2002D0882 — EN — 27.11.2003 — 001.001 — 1
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►B COUNCILDECISION
of5November2002
providingfurthermacro-financial assistancetotheFederal RepublicofYugoslavia
(2002/882/EC)
(OJ L 308, 9.11.2002, p. 25)
Amended by:
Official Journal
No page date
►M1Council Decision 2003/825/EC of 25 November 2003 L 311 28 27.11.2003
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COUNCILDECISION
of5November2002
providing further macro-financial assistance to the Federal
RepublicofYugoslavia
(2002/882/EC)
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community, and
in particular Article 308 thereof,
Having regard to the proposal from the Commission (1),
Having regard to the opinion of the European Parliament (2),
Having regard to the opinion of the Economic and Financial
Committee (3),
Whereas:
(1)The Federal Republic of Yugoslavia (FRY) authorities re-estab-
lished links with international organisations and in particularmade progress towards normalising the country's financial rela-tions withmultilateral creditors, including th e EuropeanInvestment Bank, and withofficial bilateral creditors.
(2)Since October 2000, the FRY has achieved substantial progressin economic stabilisation and reform and has made importantsteps towards a well-functioning market economy.
(3)Within the Stabilisation and Association process, which is theframework for the European Union's (EU) relations with theregion, it is desirable to support efforts to sustain political and
economic stabilisation in the FRY, with a view to evolving
towards the development of a full cooperation relationship withthe Community.
(4)Financial assistance from the Community should be instrumentalin bringing the FRY closer to the Community.
(5)The Community already provided in 2001 macro-financial assis-tance of EUR 345 million to the FRY(
4). The International
Monetary Fund (IMF) approved in May 2002 a three-year
‘Extended Arrangement’ for the FRY of about USD 829 millionto support the authorities' economic programme in 2002 to 2005.
(6)The World Bank decided in May 2001 to make available to theFRY on a temporary basis a package of concessional loans ofUSD 540 million over a three year period. So far, two structuraladjustment credits of USD 70 million and of USD 85 millionhave been approved in January and May 2002, respectively, to
support reforms in public finance as well as in the energy and
social sector and to foster private sector development.
(7)The Members of the Paris Club agreed in November 2001 on a
substantial debt relief in favour of the FRY, already alleviating
the balance of payments situation.
(8)The authorities of the FRY have requested financial assistancefrom the international financial institutions, the Community, and
other bilateral donors.
(9)Over and above the estimated financing which could be provided
by the IMF and the World Bank, an important residual financing2002D0882 — EN — 27.11.2003 — 001.001 — 2
(1) Proposal of 27 August 2002 (not yet published in the Official Journal).
(2) Opinion delivered on 10 October 2002 (not yet published in the Official
Journal).
(3) Opinion delivered on 17 October 2002 (not yet published in the Official
Journal).
(4) Decision 2001/549/EC (OJ L 197, 21.7.2001, p. 38), Decision as amended
by Decision 2001/901/EC (OJ L 334, 18.12.2001, p. 30).
▼B
gap remains to be covered to support the policy objectives
attached to the authorities' reform efforts.
(10)Community macro-financial assistance to the FRY is an appro-priate measure to help ease the country's external financial
constraints, supporting the balance of payments and strength-
ening the reserve position.
(11)Financial assistance from the Community in the form of acombination of a long-term loan and a straight grant is an appro-priate measure to support the sustainability of the FRY's externalfinancial position, given its limited borrowing capacity. This
Community financial assistance should be effective and properly
implemented.
(12)The inclusion of a grant component in this assistance is withoutprejudice to the powers of the Community budgetary authority.
(13)A new Constitutional Charter is presently in the process ofparliamentary discussion. Upon its entry into force, the FRYwould continue to exist under a new name. The pending namechange does not affect this Decision.
(14)Upon entry into force of the aforementioned Constitutional
Charter, the National Bank of Yugoslavia may cease to exist.
Therefore, after entry into force of the Constitutional Charter,the macro-financial assistance provided under this Decision willbe paid to the institution or institutions designated to take on theresponsibilities from the National Bank of Yugoslavia forreceiving funds in the context of this Decision.
(15)This assistance should be managed by the Commission, in
consultation withth e Economic and Financial Committee.
(16)The Treaty does not provide, for the adoption of this Decision,
powers other than those of Article 308,
HAS DECIDED AS FOLLOWS:
Article 1
1. The Community shall make available to ►M1Serbia and
Montenegro ◄further macro-financial assistance in the form of a
long-term loan and a straight grant with a view to ensuring a sustain-
able balance-of-payments situation and strengthening the country's
reserve position.
2. The loan component of this assistance shall amount to a
maximum principal of EUR 80 million witha maximum maturity of15 years. To this end, the Commission is empowered to borrow, onbehalf of the Community, the necessary resources that will be placed
at the disposal of Serbia and Montenegro in the form of a loan.
3. The grant component of this assistance shall amount to a
maximum of EUR 120 million.
4. This Community financial assistance shall be managed by the
Commission in close consultation withth e Economic and Financial
Committee and in a manner consistent with the agreements reachedbetween the IMF and ►
M1Serbia and Montenegro ◄.
Article 2
1. The Commission is empowered to agree with the authorities of
►M1Serbia and Montenegro ◄, after consultation withth e
Economic and Financial Committee, the economic policy conditionsattached to further Community macro-financial assistance. These
conditions shall be consistent with the agreements referred to in Article
1(4).
2. The Commission shall verify at regular intervals, in collaboration
withth e Economic and Financial Committee and in coordination with2002D0882 — EN — 27.11.2003 — 001.001 — 3
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the IMF, that economic policies in ►M1Serbia and Montenegro ◄
are in accordance with the objectives of this macro-financial assistanceand that its conditions are being fulfilled.
Article 3
►
M11. The loan and grant components of this assistance shall be
made available to Serbia and Montenegro in at least three
instalments. ◄Subject to Article 2, the first instalment is to be
released on the basis of satisfactory implementation of the adjustmentand reform programme of ►
M1Serbia and Montenegro ◄under the
present Extended Arrangement withth e IMF.
2. Subject to Article 2, the second and any further instalments shall
be released on the basis of a satisfactory track record on ►M1Serbia
and Montenegro ◄'s adjustment and reform programme, and not
before one quarter after the release of the previous instalment.
3. The funds shall be paid to the National Bank of ►M1Serbia and
Montenegro ◄, and after the entry into force of a new Constitutional
Charter, to the institution or institutions designated to take on theresponsibilities of the National Bank of Yugoslavia for receiving funds
in the context of this Decision.
Article 4
1. The borrowing and lending operations referred to in Article 1
shall be carried out using the same value date and must not involve
the Community in the transformation of maturities, in any exchangeor interest rate risks, or in any other commercial risk.
2. The Commission shall take the necessary steps, if ►
M1Serbia
and Montenegro ◄so requests, to ensure that an early repayment
clause is included in the loan terms and conditions and that it may be
exercised.
3. At the request of ►M1Serbia and Montenegro ◄, and where
circumstances permit an improvement in the loan's interest rate, theCommission may refinance all or part of its initial borrowings orrestructure the corresponding financial conditions. Refinancing orrestructuring operations shall be carried out in accordance with theconditions set out in paragraph 1 and shall not have the effect of
extending the average maturity of the borrowing concerned or
increasing the amount, expressed at the current exchange rate, ofcapital outstanding at the date of the refinancing or restructuring.
4. All related costs incurred by the Community in concluding and
carrying out the operation under this Decision shall be borne by►
M1Serbia and Montenegro ◄, if appropriate.
5. The Economic and Financial Committee shall be kept informed of
developments in the operations referred to in paragraph 2 and 3 at least
once a year.
Article 5
At least once a year, and before September, the Commission shall
address to the European Parliament and to the Council a report, whichwill include an evaluation on the implementation of this Decision inthe previous year.
Article 6
This Decision shall take effect on the day of its publication in the Offi-
cial Journal of the European Communities .
It shall apply until two years after that date.2002D0882 — EN — 27.11.2003 — 001.001 — 4