1999D0325 — EN — 10.12.2001 — 001.001 — 1
Thisdocumentismeantpurelyasadocumentationtoolandtheinstitutionsdonotassumeanyliabilityforitscontents
►B COUNCILDECISION
of10May1999
providingmacro-financialassistancetoBosniaandHerzegovina
(1999/325/EC)
(OJ L 123, 13.5.1999, p. 57)
Amended by:
Official Journal
No page date
►M1Council Decision 2001/899/EC of 10 December 2001 L 334 28 18.12.2001
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COUNCILDECISION
of10May1999
providingmacro-financialassistancetoBosniaandHerzegovina
(1999/325/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 of the Commission(1),
Having regard to the opinion of the European Parliament(2),
(1)Whereas the Commission consulted the Monetary Committee
before submitting its proposal;
(2)Whereas Bosnia and Herzegovina is undertaking fundamental
institutional and political reforms to establish common institu-
tions and policies; whereas Bosnia and Herzegovina is makingsubstantial efforts to promote economic reform and establish anopen market economy, which is essential order to create jobs,improve living conditions for the people and allow the return ofrefugees and displaced persons;
(3)Whereas within the Regional Approach defined by the Council, itis desirable to support efforts made to ensure a stable political andeconomic environment in Bosnia and Herzegovina, with a view toevolving towards the development of a relationship of fullcooperation with the Community;
(4)Whereas financial assistance of an exceptional nature from the
Community should be instrumental in supporting the implemen-
tation of common institutions and policies in Bosnia andHerzegovina consistent with the Dayton peace agreement, whilestrengthening mutual confidence and bringing Bosnia andHerzegovina closer to the Community;
(5)Whereas Bosnia and Herzegovina has agreed with the Interna-
tional Monetary Fund (IMF) on a comprehensive set of economic
and institutional policy reform measures to be supported by a 12-month upper credit tranche Stand-By Arrangement (SBA);whereas the SBA will be followed or replaced by an EnhancedStructural Adjustment Facility (ESAF);
(6)Whereas Bosnia and Herzegovina has agreed with the World
Bank on a set of structural adjustment measures to be backed by
two highly concessional structural adjustment loans and credits inthe areas of publicfinanc e reform, and enterprise and bankingprivatisation;
(7)Whereas the authorities of Bosnia and Herzegovina haverequested financial assistance from the international financial
institutions, the Community, and other bilateral donors; whereas,
over and above the estimated financing which could be providedby the IMF and the World Bank, an important residual financinggap remains to be covered in the coming months in order tostrengthen the country's reserve position and support the policyobjectives attached to the authorities' reform effort;
(8)Whereas an the fourth Donors' Pledging Conference on Bosniaand Herzegovina on 7 and 8 May 1998, the internationalcommunity welcomed the agreements reached with the BrettonWoods institutions and decided to support strongly the economicreform and reconstruction programmes of Bosnia and Herzego-vina in the form of firm financial pledges;1999D0325 — EN — 10.12.2001 — 001.001 — 2
(1) OJ C 396, 19.12.1998, p. 16.
(2) Opinion delivered on 12 March 1999 (not yet published in the Official
Journal).
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(9)Whereas the authorities of Bosnia and Herzegovina have
committed themselves to discharge fully all outstanding financial
obligations of all publicentities of Bosnia and Herzegovinatowards the European Community and the European InvestmentBank, and to accept the responsibility by way of guarantee ofthose obligations that are not yet due;
(10)Whereas the present exceptional Community macro-financialassistance to Bosnia and Herzegovina aims to help ease thecountry's external financial constraints, supporting the balance ofpayments and strengthening the reserve position;
(11)Whereas Bosnia and Herzegovina being a low-income countryeligible for highly concessional loans and facilities from the
World Bank and the IMF, this macro-financial assistance requires
substantial elements of concessionality;
(12)Whereas the strengthening of Bosnia and Herzegovina's common
institutions and the reform of its economic system are two of the
priorities identified by the Peace Implementation Conference heldin Madrid in December 1998;
(13)Whereas the statement by the European Union on Bosnia andHerzegovina of 8 June 1998 recognises that the future of thecountry lies with Europe;
(14)Whereas the inclusion of a grant component in this assistance iswithout prejudice to the powers of the budgetary authority;
(15)Whereas this assistance should be managed by the Commission;
(16)Whereas the Treaty does not provide, for the adoption of thisDecision, powers other than those of Article 308,
HAS DECIDED AS FOLLOWS:
Article 1
1. The Community shall make available to Bosnia and Herzegovina
an exceptional macro-financial assistance in the form of a long-termloan and a straight grant with a view to ensuring a sustainable 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 20 million with a grace period of 10 years and amaximum maturity of 15 years. To this end, the Commission isempowered to borrow, on behalf of the European Community, thenecessary resources that will be placed at the disposal of Bosnia andHerzegovina in the form of a loan.
3. The grant component of this assistance shall amount to a
maximum of EUR 40 million.
4. The Community financial assistence shall be managed by the
Commission in close consultation with the Economic and FinancialCommittee and in a manner consistent with any agreement reachedbetween the IMF and Bosnia and Herzegovina.
5. The implementation of this assistance is conditional upon
clearance in full by Bosnia and Herzegovina of outstanding duefinancial obligations of all public entities towards the Community andthe European Investment Bank and upon the acceptance by Bosnia andHerzegovina of responsibility by way of guarantee of those obligationsthat are not yet due.
Article 2
1. The Commission is empowered to agree with the authorities of
Bosnia and Herzegovina, after consultation with the Economic andFinancial Committee, the economic and institutional policy conditionsattached to the Community macro-financial assistance. These conditionsshall be consistent with the agreement referred to in Article 1(4).1999D0325 — EN — 10.12.2001 — 001.001 — 3
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2. The Commission shall verify at regular intervals, in collaboration
with the Economic and Financial Committee and in coordination withthe IMF, that the economic and institutional policy in Bosnia and
Herzegovina is in accordance with the objectives of this macro-financial
assistance and that its conditions are being fulfilled.
Article 3
1. The loan and grand components of this assistance shall be made
available to Bosnia and Herzegovina in at least two successive tranches.Subject to the provisions of Article 2, the first tranche shall be releasedon the basis of a successful completion of the first review of the 12-month SBA between the IMF and Bosnia and Herzegovina, subject to
the provisions of Article 1(5).
2. Subject to the provisions of Article 2, the second tranche shall be
released on the basis of a satisfactory track record in the implementationof the SBA with the IMF and not before three months after the release ofthe first tranche.
3. The funds shall be paid to the Central Bank of Bosnia and
Herzegovina.
Article 4
1. The borrowing and lending operations referred to in Article 1(2)
shall be carried out using the same value date and must not involve the
Community in the transformation of maturities, in any exchange or
interest rate risks, or in any other commercial risk.
2. The Commission shall take the necessary steps, if Bosnia and
Herzegovina so requests, to ensur that an early repayment clause isincluded in the loan terms and conditions and that it may be exercised.
3. At the request of Bosnia and Herzegovina, and where circum-
stances permit an improvement in the interest rate on the loan, the
Commission may refinance all or part of its initial borrowings or
restructure 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 ofextending the average maturity of the borrowing concerned or increasingthe amount, expressed at the current exchange rate, of capital
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 Bosniaand Herzegovina.
5. The Economic and Financial Committee shall be kept informed of
developments in the operations referred to in paragraph 2 and 3 at leastonce a year.
Article 5
At least once a year the Commission shall address to the European
Parliament and to the Council a report, which will include an evaluation
of the implementation of this Decision.
Article 6
This Decision shall expire on 31 December 2002.1999D0325 — EN — 10.12.2001 — 001.001 — 4
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