CHAPTER IV

The financial envelope referred to in point (a) of Article (6)(2) shall cover the European Fund for Sustainable Development Plus (EFSD+) and the External Action Guarantee. The purpose of the EFSD+ as an integrated financial package supplying financial capacity in the form of grants, technical assistance, financial instruments, budgetary guarantees and blending operations referred to in Article 27(1) of this Regulation shall be to support investments and increase access to financing, as a means of contributing to the achievement of the objectives and general principles laid down in Articles 3 and 8 of this Regulation, and, where relevant, the objectives of the IPA III Regulation while maximising additionality and development impact and delivering innovative products, including to SMEs. The EFSD+ shall in particular foster sustainable and inclusive economic, environmental and social development, transition into sustainable value-added economy and a stable investment environment. It shall also promote socio-economic and environmental resilience in partner countries with a particular focus on the eradication of poverty. The EFSD+ shall thus contribute to the reduction of socio-economic inequalities, sustainable and inclusive growth, climate change adaptation and mitigation, environmental protection and management, the creation of decent jobs on the basis of the core ILO labour standards, economic opportunities, skills and entrepreneurship, socio-economic sectors, including social enterprises and cooperatives, SMEs, sustainable connectivity, the support to vulnerable groups, the promotion of human rights, gender equality and the empowerment of women and young people, as well as addressing specific socio-economic root causes of irregular migration and root causes of forced displacement, in accordance with the priority areas outlined in Annex V and relevant indicative programming documents. Special attention shall be given to countries identified as experiencing fragility or conflict, LDCs and heavily indebted poor countries, including by providing support for institutional capacity building, economic governance and technical assistance. The External Action Guarantee shall support the EFSD+ operations covered by budgetary guarantees in accordance with Articles 32 to 39 of this Regulation. The External Action Guarantee shall also support macro-financial assistance and loans to third countries referred to in Article 10(2) of Regulation (Euratom) 2021/948. Under the External Action Guarantee, the Union may guarantee operations, under Guarantee agreements signed between 1 January 2021 and 31 December 2027, up to EUR 53449000000. The Commission is empowered to adopt a delegated act in accordance with Article 44 to amend the maximum amount of the External Action Guarantee by up to 20 %. The provisioning rate shall range between 9 % and 50 % depending on the type of operations. A maximum amount of EUR 10000000000 from the Union budget may be used to provision the External Action Guarantee. The Commission is empowered to adopt delegated acts in accordance with Article 44 to amend this maximum amount to ensure that the provisioning amount reflects the amount and the provisioning rates of the External Action Guarantee, taking into account the type of guaranteed operations. The provisioning rate for the External Action Guarantee shall be 9 % for the Union’s macro-financial assistance and for budgetary guarantees covering sovereign risks associated with lending operations. The provisioning rates shall be reviewed at least every three years from the date of application of this Regulation laid down in Article 51. The Commission is empowered to adopt delegated acts in accordance with Article 44 to amend the provisioning rates. The External Action Guarantee shall be considered as a single guarantee in the common provisioning fund established by Article 212 of the Financial Regulation. The EFSD+ and the External Action Guarantee may support financing and investment operations in partner countries in the geographical areas referred to in Article 4(2). The provisioning of the External Action Guarantee shall be financed from the budget of the relevant geographic programmes established by point (a) of Article 6(2) and shall be transferred into the common provisioning fund. The EFSD+ and the External Action Guarantee may also support operations in beneficiaries listed in the relevant Annex to the IPA III Regulation. The funding for those operations under the EFSD+ and for the provisioning of the External Action Guarantee shall be financed from the IPA III Regulation. The provisioning of the External Action Guarantee for loans to third countries referred to in Article 10(2) of Regulation (Euratom) 2021/948 shall be financed from that Regulation. The provisioning referred to in Article 211(2) of the Financial Regulation shall be constituted on the basis of the Union’s total liabilities authorised under this Regulation. The annual amount of provisioning required may be constituted during a period not exceeding seven years. The provisioning of guarantees authorised under Regulation (EU) 2017/1601 and of guarantees, financial assistance and Euratom loans to third countries authorised under basic acts whose provisioning is governed by Regulation (EC, Euratom) No 480/2009 shall continue to follow the provisions of those Regulations. The net assets on 31 July 2021 of the EFSD Guarantee Fund and of the Guarantee fund for external actions established by Regulation (EU) 2017/1601 and Regulation (EC, Euratom) No 480/2009, respectively, shall be transferred into the common provisioning fund for the purpose of provisioning the budgetary guarantees authorised under Regulation (EU) 2017/1601 and the guarantees, financial assistance and Euratom loans to third countries authorised under basic acts whose provisioning is governed by Regulation (EC, Euratom) No 480/2009. The EFSD+ shall be composed of regional investment platforms within the regional areas laid down in Article 4(2) of this Regulation and in the IPA III Regulation and established on the basis of the working methods, procedures and structures of the existing external blending facilities of the Union, which may combine their blending operations and External Action Guarantee operations under the EFSD+. The Commission shall ensure the management of the EFSD+. In ensuring the management of the EFSD+, the Commission shall be advised by a strategic board (the ‘EFSD+ strategic board’), except in the case of the operations covering the Western Balkans’ beneficiaries listed in the relevant Annex to the IPA III Regulation, which shall have its specific strategic board. The EFSD+ strategic board shall advise the Commission on the strategic orientation and priorities of External Action Guarantee investments under the EFSD+, including for the investment windows referred to in Article 36, and contribute to their alignment with the guiding principles and objectives of the Union’s external action, development policy, European Neighbourhood Policy, as well as with the objectives set out in Article 3 and the purpose of the EFSD+ as set out in Article 31. The EFSD+ strategic board shall also support the Commission in setting overall investment goals as regards the use of the External Action Guarantee to support EFSD+ operations and monitor an appropriate and diversified geographical and thematic coverage for investment windows. The EFSD+ strategic board shall also support overall coordination, complementarity, and coherence between the regional investment platforms, between the three pillars of the External Investment Plan, between the External Investment Plan and the Union’s other efforts on migration and on the implementation of the 2030 Agenda, including the fight against climate change, as well as with Union external programmes and financing instruments. The EFSD+ strategic board shall be composed of representatives of the Commission and of the High Representative, of all Member States and of the EIB. The European Parliament shall have observer status. Contributors, eligible counterparts, partner countries, relevant regional organisations and other stakeholders may be given observer status, where appropriate. The EFSD+ strategic board shall be consulted prior to the inclusion of any new observer. The EFSD+ strategic board shall be co-chaired by the Commission and the High Representative. The EFSD+ strategic board shall meet at least twice a year and, when possible, adopt opinions by consensus. Additional meetings may be organised at any time by the chair or at the request of one third of its members. Where consensus cannot be reached, the voting rights as agreed during the first meeting of the EFSD+ strategic board and laid down in its rules of procedure shall apply. The rules of procedure shall set out the framework regarding the role of observers. The minutes and agendas of the meetings of the EFSD+ strategic board shall, following their adoption, be made public. The Commission shall report annually to the EFSD+ strategic board about the progress made in respect of the implementation of the EFSD+. The strategic board covering the Western Balkans shall inform on progress made on the implementation of the guarantee instrument for that region to complement the abovementioned reporting. The strategic boards shall examine the evaluation reports referred to in Article 42(5) and shall take them into account. The EFSD+ strategic board shall regularly organise a consultation of relevant stakeholders on the strategic orientation and implementation of the EFSD+. The existence of the EFSD+ strategic board and the strategic board covering the Western Balkans shall not influence the need to have a single, unified EFSD+ risk management framework. The risk management function for guarantees under the EFSD+ shall take into account the objectives and principles of the Instrument. Risk assessment and remuneration methodologies under EFSD+ shall be consistently applied to all investment windows, including those referred to in Article 36. A technical risk assessment group shall be established by the Commission. The Commission shall ensure an independent, impartial and inclusive high-quality function of the technical risk assessment group. The Commission shall also ensure that information and analysis are shared in a timely, transparent and inclusive manner with all Member States, with due regard to confidentiality. The composition, rules of procedure and working methods of the technical risk assessment group shall be inclusive, open to experts from the EIB, other eligible counterparts and interested Member States, and shall be presented to the EFSD+ strategic board. The Commission shall disclose to the European Parliament and the Council the composition, terms of reference and rules of procedure of the technical risk assessment group and ensure the impartiality and absence of conflict of interest of its members. During the application period of the EFSD+, the EFSD+ strategic board shall, as soon as possible, adopt and publish guidelines setting out how conformity of EFSD+ operations with the purpose, objectives and eligibility criteria set out in Articles 31 and 35 is to be ensured. The operational boards of regional investment platforms, taking into account the advice of the strategic board concerned and relevant risk assessments, shall support the Commission at the implementation level in defining regional and sectoral investment goals and regional, sectoral, and thematic investment windows and shall formulate opinions on blending operations and on the use of the External Action Guarantee covering EFSD+ proposed investment programmes. The financing and investment operations eligible for support through the External Action Guarantee shall be consistent and aligned with Union policies, the relevant programming documents, as well as with the partner countries’ strategies and policies. They shall in particular support the objectives, general principles and policy framework of the Instrument and, where relevant, the IPA III Regulation, with due regard to the priority areas laid down in Annex V to this Regulation. The External Action Guarantee shall support financing and investment operations which comply with the conditions set out in points (a) to (e) of Article 209(2) of the Financial Regulation concerning in particular the need to achieve additionality, including by addressing market failures or sub-optimal investment situations, alignment of interest of the eligible counterparts, avoiding the distortion of competition, and, where appropriate, maximising private investment, and which: undergo, in line with Article 34 of the Financial Regulation, ex ante evaluations which shall be proportionate to the objectives and amounts of the envisaged operations to determine the possible implications and risks of these operations with regard to human rights, environmental, labour and social standards including in the form of impact assessments for major programmes that are expected to have a significant impact on these areas, in line with the purpose of the EFSD+ laid down in Article 31(2) of this Regulation and taking due account of the principle of free and prior informed consent of affected communities in land related investments; ensure complementarity within the different pillars of the External Investment Plan as well as with other initiatives; are economically and financially viable, with due regard to the possible support from, and co-financing by, private and public partners to the project, while taking into account the specific operating environment and capacities of countries identified as experiencing fragility or conflict, LDCs, small island developing states, landlocked developing countries and heavily indebted poor countries which may benefit from more concessional terms; are technically viable and are sustainable from an environmental and social point of view and maximise development impact; do not distort markets in partner countries and regions and do not compete unfairly with local actors; are implemented in accordance with the policy framework referred to in Article 7, applicable environmental, social and labour law obligations and standards and internationally agreed guidelines, principles and conventions on investments, in particular those adopted by the UN and the OECD, with full respect for international human rights law as well as in accordance with the objectives and general principles laid down in Articles 3 and 8. The External Action Guarantee shall be used to cover the risks for the following instruments: loans, including local currency loans; guarantees; counter-guarantees; capital market instruments; any other form of funding or credit enhancement, insurance, and equity or quasi-equity participations. The eligible counterparts for the purposes of the External Action Guarantee shall be those identified in Article 208(4) of the Financial Regulation, including those from partner countries and third countries contributing to the External Action Guarantee, subject to approval by the Commission in accordance with Article 37 of this Regulation. In addition, and by derogation from point (c) of Article 62(1) of the Financial Regulation, bodies governed by private law of a Member State, a partner country or a third country which has contributed to the External Action Guarantee in accordance with Article 37 of this Regulation, and which provide adequate assurance of their financial capacity shall be eligible for the purpose of the External Action Guarantee. Eligible counterparts shall comply with the rules and conditions provided for in point (c) of Article 62(1) of the Financial Regulation. In the case of bodies governed by private law of a Member State, a partner country or a third country which have contributed to the External Action Guarantee in accordance with Article 37 of this Regulation, preference shall be given to those bodies that disclose information related to environment, social, tax and corporate governance criteria. The Commission shall ensure the effective, efficient and fair use of available resources among eligible counterparts, including small and medium-sized counterparts, while promoting cooperation between them and taking due account of their capacities, added value and experience. The Commission shall ensure fair treatment for all eligible counterparts, in accordance with Article 27(7), and shall ensure that conflicts of interest are avoided throughout the implementation period of the EFSD+. In order to ensure complementarity, the Commission may request any relevant information from eligible counterparts about their non-EFSD+ operations. The condition set out in Article 219(4) of the Financial Regulation on contributions with own resources shall apply to each eligible counterpart allocated with a budgetary guarantee under the Instrument on a portfolio basis. The Commission shall select the eligible counterparts in accordance with Article 154 of the Financial Regulation, taking due account of: the advice of the strategic and regional operational boards; the objectives of the investment window; the experience and risk management capacity of the eligible counterpart; the amount of own and additional resources, as well as private sector co-financing, that the eligible counterpart is ready to mobilise for the investment window taking in due account the size of the investment; the sectoral or geographic expertise of the eligible counterparts; the benefits of promoting collaboration between eligible counterparts. On the basis of the multiannual indicative programmes and of the advice provided by the EFSD+ strategic board and the strategic board covering the Western Balkans, the Commission shall, after consulting the regional operational boards and informing the European Parliament and the Council, set up investment windows for regions or specific partner countries, or both, for specific sectors, or for specific projects or specific categories of final beneficiaries, or both, which are to be funded under the Instrument, to be covered by the External Action Guarantee up to a fixed amount. The Commission shall inform the European Parliament and the Council on how the investment windows comply with this Article and on their detailed funding priorities. All requests for financial support within investment windows shall be made to the Commission. The choice of investment windows shall be duly justified by an analysis of the market failure or sub-optimal investment situations and an assessment of its alignment with the priorities of this Regulation and, where relevant, the IPA III Regulation. The Commission shall carry out that analysis in cooperation with potentially eligible counterparts and stakeholders. Eligible counterparts may provide the instruments referred to in paragraph 3 under an investment window or individual project administered by an eligible counterpart. Those instruments may be provided for the benefit of partner countries, including countries experiencing fragility or conflict, or countries facing challenges in reconstruction and post-conflict recovery, for the benefit of those partner countries’ institutions, including their public national and private local banks and finance institutions, as well as for the benefit of private sector entities, including SMEs, of those partner countries. Those instruments shall not benefit companies controlled by the military or state security sector, except for duly justified cases. The Commission shall assess the operations supported by the External Action Guarantee against the eligibility criteria set out in paragraphs 1, 2 and 3, where possible drawing on the existing result measurement systems of the Union and of eligible counterparts. The Commission shall establish a checklist of the eligibility criteria as set out in Article 31, Article 35(1) and (2) and shall assess and select all proposals to be supported by the External Action Guarantee against this checklist, on the basis of the information provided by the eligible counterparts. If necessary, the Commission shall ask the eligible counterparts to clarify or to amend the information provided. The Commission shall publish on an annual basis the checklists and the results of its assessment for each investment window broken down by country and sector. The Commission is empowered to adopt delegated acts in accordance with Article 44 to amend the priority areas in Annex V. The EIB shall implement an exclusive dedicated investment window covering a comprehensive risk cover for operations with sovereign counterparts and non-commercial sub-sovereign counterparts with an indicative minimum amount of EUR 11000000000 which shall be programmed in accordance with the procedures laid down in Chapters I and III of this Title. The EIB shall have the exclusivity for operations with sovereign counterparts and non-commercial sub-sovereign counterparts under the exclusive dedicated investment window. Under the exclusive dedicated investment window, the own resources contribution shall be understood as the assumption of residual risk and the EU guarantee shall cover 65 % of the aggregate amount disbursed and guaranteed under EIB financing operations, less amounts reimbursed, plus all related amounts. By way of derogation from the second subparagraph, if the EIB cannot carry out or decides not to carry out operations under the exclusive dedicated investment window, the implementation of these operations shall be open to other eligible counterparts, in accordance with conditions which shall be laid down in the relevant External Action Guarantee agreements, which shall take into account the conditions offered to the EIB for the same type of operations and the specific needs, circumstances and nature of the eligible counterpart implementing these operations. The EIB shall be eligible for implementing operations with sub-sovereign counterparts not covered under the exclusive dedicated investment window referred to in paragraph 1 and operations with the private sector. The procedure referred to in Article 35 shall be used to entrust the EIB, if appropriate, with two additional dedicated investment windows covering: a non-exclusive comprehensive risk cover for operations with commercial sub-sovereign counterparts; and non-exclusive operations for the promotion of foreign direct investment, trade and the internationalisation of partner countries’ economies, providing a political risk cover for private sector operations. The indicative amount for the dedicated investment windows referred to in paragraphs 1 and 2 shall be of EUR 26725000000. In implementing the dedicated investment windows referred to in paragraphs 1 and 2, the EIB shall comply with this Regulation, including its overall objectives and those of the EFSD+ and, where relevant, of the IPA III Regulation, as well as with the relevant programming documents and the reporting obligations. In accordance with point (f) of Article 209(2) of the Financial Regulation, due to the nature and policy objective of the exclusive dedicated investment window referred to in paragraph 1, the relevant External Action Guarantee agreement may provide that the Union shall not be remunerated for operations under that investment window. For the purpose of this Article, sub-sovereign operations shall be considered commercial unless otherwise duly justified by the EIB and confirmed by the Commission. The operations under the dedicated investment window referred to in point (b) of paragraph 2 shall be coherent with those of the export credit agencies of Member States. The EIB shall be subject to the opinion of the boards laid down in Articles 33 and 34, respectively. For EIB operations falling under the investment windows referred to in this Article, the eligibility assessment laid down in Article 35(9) shall be satisfied within the framework of the procedure provided for in Article 19 of Protocol No 5 on the Statute of the European Investment Bank, annexed to the TFEU. The EIB shall, in a timely manner, provide all information required by the Commission for that purpose. The EIB financing operations falling under those investment windows shall not be covered by the EU guarantee where the Commission delivers an unfavourable opinion under the procedure provided for in Article 19 of Protocol No 5 on the Statute of the European Investment Bank, annexed to the TFEU. All further modalities applicable to the EIB shall be established in the relevant External Action Guarantee agreements. The EIB shall be eligible for implementing activities under other investment windows established under Article 35(8). In compliance with this Regulation, including its objectives and principles and the relevant programming documents, as well as, where relevant, the IPA III Regulation, the Commission and the EIB shall conclude dedicated External Action Guarantee agreements for the dedicated investment windows referred to in paragraphs 1 and 2. Member States, third countries and other third parties may contribute to the External Action Guarantee. By derogation from the second subparagraph of Article 218(2) of the Financial Regulation, the contracting parties to the Agreement on the European Economic Area may provide contributions either in the form of guarantees or cash. Third countries other than the contracting parties to the Agreement on the European Economic Area and other third parties shall provide contributions in the form of cash and subject to the opinion of the EFSD+ strategic board and approval by the Commission. Member States may request that their contributions be earmarked for the initiation of actions in specific regions, countries, sectors or existing investment windows. The Commission shall inform the European Parliament and the Council without delay of the contributions approved Contributions in the form of a guarantee shall not exceed 50 % of the amount referred to in Article 31(4). The contributions made by Member States and the contracting parties to the Agreement on the European Economic Area in the form of a guarantee may only be called for payments of guarantee calls after the funding from the general budget of the Union, increased by any other cash contributions, has been used on payments of guarantee calls. Any contribution may be used to cover guarantee calls regardless of earmarking. A contribution agreement shall be concluded between the Commission, on behalf of the Union, and the contributor, and shall contain, in particular, provisions concerning the payment conditions. On behalf of the Union, the Commission shall conclude External Action Guarantee agreements with the eligible counterparts selected pursuant to Article 35. Those agreements may be concluded with a consortium of two or more eligible counterparts. In compliance with Article 219(1) of the Financial Regulation, budgetary guarantees shall be irrevocable, unconditional and on demand for the types of operations covered under the External Action Guarantee. When concluding External Action Guarantee agreements, the Commission shall take due account of the advice and guidance of the boards and of the technical risk assessment group. One or more External Action Guarantee agreements shall be concluded for each investment window between the Commission and the eligible counterpart or eligible counterparts selected. In addition, in order to address specific needs, the External Action Guarantee may be granted for individual financing or investment operations. The European Parliament and the Council shall be notified of the signature of all External Action Guarantee agreements. Upon their request, those agreements shall be made available to the European Parliament and the Council, taking into account the protection of confidential and commercially sensitive information. External Action Guarantee agreements shall contain, in particular: detailed rules on the coverage, requirements, eligibility, eligible counterparts, and procedures; detailed rules on the provision of the External Action Guarantee, including its arrangements on the coverage and its defined coverage of portfolios and of projects of specific types of instruments, as well as a risk analysis of projects and project portfolios, including at sectoral, regional, and national levels; a reference to the objectives and purpose of the Instrument, an assessment of the needs and an indication of the expected results, taking into account the promotion of corporate social responsibility and responsible business conduct, including in particular by the respect of internationally agreed guidelines, principles and conventions on investment referred to in point (f) of Article 35(2); the remuneration of the External Action Guarantee, which is to reflect the risk level, and the possibility for the remuneration to be partly subsidised in order to give more concessional terms in duly justified cases; and, in particular to countries experiencing fragility or conflict, LDCs and heavily indebted poor countries; requirements for the use of the External Action Guarantee, including payment conditions, such as specific time frames, interest to be paid on due amounts, expenses and recovery costs and possibly necessary liquidity arrangements; claims procedures, including, but not limited to, triggering events and waiting periods, and procedures regarding the recovery of claims; monitoring, reporting, transparency and evaluation obligations; clear and accessible complaints procedures for third parties that could be affected by the implementation of projects supported by the External Action Guarantee. The eligible counterpart shall approve financing and investment operations in accordance with its own rules and procedures and in compliance with the External Action Guarantee agreement. The External Action Guarantee may cover: for debt instruments, the principal and all interests and amounts due to the selected eligible counterpart, but not received by it in accordance with the terms of the financing operations after an event of default has occurred; for equity investments, the amounts invested and their associated financing costs; for other financing and investment operations referred to in Article 35(2), the amounts used and their associated funding costs; all relevant expenses and recovery costs related to an event of default, unless deducted from recovery proceeds. For the purposes of the Commission’s accounting and its reporting of the risks covered by the External Action Guarantee, and in accordance with Article 209(4) of the Financial Regulation, eligible counterparts with which an External Action Guarantee agreement has been concluded shall provide the Commission and the Court of Auditors annually with the financial reports on financing and investment operations covered by this Regulation, audited by an independent external auditor, containing, inter alia, information on: the risk assessment of financing and investment operations of the eligible counterparts, including information on Union liabilities measured in compliance with the accounting rules referred to in Article 80 of the Financial Regulation and International Public Sector Accounting Standards; the outstanding financial obligation for the Union arising from the EFSD+ operations provided to the eligible counterparts and their financing and investment operations, broken down by individual operation. The eligible counterparts shall, upon request, provide the Commission with any additional information necessary to fulfil the Commission’s obligations pursuant to this Regulation, in particular with regard to the selection criteria set out in Article 35, including compliance with human rights, and social, labour and environment standards. The Commission shall submit an annual report to the EFSD+ strategic board, to regional operational boards, to the European Parliament and to the Council on financial instruments, budgetary guarantees, including those implemented by the EIB, financial assistance in accordance with Article 41(4) and (5) and Articles 241 and 250 of the Financial Regulation. For that purpose, the eligible counterparts shall provide annually the information necessary to allow the Commission to comply with those reporting obligations. In view of possible grievances of third parties in partner countries, including communities and individuals affected by projects supported by the EFSD+ and the External Action Guarantee, the Commission and Union delegations shall publish on their websites direct references to the complaints mechanisms of the relevant counterparts that have concluded agreements with the Commission. The Commission shall also provide the possibility of directly receiving complaints related to the treatment of grievances by eligible counterparts. The Commission shall take that information into account in view of future cooperation with those counterparts. Persons and entities implementing financial instruments and budgetary guarantees shall comply with applicable Union law and principles and agreed international and Union standards as laid down in Article 155(2) and (3) of the Financial Regulation. The Commission shall assess whether the systems, rules and procedures of those persons and entities ensure protection of the financial interests of the Union equivalent to that provided for where the Commission implements the Union budget, with due regard to the principle of proportionality, taking into account the nature of the action and the conditions under which this action is implemented. The envelope for geographic programmes, referred to in point (a) of Article 6(2), may be used to contribute to the capital endowment of European and other development finance institutions.

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Source: EUR-Lex (Cellar) · retrieved 2026-11-02 · Text as adopted (Official Journal); later amendments are not incorporated in this text.