goods and services (%) Arrears (on both interest and principal. bn USD) Debt relief agreements and rescheduling Indicators of EU exposure EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of goods and services (%) IMF arrangements Type (Date) On track Indicators of market's perception of 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 Footnotes (1) (2) (3) See explanatory notes (4) (5) London Club DDSR (July) Paris Club rescheduling (April) SBA suspended in 09/94 and 09/96 5,3 -2,1 105 1. 3 3,0 11. 4 0,9 0,5 0,5 119 220 28 17,6 (4) 6,8 4,6 8,9 SBA/STF (3/94-3/95) no (5) 7,0 -0,5 90 1. 5 2,8 10,2 0. 9 0,3 0,6 79 151 14 none none 7,3 5,7 7,7 - 6,1 -0. 0. 115 0,8 1. 6 9,7 1,0 0,4 0,6 99 159 17 none none 8,1 6,5 10,3 (09/96) est. (09/96) SBA (7/96-2/98) no (5) none none 03/94 09/94 88 98 (167) (167) 03/94 09/94 91 95 (135) (135) 19. 8 20. 8 none none 03/95 09/95 90 90 (187) (181) 03/95 09/95 93 94 (135) (135) 21. 9 22. 2 none none 03/96 09/96 99 92 (178) (178) 03/96 09/96 92 93 (135) (135) 23. 1 23. 5 (1) (2) (2) (3) -39 Country-risk indicators Country: Czech Republic footnotes 1994 1995 1996 4,4 6,8 3,5 8,6 27,1 0,0 29,7 -8,6 1388 12,4 4,4 20,4 3,8 3,0 0,8 39,2 68,8 12,8 none none 7,3 2,8 1,9 - Real GDP growth rate (%) Industrial production ( % change) Unemployment Inflation rate Exchange rate (CK's per USD) (end of period) (Dec/Dec) (end of period) 2,6 2,1 3,2 9,7 28,8 4,8 8,7 2,9 7,9 26,6 General government balance (as % of GDP) 1,0 0,6 18,9 -0,1 749 6,2 3,9 10,7 2,5 2,1 0,4 27,9 56,6 13,2 none none 5,2 3,4 2,5 SBA (3/93-3/94) yes (4) 28,2 -2,9 2526 14,0 5,6 16,5 2,6 2,0 0,6 35,1 58,6 9,2 none none 5,8 2,6 2,5 - Balance of payments Exports of goods and services (bn USD) Current account balance (% of GDP) Net inflow of foreign direct investment (m USD) Official foreign exchange reserves (end of period) b n U SD months' imports of goods and services External debt Convertible currency external debt (bn USD, end of period. ) Convertible debt service (bn USD) principal interest External debt/GDP (%) External debt/exports of goods and services (%) Debt service/exports of goods and services (%) Arrears (on both interest and principal, m USD) Debt relief agreements and rescheduling Indicators of EU exposure EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of goods and services (%) (D IMF arrangements Type (Date) On track Indicators of market's perception of 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 Footnotes (1) (2) (3) See explanatory notes (4) All debts to IMF paid ahead of schedule. 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 (2) (2) (3) Baal A 03/96 09/96 36 35 (178) (178) 03/96 09/96 30 29 (135) (135) 60. 1 62. 0 - 4 0- Country-risk indicators Country: Estonia footnotes 1994 1995 1996 est. 4,0 1. 1 4. 3 14,8 12,4 -1,5 -1,6 est. est. 2074 -12,0 70 640 2,4 est. est. est. est. est. est. Real GDP growth rate (%) Industrial production ( % change) Unemployment Inflation rate Exchange rate (Kroons per USD) (end of period) (Dec/Dec) (end of period) General government balance (as % of GDP) Financial balance Fiscal balance Balance of payments -1,8 3,5 4,5 41. 7 12,6 (4) (4) 2,9 1,3 Exports of goods (m USD) Current account balance (% of GDP), excl. official transfers Net inflow of foreign direct investment (m USD) Official foreign exchange reserves (end of period) m USD months' imports of goods 1312 -11,7 214 447 3,2 4,3 1,4 4,1 28,9 11,5 -0,4 -0,8 1838 -7,4 204 583 2,7 External debt Convertible currency external debt (incl. to IMF) 170,3 246,8 296,5 (m USD, end of period) Convertible debt service (m USD) principal interest + charges to IMF External debt/GDP (%) External debt/exports of goods (%) Debt service/exports of goods (%) Arrears (on both interest and principal, m USD) Debt relief agreements and rescheduling Indicators of EU exposure EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of goods (%) IMF arrangements Type (Date) On track Indicators of market's perception of 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) (1) (2) (2) (3) 8,1 3,0 5,1 7,2 12,8 0,8 none none 0,4 15,7 2,0 21,0 6,0 15,0 7,8 15,3 1,1 none none 0,5 16,5 2,2 51,2 27,5 23,7 6,4 13,5 2,5 none none 0,6 15,6 2,2 SBA/STF (10/93-3/95) yes SBA (4/95-6/96) yes SBA (7/96-8/97) yes none none 03/94 09/94 105 102 (167) (167) 03/94 09/94 88 86 (135) (135) 20. 7 23. 6 none none 03/95 09/95 66 76 (187) (181) 03/95 09/95 79 79 (135) (135) 25. 4 26. 3 none (6) none (6) 03/96 09/96 73 71 (178) (178) 03/96 09/96 76 71 (135) (135) 28. 9 31. 1 Footnotes (1) (2) (3) See explanatory notes (4) (5) Financial balance does not take into account government net lending, whereas fiscal balance does. Kroon figures have been converted using the yearly average exchange rate of the dollar. In 1996, Estonia repaid in advance some foreign loans. Estonia has asked for a rating (6) -41 Country-risk indicators Country: Hungary footnotes 1994 1995 1996 Real GDP growth rate (%) Industrial production ( % change) Unemployment Inflation rate Exchange rate (forints per USD) (end of period) (Dec/Dec) (end of period) 2,9 9,0 10,4 21,2 111,0 1. 5 6,0 10,4 28,5 139,5 1,0 2,3 10,5 19,8 164,0 Consolidated state budget balance (as % of GDP) -6,3 -6,8 -3. 3 Balance of payments Exports of goods and services (bn USD) Current account balance (% of GDP) Net inflow of foreign direct investment (m USD) Official reserves (end of period) bnUSD months' imports of goods External debt Convertible currency external debt (bn USD, end of period) Convertible debt service (bn USD) principal, including early repayments interest External debt/GDP (%) External debt/exports of goods and services (%) Debt service/exports of goods and services (%) Arrears (on both interest and principal, m USD) Debt relief agreements and rescheduling Indicators of EU exposure EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of goods and services (%) IMF arrangements Type (Date) On track Indicators of market's perception of 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 Footnotes (1) (2) (3) See explanatory notes (4) First review uncompleted. est. 7,6 -9,5 1100 6,8 7,2 28,5 6,2 4,3 1,9 68,4 267,2 48,7 none none 16,5 4,0 11,3 SBA (9/93-12/94) no (4) 12. 8 -5,6 4410 12,0 9,5 31,7 7,7 5,3 2,4 72,3 185,9 43,8 none none 13,0 3,1 6,6 - 14,2 -3,2 1987 9,7 6,9 27,6 7,4 5,1 2,3 63,6 144,1 44,7 none none 9,6 2,7 5,2 SBA (3/96-2/98) yes 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) (2) (3) 42 Country-risk indicators Country: Latvia footnotes 1994 1995 1996 Real GDP growth rate (%) Industrial production ( % change) Unemployment Inflation rate Exchange rate (Lats per USD) (end of period) (Dec/Dec) (end of period) 2,0 -2. 2 6. 5 26,3 0,55 -1,6 -6,3 6. 1 23,1 0,54 General government balance (as % of GDP) -4,4 -3,4 est. 2,8 1,4 7,2 13,0 0,56 -1,9 1443 -9,0 171 652 2,9 409 71,0 n. a. n. a. 8,2 28,6 4,9 none none 0,7 12,4 3,5 988 5,5 155 545 4,5 345 50,0 n. a. n. a. 9,2 34,1 5,1 none none 0,7 13,3 4,8 1304 -0,4 165 527 2,9 403 39,0 n. a. n. a. 9,2 31,4 3,0 none none 0. 7 12,3 4,0 SBA/STF (12/93-3/95) yes SBA (4/95-4/96) no SBA (5/96-8/97) yes none none 03/94 09/94 104 125 (167) (167) 03/94 09/94 94 92 (135) (135) 19. 6 21. 3 none none 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 Balance of payments Exports of goods (m USD) Current account balance (% of GDP) Net inflow of foreign direct investment (m USD) Official foreign exchange reserves (end of period) m USD months' imports of goods and non-factor services External debt Convertible currency external debt (m USD, end of period) Convertible debt service (m USD) principal interest External debt/GDP (%) External debt/exports of goods (%) Debt service/exports of goods (%) Arrears (on both interest and principal, m USD) Debt relief agreements and rescheduling Indicators of EU exposure EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of goods (%) IMF arrangements Type (Date) On track Indicators of market's perception of 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 Footnotes (1) (2) (3) See explanatory notes (D (2) (2) (3) 43 Country-risk indicators Country: Lithuania Real G DP growth rate (%) Industrial production ( % change) Unemployment Inflation rate Exchange rate (Litas per USD) (end of period) (Dec/Dec) (end of period) General government balance (as % of GDP) Financial balance Fiscal balance Balance of payments Exports of goods and services (bn USD) Current account balance (% of GDP), excl. official transfers Net inflow of foreign direct investment (m USD) Official foreign exchange reserves (end of period, gross foreign assets) m USD months' imports of goods and services External debt Convertible currency external debt (m USD, end of period) Convertible debt service (m USD) principal interest External debt/GDP (%) External debt/exports of goods and services (%) Debt service/exports of goods and services (%) Arrears (on both interest and principal, m USD) Debt relief agreements and rescheduling Indicators of EU exposure EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of goods and services (%) IMF arrangements Type (Date) On track Indicators of market's perception of 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 footnotes 1994 1995 1996 1. 0 -6,7 3,8 72,2 4,3 -1,5 -4,2 1,9 -4,2 60 587 3,1 448 19 n. a n a. 8,0 23,2 1,0 none none 0,9 13,3 3,1 3,0 0,8 7,3 39,6 4,0 -1,8 -3,3 2,7 -3,2 55 819 3,9 757 69 n. a. n a. 13,9 34,3 3,1 none none 1,4 13,9 4,8 3,6 -1,5 6,2 13,1 4,0 -1,9 -3,6 3,3 -2,7 152 834 2,4 1076 120 n a n. a. 15,6 32,7 3,6 none none 1,4 10,2 3,3 STF (10/93-3/94) EFF EFF EFF (10/94-10/97) (10/94-10/97) (10/94-10/97) yes yes yes none none 03/94 09/94 110 121 (167) (167) 03/94 09/94 97 96 (135) (135) 18. 4 20. 0 none none 03/95 09/95 108 118 (187) (181) 03/95 09/95 95 90 (135) (135) 21. 7 22. 9 Ba2 none 03/96 09/96 85 59 (178) (178) 03/96 09/96 89 90 (135) (135) 23. 8 25. 3 (4) (4) (1) (2) (2) (3) Footnotes (1) (2) (3) See explanatory notes (4) Financial balance does not take into account government net lending, whereas fiscal balance does. 44 Country-risk indicators Country: Romania footnotes 1994 1995 1996 Real GDP growth rate (%) Industrial production ( % change) Unemployment Inflation rate Exchange rate ( lei per USD) (end of period) (Dec/Dec) (end of period) 3,9 3,3 8,1 61,7 1767 7,1 9,4 8,0 27,8 2760 4,1 9,9 6,3 56,9 4035 General government balance (as % of GDP) -2,0 -2,6 -3,9 Balance of payments Exports of goods and services (bn USD) Current account balance (% of GDP) Net inflow of foreign direct investment (m USD) Official foreign exchange reserves (end of period) m USD months' imports of goods and services External debt Convertible currency external debt, incl. short-term debt (bn USD, end of period) Convertible debt service (m USD) principal interest External debt/GDP (%) External debt/exports of goods and services (%) Debt service/exports of goods and services (%) Arrears (on both interest and principal, m USD) Debt relief agreements and rescheduling Indicators of EU exposure EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of goods and services (%) (D 7,2 -1,4 341 1596 2,2 5,5 589 313 276 18,3 76,6 15,4 none none 8,4 10,7 9,7 9,4 -4,6 367 1523 1,9 6,6 1366 1073 293 18,7 73,9 14,5 none none 10,2 11,5 10,1 9,8 -5,8 555 2099 2,1 8,3 1980 1524 456 23,5 85,0 20,2 none none 10,2 9,4 8,0 est. est. IMF arrangements Type (Date) On track Indicators of market's perception of 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 SBA (5/94-12/95) yes SBA (5/94-12/95) yes SBA (4) no (5) none none 03/94 09/94 74 77 (167) (167) 03/94 09/94 76 74 (135) (135) 25. 4 26. 2 none none 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 (2) (2) (3) Footnotes (1) (2) (3) See explanatory notes (4) (5) The SBA approved in May 1994 was augmented and extended through 1997. Suspended in March 1996. New SBA approved by IMF Board on 22 April 1997 - 4 5- Country-risk indicators Country: Slovak Republic footnotes 1994 1995 1996 Real GDP growth rate (%) Industrial production ( % change) Unemployment Inflation rate Exchange rate (SrCs per USD) (end of period) (Dec/Dec) (end of period) 4,9 4,8 14,8 11,7 31,3 6,8 8,3 13,1 7,2 29,6 6,9 2,5 12,8 5,4 31,9 General government balance (as % of GDP) -1,3 0,1 -1,3 Balance of payments Exports of goods and services (bn USD) Current account balance (% of GDP) Net inflow of foreign direct investment (m USD) Official foreign exchange reserves (end of period) m USD months' imports of goods and services External debt Convertible currency external debt (bn USD, end of period) Convertible debt service (m USD) principal interest External debt/GDP (%) External debt/exports of goods and services (%) Debt service/exports of goods and services (%) Arrears (on both interest and principal, m USD) Debt relief agreements and rescheduling Indicators of EU exposure EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of goods and services (%) (D IMF arrangements Type (Date) On track 8,9 4,8 184 1691 2,3 4,2 766 497 269 30,5 46,9 8,6 none none 2,9 5,3 2,3 11,0 2,3 157 3400 4,1 5,7 1390 1130 260 32,9 52,0 12,7 none none 4,1 5,2 2,8 STF (7/93 -7/94) yes SBA (7/94-3/96) no (4) 10,9 -10,1 189 3473 3,4 7,7 1444 1186 258 40,6 70,6 13,3 none none 4,5 4,5 3,2 - Indicators of market's perception of 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 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) 38. 6 41. 2 (2) (2) (3) Footnotes (1) (2) (3) See explanatory notes (4) The mid-term review of the programme, which had been scheduled for February 1995, was not completed. -46- Country-risk indicators Country: Belarus footnotes 1994 1995 1996 Real GDP growth rate (%) Industrial production ( % change) Unemployment Inflation rate Exchange rate ( Rbs per USD) (end of period) (yearly average) (average) -12,6 -19,9 2,1 1960 10600 -10,4 -11,5 2,7 244 11500 2,6 3,3 3,9 39,3 15500 General government balance (as % of GDP) -1,6 -2,3 -1,8 Balance of payments. Exports of goods and services (bn USD) Current account balance (% of GDP) Net inflow of foreign direct investment (m USD) Official foreign exchange reserves (end of period) m USD months' imports of goods and services External debt Convertible currency external debt (bn USD, end of period) Convertible debt service (m USD) principal interest External debt/GDP (%) External debt/exports of goods and services (%) Debt service/exports of goods and services (%) Arrears (on both interest and principal, m USD) Debt rescheduling agreement Indicators of EU exposure EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of goods and services (%) (D IMF arrangements Type (Date) On track 2,5 -12,4 10 101,0 0,3 1,3 123,0 n. a. n. a. 25,9 47,4 4,3 493 (4) 0,9 4,8 2,3 4,7 -4,7 7 377,0 0,7 1,5 178,0 n. a. n. a. 14,7 32,7 3,4 460 none 0,5 2,6 0,8 est. est. est. est. 5,4 -9,1 6 10,0 0,0 1,0 163,2 n. a. n. a. 8,1 17,6 3,0 n. a. none 0,5 4,0 0,7 STF (07/93-06/94) no (5) SBA (12/95-11/96) no (6) SBA (12/95-11/96) no (6) Indicators of market's perception of 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 none none 03/94 09/94 145 138 (167) (167) 03/94 09/94 109 109 (135) (135) 15. 5 15. 7 none none 03/95 09/95 135 134 (187) (181) 03/95 09/95 112 112 (135) (135) 15. 2 15. 5 none none 03/96 09/96 128 142 (178) (178) 03/96 09/96 116 118 (135) (135) 14. 5 14. 6 (2) (2) (3) Footnotes (1) (2) (3) See explanatory notes (4) (5) With Russia for gas arrears IMF 1993 STF programme went off track in early 1994. However, IMF staff regarded favourably the government programme adopted in Autumn 1994, which was supported with the second STF tranche by end-January 1995. The first quarterly review of the programme, initially scheduled for December 1995, has never been completed. (6) 47 Country-risk indicators Country: Moldova footnotes 1994 1995 1996 Real GDP growth rate (%) Industrial production ( % change) Unemployment Inflation rate Exchange rate (leu per USD) (end of period) (yearly average) (end of period) -30,9 -12,0 20,6 116 4,27 -1. 9 -6,0 24,5 24 4,50 -8,0 -5,1 23,4 15 4,59 General government balance (as % of GDP) -5,9 -5,9 -10,0 Balance of payments Exports of goods (m USD) Current account balance (% of GDP) Net inflow of foreign direct investment (m USD) Official foreign exchange reserves (end of period) m USD months' imports of goods External debt Convertible currency external debt (m USD, end of period) Convertible debt service (m USD) principal interest External debt/GDP (%) External debt/exports of goods (%) Debt service/exports of goods (%) Arrears (on both interest and principal, m USD) Debt relief agreements and rescheduling Indicators of EU exposure EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of goods(%) (1) 618 -12,9 11,6 179 2,9 739 -8,1 63,7 257 3,2 506,2 696,3 12,3 n. a. n. a. 30,0 55,5 4,0 none none 0,9 18,0 10,0 91,0 n. a. n. a. 38,0 91,1 11,0 none none 0,8 8,7 7,9 801 -18,8 40,0 315 4,1 818,2 n. a. n. a. n. a. 57,6 102,1 n. a. none none 1,0 9,3 9. 5 IMF arrangements Type (Date) On track Indicators of market's perception of 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 Footnotes (1) (2) See explanatory notes SBA (12/93-3/95) yes SBA (3/95-3/96) yes EFF (5/96-5/99) yes none none 03/94 09/94 148 155 (167) (167) none none 03/95 09/95 157 141 (187) (181) none none 03/96 09/96 134 125 (178) (178) (2) none none none none none none 48 Country-risk indicators Country: Ukraine footnotes 1994 1995 1996 Real GDP growth (%) Industrial production ( % change) Unemployment Inflation rate Exchange rate (Krb per USD) (Hrv per USD 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 General government balance (as % of GDP) -8,2 -5,0 -10,0 -5,1 1,3 40 1,9 1,9 -3,2 20,3 -3,9 0,52 1994 5,3 9,2 1221 716 505 21,2 45,3 6,0 n. a. (4) 3,0 2,6 1,2 14,7 -6,0 0,09 646 2,3 7,2 1794 n. a. n. a. 29,2 48,0 12,1 2722 (4) 1,6 1. 6 0,8 16,4 -5,0 0,27 1134 3,7 8,1 1531 986 545 23,3 53. 6 9,3 236 (4) 1,5 1. 4 0,7 STF (04/93-04/95) yes SBA (04/95-04/96) no (5) SBA (05/96-02/97) yes none none 03/94 09/94 149 147 (167) (167) 03/94 09/94 111 113 (135) (135) 15. 1 14. 5 none none 03/95 09/95 138 145 (187) (181) 03/95 09/95 109 111 (135) (135) 15. 5 15. 7 none none 03/96 09/96 135 136 (178) (178) 03/96 09/96 107 111 (135) (135) 16. 7 16. 6 Balance of payments Exports of goods and services (bn USD) Current account balance (excl. transfers) (% of GDP) Net inflow of foreign direct investment (bn USD) Gross official foreign exchange reserves m USD weeks' imports of goods and services External debt Convertible currency external debt (bn USD, end of period) Convertible debt service paid (m USD) principal interest External debt/GDP (%) External debt/exports of goods and services (%) Debt service/exports of goods and services (%) Arrears (on both interest and principal, m USD) Debt relief agreements and rescheduling Indicators of EU exposure EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of goods and services (%) IMF arrangements Type (Date) On track Indicators of market's perception of 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 Footnotes (1) (2) (3) See explanatory notes (4) (5) Rescheduling of debt owed to Russia and Turkmenistan. Suspended in November 1995. (D (2) (2) (3) -49 Country-risk indicators Country: Algeria footnotes 1994 1995 1996 Real GDP growth rate (%) 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 goods and services (bn USD) Current account balance (% of GDP) Net inflow of foreign direct investment (m USD) Official foreign exchange reserves bn USD months' imports of goods and services External debt Convertible currency external debt (bn USD, end of period) Convertible debt service (bn USD) principal interest External debt/GDP (%) External debt/exports of goods and services (%) Debt service/exports of goods and services (%) Arrears (on both interest and principal, m USD) Debt relief agreements and rescheduling (bn US$) Indicators of EU exposure EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of goods and services (%) (1) -0,9 -2,5 38,6 42,9 -4,4 8,9 -4,4 0,0 2,6 2,9 29,5 8,9 7,1 1,8 70,0 307,5 48,6 none 4,5 9,9 2,4 7,8 3,9 4,4 21,9 52. 2 -1,4 10,3 -5,3 0,0 2,1 2,1 32,5 9,4 7,1 2,3 78,4 297,1 42,5 none 4,9 12,2 2,8 8,9 4,0 6,3 15,1 56,2 3,0 13,2 2,8 0,3 4,2 4,5 33,5 7,4 5,2 2,2 73,3 240,1 29,2 none 3,5 11,6 2,7 6,8 IMF arrangements Type (Date) On track Indicators of market's perception of creditworthiness Moody's long-term foreign currency rating (end of per. ) S&P long-term foreign currency rating (end of period) Euromoney Position in the ranking (number of countries) The Institutional Investor Position in the ranking (number of countries) Credit rating Footnotes (1 ) (2) (3) See explanatory notes SBA (5/94 - 5/95) yes SBA/EFF (5/94 - 5/95) yes EFF/CCFF (5/95 - 5/98) yes none none 03/94 09/94 92 96 (167) (167) 03/94 09/94 75 78 (135) (135) 26. 3 24. 6 none none 03/95 09/95 102 107 (187) (181) 03/95 09/95 89 91 (135) (135) 23. 5 22. 8 none none 03/96 09/96 109 97 (178) (178) 03/96 09/96 95 95 (135) (135) 21. 5 22. 8 (2) (2) (3) 50 Country-risk indicators Country: Israel Real GDP growth rate (%) Industrial production ( % change) Unemployment Consumer Price Index Exchange rate (shekel per USD) (yearly average) (yearly average) (end of period) Central government overall deficit (as % of GDP) Balance of payments Exports of goods (bn USD) Current account balance (% of GDP) Net inflow of foreign direct investment (bn USD) Gross official foreign exchange reserves bn US$ months' imports of goods External debt External debt (gross external liabilities) (bn USD, end of period) Debt service (bn USD) principal interest (gross) External debt/GDP (%) External debt/exports of goods and services (%) Debt service/exports of goods and services (%) Arrears (on both interest and principal, m USD) Debt relief agreements and rescheduling Indicators of EU exposure EU exposure/total EU exposure (%) EU exposure/external debt (%) EU exposure/exports of goods (%) IMF arrangements Type (Date) On track Indicators of market's perception of 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 Footnotes (1) (2) (3) See explanatory notes footnotes 1994 1995 1996 6,8 7,4 7. 8 14,5 3,01 -2,3 16,0 -3,2 0,6 6,6 2,4 41,8 3,8 2,2 1. 6 56,2 171,0 15,5 none none 4,4 0,8 1,9 7,1 8,4 6,9 8,1 3,12 -4,2 17,9 -5. 6 2,0 9. 1 2,8 45,1 4,2 2,5 1. 7 53,8 165,0 15,4 none none 4,4 0. 7 1,7 4,4 5,4 6,7 10,6 3,24 -3,6 19,1 -5,6 2,4 10,0 2. 8 48,0 4,5 2,8 1,7 51,1 164,0 15,4 none none 3,9 0. 6 1,6 none none none none BBB+ 03/94 09/94 30 33 (167) (167) 03/94 09/94 46 43 (135) (135) 43. 4 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- 03/96 09/96 33 32 (178) (178) 03/96 09/96 41 40 (135) (135) 50. 8 52. 2 (1) (2) (2) (3) Explanatorv notes for country-risk indicators - 5 1- Standard footnotes (1) (2) (3) Includes 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; 100 represents the least chance of default. A given country may improve its rating and still fall in the ranking if the average global rating for all rated countries improves. Abbreviations and English words used in tables S&P Standard and Poor's CCFF= Compensatory and Contingency Financing Facility EFF= SBA = STF= Extended Financing Facility Stand-By Arrangement Systemic Transformation Facility est. = n. a. = prelim. = estimates not available preliminary c^ ISSN 0254-1475 COM(97) 464 final DOCUMENTS EN 01 06 09 10 Catalogue number : CB-CO-97-479-EN-C ISBN 92-78-24930-0 Office for Official Publications of the European Communities L-2985 Luxembourg