Etude Pays cibles FINAL WEBSITE

Financing social projects in
Ceb target countries:
Achievements and challenges

FINANCING SOCIAL PROJECTS IN
CEB TARGET COUNTRIES:
ACHIEVEMENTS AND CHALLENGES
January 2012

FINANCING SOCIAL PROJECTS IN CEB TARGET COUNTRIES: ACHIEVEMENTS AND CHALLENGES
ACKNOWLEDGEMENTS
This study was prepared by Lucia Athenosy, Senior Economist, with contributions by
Carole Vachet, under the responsibility of Michael Roeskau (Special Adviser to the
Governor and former Central Director for Studies and International Relations) and
Sébastien Relland (Head of Economic, Social and Strategic Studies).

FOREWORD
Combating social exclusion and promoting social justice and fundamental rights have long been
major pillars of activity of the Council of Europe Development Bank (CEB), founded fifty-five
years ago as a financial instrument of solidarity in Europe. Endowed from its creation with an
exclusively social mandate, the CEB has dedicated significant lending volumes to strengthening
social cohesion in Europe. Today, the CEB strives to foster social convergence through the
financing of social investment projects in its Member States and, more particularly, in the
countries of Central, Eastern and South Eastern Europe, its so-called “target countries”. Ever since
the fall of the Berlin Wall in 1989, the Bank has increasingly deployed its activities in the Eastern
regions of Europe.
The overall objective of this study, entitled “Financing Social Projects in CEB Target Countries:
Achievements and Challenges”, is to take quantitative and qualitative stock of the actions
conducted by the CEB in this region over the last two decades. Covering all the Bank’s sectors of
action, the study shows the Bank’s diversity of action and sound achievements in the target
countries, which are a priority geographic area for the Bank’s financings. The study also seeks to
discuss the main lessons learned from the Bank’s long-standing experience in financing social
projects in the target countries and to outline the challenging operational environment in which
the CEB intends to consolidate its activities in the target countries in the years to come.
The global financial and economic crisis has hit most of the Bank’s target countries hard. At the
time of writing, the overall pace of recovery remains fragile, with increasing cross-country
divergence, against the backdrop of the Eurozone sovereign debt crisis, financial market
volatility and pressures to accelerate fiscal consolidation in both East and West. Within this
context, multilateral development banks have a core role to play in addressing increasingly
pressing social challenges. Since the crisis has had a major economic and social impact in the
Bank’s Member States, the CEB is committed to deploying every possible effort to best fulfil its
social mandate. I believe that in the face of the crisis, the CEB has capitalised on its strong points,
namely its rigorous financial and risk management, inseparable from the banking nature of its
activity, the originality of its mandate and its capacity for adaptation and rapid response.
Looking ahead, the CEB, as the social development bank in Europe, will remain committed to its
social mandate and will be part of the necessary international support designed to improve the
living conditions of populations throughout Europe and, more specifically, in its target countries.
I am confident that the enhanced means the CEB will have at its disposal thanks to its recent
6th capital increase should enable it to continue to provide substantial support to its Member
States in a difficult and uncertain environment. For the CEB, the challenge will be to achieve
tangible and sustainable results over the long term in promoting social cohesion and inclusion,
while preserving its financial solidity and high standing in international financial markets.
I hope that this publication will provide a wide audience with useful information about our
commitment and contribution to sustainable socio-economic development in the target countries.
At the same time, I believe that the observations and conclusions it contains will add to the on-
going discourse on challenging issues confronting this region of Europe.
Rolf Wenzel
Governor
Council of Europe Development Bank

CEB Member States including the Target Group countries (year of accession)
Albania 1999 Holy See 1973 Poland 1998
Belgium 1956 Hungary 1998 Portugal 1976
Bosnia and Herzegovina 2003 Iceland 1956 Romania 1996
Bulgaria 1994 Ireland 2004 San Marino 1989
Croatia 1997 Italy 1956 Serbia 2004
Cyprus 1962 Latvia 1998 Slovak Republic 1998
Czech Republic 1999 Liechtenstein 1976 Slovenia 1994
Denmark 1978 Lithuania 1996 Spain 1978
Estonia 1998 Luxembourg 1956 Sweden 1977
Finland 1991 Malta 1973 Switzerland 1974
France 1956 Moldova 1998 “the former Yugoslav
Georgia 2007 Montenegro 2007 Republic of Macedonia” 1997
Germany 1956 Netherlands 1978 Turkey 1956
Greece 1956 Norway 1978

CONTENTS
EXECUTIVE SUMMARY 1
1. INTRODUCTION: PURPOSE AND SCOPE OF THE STUDY 3
2. HISTORICAL BACKGROUND 4
2.1. CEB countries of intervention 4
2.2. Europe after 1990: the CEB’s increasing commitment to the “target countries” 5
2.3. The target countries 5
3. CEB LENDING TO TARGET COUNTRIES 10
3.1. Trends in regional distribution 10
3.2. Sectoral perspective 15
3.2.a. Turkey, Cyprus and Malta 16
3.2.b. Central, Eastern and South Eastern Europe (CEE) 17
3.2.c. Strengthening social integration 19
3.2.d. Managing the environment 29
3.2.e. Supporting public infrastructure with a social vocation 34
3.3. Public and private borrowers 39
3.4. Developing new lending and non-lending instruments 40
4. CO-OPERATION MECHANISMS: PARTNERS & DONORS 42
4.1. Co-operation with the EU – a strategic orientation for the CEB 42
4.1.a. Pre-accession assistance: taking part in the EU enlargement process 43
4.1.b. The CEB’s contribution to the European Neighbourhood Policy 45
4.1.c. Co-financing with EU Structural Funds 45
4.1.d. Other co-operation instruments under the aegis of the European Union 46
4.2. The CEB and bilateral donors 46
4.2.a. Finland Trust Account 47
4.2.b. Norway Trust Account for the Western Balkans 47
4.2.c. Human Rights Trust Fund 48
4.2.d. Spanish Social Cohesion Account 48
4.3. Long-standing partnerships with other International Financial Institutions 48
4.4. Enhancing collaboration with UN agencies 49
4.5. Perspectives for co-operation with the European Union and donor States 49
5. SOCIAL IMPACT OF CEB FINANCING 51
5.1. The added value generated by CEB activities 51
5.2. Measuring the social impact: methodology and assessment 52
5.2.a. Strengthening social integration 52
5.2.b. Managing the environment 53
5.2.c. Supporting vulnerable population groups 54
5.3. Main findings from the CEB’s experience in project financing 55

6. LESSONS LEARNED AND CHALLENGES AHEAD 58
6.1. Why does the CEB focus its lending on “target countries”? 58
6.2. Addressing the absorption capacity issue 59
6.3. Borrowers dealing with crisis- and post-crisis challenges 61
6.3.a. Public borrowers: need for fiscal consolidation 61
6.3.b. Bank borrowers: economic and financial linkages with European banks 63
6.4. Challenges for the CEB 65
6.4.a. Pursuing objectives defined for 2010-2014 65
6.4.b. Underlying challenges 66
7. CONCLUDING REMARKS 67
BIBLIOGRAPHY 68
STATISTICAL ANNEX 69

BOXES
GENERAL & THEMATIC INFORMATION
Box 1 CEB financing and monitoring
Box 2 Sustainable housing and urban development: the CEB’s experience
Box 3 Financing projects through “Transit loans”
Box 4 Combating energy poverty in Europe
Box 5 Supporting sector policies in target countries
Box 6 Western Balkans Investment Framework
Box 7 Inter-institutional relations: CEB co-operation instruments
Box 8 Ex Post Evaluation: Lessons learned from the CEB’s operations
TABLES
Table 1 CEB Target Group countries
Table 2 Ranking of CEB member countries by income according to World Bank data
Table 3 CEB activities in target countries: Situation as at 31 December 2011
Table 4 Sectoral distribution of total CEB lending in target countries (1990-2011)
Table 5 Sectoral distribution of CEB approvals in favour of the CEE region per sub-period
(1995-2011)
Table 6 Public/private distribution of CEB borrowers in target countries (1990-2011)
GRAPHS
Graph 1 Geographic distribution of CEB lending in target countries (1990-2011)
Graph 2 Projects approved per country (1990-2011)
Graph 3 Volumes approved in favour of target countries per year (1990-2011)
Graph 4 Cumulative amounts approved and disbursed in target countries per sub-period
(1990-2011)
Graph 5 Target/Non-target distribution of loans outstanding (2004-2014)
Graph 6 Sectoral distribution of CEB lending in Turkey (1990-2011)
Graph 7 The relative breakdown of project approvals in favour of the CEE region per
sector of action and per sub-period (1995-2011)
Graph 8 The relative distribution of project approvals in favour of the CEE region per
sectoral line of action and per sub-period (1995-2011)
Graph 9 Public/private distribution of CEB borrowers in target countries (2005-2011)

ABBREVIATIONS AND ACRONYMS
ADB Asian Development Bank
CEB Council of Europe Development Bank
CEE Central, Eastern and South Eastern Europe (18 countries): Albania, Bosnia
and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Georgia,
Hungary, Latvia, Lithuania, Moldova, Montenegro, Poland, Romania, Serbia,
Slovak Republic, Slovenia and “the former Yugoslav Republic of
Macedonia”
EEFF Energy Efficiency Finance Facility
EIB European Investment Bank
ERDF European Regional Development Fund
EU European Union
EU-15 Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom
EU-12 Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland,
Slovak Republic, Slovenia (2004), Bulgaria, Romania (2007)
EU-27 EU-15 plus EU-12
FTA Finland Trust Account
HRTF Human Rights Trust Fund
IDPs Internally displaced persons
IFI(s) International Financial Institution(s)
IOM International Organisation for Migration
IPA Instrument for Pre-Accession Assistance
IPF Infrastructure Project Facility
JESSICA Joint European Support for Sustainable Investment in City Areas
KfW Kreditanstalt für Wiederaufbau
NIF Neighbourhood Investment Facility
NTA Norway Trust Account
OECD Organisation for Economic Co-operation and Development
RCC Regional Co-operation Council
SEE South Eastern Europe (9 countries): Albania, Bosnia and Herzegovina,
Bulgaria, Croatia, Moldova, Montenegro, Romania, Serbia and “the former
Yugoslav Republic of Macedonia”
SCA Spanish Social Cohesion Account
SMEs Small and medium-sized enterprises
STA Selective Trust Account
UNDP United Nations Development Programme
UNECE United Nations Economic Commission for Europe
UNHCR United Nations High Commissioner for Refugees
UNICEF United Nations Children’s Fund
WB Western Balkans (6 countries): Albania, Bosnia and Herzegovina, Croatia,
Montenegro, Serbia and “the former Yugoslav Republic of Macedonia”
WBIF Western Balkans Investment Framework

EXECUTIVE SUMMARY 1
EXECUTIVE SUMMARY
1. Set up in 1956, the Council of Europe Development Bank (CEB) is a multilateral bank with an
exclusively social mandate. Today, the CEB strives to foster social convergence through the
financing of social investment projects in its 40 Member States and, more particularly, in the
countries of Central, Eastern and South Eastern Europe, its so-called “target countries”.
2. Since the fall of the Berlin Wall in 1989, the CEB has significantly increased its lending to target
countries in line with its strategic orientations and within a strong prudential framework. The Bank
has financed an overall amount of € 17 billion in social projects located in target countries,
structured around three sectoral lines of action: strengthening social cohesion (57% of total),
managing the environment (28% of total) and supporting public infrastructure with a social
vocation (15% of total).
3. Over the years, traditional lending instruments have constituted the main tool for the CEB’s
activities in the target group countries. Indeed, CEB support has primarily been channelled through
the provision of flexible long-term loans at favourable interest rates. However, the CEB has been
able to diversify its financing instruments. Firstly, “transit loans” have represented an additional
means of action for developing CEB activities in target countries, while improving the lending risk
profile. Secondly, the CEB has introduced subsidised loans through the Selective Trust Account in
very specific cases involving the CEB’s statutory priorities and the most fragile countries. Thirdly,
the CEB has progressively developed various grant financing facilities in the target countries. As a
complement to the favourable financing conditions provided on its loans, the Bank can also offer
its “non-lending instruments”, mainly in the form of technical assistance, funded either from
different CEB trust accounts or via various EU grant facilities. Last but not least, the CEB has
implemented joint project activities with the European Union and other international financial
institutions active in its countries of intervention.
4. Over the two decades under consideration, CEB lending has been marked by the progressive
geographic deployment and sectoral diversification of the Bank’s activities in the target group. At
the same time, the CEB has developed its activities in close co-operation with other international
institutions, the European Union and the United Nations specialised agencies so as to maximise
synergies, development impact and social added value. Through this policy of partnerships, the
CEB has been able to widen its scope of action, leverage its expertise and affirm its specific
nature as the social development bank in Europe.
5. Against the background of the global crisis, the CEB has proved to be an effective tool of
European solidarity. In a difficult economic and financial context, the Bank has continued to
provide support for projects promoting social cohesion and complying with the values of the
Council of Europe: it approved close to € 9 billion in 139 new projects between 2008 and 2011.
The majority of these projects (58%) were in favour of target countries.
6. While financing social projects across its member countries, even in those enjoying higher incomes,
the CEB has endeavoured, over the years, to strengthen the geographic focus of its lending on
target countries. This “political” orientation finds its economic rationale in persistent, although
diminishing, gaps between the East and the West of the European continent. It also highlights the
importance of social sector reforms and investments for economic growth, social development and
the catch-up process with the more advanced countries.
7. Looking ahead, significant challenges for the CEB and its borrowers need to be addressed on
the road to strengthening social cohesion in Europe. For the target group countries, restoring a
self-sustained path of growth with more and better jobs in the whole region will be a challenging
task for any country. In a complex economic and financial environment, the main challenge for the
CEB will be to achieve tangible and sustainable results while investing in social infrastructure over
the long term and preserving the Bank’s financial solidity and high standing in financial markets.
8. The decision on the CEB’s 6th capital increase, adopted on 4 February 2011 and bringing its
capital from € 3.3 billion to € 5.5 billion when fully subscribed will enable the Bank to strengthen
its financial soundness and ensure its possibilities for action in favour of target countries. The
6th capital increase became effective on 31 December 2011, reaching a subscription rate of
75%, therefore exceeding the minimum threshold of 67%. The enhanced means the CEB will have
at its disposal in the future should enable it to continue to provide substantial support to its
Member States in a difficult and uncertain environment.

EXECUTIVE SUMMARY2

INTRODUCTION: PURPOSE AND SCOPE OF THE STUDY 3
1. INTRODUCTION: PURPOSE AND SCOPE OF THE STUDY
Endowed from its creation fifty-five years ago with an exclusively social mandate, the Council of
Europe Development Bank (hereafter the CEB or “the Bank”) has dedicated significant lending
volumes to strengthening social cohesion in Europe. Today, the CEB strives to foster social
convergence through the financing of social investment projects in its Member States and, more
particularly, in the countries of Central, Eastern and South Eastern Europe, its so-called “target
countries”.
Entitled “Financing Social Projects in CEB Target Countries: Achievements and Challenges”,
this new study responds first and foremost to a geographic logic, as opposed to a purely
sectoral focus. Covering all the Bank’s sectors of action, the study will show the Bank’s steadily
growing commitment and diversity of action in the target group countries, which are a priority
geographic area for the Bank’s financings. Over two decades after the fall of the Berlin Wall,
the study will take quantitative and qualitative stock of the actions conducted by the CEB in this
region.
As a further example of the Bank’s action to consolidate its visibility with respect to a wider
public, this study adds to a series of earlier publications1 and hence complements the
communication actions deployed by the Bank. The study also comes within the Bank’s policy of
accessibility to the “institutional memory”.
First, the study aims to give an extensive overview of the Bank’s experience in financing social
projects in target countries, both from a geographic and sectoral perspective, over the last
twenty years. The study will focus on the progressive geographic deployment and sectoral
diversification of the CEB’s activities in target countries. The analysis will be illustrated by
concrete examples of financed projects so as to capture the diversity of the CEB’s experience in
the region. It will also detail different types of borrowers and financing instruments over the
period under discussion.
In addition to project financing activities, the study will pay particular attention to co-operation
that the CEB has developed over the years with international institutions, the European Union, the
United Nations specialised agencies and other international financial institutions. The CEB has
implemented various co-operation mechanisms in its project and grant financing activities so as to
develop and further expand its presence in the target group countries. The Bank has also
actively participated in various European initiatives and networks, with the aim of sharing and
enhancing its expertise and its specific role as a social development bank in Europe. These
partnerships have enabled the CEB to increase the added value and effectiveness of its actions.
Finally, the study will seek to discuss the main lessons and achievements from the Bank’s long-
standing experience in financing social projects in the target group countries and to outline the
challenging operational environment in which the CEB intends to consolidate its activities in its
target countries in the years to come.
1 Publications available on the CEB’s website www.coebank.org: Housing in South Eastern Europe: solving a puzzle of challenges
(2004); Social challenges in South Eastern Europe (2005); Trends and progress in housing reforms in South Eastern Europe (2005);
Health and economic development in South Eastern Europe (2006); Migration in Europe: the CEB’s experience (2008); Housing policy
reforms in post-socialist Europe: Lost in transition (2009); Evaluation of public health services in South Eastern Europe (2009);
Sustainable Housing and Urban Development: the CEB’s Contribution (2010).

HISTORICAL BACKGROUND4
2. HISTORICAL BACKGROUND
The Council of Europe Development Bank (the CEB or “the Bank”) is a multilateral bank with a
social mandate. The Bank was set up on 16 April 1956 by eight member countries of the Council
of Europe – Belgium, France, Greece, Germany, Iceland, Italy, Luxembourg and Turkey – as the
Council of Europe Resettlement Fund for National Refugees and Over-Population in Europe. The
primary purpose of the Fund/CEB was initially to provide assistance to populations forced to flee
from regions affected by political or economic upheavals, and to help those driven from their
homes by natural or ecological disasters. Aid to refugees, migrants and displaced persons, and
victims of disasters are the CEB’s statutory priorities.
The Bank’s scope of action has progressively widened to include other sectors directly
contributing to strengthening social cohesion in Europe. Today, while remaining faithful to its
priority missions, the CEB participates in the financing of socially oriented investment projects and
strives more generally to foster social convergence among its Member States and, more
particularly, in the countries of Central, Eastern and South Eastern Europe, the so-called “target
countries”.
This chapter gives an overview of the Bank’s geographic coverage and its specificity among
other international financial institutions (IFIs) operating in Europe. It also describes the historical
context in which the CEB has developed activities in its “target countries” since the fall of the
Berlin Wall in 1989.
2.1. CEB countries of intervention
The CEB has 40 member countries today (see map opposite Contents). Among these 40 members,
36 are the CEB’s countries of intervention with at least one project approved since their
accession. CEB operations are spread across its member countries without being geographically
limited to the most needed and fragile countries. Unlike the World Bank, acting in Eastern Europe
and Central Asia, or the EBRD, investing exclusively in the transition countries, the CEB finances
social projects in both richer and poorer parts of Europe, with special attention paid to the social
needs of the most vulnerable populations. Borrower profiles can differ greatly from one country
to another. The reason for this lies in the differences in the levels of development between and
within countries and in individual economic policies.
The CEB’s capacity for action is largely determined by the level of risk it incurs and by trends in
that risk. In concrete terms, lending to well-rated borrowers enables the CEB to balance its risk
profile with regard to “below-investment-grade” counterparties without jeopardising its rating.
This relative balance between the tendency to minimise its risks and the desire to strengthen the
social added value of its loans is backed up by a strong prudential framework and
conservative risk management with rigorous control standards. This has enabled the CEB to
develop its activities, including those in the most fragile European countries and regions, without
undermining either the soundness of its rating or its financial solidity over the years. Moreover,
the Bank’s rating further strengthens its position as a privileged borrower, whereas for the
majority of its borrowers, particularly those most indebted States, financing conditions have
worsened considerably.
From a historic perspective, the geographic distribution of CEB lending has gradually expanded
in two directions, namely North-South and West-East, along with the accession of new members
to the Bank. Prior to the 1990s, CEB lending developed in favour of North-South solidarity, with
a continuously growing number of member countries and volumes of activity. The CEB’s increased
commitment to the wider Mediterranean and Iberian Peninsula regions was balanced by its
operations in the countries of Northern Europe, including all the Scandinavian countries. CEB
activities were mainly aimed at providing financial assistance according to its priority missions
and at reducing socio-economic disparities between the North and the South of Europe through
social infrastructure investments in favour of the less developed Southern countries. The
reunification of the European continent that occurred after 1990 allowed the CEB to develop the
West-East axis of solidarity, which will be described in detail in chapter 3.

HISTORICAL BACKGROUND 5
The geographic diversification of CEB loans thus confirmed the emphasis placed on the balance
gradually achieved between the Bank’s activities in its “traditional” areas in Western and
Northern Europe and the “new” priority given to Central, Eastern and South Eastern Europe (CEE).
Indeed, the increasing focus of the Bank’s activities in favour of CEE countries has strengthened its
visibility as the European financial institution devoted to social development. In parallel, the Bank
has maintained substantial volumes of lending in its Western European countries of intervention.
2.2. Europe after 1990: the CEB’s increasing commitment to the “target countries”
Following the fall of the Berlin Wall in 1989, the reunification of the European continent
prompted the CEB’s transformation into a true development bank. The CEB undertook to renew
and adapt its methods of functioning so as to best be able to accompany the CEE countries in
their transition, reconstruction and integration into European institutions.
As of the early 1990s, the mobilisation of increased means in favour of the transition countries
had to deal with challenging issues. On the one hand, these countries had very significant needs.
On the other, the Fund/CEB had to extend loans to already heavily indebted countries, without
running the risk of jeopardising its financial equilibrium.
The process of accession of CEE countries to the Council of Europe and to the Fund/CEB was
however more gradual than originally anticipated. In fact, their accession took place mainly in
the second half of the 1990s (see Table 1: for each country - year of accession / first project
approved), when the institution had undergone a profound transformation.
In 1997, following the Second Council of Europe Summit held in Strasbourg, two priority lines of
focus were established for the CEB: (i) deployment towards Central and Eastern Europe, (ii) job
creation and social cohesion in Europe. Furthermore, in order to clearly indicate its nature and
mandate, the institution, up to then known as the “Council of Europe Social Development Fund”, in
1999 took the official new name of “Council of Europe Development Bank”. This change of
denomination came along with an extension of the Bank’s means: having started in 1956 with a
capital equivalent to € 5.7 million, the Bank operated the 5th increase in its subscribed capital so
as to reach € 3.3 billion.
The ambitious objective of geographically balancing CEB lending has been progressively
translated into the Bank’s lending operations since the end of the 1990s. The medium-term Action
Plan 1997-2001 provided for an increase in commitments in respect of the group of
CEE “transition countries” and this increase was confirmed in the revised version of the Plan in
1999. In the Development Plan 1999-2004, major efforts were made to approve 50% of new
projects in these countries. And it was in 2005, when the CEB launched the new five-year
development plan, that the CEE countries officially became part of the Bank’s “target countries”.
2.3. The target countries
Within its 40 member countries, the CEB established a group of “target countries” in the
Development Plan 2005-2009 with the clear objective of further expanding its lending to the
CEE region. This target group today includes 21 countries (see Tables 1&2), representing 17% of
the Bank’s subscribed capital and a total population of 204 million:
 18 CEE countries: Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic,
Estonia, Georgia, Hungary, Latvia, Lithuania, Moldova, Montenegro, Poland, Romania,
Serbia, Slovak Republic, Slovenia and “the former Yugoslav Republic of Macedonia”;
 3 countries that joined the Bank earlier, i.e. Turkey - a founding member and one of the
largest CEB borrowers, Cyprus (1962) and Malta (1973), still facing significant needs in
terms of investments in social infrastructure.
The Development Plan 2005-2009 successfully achieved the objective of disbursing 50% of
total loans to target countries. Furthermore, the CEB consolidated and strengthened its actions in
the target group in the last two years of the Plan in a particularly difficult context of the global
financial and economic crisis.

Given the prospects for a fragile and weak economic recovery, accompanied by greater
vulnerability and increased needs on the part of the emerging market countries in the target
group, the Development Plan for the period 2010-2014 foresees a continued effort in favour of
target countries with the objective of bringing loans to these countries up to 60% of the total
outstanding by 2014. This effort is all the more significant in that these countries represent a
17% share in the Bank’s subscribed capital.
The continuous increase in CEB lending to target countries over the last twenty years is a good
indication of how the Bank strives, in practical terms, to reach the right balance between the
quality of its project portfolio and its contribution to social cohesion on the one hand, and the
prudential framework underpinning its financing, on the other hand.
Table 1: CEB Target Group countries
Year of accession First project
approved
Turkey 1956 1957
Cyprus 1962 1963
Malta 1973 1973
Bulgaria 1994 1995
Slovenia 1994 1997
Lithuania 1996 1996
Romania 1996 1996
Croatia 1997 1998
“the former Yugoslav Republic of Macedonia” 1997 1999
Estonia 1998 2000
Hungary 1998 1998
Latvia 1998 2001
Moldova 1998 2003
Poland 1998 1999
Slovak Republic 1998 1999
Albania 1999 2001
Czech Republic 1999 2000
Bosnia and Herzegovina 2003 1996*
Serbia 2004 2005
Georgia 2007 2008
Montenegro 2007 2010
* Although Bosnia and Herzegovina joined the CEB only in 2003, the Bank was able to finance the first project in 1996, “the Refugee
and War Victim Rehabilitation Project”, taking into account its emergency help and assistance purpose.

Table 2: Ranking of CEB member countries by income according to World Bank data
Gross national income (GNI) per capita2
Latest available data, 2010
Atlas method
(current US$)
Purchasing Power
Parity (PPP)
High-income countries: $12,276 or more (Atlas method)
Liechtenstein 136,540 n/a
Norway 85,380 57,130
Luxembourg 79,510 63,850
Switzerland 70,350 49,180
Denmark 58,980 40,140
San Marino 50,670 n/a
Sweden 49,930 39,600
Netherlands 49,720 42,590
Finland 47,170 37,180
Belgium 45,420 37,840
Germany 43,330 38,170
France 42,390 34,440
Ireland 40,990 32,740
Italy 35,090 31,090
Iceland 33,870 28,630
Spain 31,650 31,550
Cyprus 30,460 30,160
Greece 27,240 27,360
Slovenia 23,860 26,970
Portugal 21,860 24,710
Malta 18,350 23,070
Czech Republic 17,870 23,620
Slovak Republic 16,220 23,140
Estonia 14,360 19,500
Croatia 13,760 18,710
Hungary 12,990 19,280
Poland 12,420 19,020
Upper-middle income: $3,976 - $12,275 (Atlas method)
Latvia 11,620 16,360
Lithuania 11,400 17,880
Turkey 9,500 14,580
Romania 7,840 14,050
Montenegro 6,690 12,710
Bulgaria 6,240 13,210
Serbia 5,820 11,230
Bosnia and Herzegovina 4,790 8,970
“the former Yugoslav Republic of Macedonia” 4,520 10,830
Albania 4,000 8,840
Lower-middle income: $1,006 - $3,975 (Atlas method)
Georgia 2,700 4,980
Moldova 1,810 3,340
Source: http://siteresources.worldbank.org/DATASTATISTICS/Resources/GNIPC.pdf (World Development Indicators
Database 2011, 1 July 2011)
2 GNI per capita is the gross national income, converted to US dollars using the World Bank Atlas method, divided by the midyear
population. GNI is the sum of value added by all resident producers plus any product taxes (less subsidies) not included in the
valuation of output plus net receipts of primary income (compensation of employees and property income) from abroad.

Box 1 - CEB financing and monitoring
The CEB takes action in the form of loans, guarantees or through the use of trust accounts. The
Bank offers flexible long-term loans at favourable interest rates, in specific cases accompanied
by interest rate subsidies, to its Member States, their regional or local authorities, and public or
private financial institutions (€ 2.1 billion in approved projects in 2011). At the time of publishing
this study, the Bank enjoys the highest rating (AAA/Aaa) awarded by the three rating agencies
(Moody’s, Standard and Poor’s, Fitch), which mirrors its strong financial profile, the support of its
shareholders and its stringent risk management policy. The AAA rating enables the Bank to offer
particularly favourable financing conditions to its borrowers.
Along with loans, some very limited grant resources can be made available through the CEB’s
trust accounts in order to subsidise interest rates and/or to finance technical assistance. On a
much smaller scale, the Bank also provides separate grants.
CEB projects are financed through long-term loans, disbursed in several tranches, generally with
a grace period. The Bank’s activity thus makes it possible to alleviate the constraints weighing
upon access to long-term credit for projects generating positive externalities.
All CEB operations are granted in accordance with specific technical and social criteria and in
strict compliance with public procurement rules. The eligibility criteria and general procedures for
projects financed by the CEB are presented in the Policy for Loan and Project Financing (2010)
- a reference document setting out provisions for the appraisal, approval, financing and
monitoring of the Bank’s projects.
The CEB pays particular attention to the quality of its projects in order to optimise their social
impact. Assistance and monitoring throughout the whole project cycle therefore constitute key
factors in the effective implementation of the projects.
The different stages in the project cycle

Project identification encompasses a number of actions to define the eligibility, feasibility and
objectives of a proposed project, including a description of the means required to achieve the set
objectives. The process of project identification and appraisal thus involves a thorough evaluation
of the financial and technical sustainability of both the project and the borrower.
On the basis of the loan request formulated by the borrower, the Bank evaluates the project’s
objectives and financing plan by carefully analysing its socio-economic impact, technical aspects
and costs, the institutional capacity to manage the project as well as the project’s impact on the
environment.
As soon as a project is approved by the Bank’s Administrative Council, a framework loan
agreement is negotiated and signed by the Bank with the borrower to provide a contractual
basis for the project’s implementation.
After the first disbursement, the Bank’s services carry out regular monitoring and on-site missions
in order to check on the physical progress of the works, compliance with costs and procurement
procedures, and the achievement of the project’s approved objectives and anticipated social
effects. On completion of the project, a final report drawn up by the borrower details the use of
funds and compliance with the objectives and projections approved by the Administrative
Council. At the same time, it provides information on the material and social results obtained. The
Bank also plays a role in respect of any eventual difficulties that could jeopardise the success of
the project as well as an advisory role in solving any such difficulties.
The CEB continually strives to enhance the quality of the projects it finances. Within this policy, the
aim of ex post evaluation is primarily to improve understanding of the social impact of the
Bank’s actions, contribute to increasing the quality of projects and programmes financed by the
Bank and help strengthen the transparency of CEB operations.
The Bank’s Ex Post Evaluation Department (DEP) works on the basis of evaluation programmes,
consisting of a series of evaluations of projects/programmes in one of the Bank’s sectors of
activity. Individual evaluations investigate the performance and quality of projects and
programmes financed by the CEB and assess their impact and sustainability.
Dissemination of the good practices and lessons learned stemming from the results of the ex post
evaluations contributes to organisational learning within the CEB with a view to improving the
planning, selection and design of future projects and programmes, thus increasing the impact of
Bank’s assistance and service to clients.

CEB LENDING TO TARGET COUNTRIES10
3. CEB LENDING TO TARGET COUNTRIES
The objective of this chapter is to provide an overview of the CEB’s project portfolio in the target
group countries, both from a geographic (section 3.1) and sectoral (section 3.2) perspective. This
analysis will be illustrated by concrete examples of financed projects so as to capture the
diversity of the CEB’s experience in the region. Furthermore, section 3.3 will seek to identify
trends in borrowers and financing instruments over the period under discussion. Lastly, section 3.4
will be dedicated to instruments of intervention developed by the CEB in target countries in
addition to its lending instruments.
Over the last twenty years, the CEB has significantly increased its lending to target countries in
line with its strategic orientations. The following figures (as at 31 December 2011) illustrate the
Bank’s commitment to this region:
 Total projects approved (since 1990): € 17 billion to all target countries (of which
€ 11 billion in CEE), compared to € 38 billion approved over the whole period in all CEB
countries of intervention, i.e. about 45% of the total projects approved during this period.
 Total loans disbursed (since 1990): nearly € 12 billion in favour of all target countries (of
which € 7.3 billion in CEE), compared to € 28 billion disbursed in all CEB countries of
intervention, i.e. 43% of total loans disbursed in target group over the period 1990-2011.
 Loans outstanding (as at 31 December 2011): € 6.9 billion (of which € 5.4 billion in CEE),
equivalent to 57% of total CEB loans outstanding (€ 12.1 billion) as at 31 December 2011.
3.1. Trends in regional distribution
Over the twenty years under consideration, CEB lending in favour of the target group countries
has been marked by two major developments:
 a gradual geographic deployment in the CEE region;
 a progressive increase in volumes financed in these countries.
During the period 1990-1994, data reflect exclusively projects financed in Cyprus, Malta and
Turkey. The CEB developed its operations in the CEE region after 1995, when the first CEE
countries joined the Bank. As can be seen in Table 1, the CEB approved its first projects in
Bulgaria, Romania and Lithuania in 1995-1996, Bosnia and Herzegovina, Croatia, “the former
Yugoslav Republic of Macedonia” in 1996-1999, Central Europe (Hungary, Poland, Slovenia, the
Czech and Slovak Republic) in 1997-1999, Estonia and Latvia in 2000-2001, Albania in 2001,
Moldova in 2003, and other Western Balkan countries after 2005. Finally, the CEB’s first loan
operation in Georgia was approved in 2011; but Georgia benefited from three grant projects,
approved by the CEB, in 2008.
The geographic deployment of the CEB’s activities in target countries has progressively
diversified over the years, with some major poles of concentration in Central Europe, Turkey and
Cyprus, and certain countries in South Eastern Europe, mostly in Romania (see Graph 1).
Particular attention should be paid to so-called “transit loans”, which represent 13% of the total
approved in target countries since 1990. Indeed, the CEB has also financed projects in target
countries “indirectly”, i.e. through loans granted to intermediary banks located in non-target
countries, for example in Austria, Germany, Italy and Sweden, for the benefit of the local
banking sectors in target countries, in order to finance projects in these target countries. Projects
are thus intermediated by banks in Western Europe, the CEB’s direct borrowers, which on-lend
the funds to a subsidiary or an associate local bank to fund projects in the target countries. More
detailed information on “transit loans” is provided in Box 3.

CEB LENDING TO TARGET COUNTRIES 11
Graph 1: Geographic distribution of CEB lending in target countries (1990-2011)
Graph 2: Projects approved per country (1990-2011)
At country level, the Bank’s largest borrowers in the target group are Turkey, Poland, Hungary,
Cyprus and Romania (see Graph 2). These five countries represent about 70% of the CEB’s loan
portfolio of the target group. Totalling over € 2 billion, “transit loans” cover a relatively
important share (13%) of the approved projects (see also box 3).
The remaining amounts include projects in Croatia (€ 561 million), Lithuania, Serbia and Slovenia
(roughly € 300 million), between € 200 million and € 250 million in Bulgaria, the Czech Republic
and Malta. The CEB has approved cumulative amounts of projects of between € 100 million and
€ 200 million in Albania, Bosnia and Herzegovina, Latvia, “the former Yugoslav Republic of
Macedonia” and the Slovak Republic. The first loan operation in Georgia involves € 60 million,
approved in 2011. Finally, the CEB has implemented small but significant social projects in
Estonia, Moldova and Montenegro with loan portfolios of less than € 50 million.
In parallel with the progressive geographic diversification of the CEB’s activities in target
countries, we observe a gradual increase in volumes financed per year. In graph 3, amounts
approved over the period 1990-1994, i.e. prior to the accession of CEE countries to the Bank,
represent projects approved in Cyprus, Malta and Turkey.
Central Europe
32%
Bulgaria, Romania
10%Baltic countries
3%
Western Balkans
8%
Cyprus, Malta
11%
Turkey
22%
Moldova, Georgia
<1%
"Transit loans"
13%
Geographic distribution of CEB lending in target countries
Cumulative amounts approved (1990-2011): Total € 17 billion
125 163 222
1 712
236
46 60
561
2 012
297
165
38
183
25
235
2 686
1 468
284
198
295
3 788
2 250
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
AL BiH BG CY CZ EE GE HR HU LT LV MD MK MO MT PL RO SI SK SR TQ "Transit
loans"
in€millions
Projects approved to target countries (1990-2011)

CEB LENDING TO TAR GET COUNTRIES12
Graph 3: Volumes approved in favour of target countries per year (1990-2011)
Graph 4: Cumulative amounts approved and disbursed in target countries per sub-
period (1990-2011)
The strongest increase in CEB lending to the target group can be observed in the last years, over
the period 2005-2009, with around 40% of the total volumes approved and disbursed in the
target group countries over the 20-year period under consideration (see Graph 4).
Indeed, the CEB has significantly intensified its action in target countries during 2005-2009, with
135 projects approved for a total of € 7 billion, representing 60% of the total approved over
the same period. This sharp increase is the result of the main operational objective to strengthen
the Bank’s commitment in favour of target countries, defined in the Development Plan for 2005-
2009. Furthermore, the last two years of the Plan were marked by an unprecedented global
economic and financial crisis, which engendered greater vulnerability, both at economic and
social levels, within the CEB’s countries of intervention, especially in “emerging Europe”. Against
the background of the crisis, the CEB saw increased demand for its financings in 2008-2009,
particularly in favour of social public infrastructure, “green” investments and job creation. This
strong demand for CEB financing continued in 2010-2011 with new projects approved totalling
€ 2.5 billion.
200
544
276
516
328
457
324
91
218
382 378
744
972
1 085
847
1 398
1 967
1 191 1 201
1 385
1 259 1 290
0
400
800
1 200
1 600
2 000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
in€millions
Volumes approved to target countries per year (1990-2011)
1 863
1 471
4 026
7 141
2 549
1 684
629
2 590
4 723
2 161
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
1990-1994 1995-1999 2000-2004 2005-2009 2010-2011
in€millions
Cumulative amounts approved & disbursed per sub-period (1990-2011)
Total approved: € 17 billion
Total disbursed: € 12 billion
Projects approved Loans disbursed

Similarly, loans disbursed in favour of the target group countries have gradually increased over
the years and have been spread over a larger number of countries. Specifically, over the five-
year period corresponding to the Development Plan 2005-2009, disbursements totalled
€ 4.7 billion, representing 58% of all disbursements. As in the case of projects approved, this
amount represents around 40% of the total financed in the target group countries since 1990.
According to the latest Development Plan for 2010-2014, the CEB expects to further develop its
action in the target group countries in the coming years. During the first two years of the Plan
2010 and 2011, new project approvals amounted to € 2.5 billion, representing 58% of total
approvals. Disbursements amounted to € 2.2 billion, equivalent to 59% of total loans disbursed
in 2010 and 2011.
When it comes to loans outstanding, the relative distribution has changed over the years in
favour of the target group countries (see Graph 5), illustrating the progressive development of
the Bank’s operations in these countries. At the end of the year 2004, the distribution was 76/24
in favour of non-target countries. In line with the increase in the CEB’s activities in favour of target
countries, the share of these countries in total loans outstanding went from 24% at end 2004 to
57% at end 2011. In absolute amounts, loans outstanding in target countries reached
€ 6.9 billion at end 2011, while this volume represented only € 2.6 billion at end 2004.
Graph 5: Target/Non-target distribution of loans outstanding (2004-2014)
The objective to continue efforts in favour of target countries, set forth in the Development Plan
for 2010-2014, should lead to these countries representing up to 60% of total loans
outstanding by 2014. This effort is all the more significant in that these countries represent a
17% share in the Bank’s subscribed capital.
24%
27% 29%
35%
40%
48%
54%
57%
60%
76%
73% 71%
65%
60%
52%
46%
43%
40%
0%
20%
40%
60%
80%
100%
2004 2005 2006 2007 2008 2009 2010 2011 Objective
2014
Target countries Other countries

Table 3 below shows cumulative totals approved, disbursed and outstanding per target country
over the period 1990-2011, as at 31 December 2011. For those that joined the Bank before
1990, i.e. Cyprus, Malta and Turkey, figures refer to the CEB’s activities since 1990.
Table 3: CEB activities in target countries: Situation as at 31 December 2011
Cumulative amounts (MEUR) since 1990 Project
approvals
Loan
disbursements
Loans
outstanding
Albania 125 102 101
Bosnia and Herzegovina 163 107 69
Bulgaria 223 124 73
Croatia 561 346 247
Czech Republic 236 55 30
Estonia 46 30 23
Georgia 60 0 0
Hungary 2,012 1,653 1,243
Latvia 297 192 160
Lithuania 165 65 51
Moldova 38 10 10
Montenegro 25 10 10
Poland 2,686 1,757 1,355
Romania 1,468 991 889
Serbia 295 85 73
Slovak Republic 198 75 41
Slovenia 284 213 146
“the former Yugoslav Republic of
Macedonia”
183 55 39
(1) Sub-total 18 CEE countries 9,065 5,870 4,560
Cyprus 1,712 1,265 652
Malta 235 165 68
Turkey 3,788 3,060 823
(2) Other target countries 5,735 4,490 1,543
(3) “Transit loans” 2,250 1,415 807
TOTAL (1+2+3) 17,050 11,775 6,910

3.2. Sectoral perspective
The CEB’s original mandate was to respond to emergency situations, but its scope of action has
gradually widened to include other sectors of activity that directly contribute to strengthening
social cohesion in Europe. Today, CEB lending is structured around three sectoral lines of action:
 Strengthening social integration
 Managing the environment
 Supporting public infrastructure with a social vocation.
Sectoral lines of action Sectors of action
Strengthening social integration  Aid to refugees, migrants and displaced persons
 Housing for low-income persons
 Creation and preservation of viable jobs
 Improvement of living conditions in urban and rural areas
Managing the environment  Natural or ecological disasters
 Protection of the environment
 Protection and rehabilitation of historic and cultural heritage
Supporting public infrastructure
with a social vocation
 Health
 Education and vocational training
 Infrastructure of administrative and judicial public services
Table 4 shows the sectoral breakdown of both project approvals and loan disbursements in
favour of all target countries over the period 1990-2011.
Table 4: Sectoral distribution of total CEB lending in target countries (1990-2011)
Figures as at 31 December 2011
Total CEB lending to target countries (1990-2011)
PROJECTS APPROVED LOANS DISBURSED
M€ % M€ %
Strengthening social integration 9,700 57 7,258 62
Aid to refugees, migrants and displaced persons 330 2 530 5
Housing for low-income persons 1,270 7 993 9
Improvement of living conditions in urban and rural areas 3,280 19 2,165 18
Creation and preservation of viable jobs 4,820 29 3,570 30
Managing the environment 4,730 28 2,905 25
Natural or ecological disasters 2,132 13 1,455 13
Protection of the environment 2,368 14 1,320 11
Historic and cultural heritage 230 1 130 1
Supporting public infrastructure with a social vocation 2,620 15 1,612 13
Health 1,140 7 740 6
Education and vocational training 1,265 7 852 7
Infrastructure of administrative and judicial public services 215 1 20 <1
Total 17,050 100 11,775 100
The sector analysis of the project portfolio will be carried out with a view to identifying sectoral
trends and patterns per geographic area and per sub-period.
As a first step, three target countries – Turkey, Cyprus and Malta – will be considered
separately (section 3.2.a). The 18 Central, Eastern and South Eastern European (CEE) countries
will be then examined as a “region” (section 3.2.b).
Lastly, a more detailed assessment will be carried out in sections 3.2.c, 3.2.d and 3.2.e, per
sectoral line of action and per sector, with an attempt to determine clusters of countries with
similar sectoral features in CEB projects.

3.2.a. Turkey, Cyprus and Malta
The CEB has been an active partner in Turkey’s economic and social development over the past
fifty years. Turkey is one of the eight CEB founding members, ranks as the fifth largest
shareholder with a 7% share in the CEB’s capital and is the largest borrower in the target group.
Some 160 projects approved by the CEB in favour of Turkey represent € 6 billion since 1957,
representing 14% of all CEB approvals over the period. Loans disbursed over the fifty years
totalled almost € 4.5 billion, accounting for 14% of all CEB disbursements. Since 1990, project
approvals have amounted to almost € 4 billion or 22% of total projects approved in target
countries (see Graphs 1&2); loan disbursements represented € 3 billion over this period.
The CEB has supported projects in Turkey in almost all its sectors of action (see Graph 6), mainly
including projects related to the CEB’s statutory priorities involving disaster reconstruction and
prevention, urban and rural modernisation, creation and preservation of jobs in small and
medium-sized enterprises (SMEs), protection of the environment, and to a lesser extent, projects in
the health, housing and education sectors. More recently, the CEB has increasingly focused on
projects dedicated to environmental infrastructure, disaster preparedness and mitigation, and
SME financing.
When engaging in projects in Turkey, the CEB has accepted higher risks than elsewhere. Indeed,
Turkey was and still is rated “below investment grade” by the major rating agencies. However, the
perceived risk has never materialised and all repayments have invariably been made on time.
Graph 6: Sectoral distribution of CEB lending in Turkey (1990-2011)
While Cyprus became a member as early as 1962, only minor projects were financed at the
beginning. However, since 1990 relations have intensified and Cyprus has become the fourth
largest borrower in the target group, with € 1.7 billion of projects approved since 1990. This
amount involves a significant series of environmental projects for the construction or extension of
sewerage or irrigation networks in several municipalities (including one project, approved in
2009, benefiting the two communities in the Greater Nicosia area), the extension of the
electricity distribution network, and the construction and rehabilitation of health and education
infrastructure. Several of these projects have been financed in co-operation with the World Bank
and the EIB. Before 1990, the CEB financed several projects to help refugees displaced by the
conflict that divided the island in 1974. These programmes supported the construction of housing,
the development of water supply infrastructure, the reforestation of certain areas damaged by
the conflict and the development of the road network and small-scale industry.
In Malta, the CEB financed successive stages of the construction of the Mater Dei Hospital (70%
of total CEB lending to Malta) during the 1990s and also contributed to job creation in SMEs.
Prior to this, the CEB had financed the construction and rehabilitation of housing for migrants in
the 1970s.
Aid to refugees, migrants
and displaced persons
3%
Natural disasters
25%
Protection of the
environment
10%
Improvement of living
conditions in urban and
rural areas
23%
Housing for low-income
persons
4%
Creation and
preservation of viable
jobs
26%
Education
1%
Health
8%
Sectoral distribution of CEB lending in Turkey
Total project approvals (1990-2011): € 3.8 billion

3.2.b. Central, Eastern and South Eastern Europe (CEE)
When the CEB started operating in the CEE region in the mid-1990s, its “first” sectors of action
mainly reflected two of the Bank’s statutory priorities, namely aid to refugees, migrants and
displaced persons and aid to victims of natural or ecological disasters. Although their relative
share in the portfolio is today less important, these projects have represented significant volumes
financed over the 20-year period. Furthermore, the health and education sectors received a
specific attention in 1995-1999 and have been regularly present in the portfolio ever since.
Among all the sectors, job creation and preservation in the form of credit for SMEs represents the
most important sector of action over the whole period, with the most significant increase since
2000. Indeed, this sector received 27% of all the approvals in the region during 2000-2004
growing to 37% in 2005-2009. The housing sector also took on particular importance in the CEE
region during the period 2000-2004, representing 26% of total approvals during the period.
In the last five years, CEB lending has gradually diversified into other and/or “new” sectors, such
as urban renewal, energy efficiency, administrative and judicial public services. In particular,
municipal programmes involving investments in social and environmental infrastructure in urban
and rural areas represented more than one third of the approvals during 2005-2009.
In the specific case of the Western Balkan countries, there has been a clear shift from urgent
reconstruction of damaged infrastructure to other sectors such as SME financing, modernisation
and upgrading of municipal infrastructure, health and education, environment and energy
efficiency.
Graph 7: The relative breakdown of project approvals in favour of the CEE region
per sector of action and per sub-period (1995-2011)
This sectoral diversification of CEB lending in the CEE region can be explained by factors such
as changes in national and/or regional priorities: evolving sectoral challenges, needs and
policies; the development of CEB/EU co-operation (see chapter 4 for detailed description) in the
form of co-financing with the EU Structural and Pre-accession Funds due to increasing geographic
and sectoral synergies; increased needs as a result of the financial and economic crisis.
0%
20%
40%
60%
80%
100%
1995-1999
(419M€)
2000-2004
(€2.7bn)
2005-2009
(€6.3bn)
2010-2011
(€1.9bn)
Infrastructure of administrative and judicial
public services
Education and vocational training
Health
Historic and cultural heritage
Protection of the environment
Natural or ecological disasters
Creation and preservation of viable jobs
Improvement of living conditions in urban
and rural areas
Housing for low-income persons
Aid to refugees, migrants and displaced
persons

Table 5 shows the sectoral breakdown of project approvals in favour of CEE countries per five-
year sub-period from 1995 to 2009 and in the last two years 2010 and 2011. It comes as a
complement to Graph 7 with more precise figures.
Table 5: Sectoral distribution of CEB project approvals in favour of the CEE region per
sub-period (1995-2011)
Total projects approved in CEE
(excluding Turkey, Cyprus, Malta)
1995-1999 2000-2004 2005-2009 2010-2011
M€ % M€ % M€ % M€ %
Strengthening social integration 90 21 1,753 64 3,803 61 1,140 60
Aid to refugees, migrants and displaced
persons
56 12 108 4 25 <1 0 0
Housing for low-income persons 15 4 713 26 261 4 116 6
Improvement of living conditions in urban and
rural areas
4 1 188 7 1,211 19 478 25
Creation and preservation of viable jobs 15 4 744 27 2,306 37 546 29
Managing the environment 225 54 579 21 1,708 27 365 20
Natural or ecological disasters 207 49 341 12 492 8 160 9
Protection of the environment 16 4 191 7 1,050 17 190 10
Historic and cultural heritage 2 <1 47 2 166 2 15 1
Supporting public infrastructure
with a social vocation
104 25 415 15 754 12 380 20
Health 30 7 150 5 328 5 62 3
Education and vocational training 74 18 265 10 386 6 143 8
Infrastructure of administrative and judicial
public services
- - - - 40 1 175 9
Total 419 100 2,747 100 6,265 100 1,885 100
Aggregate data according to the three sectoral lines of action (see Graph 8) reflect a continuous
increase in projects related to strengthening social integration, thus becoming the most
significant line of action in the CEE region after 2000, with € 6.8 billion, representing 60% of all
the projects approved over the whole period from 1995 to 2011. Totalling € 2.9 billion,
management of the environment is the second largest sectoral line of action in the CEE region,
representing 25% of the total; it received particular attention at the very beginning, although
with relatively modest amounts, and particularly benefited from substantial CEB financings
between 2005 and 2009. Last but not least, lending to public infrastructure with a social
vocation, for a total amount of € 1.6 billion, represented 15% of all the projects approved over
the whole period in this region and accounted for the most significant share of CEB financings in
the mid-1990s.
Graph 8: The relative distribution of project approvals in favour of the CEE region
per sectoral line of action and per sub-period (1995-2011)
0%
20%
40%
60%
80%
100%
1995-1999 (419M€) 2000-2004 (€2.7bn) 2005-2009 (€6.3bn) 2010-2011 (€1.9bn)
Strengthening social integration Managing the environment Supporting public infrastructure with a social vocation

3.2.c. Strengthening social integration
Social integration has always been at the core of the CEB’s mandate. For the CEB, contributing to
strengthening social integration at operational level means acting in favour of refugees, migrants
and displaced persons, financing housing for low-income persons, facilitating job creation and
preservation through easier credit access for SMEs and improving the living conditions in urban
and rural areas.
Over the past twenty years, this sectoral line has represented close to € 10 billion in terms of
projects approved for all target countries, i.e. 57% of the total approvals. During the same
period, loans disbursed in favour of these countries and this sectoral line of action have totalled
€ 7.3 billion, representing 62% of all disbursements made since 1990 (see Table 4).
3.2.c.1. Aid to refugees, migrants and displaced persons
Aid to refugees, migrants and displaced persons is one of the CEB’s original priorities. Founded
in the post-war context of increased migratory flows to Western Europe (1956), the Bank has
seen subsequent enlargements of the membership, particularly after the fall of the Berlin wall,
which have turned its attention to migratory flows in South-Eastern Europe.
The Bank’s action in this sector aims to facilitate the reintegration of returning migrants or
refugees and to improve the integration of migrants in host countries. The CEB undertakes action
both in providing emergency aid and in undertaking actions in favour of the resettlement and
sustainable integration of the populations concerned. CEB projects have allowed the
(re)integration of thousands of refugees or displaced persons in different contexts across Europe.
In concrete terms, projects in this sector involve the construction and repair of receiving structures
such as reception centres, temporary and permanent housing, and other infrastructure destroyed
by conflicts (such as health and school facilities), education and vocational training, as well as the
technical infrastructure and basic equipment necessary to meet the immediate needs of
populations victims of exceptional situations. These investments target several types of
beneficiaries, namely refugees, internally displaced persons, as well as migrants and ethnic
minorities, such as Roma.
Over the past two decades, the CEB has provided support to these vulnerable populations in
the CEE countries according to the needs expressed by its Member States: first supporting ex-
deportees and rehabilitated political prisoners returning from the former USSR to Lithuania; then
displaced populations and refugees in the Western Balkans (Bosnia and Herzegovina, Croatia,
Serbia) and, more recently, in Georgia; as well as Roma minorities, in Central (Hungary) and
Southern Europe (Bulgaria, “the former Yugoslav republic of Macedonia”). Prior to 1995, the
CEB also intervened in Turkey, Cyprus and Malta, which have also been faced with important
movements of displaced persons or refugees, caused by internal or nearby conflicts.
With a total loan portfolio of € 530 million, the Bank has provided financial support for the
resettlement and reintegration of thousands of refugees and displaced persons in countries,
where conflicts had caused vast movements of populations, and for the integration of migrants or
Roma. In the CEE region, the most important share of CEB loans in favour of refugees and
displaced populations went to the Western Balkans (almost € 200 million), where the CEB
financed projects aimed at reconstruction of basic infrastructure, especially housing.
The CEB has also supported vulnerable populations in exceptional situations through its grant
financing. The Bank provides grants via its Selective Trust Account, almost exclusively for the
benefit of refugees and displaced populations as well as socially vulnerable groups (Roma,
children, etc.). Additionally, a certain number of projects in South Eastern Europe have been
supported by the Bank’s grant resources from trust funds opened with the CEB on behalf of a
donor. More detailed information on grant financing is provided in sections 3.4 and 4.2.

3.2.c.2. Housing for low-income persons
In the housing sector, the CEB finances projects that address the constraints on access to housing,
especially for the less well-off sections of the population. In practical terms, the Bank invests in
the construction or refurbishing of housing for low-income households and can also provide
mortgage schemes. These actions are aimed at facilitating access to home ownership or rental
housing (see Box 2).
In the CEB’s approach, “social housing” is taken to refer to housing provided to persons
experiencing difficulty in obtaining a dwelling, as a tenant or as an owner, on the real estate
market, due to lack of resources. This mission thus translates into the construction or rehabilitation
of housing, either for rent or for ownership, with a view to increasing the supply of affordable
housing. The areas of action specific to “social housing” thus become: supply, accessibility and
security of tenancy of housing units to low and middle-income groups.
In a demand-driven context, the Bank’s activity, while supporting national housing programmes, is
not limited to providing housing for the poorest strata of the population. The social mandate of
the CEB provides a rationale for the Bank to finance housing for a broader range of persons.
Indeed, facilitating access to home-ownership as well as to rental housing contributes to
strengthening social cohesion for people with revenues around the national average and thus
keeps them out of vulnerable groups. The scope of CEB action is thus wider than “social housing”
per se, even though the latter constitutes a priority. The CEB’s main mission therefore translates
into providing decent and affordable dwellings for socio-economically disadvantaged groups of
populations.
In the target group countries, the CEB has contributed to national housing programmes mainly in
Central Europe (Hungary, Poland, the Slovak Republic), Latvia and Romania, later in Moldova
and in the Western Balkan countries (Albania, “the former Yugoslav Republic of Macedonia”,
Serbia) and most recently in Montenegro.
In terms of the types of borrowers, the CEB’s portfolio is quite diversified. Depending on the type
of tenure (access to home-ownership vs. rental housing), the CEB’s intermediary borrowers include
the banking sector, national or local authorities and local or regional government funding
agencies. Moreover, borrowers, such as the banking sector, may be considered as
“intermediaries” distributing mortgages to final beneficiaries in order to help them purchase their
dwelling. On the contrary, public authorities or other public bodies entrusted with responsibilities
in the field of housing, when borrowing from the CEB, generally aim to provide housing for rental
purposes.
Over the past twenty years, the Bank has invested € 1.3 billion in housing projects in target
countries. The CEB financed significant volumes in large-scale housing programmes in the CEE
region, mainly in Hungary (€ 163 million), Poland (€ 360 million) and Romania (€ 252 million),
especially in the mid-2000s, when the CEB satisfied a significant demand for this kind of
infrastructure rehabilitation and construction. The volume and relative share of housing projects in
the total portfolio has decreased in the last five years.
The loan amounts of such projects can vary substantially. The CEB has intervened in major
programmes contributing with € 100-200 million (per loan) in Hungary, Poland and Romania. On
the other hand, it has also financed smaller projects (€ 5-25 million) such as those in Albania,
Latvia, Moldova, Montenegro, the Slovak Republic, which are no less significant in terms of their
social impact.
Today, large “social housing” programmes are relatively less represented in the loan portfolio.
However, this relative decrease should be taken with caution since the CEB has shifted its
attention to energy efficiency investments, which may be classified as “environmental projects”,
but involve the housing sector at the same time. The Bank has undertaken to include the concept
of “green housing” in its operations in recent years, in order to promote housing with a lower
environmental impact. “Green housing” projects have received more modest amounts until now,

but the CEB intends to further develop energy efficiency investments both in the housing sector
and in general in the coming years (see also Box 4).
In the CEB’s integrated approach to sustainable urban development, “green housing” is
considered within a wider “green building” framework. The financing of “green buildings” can
cover residential dwellings and non-residential buildings (such as education and health facilities,
etc.) as well as different components of urban infrastructure. Moreover, in addition to housing
projects, the Bank also finances initiatives in the areas of renewable energy production and
collective urban heating. Since 1997, the Bank has devoted over € 700 million to “green
buildings” in the framework of projects located in the Czech Republic, Hungary, Poland, the
Slovak Republic, Romania, Estonia, Latvia, Lithuania, and within the EU’s “Energy Efficiency
Finance Facility” in Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Montenegro, Romania,
Serbia, “the former Yugoslav Republic of Macedonia” and Turkey.
Box 2 - Sustainable housing and urban development: the CEB’s experience
Housing is a basic need for every human person. As a decisive factor in social cohesion, housing is
a condition for access to employment and for the fulfilment of fundamental human and social
rights. Housing represents one of the main areas of expenditure of European households.
Affordable housing constitutes an essential part of the quality of life. The CEB possesses great
expertise in the financing of projects in this field.
The CEB has dedicated € 16 billion, i.e. around half the total amount of its lending, to housing
and associated infrastructure projects. This amount includes projects for housing and housing-
related infrastructure (€ 10 billion) and also covers cross-sector operations with housing and
urban components (€ 6 billion).
Pursuing an integrated approach in its operations, the CEB brings its competence in housing to
bear in a larger cross-sector perspective, such as the reconstruction of housing destroyed by
natural disasters, the provision of housing for refugees, displaced persons or migrants, the
provision of shelter for children in vulnerable situations, the construction of accommodation for the
elderly or persons with disabilities. The financing of housing projects is also an important part of
comprehensive urban renewal programmes. Finally, the CEB pays particular attention to the
residential sector as a potential vector for environmental sustainability through improvements in
energy efficiency.
In the years to come, demographic, socio-economic and environmental developments will have an
immediate and medium-term impact on housing markets throughout Europe. Overall demand will
diversify, raising significant investment needs. Environmental concerns will undoubtedly constitute
a challenge in the vast majority of integrated urban renewal programmes. As the sole social
development bank in Europe, the CEB will be expected to promote and integrate environmental
and energy efficiency standards into all its activities, most obviously when it comes to investment
in “green” housing and urban renewal.
A full account of the Bank’s experience to date in the field of housing is now available in the
form of a study entitled “Sustainable Housing and Urban Development: the CEB’s
Contribution”. The study also examines future trends and needs in the housing markets and
provides some reflections on the CEB’s activities in the coming years.
The full text of the study is available on the CEB’s website.

3.2.c.3. Creation and preservation of viable jobs
Micro and small and medium-sized enterprises (SMEs) play a major role in sustainable social and
economic development since they have a high potential for generating jobs, lowering regional
disparities and strengthening competitiveness. At the same time, micro-enterprises and SMEs
today may suffer not only from constrained access to finance but also from a scarcity of well-
trained skilled and adaptable workers, thus underlining the importance of improving the quality
and relevance of education and vocational training programmes.
Recognising this sector as an important driver for ensuring sustainable economic and social
development, the CEB provides long-term loans for productive investment projects (fixed assets)
for the prime purpose of promoting the creation and preservation of viable jobs by facilitating
access to credit. These projects target micro, small and medium-sized enterprises, as well as
entities exercising craft activities or family enterprises carrying out regular economic activity.
Over the past twenty years, the CEB has allocated € 4.8 billion to the creation and preservation
of viable jobs in the target group and implemented projects in all target countries except
Georgia. This sector represents the most substantial sector of CEB investments in the target
group, with 28% of total project approvals in favour of these countries.
Moreover, volumes and the percentage of total lending have substantially increased over the
period considered. For instance, in CEE countries (see Table 5), SME financing for the creation
and preservation of viable jobs represented only 4% of all investments between 1995 and
1999 (€ 15 million), but increased sharply during 2000-2004 with 27% of total lending to the
CEE region (€ 744 million) to reach € 2.3 billion or 37% of the total amount approved over the
period 2005-2009. This trend continued in 2010-2011, since this sector received € 546 million
or 29% of all approvals in favour of the CEE region in the last two years. Similarly, CEB lending
to the SME sector reached € 700 million in Turkey.
This substantial and rapidly-growing SME financing can be explained by impressive economic
growth in the CEE region in the 2000s accompanied and supported by the progressive
development and diversification of the local banking sector (with a high share of foreign bank
ownership), the CEB’s main borrower in this sector. In this context, the CEB has provided
substantial aid in the form of credits for SMEs to promote job creation and, more generally,
development of the private sector. Since the crisis hit emerging Europe in 2008, the CEB has
continued to provide its support to SMEs so as to limit the effects of credit crunch. Over the last
four years (2008-2011), the CEB devoted € 1.7 billion or 34% of all its investments in target
countries (€ 5.1 billion over the period) to the creation and preservation of viable jobs in SMEs.
Against the crisis background and as a complement to investments in employment and SMEs, the
CEB has also strengthened its participation in investment programmes aimed at public social
infrastructure.
The total amount approved in this sector includes € 1.4 billion in “transit loans” (see Box 3) via
KfW Bankengruppe (Germany), Intesa Sanpaolo and Unicredito (Italy), Raiffeisen Bank (Austria)
and Skandinaviska Enskilda Banken (Sweden), invested in micro-enterprises and SMEs located in
target countries. “Transit loans” for SME financing represented two thirds of all “transit loans”
distributed among all CEB sectors. Furthermore, the volume of “transit loans” in the SME sector
grew steadily as of 2005, totalling more than € 1 billion over the period 2005-2009. However,
their volume and share in total CEB lending have decreased since 2009, partly due to the lack of
demand and to the increased credit risk because of the crisis, but also as a result of increased
demand for CEB lending from state development banks in target countries.
Also eligible for CEB financing are micro-credit programmes in favour of micro-enterprises, i.e.
with less than 10 permanent employees and an annual turnover below € 2 million. Micro-credit
addresses “disadvantaged persons” such as unemployed or inactive people, those receiving
social assistance, ethnic minorities, immigrants, refugees, women, etc., who wish to go into self-
employment but do not have access to traditional banking services. In this sense, micro-credit

targets vulnerable population groups and therefore helps fight against economic and social
exclusion, especially in rural areas. With the objective of providing beneficiaries with viable
economic opportunities, the CEB has developed micro-credit programmes in order to facilitate
the creation of small businesses and vocational training. Small micro-credit projects have been
implemented in Albania, the three Baltic countries, Bosnia and Herzegovina, Bulgaria, Croatia,
“the former Yugoslav Republic of Macedonia”, the Czech Republic, Poland, Slovenia as well as
through “transit loans”, implemented with UniCredito and Intesa Sanpaolo.
Box 3 - Financing projects through “transit loans”
The CEB has made significant use of “transit loans”, i.e. loans granted to intermediaries outside
the target group to fund projects in target group countries. Totalling € 2.3 billion, they accounted
for 14% of the projects approved in target countries in the period from 1990 to 2010 and for
18% when considering the 2000-2010 period.
Characteristics of “transit loans”
CEB loans are said to be “intermediated” when borrowers from the CEB provide funding for
legally separate third parties responsible for implementing one or more projects. The relevant
intermediaries must:
- assume operational responsibility for identifying final beneficiaries;
- transfer the funds to the final beneficiaries;
- effect the repayment to the CEB of the loans granted to the final beneficiaries, the CEB’s
credit risk being that of the intermediaries;
- assume responsibility for reporting to the CEB on the operations carried out.
The various benefits of “transit loans” for the CEB
Firstly, “transit loans” meet the dual requirement of fostering investments in the target group
while minimising the credit risk. In the context of “intermediated loans”, the risk borne by the
CEB is the risk of the financial intermediaries, not that of the final beneficiaries. Because of the
expertise of the financial intermediaries, which are themselves often monitored by international
rating agencies or are backed by guarantees from governments or financial institutions, the
credit risk borne by the CEB is reduced.
Secondly, the CEB enjoys a broader spectrum of final beneficiaries by operating through
“transit loans”. With the aid of financial intermediary networks, the CEB is able to reach final
beneficiaries it would not otherwise have access to.
Thirdly, intermediaries can also offer specific expertise in a given sector and/or geographic
area, which the CEB is unable to provide itself because of its limited resources. The CEB can
therefore focus its efforts both upstream, by seeking to identify the intermediaries most capable
of carrying forward its action, and downstream, in the context of monitoring, by assessing the
performance of the intermediaries in relation to the objectives pursued.
In terms of the sectors concerned, “transit loans” have mainly concerned lending to small and
medium-sized enterprises (SMEs) for the preservation and/or creation of jobs, funding for social
housing and investments in small municipal infrastructure projects, which are naturally suited to the
use of intermediaries. This is all the more true since the size of the loans for the sub-projects is
sometimes small, as in the case of mortgage loans or micro-credit. With € 1.4 billion, “transit loans”
for SME financing represented two thirds of all “transit loans” distributed among all CEB sectors.
The volume and share of “transit loans” in total CEB lending in favour of target countries can also
be explained by the significant presence of Western European banks in the CEE banking
systems.

3.2.c.4. Improvement of living conditions in urban and rural areas
By facilitating access to credit to modernise local infrastructure, CEB projects, financed in
conjunction with national or local authorities and/or transiting via the banking sector, can involve
the construction or rehabilitation of:
- Economic infrastructure: urban transport or local transportation networks in rural areas,
development of industrial zones, rehabilitation of industrial brown-field sites;
- Social infrastructure: basic educational and medical infrastructure, playgrounds, green
areas;
- Utilities: wastewater treatment, water, electricity and gas supplies;
- Irrigation networks in rural areas.
The CEB finances projects in priority in run-down urban areas and neighbourhoods lacking in
urban infrastructure and/or public amenities, in accordance with its primary mission of
strengthening social cohesion. In rural areas, projects must concern regions characterised by a low
population density or activities in fields such as agriculture, forestry, aquaculture and fishing,
defined by the national legislation.
Since a vast majority of projects are targeted to developing a specific geographic area, they
usually entail a multi-sector approach involving investments in housing, education, health,
environment, historic heritage or administrative and judicial public services. Within multi-project
programmes that require a large, global borrower, the CEB has mainly worked with the local
banking sector, in several cases via “transit loans”. On the other hand, the Bank is also committed
to developing operations with national, local or regional government authorities, in CEE countries
in particular.
Over the past twenty years, approved loans in this sector totalled € 3.3 billion for the benefit of
the target countries. With 19% of total approvals, this represents the second largest sector of
action for the CEB in the target group. Between 1990 and 1999, investments represented 30%
of total CEB lending to the region (€ 1 billion) and were exclusively aimed at rural areas in
Cyprus and Turkey. After 2000, the CEB started financing urban and rural projects in the CEE
countries, mostly through “transit loans”. More rapid development came after 2004 and 2007,
i.e. after twelve target countries joined the EU, with € 1.7 billion approved since 2005. In 2009
alone, € 463 million or 33% of all approvals in the target group were committed for the
improvement of living conditions in urban and rural areas. In the last two years 2010 and 2011,
this sector of action has continued to benefit from significant investments, totalling € 518 million
or 20% of all new approvals in the target group.
This remarkable increase has been closely linked to the EU enlargement process and to a need
for national and local authorities for co-financing EU funds. A large and still growing number of
projects are co-financed with EU Structural Funds, mainly in Hungary, Poland, the Czech and
Slovak Republics, Slovenia and the Baltic States. Similarly, a number of these projects put the
CEB in a position to cooperate with the EIB. Furthermore, the CEB has financed, in co-operation
with the EU, municipal infrastructure projects in EU candidate and potential candidate countries,
with EU Pre-accession Funds, mainly in Albania, Bosnia and Herzegovina, Croatia, Serbia and
Turkey.

FINANCINGSOCIALPROJECTSINCEBTARGETCOUNTRIES:ACHIEVEMENTSANDCHALLENGES
ExamplesofCEBprojects:STRENGTHENINGSOCIALINTEGRATION
1.Aidtorefugees,migrantsanddisplacedpersons
CountryAmount
approved
Yearof
approval
Projectobjectives
Bosniaand
Herzegovina
8.02004Rehabilitationofthehousingstockdamagedduringthewarinordertoprovidesustainablereturnsupportto
some4,500internallydisplacedpersonsthenlivingintemporaryaccommodationsuchascollectivecentres
andalternativeaccommodation
Bulgaria8.72000-2001ConstructionandrehabilitationofhousingandbasicinfrastructureinfavourofRomalivingindisadvantaged
districtsintheMunicipalitiesofSofiaandPlovdiv
Croatia69.02000,2003Reconstructionofdamagedhousesandbasicmunicipalinfrastructureinordertosupportthereturnand
resettlementofrefugeesanddisplacedpersons,incollaborationwithlocalauthoritiesandUNHCR
Georgia1.02008Grantassistanceof€1million,channelledthroughUNagencies,foremergencyrelieftopeopledisplacedby
theconflictthatoccurredinAugust2008.TheCEBhelpedrehabilitatecollectivecentres(UNHCR),rebuild
basicservicesandlivelihoods(UNDP)andcreateacommunityreadingcentre(UNICEF)
Hungary5.02005Implementedwithintheframeworkofthe“DecadeofRomaInclusion2005-2015”,acomprehensivepilot
projectaimedatthesocialintegrationofRomabyaddressingtheserioushousing,education,healthand
employmentproblemsoftheRomacommunity.Investmentsmainlyconcentratedontheprovisionofnew
dwellings,rehabilitationofthehousingenvironmentandimprovementstorelatedsocialandtechnical
infrastructure,includingtheimprovementofsanitaryandenvironmentalconditions.
Lithuania10.01997Provisionofhousingforex-deporteesandtheirfamiliesreturningfromtheformerUSSR(5,400beneficiaries),
aimedatfacilitatingtheirsocio-economicintegration
Moldova4.92006Provisionofrentalhousingunitstosome1,500registeredrefugeesandsocially-vulnerablesegmentsofthe
population,withintheframeworkofanationalstrategy
Serbia2.02005ConstructionofhousingunitsinBelgradeforrefugeeorformerrefugeehouseholdsandothervulnerable
groupsthatcannotaccessdecenthousingsolutionsthroughthefreemarket

2.Housingforlow-incomepersons
CountryAmount
approved
Yearof
approval
Projectobjectives
Albania15.02006Provisionofhousingforvulnerablepersonssuchaspoorpersons,victimsofviolence,migrants,peoplewith
disabilities,andorphanswhohavenoaccesstotheformalhousingmarket
“theformer
YugoslavRepublic
ofMacedonia”
25.42009Constructionof37buildingswithsome1,700rentalhousingunitsinfavourofvulnerablebeneficiaries,suchas
residentsofareasaffectedbynaturaldisasters;orphansattainingthelegalageforleavinginstitutional
accommodation;Roma;dependentordisabledhouseholds;permanentlyunemployedandwelfarerecipients;
andsingleparentswithyoungchildren
Latvia18.82001Participationinthe“HousingDevelopmentLendingProgramme”,implementedwiththeGovernmentand
MortgageandLandBankofLatvia,mainlythroughtherehabilitationofmulti-storeyapartmentbuildingsand
thecompletionofunfinishedbuildings,inco-operationwithlegalhousingentitiesandsocialhousingproviders
Moldova18.32006,2011Provisionofsustainablesocialhousingtolow-incomepersonsandvulnerablepopulationsgroups
Montenegro25.02010Co-financingofasubsidisedmortgageschemewiththeGovernment,toallowaccesstopropertyforaround
1,000households,eligibleforsocialhousing,butexperiencingproblemsonthefreemarket
Poland360.02001,2002Constructionandmodernisationof26,000socialdwellingsforlow-andmiddle-incomefamilies,givingthem
accesstodecentandaffordablehousingintheregulatedrentalsector,inco-operationwiththeGovernment
andBankGospodarstwaKrajowego
Romania251.72001,2002,
2005
Constructionandrehabilitationoftherentalsocialhousingsectorthroughoutthecountry,especiallyforyoung
peopleinthe18-35agebracketlivingonlowincomes,withinalarge-scalenationalhousingprogramme
Serbia30.02007Provisionofmortgagestolow-andmiddle-incomehouseholds(viaIntesaSanpaoloGroup)tofinancethe
purchaseofprimaryresidences,especiallyinthemaincitiesofSerbia
Serbia32.02010Constructionofaround1,700newhousingunitsundertwonon-profitsocialhousingschemes:publicrental
housingandowner-occupiedhousing.Throughthisproject,theSerbianauthoritiesaimtoimproveliving
conditionsfortargetedpopulationswhodonothaveaccesstohousingunderexistingmarketconditions.This
objectivewillbeachievedbyestablishingthesustainablehousingfinancemechanismderivingfromtheSocial
HousingLawadoptedinAugust2009.
SlovakRepublic8.12000Renovationandrevitalisationofthehousingstock,includingsustainablerepairsandrefurbishmentofcommon
partsinmulti-familyhigh-riseresidentialbuildings,implementedwiththeSlovakGuaranteeandDevelopment
Bank(SZRB)

3.Creationandpreservationofviablejobs
CountryAmount
approved
Yearof
approval
Projectobjectives
Albania5.02008Partialfinancingofproductiveinvestmentprojectsinmicro-andsmall-sizedenterprisesatnationallevel,
especiallyinruralareas,implementedwiththeGovernmentwithinthe“ProgrammeforSustainable
DevelopmentinRuralMountainAreas”andtheMountainAreaFinanceFund(MAFF)
Bulgaria125.02002-2010CreditlinestoSMEsthroughtheBulgarianDevelopmentBank(50M€;2002,2004,2009,2010),
RaiffeisenbankBulgaria(40M€,2003,2006),RaiffeisenLeasingBulgaria(30M€;2005,2008)andSociété
GénéraleExpressbank(5M€;2010)
CEB/EU/KfW
SMEFinanceFacility
412.52000-2006CreditlinestoSMEsbyassistingcreditinstitutionsinthenewEUmemberstatesindevelopingtheirloan
operationswithSMEs
Croatia108.02001,2008,
2009
Partialfinancingofproductiveinvestmentprojectsinmicro,smallandmedium-sizedenterprisesthroughout
Croatia,implementedthroughtheCroatianBankforReconstructionandDevelopment(HBOR)
Estonia,Latvia,
Lithuania
15.02002-2003
2007
Micro-creditprogrammesinsupportofwomen’sentrepreneurship,implementedwiththelocalbankingsector
“theformerYug.
Rep.ofMacedonia”
12.02008Productiveinvestmentsinmicro-andsmallenterpriseswithProCreditBanktosupportjobcreationinacountry
facingveryhighunemploymentlevels
Poland480.02004,2007,
2008,2010
Partialfinancingofproductiveinvestmentprojectsinmicro/smallandmedium-sizedenterprisesthroughout
Poland,extendedtoend-beneficiariesintheformofinvestmentloansthroughPKOBankPolski(250M€;
2008,2010),andextendedintheformofleasesviaEuropejskiFunduszLeasingowy(180M€;2004,2008)
andRaiffensenLeasingPolska(50M€;2007)
Slovenia120.02004,2005,
2009
Partialfinancingofproductiveinvestmentsub-projectsundertakenbyexistingandstart-up,micro-,small-and
medium-sizedenterprises,financedwithNovaKreditnaBankaMaribor(20M€;2004),RaiffeisenKrekova
Banka(30M€;2005),NovaLjubljanskaBanka(70M€;2005,2009)
“Transitloans”
(Italy)
627.02003-2008ParticipationinaseriesofcreditprogrammestoSMEs,includingmicro-credit,locatedinCroatia,Hungary,
CzechandSlovakRepublic(90M€;2003-04,2006),BosniaandHerzegovina,Serbia(37M€;2005-2007)
withIntesaSanpaolo,andinothertargetcountriesthroughUnicreditoItaliano(500M€;2005,2006,2008)
Turkey550.02003,2005,
2009-2010
FinancingofproductiveinvestmentscarriedoutbyeitheralreadyexistingornewlycreatedSMEsthroughout
thecountry,withtheGovernment(200M€;2003),TürkiyeVakiflarBankasi–‘Vakifbank’(100M€;2005),
TürkiyeSınaiKalkınmaBankası(200M€;2005,2009)andTürkiyeKalkınmaBankası(50M€;2010)

4.Improvementoflivingconditionsinurbanandruralareas
CountryAmount
approved
Yearof
approval
Projectobjectives
Albania40.02009Rehabilitationofsecondaryandlocalroadsthroughoutthecountry,implementedwiththeAlbanian
DevelopmentFundandtheWorldBank
Bosniaand
Herzegovina
10.02007Modernisationandrehabilitationoflocalinfrastructure(roads,streetlighting,watersupply,sewage,
communityamenities,etc.)withRaiffeisenBankBosnaiHercegovina
CEB/EU/KfW
MunicipalFinance
Facility
72.52003-2009Tripartiteco-operationprogrammeinCentralandSouthEasternEuropeaimedatincitinglocalbanksto
expandtheirlendingtomunicipalitiesforsmallerprojectsinvolvingpublicandprivatesocialinfrastructure
constructionandrehabilitation,includinginthesectorsofenvironmentalprotection,healthandeducation
Croatia25.52004Construction,reconstructionand/orequipmentofwatertanks,sewagecollectionnetworks,treatmentfacilities,
primaryhealthcarefacilitiesandclinics,schoolfacilities,andsocialwelfarehomes,withinthe‘National
ProgramofIslandDevelopment’,inordertohelphaltandreversedepopulationoftheislands
CzechRepublic120.02009
2011
Constructionandmodernisationofmunicipalinfrastructureintheareasoftransport,culturalandeducational
amenities,andsocialservices(socialcentres,day-carecentres,schools,homesfortheelderly,etc.),financed
withCzechMoravianGuaranteeandDevelopmentBank(50M€;2009)andKomercniBanka(70M€;2011,in
parallelfinancingwithEUStructuralFunds)
Estonia,Latvia,
Lithuania
200.02009Rehabilitationoftheroadandtransportnetworksaswellasbasiceducational,medicalandsocio-cultural
amenitiesthroughtheSkandinaviskaEnskildaBankenGroup
Hungary320.02006
2009
2010
Modernisationofmunicipalenvironmental,culturalandhealthcareinfrastructure,implementedwithMagyar
FejlesztésiBank(MFB),withintheframeworkoftheMunicipalInfrastructureDevelopmentLoanProgramme
launchedin2004bytheMFB
Lithuania130.02009ParticipationintheStateInvestmentProgramme2009-2011targetedtofinancinginvestmentsinsocial
infrastructureinthewakeofthesevereeconomicdownturn
Poland784.02005-2011Modernisationofpublicamenitiesintheareasofhealth,education,urbantransportationandenvironmental
protection,inco-operationwithRegionsofLodzkie,Malopolska,Mazovia,PodkarpackieandPomerania,and
CitiesofKatowice,Krakow,Lodz,WarsawandGdansk
Romania10.01999Implementationofsmall-scalesub-projectsaimedatpovertyalleviationandcommunity-drivendevelopmentin
poorruralcommunities,co-financedwiththeWorldBank

3.2.d. Managing the environment
For the CEB, sustainable management of the environment is both a sectoral line of action and a
constant requirement in its projects, since the CEB systematically takes into account environmental
aspects of all projects it finances, in each of its sectors of action. The CEB’s contribution towards
building sustainable communities therefore takes place through the integration of environmental
considerations in all its lending operations. CEB projects are designed and implemented in such a
way as to optimise social and environmental benefits, minimise negative environmental impacts,
and comply with appropriate environmental standards (cf. CEB’s Environmental Policy).
To help foster more responsible management of the environment, the CEB finances projects that:
- Undertake sustainable, long-term preventive action to protect populations from the
consequences of natural and ecological disasters, including floods, landslides, fires,
avalanches and earthquakes;
- Provide emergency aid in the aftermath of natural or ecological disasters;
- Contribute to protecting and improving the environment;
- Aim at preserving historic and cultural heritage.
Over the past twenty years, this sectoral line has represented € 4.7 billion in terms of projects
approved for the target countries, i.e. 28% of total approvals. During the same period, loans
disbursed in favour of these countries totalled € 2.9 billion, or 25% of all disbursements made
since 1990 (see also Table 4).
3.2.d.1. Natural or ecological disasters
Aid to victims of natural or ecological disasters constitutes one of the CEB’s two statutory
priorities, together with aid to refugees, migrants and displaced persons. Projects in this sector
involve the reconstruction or rehabilitation of destroyed or damaged infrastructure, in particular
housing and basic infrastructure, such as water supplies, waste water and solid waste treatment,
electricity and gas supplies.
Enhancing the effectiveness and sustainability of the CEB’s contribution to helping populations
manage natural risks has meant shifting the operational focus from immediate emergency
response to long-term preventive action. This is reflected by the Bank’s pro-active approach to
tackling climate change related events first and foremost through adaptation and mitigation
rather than emergency reconstruction. Within this sustainability perspective, the CEB’s actions
have steadily evolved in favour of prevention so that the breakdown of the CEB’s actions
between prevention and reconstruction over the past five years has been approximately 50/50.
The CEB projects that help protect populations and livelihoods from damage arising from natural
disasters aim at providing lasting solutions for reducing vulnerability to natural disasters,
reversing environmental degradation and promoting the Member States’ sustainable
development and adherence to national and international environmental standards.
Over the past twenty years, projects in this sector have totalled € 2.1 billion in target countries,
located in Bosnia and Herzegovina, Bulgaria, Hungary, Poland, Romania, Serbia, the Slovak
Republic, Slovenia and Turkey. These projects have mainly been implemented with central and
local government authorities.
As a statutory priority, this sector has always represented a substantial share of CEB loans in the
target region. In cumulative amounts over twenty years, it has represented 13% of total lending
to the target group. Although the relative share of this sector (in total lending to the target
group) has decreased over the years, absolute volumes invested in this sector have continuously
increased with a clear shift towards from reconstruction to preventive measures. In effect, in the
1990s, the Bank’s first actions were aimed at post-disaster rehabilitation, after floods in Central
Europe or earthquakes in Slovenia and Turkey. However, since the beginning of the 2000s, the
CEB has implemented significant large-scale preventive projects in the region, mostly in Hungary,
Poland, Romania and Turkey, while still paying attention to post-disaster support in the region.

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