I move: "That the Bill be now read a Second Time."
Is onóir mhór dom an Bille um Banc Forbartha Chomhairle na hEorpa a chur faoi bhráid na Dála, agus tá mé ag súil leis an díospóireacht anseo inniu.
This Bill provides for Ireland's membership of the Council of Europe Development Bank. The Council of Europe Development Bank, CEB, is the oldest international financial institution in Europe and the only one with an exclusively social vocation. Its activities are targeted to emergency projects and to strengthening social cohesion in Europe. The CEB is the financial instrument of the policy of solidarity developed by the Council of Europe. We view the Council of Europe Development Bank as a valuable expression of that solidarity and of social cohesion in a wider Europe. Although Europe is one of the most developed regions of the world, there are still large pockets of poverty. This is where the Council of Europe Development Bank assists in development. It acts first and foremost in favour of the most vulnerable and fosters balanced social development in the fields of health, education, social housing and employment. The bank is valued in EU member states, in particular by the countries of central and eastern Europe, as an important source of lending for social projects. Ireland's accession to the bank will be viewed positively by these states as a reflection of our commitment to wider European solidarity.
The Bank is a multilateral development institution, placed under the supreme authority of the Council of Europe. It nevertheless has its own full legal status and financial autonomy. By granting loans, the bank participates in the financing of social projects, responds to emergency situations and thus contributes to improving living conditions and social cohesion in the less advantaged regions of Europe. The question of Ireland joining this bank has been under consideration for some time. It is an appropriate time for this Bill to come into this House as it gives a further signal that Ireland welcomes the accession of the new member states into the EU and displays our willingness to play our part fully in the new Europe.
The current subscribed capital of the bank is just over €3 billion, but only 11% is paid in. The balance is designated as callable capital, but it is most unlikely that this will ever be called on. Ireland would provide subscribed capital of €30.515 million. The paid in capital contribution for Ireland would be €3.369 million. In joining, we must also pay a contribution to the bank's accumulated reserves of €9.764 million. Our full contribution paid in capital and contribution to the reserves, amounting to €13.1 million, will be paid in four annual equal instalments of €3.283 million each. Provision for these costs is being made in the Bill before us here today.
Set up in 1956 and originally named the Council of Europe Resettlement Fund for National Refugees and Over-Population in Europe, it started out with eight members. A number of EU member states joined over the next 25 years. However, with the change in the political landscape in Europe in the early 1990s, the influx of new members over the next ten years reflected the growing interest in the bank. The new member states of the EU and former members of the Soviet Union brought the membership up to 37 different countries. In 1999, the name was changed to the Council of Europe Development Bank.
The primary purpose of the bank is to help in solving the social problems with which European countries are or may be faced with as a result of the presence of refugees, displaced persons or migrants, consequent upon forced movements of populations, as a result of natural or ecological disasters. However, in recent years the bank has expanded its operations to support projects relating to social housing, health, education, rural modernisation, support for SMEs and the improvement of the quality of life in disadvantaged urban areas and the protection and rehabilitation of historic heritage. It is the only European development bank with a social purpose. Its activities are targeted primarily to emergency projects and to programmes directed at strengthening social cohesion throughout Europe.
The Bank provides loans and guarantees, not subsidies, to its member states, to local authorities and to financial institutions. Its loans are intended for the implementation of social projects, which thus enjoy the benefit of favourable financial conditions. Since the bank receives no annual contributions from its members, its financial activity is based on its paid up capital and reserves and the resources which it raises on the financial markets. The bank's capital has been increased regularly since its inception back in 1956 to sustain the development of its activity, while at the same time preserving its financial soundness. The latest capital increase, the fifth, was approved in November 1999 and closed in September 2001. As a result, the subscribed capital increased from €1.401 billion to €3.004 billion. On 31 December 2001, the bank had reserves totalling €814 million and a fund for general banking risks, set up in 1993, amounting to €144 million.
Following implementation of the fifth capital increase, the bank's own funds stand at €4 billion, including available owned funds amounting to €1.3 billion. The bank does not receive any other aid, subsidy or budgetary contribution from the member states to finance its activities. The necessary resources are therefore raised on the international capital markets in the form of borrowings. For its borrowing activity, the bank has been rated by Moodys since 1988, by Standard and Poors since 1989 and by Fitch Ratings since 1996. It enjoys the maximum AAA rating with all three agencies on its principal long-term debt. To ensure that it maintains access to the funds needed to pursue its activities, the bank continues to have recourse both to large scale borrowings in major currencies, aimed at a broad range of institutional investors, and to issues in given currencies or with specific structures.
A total of 78% of the funds raised in 2001 came from the American US dollar market. The euro market came in second position with 13% of the funds raised denominated in euro. The average maturity of issues launched in 2001 is of eight years and four months. The member states submit projects for the administrative council to approve their financing according to the fields of action defined in the articles of agreement and administrative council. To finance these projects, the CEB borrows on the international money markets by means both of public issues and private investments. The quality of its financial structure guarantees the quality of its rating and enables it to raise resources on the capital markets on the best possible terms. This in turn enables the bank's own borrowers to significantly lower the cost of their resources for the financing of social projects.
In order to obtain CEB financing, the projects presented must meet the following general criteria: compliance with Council of Europe conventions, respect for the environment on the basis of international conventions and compliance with standards of quality, participation in the financing of projects may not exceed 50% of the total eligible cost; the balance may be co-financed by other international institutions, and compliance with bidding procedures in accordance with national and international directives.
Since 1994, the bank's circle of member states has widened to include a large number of new states, including EU member states and former members of the Soviet Union. Some 14 states have joined since 1994. The policy developed by the bank is aimed at strengthening its activities in the new member states by contributing to their economic and social development and reducing inequality. It has introduced innovative instruments to meet the specific needs of each country. Some €1.804 billion has been lent to the new member countries since 1995, spread over 66 projects in 14 countries. The loans are issued on favourable terms, with a deferred repayment period being carried on long-term loans, for example.
The sectoral breakdown of approved projects illustrates the bank's capacity for action, not only in its statutory priority sectors, but also in health and education infrastructure, employment, vocational training and employment in small and medium enterprises and the Roma community. The bank has adjusted the eligibility criteria as a consequence of the strategy for supporting the social housing sector which has particular characteristics in the new member countries. The total of disbursements made in favour of the new member countries in 2000 was higher than the total made during the previous five years.
The bank has signalled its intention to become the reference financial institution for the Balkans on the question of refugees and migrants. It has become heavily involved in the work of the stability pact for south-eastern Europe. One of the pact's priorities concerns refugees, and specific attention is being paid to the Roma community. For example, the bank approved a €30 million project in 2000 for the construction of housing in Croatia aimed at facilitating the return and integration of refugees there.
Strengthening social cohesion means contributing to solving the unemployment problem in the first instance. The Council of Europe Development Bank has adopted two lines of action to that end. It promotes the creation and preservation of jobs and supports investment in SMEs, which are the principal source of new jobs and vocational training. Action in favour of employment is one of the bank's new priorities. It has financed several projects aimed at the preservation and creation of jobs in small and medium-sized firms in many countries.
The governing board sets out the general orientation of the bank's activity, lays down conditions for membership and decides on capital increases. It approves the bank's annual report, accounts and general balance sheet. The board consists of a chairman and one representative from each of the bank's member countries. The administrative council exercises the powers delegated to it by the governing body, establishes and supervises operational policies and approves investment projects submitted by Governments. It votes on the bank's operating budget. The governing board elects the chairman.
The governor, who is the bank's legal representative, heads up its operational services. He is responsible for the bank's staff, under the general supervision of the administrative council. He conducts the bank's financial policy in line with the administrative council's guidelines and represents it in its transactions. He examines the technical and financial aspects of requests for financing to the bank. The auditing board consists of three members who are appointed by the governing board. It checks the accuracy of the annual accounts which will also be examined by an external auditor.
I reiterate the Government's view that the Council of Europe Development Bank is an important part of the operations of the Council of Europe. It plays a vital role in the new and expanded Europe. Ireland's membership of the bank at this time is a valuable expression of its solidarity with the new and expanded Europe at an exciting and historic period for the growing European Union. I commend the Bill to the House.