COMMISSION OF THE EUROPEAN COMMUNITIES 
COM(95) 64 final 
Brussels, 07.04.1995 
95/0065 (AVC) 
Proposal for a 
COUNCIL DECISION 
on the conclusion of a Protocol on financial and 
technical cooperation between the European Union 
and the Republic of Malta 
(presented by the Commission) 
EXPLANATORY MEMORANDUM ^ 
1. By its Decision of 14 June 1994 the Council authorized the Commission to enter into 
negotiations with the Republic of Malta with a view to concluding a new financial 
Protocol under the EEC-Malta Association Agreement. 
2. A draft Protocol was initialled in Brussels on 21 December 1994 on the basis of the 
negotiating directives laid down by the Council, 
3. The Protocol provides for a total budget of ECU 45 million, broken down as follows: 
ECU 15 million from the Community budget 
ECU 30 million in EIB loans. 
4. Legal basis: Article 238 of the Treaty. 
5. The Commission invites the Council to approve the outcome of the negotiations with 
Malta and initiate the procedures for signing and concluding the new financial Protocol. 
It therefore transmits to the Council a proposal for a Council Decision on the conclusion 
of the initialled Protocol contained in the attached annex. 
COUNCIL DECISION ^ 
on the conclusion of a Protocol on financial and 
technical cooperation between the European Community 
and the Republic of Malta 
THE COUNCIL OF THE EUROPEAN UNION, 
Having regard to the Treaty establishing the European Community, and in particular Article 238 
thereof, in connection with its Article 228, paragraph 2, second sentence and paragraph 3, 
indent 2, 
Having regard to the proposal from the Commission, 
Having regard to the assent of the European Pari iament, 1 
Whereas the Protocol on financial and technical cooperation between the European Community 
and the Republic of Malta should be approved, 
HAS DECIDED AS FOLLOWS: 
Article 1 
The Protocol on financial and technical cooperation between the European Community and the 
Republic of Malta is hereby approved on behalf of the Community. 
The text of the Protocol is attached to this Decision. 
Article 2 
The President of the Council shall give the notification provided for in Article 21 of the 
Protocol.2 
Article 3 
This Decision shall enter into force on the day following that of its publication in the Official 
Journal of the European Communities. 
Done at Brussels, 
For the Council 
The President 
1 OJ No 
2 The date of entry into force of the Protocol will be published in the Official Journal of the European 
Communities by the General Secretariat of the Council. 
PROTOCOL 
on financial and technical cooperation between the European 
Community and Malta 
THE COUNCIL OF THE EUROPEAN UNION, 
of the one part, and 
THE GOVERNMENT OF THE REPUBLIC OF MALTA, 
of the other part, 
ANXIOUS to promote the development of the Maltese economy and the objectives of the 
Agreement establishing an Association between the European Economic Community and Malta, 
and in the light of the Council Decision to offer Malta financial cooperation, technical assistance 
and training resources and other assistance in the framework of an appropriate Protocol to 
facilitate Malta's economic transition with a view to its accession to the European Union, 
HAVE DECIDED to conclude this Protocol and to this end have designated as their 
Plenipotentiaries: 
The Counci 1 of the European Un ion : 
• • » 
Minister for Foreign Affairs, 
President of the Council of the European Union, 
Member of the Commission of the European Communities, 
The Government of the Republic of Malta: 
• » 
Minister , 
WHO, having exchanged their Full Powers, found in good and due form, 
HAVE AGREED AS FOLLOWS: 
Article 1 
Within the framework of the financial and technical cooperation provided for in the Agreement 
establishing an Association between the European Economic Community and Malta, the 
Community shall participate, on the terms set out in this Protocol, in the financing of measures 
intended to contribute to the economic and social development of Malta and facilitate its 
economic transition with a view to accession to the European Union. 
Article 2 
1. For the purposes specified in Article 1, and for a period expiring on 31 October 1998, an 
aggregate amount of ECU 45 million may be committed as follows: 
(a) ECU 30 million in the form of loans from the European Investment Bank, 
hereinafter referred to as 'the Bank', made from its own resources; 
(b) ECU 13 million from the Community's budgetary resources, in the form of 
grants; 
(c) ECU 2 million from the Community's budgetary resources, in the form of 
contributions to risk capital formation. 
2. The risk capital referred to in paragraph 1(c) shall contribute to the cooperation 
objectives and operations defined in Article 3, in particular those indicated in the second 
indent of paragraph 2 of that Article. 
It shall be used primarily to make equity capital or the like available to Maltese 
industrial and commercial undertakings, in particular those with which natural or legal 
persons who are nationals of a Community Member State are associated. 
It shall be granted and administered by the Bank and may take the form of: 
(a) subordinated loans, where repayment and payment of any interest will not be 
made until other bank claims have been settled; 
(b) conditional loans, where repayment or duration will depend on the fulfilment of 
conditions specified at the time the loan is granted; 
(c) acquisition of temporary minority holdings on behalf of the Community in the 
capital of undertakings established in Malta; 
(d) finance for the acquisition of holdings, in the form of conditional loans granted to 
Malta or, with the Maltese Government's agreement, to Maltese undertakings, 
either directly or through the intermediary of Maltese financial institutions. 
Article 3 
1. The total amount fixed in Article 2 shall be used primarily for the financing or part-
financing of cooperation projects or operations to help implement the structural reforms 
needed to facilitate the transition of Malta's economy towards European integration and 
to face up to the challenges posed by accession to the European Union in the best 
possible conditions by developing cooperation in the fields of government matters, 
training, research and technology, industry, trade and services. Financing may also be 
provided for economic infrastructure, productive investments and, where appropriate, 
industrial conversion operations as well as for investments which complement the said 
cooperation projects. 
2. Priority shall be given to those of the eligible projects and operations having the 
following aims: 
in the field of public administration, closer administrative cooperation between 
Malta and the Community to help Malta adopt the acquis communautaire and 
improve the efficiency of its public services; 
<r 
in the field of industry and services, support for structural reforms, adapting the 
Maltese economy to the exigences of the single market and improvements in 
economic competitiveness, encouragement for economic cooperation between 
undertakings in Malta and the European Community, investment promotion and 
private capital backing, and support for small and medium-sized enterprises; 
in the field of science and technology, the creation or 
strengthening of links between training and research establishments in Malta 
and the European Community, and the participation of undertakings or research 
centres, in accordance with the conditions and arrangements laid down by 
Council Decisions 94/761, 94/762 and 94/763 concerning the rules for the 
participation of undertakings, research centres and universities in the specific 
framework programmes of research and technological development and 
demonstration of the European Community;3 
in the fields of trade, the diversification and promotion of exports, support for 
implementation of the agreed reforms of Malta's commercial, customs and tax 
policies with a view to integration into the economy of the European 
Community, and the organization of contacts between businesses in Malta and 
the Union; 
in the priority areas referred to above, the provision of technical and legislative 
assistance and implementation of training programmes in government bodies, 
businesses and research establishments; 
in the fields of education, culture and youth, the promotion of the participation 
of Malta in EC programmes, according to specific arrangements to be negotiated 
and concluded in accordance with the procedures adopted by each party, 
in the fields of transport, energy and telecommunications, the promotion of the 
participation of Malta in EC framework programmes, specific programmes or 
other actions according to specific arrangements to be negotiated and concluded 
in accordance with the procedures adopted by each party. 
3. The Community's financial contributions shall be used to cover internal and external 
costs necessarily incurred in carrying out approved projects or operations (including 
costs in respect of studies, consultants and technical assistance). They may not be used 
to cover regular administrative, maintenance or other operational expenditure. 
Article 4 
1. Capital projects shall be eligible for financing by loans from the Bank or risk capital, 
grants or a combination of these means. 
2. Technical and economic cooperation shall normally be financed by grants. 
Article 5 
1. The amounts to be committed each year shall as far as possible be distributed throughout 
the period of application of this Protocol. 
2. Should Malta accede to the European Union during the period covered by this Protocol, 
arrangements will have to be negotiated to ensure a harmonious transition as regards 
financial aid from the system for associate countries to that for Member States. 
OJ L 306,30.11.1994, p. 1, 5 and 8. 
Article 6 
1. Loans granted by the Bank from its own resources shall be made in accordance with the 
arrangements, conditions and procedures laid down in its statute. They shall, as regards 
their duration, be subject to terms established on the basis of the economic and financial 
characteristics of the projects for which these loans are intended, also taking into 
account the conditions obtaining on the capital markets on which the Bank procures its 
resources. The interest rate shall be determined in accordance with the Bank's practice at 
the time of signature of each loan contract. 
2. The terms and arrangements for contributions to risk capital shall be determined on a 
case-by-case basis. 
3. Aid financed from the Community's budget resources, other than that intended for risk 
capital operations, shall be granted and administered by the Commission. 
4. The funds referred to in Article 2 may be granted through the intermediary of the State 
or appropriate Maltese bodies, on condition that they allocate the amounts to the 
recipients on terms decided, by agreement with the Community, on the basis of the 
economic and financial characteristics of the projects and operations for which they are 
intended. 
Article 7 
Aid contributed by the Community for the execution of certain projects may, with the agreement 
of Malta, take the form of cofinancing in which, in particular, credit and development bodies and 
institutions of Malta, of Member States or of third States or international finance organizations 
would take part. 
Article 8 
The following shall be eligible for financial and technical cooperation: 
(a) in general: 
Malta; 
(b) with the agreement of the Maltese Government, for projects or operations approved by it: 
official Maltese development agencies, 
private agencies working in Malta for economic and social development, 
undertakings carrying on their activities in accordance with industrial and 
business management methods and set up as legal persons within the meaning of 
Article 12, 
groups of producers who are nationals of Malta and, exceptionally, where no 
such groups exist, the producers themselves, 
scholarship holders and trainees sent by Malta under the training schemes 
referred to in Article 3. 
Article 9 ? 
<? 
1. With a view to making optimum use of the instruments and means provided for in this 
Protocol and achieving the objectives laid down in Article 3, the Community and Malta 
shall, by mutual agreement on the basis of information provided by Malta, draw up an 
indicative programme committing both parties and determining the specific objectives 
of financial and technical cooperation, the priority sectors for intervention and the action 
programmes envisaged. 
2. The indicative programme may be reviewed by mutual agreement to take account of any 
changes in Malta's economic situation or in the objectives and priorities laid down by its 
development plan. 
3. The Community and Malta shall continue their exchanges of views within the 
appropriate bodies and shall, at least once during the period of implementation of this 
Protocol and at the latest by the end of the third year following its entry into force, make 
an assessment of the implementation of the indicative programme. 
Article 10 
1. Within the framework laid down in accordance with Article 9, Malta or, with the 
agreement of its Government, the other possible beneficiaries referred to in Article 8, 
shall submit their requests for financial aid to the Community. 
2. The Community shall appraise the requests for financing in collaboration with the 
competent Maltese authorities and other beneficiaries, in accordance with the objectives 
referred to in Article 9, and shall inform them of the decisions taken on such requests. 
Article 11 
1. The execution, management and maintenance of schemes that are the subject of 
financing under this Protocol shall be the responsibility of Malta or of the other 
beneficiaries referred to in Article 8. 
The Community shall make sure that this financial aid is expended in accordance with 
the agreed allocations and to the best economic advantage. 
2. The projects and action programmes shall be the subject of appropriate evaluation, the 
outcome of which shall be communicated to both parties, which shall take appropriate 
measures by mutual agreement. 
3. Certain rules for administering the financial aid granted by the Community shall be the 
subject of an Exchange of Letters or a Framework Agreement between the Commission 
and Malta upon conclusion of this Protocol. 
Article 12 
1. All natural and legal persons falling within the scope of the Treaty establishing the 
European Community and all natural and legal persons of Malta may participate on 
equal terms in tendering procedures and other procedures for the award of contracts 
likely to be financed. Any such legal person formed in accordance with the law of a 
Member State of the European Community or of Malta must have its registered office, 
its administrative head office or its principal establishment in the territories in which the 
European Community Treaty is applied or in Malta; however, where only its registered 
office is in the said territories or in Malta, the activities of such legal person must be 
effectively and continuously linked with the economy of those territories or of Malta. 
2. In agreement with Malta, natural and legal persons who are nationals of developing 
countries associated with the Community by comprehensive cooperation or association 
agreements may exceptionally, on a case-by-case basis, be authorized by the Community 
to participate in the operations referred to in paragraph 1 which are financed by the 
Community. The eligibility of such natural or legal persons shall be assessed, mutatis 
mutandis, on the terms set out in paragraph 1. 
Article 13 
To promote participation by Maltese undertakings in the performance of contracts and to ensure 
the rapid and effective implementation of projects and operations financed from resources 
administered by the Commission: 
1. An accelerated procedure for issuing invitations to tender involving shorter time limits 
for the submission of tenders may be used by Malta in agreement with the Commission 
for works contracts which, because of their scale, are mainly of interest to Maltese 
undertakings. 
The organization of this accelerated procedure shall not rule out the possibility of 
issuing an international invitation to tender where it appears that the nature of the works 
to be carried out or the usefulness of widening participation justifies recourse to 
international competition. 
2. In urgent cases or where the nature, small scale or particular characteristics of certain 
works or supplies so warrant, Malta may, exceptionally, in agreement with the 
Commission, authorize the placing of contracts following restricted invitations to tender, 
the conclusion of contracts by direct agreement and the performance of contracts 
through public works departments. 
The procedures referred to in points 1 and 2 may be used for operations with an 
estimated cost of less than ECU 3 million. 
Article 14 
1. Malta shall apply to contracts awarded for the execution of projects or schemes financed 
by the Community fiscal and customs arrangements no less favourable than those 
applied vis-à-vis the most favoured State or the most favoured international development 
organization. 
2. The content of the arrangements referred to in paragraph 1 shall be established by means 
of an Exchange of Letters between the Parties. 
Article 15 
Malta shall take the necessary measures to ensure that interest and all other payments due to the 
Bank in respect of transactions concluded under this Protocol are exempted from any national or 
local tax or levy. 3 
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Article 16 
Where a loan is accorded to a beneficiary other than Malta, the provision of a guarantee by the 
latter or of other adequate guarantees shall be required by the Bank as a condition of the loan. 
Article 17 
Throughout the duration of the loans and risk capital operations provided for in Article 2, Malta 
shall undertake to: 
(a) place at the disposal of the beneficiaries or of their guarantors the currency necessary for 
the payment of interest and commission and amortization of loans and risk capital aid 
granted for the implementation of operations on its territory; 
(b) make available to the Bank the foreign currency necessary for the transfer of all sums 
received by it in national currency which represent the net revenue and proceeds from 
transactions involving the acquisition by the Community of holdings in the capital of 
companies or firms. 
Article 18 
The results of financial and technical cooperation may be examined within the Association 
Council, which shall establish, where appropriate, the general guidelines for such cooperation. 
Article 19 
One year before the expiry of this Protocol, the Contracting Parties shall examine what 
arrangements could be made for financial and technical cooperation. 
Article 20 
This Protocol shall be annexed to the Agreement establishing an Association between the 
European Economic Community and Malta. 
Article 21 
1. This Protocol shall be subject to approval in accordance with the Contracting Parties' 
own procedures; the Contracting Parties shall notify each other that the procedures 
necessary to this end have been completed. 
2. The Protocol shall enter into force on the first day of the second month following the 
date on which the notifications provided for in paragraph 1 have been given. 
Article 22 
This Protocol is drawn up in two original copies in the Danish, Dutch, English, Finnish, French, 
German, Greek, Italian, Portuguese, Spanish and Swedish languages, each of these texts being 
equally authentic. 
FINANCIAL STATEMENT /7 /? 
1. Title of operation 
Fourth Protocol on financial and technical cooperation between the European Union and 
Malta 
2. Budget heading involved 
B7-4040 - financial cooperation with Cyprus and Malta 
3. Legal basis 
Article 238 of the Treaty 
4. Description of operation 
4.1 General objective 
The aims are as follows: 
to contribute to the economic and social development of Malta and the integration of its 
economy with the EU's: in accordance with the Association Agreement; 
to facilitate transposition of the acquis communautaire (adapting national legislation and 
training civil servants) and help inform Maltese public opinion about life in the EU; 
on a more general level, preparing Malta's economic and social structures for the 
challenge of accession to the EU. 
4.2 Period covered and arrangements for renewal or extension 
Period covered: 1995-98 
In the event of Malta's accession to the EU during the period covered by the Protocol 
specific adaptations will be negotiated. 
5. Classification of expenditure or revenue 
5.1 Non-compulsory expenditure 
5.2 Differentiated appropriations 
5.3 Type of revenue involved: repayment of special loans 
6. Type of expenditure or revenue 
100% grant from the Community budget + EIB loans from own resources; 
Interest rate subsidy: none 
Other: risk capital 
iz 
Should the operation prove an economic success, is there provision for all or part of the Community 
contribution to be repaid?: No 
Will the proposed opération cause any change in the level of revenue? If so, what sort of change and 
what type of revenue is involved? If the risk capital operations are positive, they will generate 
revenue. 
Re-use: no 
7. Financial impact 
7.1 Method of calculating total cost of operation (definition of unit costs) 
The amounts requested have been calculated on the basis of the existing proposals for projects 
which the Commission could finance without delay. 
7.2 Itemised breakdown of cost 
ECU 13.0 million in 100% grants from Community resources 
ECU 2.0 million in risk capital from Community resources 
ECU 30.0 million in EIB loans from own resources 
7.3 Operating expenditure for studies, experts" meetings, etc, included in Part B 
(see Annex Ilia to the Commission communication of 22.4.1992, attached in Annex VIII) 
None 
7.4 Schedule for the preliminary draft budget for multiannual operations whose basic instrument 
contains an "amount deemed necessary" 
amount deemed necessary: 
period: 
1995 1996 1997 1998 TOTAL 
COMMISSION 2 5 5 3 15 
BUDGET 
EIB 5 10 10 5 30 
8. Fraud prevention measures; Results of measures taken 
Controls are undertaken by the Commission and its delegation in Malta at each stage of project 
implementation (invitation to tender, selection, preparation of contracts, provision of services, payment). 
The checks carried out take into account contractual and regulatory obligations and the principles of 
economy and sound financial management. 
Provisions concerning controls (periodic implementation reports, consultation with 
••G 
the Commission, periodic visits by Commission officials etc.) are included in all agreements and contracts 
between the Commission and beneficiaries of payments. 
Provision has been made for the Court of Auditors to conduct on-site inspections. 
9. Elements of cost-effectiveness analysis 
9.1 Specific and quantified objectives; target population 
Specific objectives: links with general objective 
To finance technical assistance and training so as to help Malta adopt and implement Community 
legislation and the policies and instruments needed to assist in its economic, social and political 
transition towards integration in the Community; 
Target population: distinguish, as app!icable,for each objective; indicate the end-beneficiaries of 
the Community's financial contribution and the intermediaries involved. 
Operations will be carried out in conjunction with Maltese private sector and government 
organizations and will involve: 
- the business sector 
- the service sector 
- government officials. 
9.2 Grounds for the operation 
- Need for Community financial aid 
Because of economies of scale, economic and social cohesion and, above all, because the 
European Union is the source of all contributions that the Member States would otherwise have 
made individually. ^ 
- Choice of ways and means 
* advantages over possible alternatives (comparative advantages) 
Cost 
The Fourth EC-Malta financial Protocol will be signed in 1995 
* spin-off effects expected 
Malta's economic and social development . 
* multiplier effects expected 
The proposal contains features conducive to the development of SME: 
- by encouraging involvement in trade and cooperation 
by facilitating the exchange of information and contacts between Community and Maltese 
SME. 
* explanatory reference to similar Community or national operations / 
Main factors of uncertainty which could affect the specific results of the operation 
The main factors of uncertainty concern the administrative efficiency of our Maltese counterparts 
and their political will to proceed with the adoption of the acquis communautaire particularly in 
view of the 1996 elections. 
93 Monitoring and evaluation of the operation 
Performance indicators of future operations. The performance indicators will be selected from 
the following: 
* output indicators (measuring activities used) 
- rate of commitments/payments 
- number of training courses organized, levelof participation; development of the national 
legislative framework (transposition of the acquis communautaire); 
- development of trade with the EU, location of European firms in Malta 
- level of involvement in Community framework programmes 
* impact indicators (measuring performance against objectives) 
- improvements in business management 
- increase in trade 
- economic recovery 
- improvements in government administration 
- industrial development 
- creation of added value in the economy 
- impact on job création 
- impact on the trade balance and balance of payments 
- impact on per capita income levels 
Details and frequency of planned evaluations 
Projects are subject to periodic checks and evaluations by the Commission and by the bodies 
responsible for their implementation. • 
On its completion, an evaluation report will be prepared on the content and impact of the project. 
Assessment of the results obtained 
The previous financial protocols have been committed in full. 
is 
9.4 Coherence with financial programming 
- Is the operation incorporated in the DG's financial programming for the relevant years? Yes 
To which broader objective defined in the DG's financial programming does the objective of the 
proposed operation correspond? 
Developing cooperation with Malta in order to help achieve economic targets and contribute to 
political stability in Malta. 
10. Administrative expenditure (Part A of the budget) 
This section of the financial statement must be sent to DGs IX and XIX; DG IX will then forward it to 
DG XIX with its opinion. 
10.1 Will the proposed operation involve an increase in the number of Commission staff? If so, 
how many? 
No 
11. Impact On The Reserve Established To Provide Guarantees 
11.1 Preliminary timetable of loans to be arranged during the life of the decision (ECU million). 
1995 1996 1997 1998 TOTAL 
5 10 10 5 30 
11.2 Estimated use of the reserve established to constitute the guarantee fund (ECU million). 
1995 1996 1997 1998 
0,75 1,5 1,125 0 
11.3 Estimated use of the reserve (taking account of this proposal; in million ECU): 
1995 1996 1997 1998 1999 
size of reserve 323 326 336 346 356 
margin of reserve 131,5 118,2 306,9 , 318 314 
IMPACT OF THE PROPOSAL ON SME /I 1C 
The proposal holds positive implications for SME, in that: 
* it will promote their involvement in exchanges and cooperation; 
* it will facilitate contact and exchanges of information between SME on both sides. 
ISSN 0254-1475 
COM(95) 64 final 
DOCUMENTS 
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Catalogue number : CB-CO-95-075-EN-C 
ISBN 92-77-86219-X 
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