RURAL CREDIT GUARANTEE FUNDRURAL CREDIT GUARANTEE FUND

(RCGF)(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, agriculturalto facilitate the access to credit for the agricultural entrepreneurs, agricultural

product processors and for the local councils developing rural infrastructureproduct processors and for the local councils developing rural infrastructure;

- to stimulate the absorption of SAPARD funds allotted to Romania- to stimulate the absorption of SAPARD funds allotted to Romania

The RCGF grants guarantees to the commercial banks for:The RCGF grants guarantees to the commercial banks for:

SHORT-TERM CREDITS AND SHORT-TERM CREDITS AND LETTERS OF GUARANTEELETTERS OF GUARANTEE ((ron/foreign currencyron/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 MEDIUM AND LONG-TERM CREDITS, LETTERS OF CREDITS, LETTERS OF GUARANTEE, LETTERS OF GUARANTEE, LETTERS OF COMFORT COMFORT ((ronron//foreign currencyforeign currency))

Investments in agriculture, agricultural product processing and rural infrastructure Purchase of agricultural land for production purpose

SCOPESCOPE OF ACTIVITYOF ACTIVITY

CREDITS ISSUED TO THE CREDITS ISSUED TO THE LOCAL COUNCILSLOCAL COUNCILS ((ronron//foreign currencyforeign currency))

Achievement of investments financed within the SAPARD Programme – Measure 2.1; Rural infrastructure development

The RCGF grants guarantees up to:The RCGF grants guarantees up to:

70 % of the investment creditof the investment credit

50 % of the short-term creditof the short-term credit

70 % of the credit for rural infrastructure of the credit for rural infrastructure developmentdevelopment

ELIGIBLE GUARANTEE BENEFICIARIES: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 councilsLocal councils developing developing rural infrastructure

Trading or agricultural companiesTrading or agricultural companies with private or majority private capital, performing agricultural or food industry activity

The risk guaranteed by the Fund: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.

ELIGIBILITELIGIBILITY CONDITIONSY 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 RCGFIn 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 portfolioRCGF guarantee portfolio

No. - EUR thou -

Outstanding guarantees as of 31.12.2004

2,886 37,415.22

Guarantees granted in 2005 3,462 49,307.88

Sources EUR 13,851 thou

Exposure 7.33 times

Default rate in 11 years 0.59%

Guarantees granted inGuarantees granted in 2005 2005No. EUR thou % % %

Guarantees granted, from which:

3,462 49,307.88 100.00

Production 961 22,558.54 45.75

Investments, from which: 2,501 26,749.34 54.25 100.00

SAPARD, from which: 156 19,898.83 74.39 100.00

- Measure 1.1 13 7,446.09 37.42

- Measure 2.1 26 4,704.79 23.64

- Measure 3.1 114 7,666.38 38.53

- Measure 3.4 3 81,57 0.41

Other investments 2,345 6,850.51 25.61