1. RURAL CREDIT IN ROMANIA - PRE - ACCESION PERIOD- Brussels, January 27, 2011 MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT

2. Legal Base Law 218/2005 – setting up the guarantee fund Law 231/2005 – setting up the credit fund + ministerial orders for laying down rules = the “Farmer Programme”

3. Flow of the funds State Budget  Ministry of Agriculture  Guarantee Funds  Beneficiaries

4. Guarantee Fund (Law 218/2005) Scope: - To guarantee the financial instruments needed by the SAPARD beneficiaries (agricultural producers, agri-food products processors and local councils and associations of local councils), in order to ensure the private co-finance of the projects.

5. Guarantee Fund (Law 218/2005) General characteristics The management of the guarantee fund is ensured by the Ministry of Agriculture and Rural Development, through agreements that are made between the Ministry and the guarantee fund administrators, mainly referring to: Interests generated by the capital: goes over the capital Guarantee fees: 1,6 – 6,3, depending on the legal organization of the beneficiary, its rating and credit type. Condition: goes over the capital Level of the guarantees in regard to credits: 70 – 100 % In case of guarantee execution, national fiscal authority is entitled to execute the beneficiary

6. Guarantee Fund (Law 218/2005) Some other specificities: Guarantees are not covering the interests of the loans; those must be paid by the beneficiaries to the banks Each monthly payment made by a beneficiary for the given loan means also a proportionally return of the guarantee over the original capital Payment of a guarantee is made to a financial institution only when the respective financial institution proves that had initiate juridical recovering procedures for recovering the loan against the beneficiary

7. Guarantee Fund (Law 218/2005) ELIGIBILITY CONDITIONS The customers for whom the bank can request guarantees should meet certain conditions, such as: to carry on a profitable activity, to be able to pay their debts, to be not subject to reorganization and bankruptcy procedure; the credits should be classified by the lending bank in standard, under observation or substandard rating categories, according to NBR Regulation no. 5/2002; to have no overdue debts towards the state budget or local budgets, special funds and social insurance fund; to have no overdue credits and interests; the credit granted to be intended to agricultural producers, agricultural product processors or local councils, achievement of investment objectives through the SAPARD Program, in case of short-term credits for production.

8. Guarantee Fund (Law 218/2005) GUARANTEE PROCEDURE Conditions: the documentation for lending is submitted to the financing commercial bank; the bank analyses the documentation; if the bank agrees to perform the operation, it will fill in the Guarantee Request The Fund analyses the documentation received and it will grant the guarantee within maximum 7 or 15 work days, taking into account the guarantee approval competence, and signs a Guarantee Contract with the bank, to the favour of the credit beneficiary

9. Guarantee Fund (Law 218/2005) GUARANTEE PROCEDURE The Fund does not grant guarantees to the banks for: -credits that would be used, even in part, to repay some previous duties of the clients or credits already contracted; - credit beneficiaries registering overdue credits and interests due to previous contracts, at the guarantee request date; - credit beneficiaries having overdue debts towards the state budget or local budgets, the special funds and the fund for social insurance, at the guarantee request date; - credit beneficiaries who register losses, have payment incapacity, or against whom legal action was introduced in order to state bankruptcy, excepting the economic agents requesting supplementation of credits in order to terminate some projects and have not carried on production activities yet. - credit beneficiaries having "doubtful" and "loss" rating categories, according to the regulations in force.

10. Results (monitoring data) in regards to SAPARD No. of guarantee contracts: 1,250 Value of the guarantees: 738,231,486.25 lei (around 175 millions euros) Destinations of the guarantees: 46.13% for the processing measure and 47.68% for the farm investments measure Only 2 banks were real partners (based on the volume of credits that were given due to the guarantee funds, these banks covered 83% of the credits)

11. Credit Fund (Law 231/2005) Scope: - ensuring capital needed to credits to agricultural producers, forest owners, agri-food products processors, local councils and associations of local councils and to fishery sector - covering the costs with technical documentation needed for loans - reduction at the reimbursement of the credit (up to 50%), but not in the case of SAPARD projects

12. Credit Fund (Law 231/2005) General characteristics Tendering system for the selection of the banks Credits can be guaranteed by both guarantee funds and beneficiaries (buildings, agricultural land, agricultural machineries etc.)

13. Credit Fund (Law 231/2005) General characteristics Specific details related to investments that are supported through these credits are described in a ministerial order, with a pronounced role of setting up the frame of the needed investments in Romanian rural area

14. 1. Credit Fund (Law 231/2005) CONDITIONS for granting the reduction at credit reimbursement payment of the loan and interest in time respect of the technical and economical indicators that were presented for granting the loan respect of the deadline for starting the investment no losses, no payment incapacity, no state bankruptcy

15. Results (monitoring data) in regards to SAPARD No. of credit contracts: 1,240 Financial envelope:155,000,000 EURO Value of credits:140,672,211 EURO Value of reimbursed credits:59,997178 EURO For 2008, the loans granted were financed on the reimbursement of older loans