donors and trust accounts

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The CEB’s Articles of Agreement state that, among its means of action, “the Bank may open and manage trust accounts for receiving voluntary contributions from its Members, from the Bank and from the Council of Europe” (Art. VII, Section 3). Furthermore, the Bank’s new Development Plan 2010-2014 has enshrined the strengthening of partnerships with donor countries as one of its strategic orientations, in light of the mutual benefits of this type of collaboration.

The CEB and donor countries: a fruitful cooperation

This co-operation enables the Bank both to enhance its means of action and to better serve its social mandate, especially in favour of the target group countries in Central, Eastern and South Eastern Europe.

On the one hand, combining CEB loans with grants from donor countries allows the Bank to:

increase the added value of its actions by using grants from donor countries to improve the preparation and monitoring of financed projects through technical assistance
ensure the economic viability of social projects by more generous financing conditions
demonstrate its specificity (compared to other international financial institutions) as a social development bank acting in favour of disadvantaged populations and regions

On the other hand, this collaboration offers several advantages to the donors, for example:

A bilateral trust account (or fund) allows the donor, in conjunction with the Bank, to focus on the specific type of social projects the donor country is most interested in supporting. In the case of the Bank, this advantage is compounded by CEB’s specific social mandate, unique amongst IFIs. Indeed, a donor trust fund has a substantial leverage effect on social infrastructure as its grants will be combined with much higher CEB loans
The Bank’s streamlined procedures for project implementation ensure an efficient link between the donor and the final beneficiary as well as relatively short lead times between a decision on, and the actual provision of, technical assistance
The Bank’s procurement procedures ensure that donors’ funds are correctly allocated.

Trust accounts currently in force at the CEB

a. Trust accounts funded by individual donor countries

Norway Trust Account for the Western Balkans (NTA)

Since end 2003, the CEB has administered an innovative assistance mechanism, the Norway Trust Account (NTA), set up on the initiative of the Norwegian Authorities, in order to provide for the implementation of various initiatives in favour of Western Balkan countries. By end 2009, the NTA had enabled support for 34 initiatives totalling € 2.8 million in a number of different eligible sectors. 59% of these allocated NTA resources were used for direct support to CEB projects, either for preparatory or feasibility works or to strengthen the implementation capacity of the institution or ministry in charge of the project in the beneficiary country.

Human Rights Trust Fund

To better enforce the decisions adopted at the 3rd Council of Europe Summit, in Warsaw (2005), the CEB, Norway and the Council of Europe - with additional contributions from Germany, the Netherlands and soon Finland - established in 2008 a Human Rights Trust Fund, endowed at May 2010 with a total amount of € 3.2 million. This new instrument, aimed at supporting the consolidation of the State of Law and the European system of human rights protection in Europe, is devoted to financing technical assistance in favour of projects in this field.

Spanish social cohesion account

Set up in 2009 on the initiative of the Spanish Authorities, this account is being used, notably, to finance technical assistance in favour of CEB projects, mainly in the 21 Central, Eastern and South Eastern European countries that comprise its target group.

b. Selective Trust Account (STA)

The main purpose of the Selective Trust Account is to grant interest-rate subsidies for the CEB’s loans for projects consistent with the Bank’s high priority objectives in low-income eligible countries from the so-called target group. The STA can also be used for making donations to help the victims of natural disasters or acts of war, refugees and displaced persons, migrants and vulnerable population groups.

Since the inception of the Selective Trust Account in 1995, CEB Member States have contributed almost all of its funding directly via transfers from the Bank’s annual profits, up to nearly € 100 million. This amount has made possible the approval of loans bearing subsidised interest rates totalling € 1.5 billion and donations totalling € 13.5 million.

Donors

Norway, a member of the CEB since 1978 with a 1.268% share in the capital, set up the Norway Trust Account (NTA) in collaboration with the Bank in 2003. The NTA was initially endowed with € 1 million. It has received further additional endowments of € 1 million in 2005 and € 1 million in 2007 (respectively € 500 000 in May 2007 and € 500 000 in December 2007). Norway was also the inspirational force and the founder of the Human Rights Trust Fund. To date, its contribution to this Trust Fund amounts to € 1.7 million.

Spain, a member of the CEB since 1978 with a 10.852% share in the capital, set up the Spanish Social Cohesion Account (SCA) with the Bank, in September 2009. The SCA has been endowed with an initial amount of € 2 million. Half of this amount was received in October 2009 and the remainder is expected for June 2010.

Finland, a member of the CEB since 1991 with a 1.268% share in the capital, was the first country to set up a trust account with the Bank. The Finland Trust Account was created in 2001 and was endowed with € 168 000 with the aim of funding technical assistance and project preparation in the Baltic countries. Finland has also decided to contribute to the Human Rights Trust Fund with € 200.000.

Germany, a founding member of the CEB in 1956 with a 16.640% share in the capital, is one of the contributors to the Human Rights Trust Fund, for an amount of € 1 million.

Netherlands, a member of the CEB since 1978 with a 3.613% share in the capital, is one of the contributors to the Human Rights Trust Fund, for an amount of € 500 000.