Presentation by Daniel Ottolenghi

1
EIB Workshop with NGOsThessaloniki, 21 February
2003EIB operations in the Mediterranean
Region
Presentation by Daniel Ottolenghi Associate
Director and Chief Development Economist
2
Presentation Structure

• Brief overview of EIB Role and Operations
• Main challenges facing Mediterranean Partner
  Countries (MPC) FEMIP as a response
• EIB funding for environmental protection in MPC

3
THE EIB
EIB European Unions Financing Institution

• Created by the Treaty of Rome in 1958 to provide
  long-term finance projects promoting European
  integration
• Subscribed capital EUR 150bn
• EIB shareholders 15 Members States of the
  European Union will be expanded to 25
• EIBs annual lending (2002) EUR 39bn (of which
  EUR 33bn within the EU)
• EIBs annual borrowing (2002) EUR 38bn

4
EIB is a policy driven Bank
Implements EU policies
In the EU
Outside EU
5
Policy Priorities within the EU

• Regional development
• Implementation of i2i the innovation 2000
  initiative
• Environmental protection and sustainable
  development
• Preparation of Accession Countries

6
Outside EU Support for EU Development Aid and
Cooperataion Policy

• 
  EUR million
• Central and Eastern European countries 9
  280 (2000-2007) (350m for Yugoslavia)
• Pre-accession facility (EIB risk) 8 500
  (2000-2003)
• Mediterranean countries 6 425
  (2001-2007)
• Euro-Med mechanism (EIB risk)
  1 000 (2001-2007)
• ACP Countries 3 965 (2001-2007)
• South Africa
  825
  (2000-2006)
• Latin America Asia
  2 480 (2000-2006)
• Russia (2000-2005)
  100

7
Mediterranean Region

• Main Problems
• Widening gap in income between MPC and EU
• High unemployment in MPC with possible negative
  effect in region and in EU
• Origins
• Inward-looking, state-directed devlopment
  policies of the past
• Lack of enabling environment for private sector
  development

8
EU policy response help MPC achieve economic and
social development through
Euro-Mediterranean Partnership ( Barcelona
Process  since 1995)

• Establish a Euro-Med free trade area by 2010
• Financial assistance to MPC to help implement
  reforms needed to move to more open, private
  sector orientated economy
• EIB loans and Commission grants

9
EIBs Concrete Support to the Euro-Med
Partnership EUR 5.9bn (19982002)
Industry, Services and Financial SectorEUR 1951
MILLIONS Environment EUR 1452
MILLIONS EnergyEUR 1238 MILLIONS Communications
EUR 1250 MILLIONS
10
Results of Euro-Med Partnership so far

• Some progress, but
• Trade liberalisation somewhat behind schedule
• Accompanying reforms pursued without much vigour
• 1. Fiscal Policy
• 2. Exchange Rates
• 3. Financial Sector Reform
• 4. Privatisation
• 5. Investment in infrastructure and human
  capital
• 6. Enabling framework for private investment
• (red tape, judicial system)
• No reduction yet in income disparities

11
GDP per capita growth
2.0
1.5
1.0
0.5
0.0
Average 1990-1995
Average 1996-2002
0.2
1.3
Mediterranean
countries
1.1
2.0
EU 15
12
The need for a new impetus for the Barcelona
Process
A new major initiative by the EU CouncilFEMIP
a reinforced mandate for the EIB with quantitive
and qualitative edge
1. Increased financial assistance from EIB for

• Private sector projects
• Complementary projects supporting private sector
  development (human capital and physical
  infrastructure)

2. Emphasis on quality of interventions and
better linkage to policy reforms (greater supply
of viable projects)
13
Instruments of FEMIP

• Higher level of EIB intervention from 1.6bn in
  2002 to 2.1bn in 2006.
• Adaptation of existing financial instruments used
  by EIB
• Wider array of new instruments, particularly for
  SME finance
• Strengthening of Technical Assistance (with EC
  budget funds), drawing on EIB existing experience
  with environmental projects

14
EIB Support for Environmental Protection in the
Mediterranean

• 2.6bn, 1992-2002 almost 30 of lending in
  region (more than in EU)
• Interest subsidies for environmental protection
  projects (from EC budget) incentives to
  governments to give higher priority to this
  sector
• Project Preparation Facility (PPF) grants for
  finance of feasibility studies for environmental
  protection investments
• Nearly 50 of environmental lending benefits from
  PPF grants (improves quality of projects)
• Strong concentration of EIB financed projects in
  water and waste water management priorities
  identified jointly with MPC