RURAL CREDIT GUARANTEE FUND (RCGF) RCGF guarantee activity Rural Credit Guarantee Schemes workshop Budapest, January 12, 2006

INCORPORATION: 1994 LEGAL ORGANISATION: Joint-stock company, according to the Law no. 31/1990 Main shareholders – commercial banks Member of the European Mutual Guarantee Association Financed by the European Union through the PHARE Financing Memorandum RO9206 and by the Ministry of Agriculture, Forests and Rural Development Incorporation purpose: Incorporation purpose: - to support the transition of the Romanian agriculture to the market economy - to support the transition of the Romanian agriculture to the market economy; - to facilitate the access to credit for the agricultural entrepreneurs, agricultural product processors and for the local councils developing rural infrastructure product processors and for the local councils developing rural infrastructure; - to stimulate the absorption of SAPARD funds allotted to Romania

The RCGF grants guarantees to the commercial banks for: SHORT-TERM CREDITS AND LETTERS OF GUARANTEE (ron/foreign currency) (ron/foreign currency)  Achievement of agricultural production (crops and animal breeding)  Purchase of inputs for the achievement of agricultural production, finance of seasonal inventories and expenses requested by the agricultural product processing MEDIUM AND LONG-TERM CREDITS, LETTERS OF GUARANTEE, LETTERS OF COMFORT (ron/foreign currency) (ron/foreign currency)  Investments in agriculture, agricultural product processing and rural infrastructure  Purchase of agricultural land for production purpose SCOPE OF ACTIVITY CREDITS ISSUED TO THE LOCAL COUNCILS (ron/foreign currency) (ron/foreign currency)  Achievement of investments financed within the SAPARD Programme – Measure 2.1;  Rural infrastructure development

The RCGF grants guarantees up to: 70 % of the investment credit 50 % of the short-term credit 70 % of the credit for rural infrastructure development

ELIGIBLE GUARANTEE BENEFICIARIES:  Agricultural producers - individuals or associated in various structures - without legal personality, working their own agricultural land or the land leased them on contractual basis, breed animals or achieve agricultural output, process and sell agricultural products or carry on agricultural works Local councils developing  Local councils developing rural infrastructure Trading or agricultural companies  Trading or agricultural companies with private or majority private capital, performing agricultural or food industry activity

The risk guaranteed by the Fund: The non-payment by the borrower, in full or in part of: - two consecutive instalments, if the credit is repaid monthly - the first credit instalment if the credit is repaid quarterly, half-yearly or in periods exceeding one month. The guaranteed risk is taken on the terms of initiation by the Bank of the legal procedures against the faulty borrower. Fund’s liability:  to pay the Bank, the guaranteed amount/outstanding guaranteed amount, within 10 work days from the initiation by the Bank of the legal procedures against the faulty borrower. The Bank will initiate the foreclosure in order to recover its receivables, from which it will deduct the guarantee paid by the RCGF. The RCGF requests no collateral from the borrower, but a promissory note equal in value with the amount paid by the Fund.

ELIGIBILITY CONDITIONS The customers for whom the bank requests guarantees should meet the following conditions:  to have no overdue credits and interests.  to be local councils, agricultural producers or agricultural product processors;  to carry on a profitable activity, to have payment capacity, to be not subject to reorganisation or bankruptcy procedure;  as regards the reliability, to be included by the lending bank in standard, under observation or sub-standard rating categories, according to the legal regulations in force;  to have no overdue debts towards the state budget or local budgets, the special funds and the fund for social insurance, without the possibility of recovery;

In order to get the guarantee of the RCGF   The credit applicant submits the documentation for lending to the financing commercial bank.  The bank analyses the documentation and, if it agrees to grant the credit, it will fill in the Guarantee Request and send it to the Fund together with the statement of the borrower, enabling the access of the RCGF to the documents and the goods purchased from credit, and the guarantee file including copies of the documents in the credit file.  The RCGF analyses the file and, if its Operational Rules are observed, it will grant the guarantee within maximum 7 or 15 work days, depending on the value of the guarantee, and sign the Guarantee Contract with the Bank, to the benefit of the borrower.  The Bank pays the RCGF a guarantee fee for the guarantees granted for legal persons.  The guarantees up to EUR 10,000 / equivalent in RON of said amount are granted by the RCGF without performing the file assessment, only on the basis of the lending approval, the Guarantee Request filled in by the Bank and Bank’s analysis report.

RCGF guarantee portfolio No.- EUR thou - Outstanding guarantees as of ,88637, Guarantees granted in 20053,46249, SourcesEUR 13,851 thou Exposure7.33 times Default rate in 11 years0.59%

Guarantees granted in 2005 No.EUR thou%% Guarantees granted, from which: 3,46249, Production 96122, Investments, from which: 2,50126,  SAPARD, from which: 15619, Measure , Measure , Measure , Measure ,  Other investments 2,3456,