EU finance ministers agreed Tuesday to lift the European Investment Bank's (EIB) lending mandate for the 2007-2013 period by EUR 7 billion and to broaden its focus mainly from EU candidates and neighbors to Latin America and Asia.

 

Under the agreement reached at a meeting of the ministers in Brussels, the EIB will have a mandate to lend EUR 27.8 billion ($36.6 billion) over the 2007-2013 period compared with EUR 20.7 billion in the current 2000-2006 period. On the same basis as the World Bank, the EIB borrows on capital markets at favorable rates thanks to its backing from member states and then lends the funds for development projects in and outside the 25-nation bloc according to the objectives and limits set by member states. Under the new lending mandate, the EU's neighbors to the east and to the south in the Mediterranean would be the bank's priority, EUR 12.4 billion in lending earmarked for them. Of that, 8.7 million was destined for loans for projects in Mediterranean countries and EUR 3.7 billion for programs in Eastern Europe, the southern Caucasus and Russia. Another EUR 8.7 billion was set for countries waiting to join the EU, such as Albania, Bosnia, Croatia, Macedonia and Turkey.

 

The new mandate lands a much greater ratio of EIB cash into Central Asia and the Caucasus -- including oil and natural gas exporters that the EU is keen to turn into reliable suppliers and transport routes. However, Asia, Africa and South and Central America get less priority after some ministers criticized the EIB's aim to spread money more widely…. Some EUR 2.8 billion will now be targeted for Latin America, EUR 1 billion for Asia and EUR 900 million for South Africa.

 

Following concerns that the EIB should carry out tighter controls over its loans, some EUR 2 billion of the funding will be held back until 2010, until the bank clears a mid-term review by independent consultants.

 

The European Commission was keen to stress the bank's role in development, helping to stabilize neighbors and trading partners, including nations where migration to the EU -- both legal and illegal -- are high.