COMMISSION OF THE EUROPEAN COMMUNITIES 
C0M(90) 57 final 
Brussels, 1 February 1990 
Amended proposal for a 
COUNCIL DECISION 
providing medium-term financial assistance for HUNGARY 
(presented by the Commission pursuant to Article 149(3) 
of the EEC-Treaty) 
AMENDED PROPOSAL v 
presented by the Commission 
pursuant to Article 149 (3) o 
the EEC Treaty 
DRAFT COUNCIL DECISION 
PROVIDING MEDIUM-TERM FINANCIAL ASSISTANCE FOR HUNGARY 
The proposal as it 
last stood Amended text 
Visas 
Having regard to the proposal from the 
Commission, and the opinion of the European 
Pari lament Having regard to the proposal from the Commission 
submitted following consultations with the Monetar 
Committee 
Having regard to the opinion of the Europeai 
Pari lament 
3rd recital 
...whereas the conditions and terms of the loan 
should emphasise necessary structural 
adjustment as well as being consistent with the 
terms and conditions put forward by the IMF; 
Article 2 
... The Commission is empowered to negotiate 
and monitor implementation over time of a 
structural adjustment programme with the 
Hungarian authorities so as to facilitate the 
evolution of Hungary's economy towards a market 
oriented system in a stable macroeconomic 
environment. ...whereas the conditions and terms of the loan 
should emphasise necessary structural adjustment, 
with due regard for social stability, as well as 
being consistent with the terms and conditions put 
forward by the IMF; 
... The Commission is empowered to negotiate an< 
monitor implementation over time of a structural 
adjustment programme with the Hungarian authorities 
so as to facilitate the evolution of Hungary's 
economy towards a market oriented system in a stable 
macroeconomic and social environment. 
- Article 4 
The Commission shall verify at regular 
intervals that the economic policy in Hungary 
accords with the adjustment programme. The Commission shall verify at regular intervals in 
collaboration with the Monetary Committee that the 
economic policy fn Hungary accords with the 
adjustment programme. The Commission, after the 
Monetary Committee has delivered an opinion, shall 
decide on the release of the instalment. 
. Article 7 
The Community provides for appropriate 
budgetary cover to guarantee its payments 
related to the borrowing operations under 
Article i. The Community provides for appropriate budgetary 
cover to guarantee its payments related to the 
borrowing operations under Article 1 up to a limit to 
be determined by the budgetary authority. 
In the event of the guarantee having to be invoked, 
the necessary financial means snail &3 provided by an 
amending or supplementary budget. 
Amended proposal for a 
COUNCIL DECISION 
of 
providing medium-term financial assistance for HUNGARY 
THE COUNCIL OF THE EUROPEAN COMMUNITIES, 
Having regard to the Treaty establishing the European Economic 
Community, and In particular Article 235 thereof, 
Having regard to the proposal from the Commission, submitted following 
consultation with the Monetary Committee 
Having regard to the opinion of the European Parliament, 
Having regard to the Action Plan adopted by the Commission on 25 
September 1989, 
Having regard to the conclusions of the 3 October General Affairs 
Council, reiterated In the agreements of the special meeting of the 
European Council on 18 November. 
Whereas the people of Hungary have close historic relationships with 
the people of the Community, and whereas that country is undertaking 
fundamental political and economic reforms and has decided to adopt a 
market economy model; 
Whereas these reforms will strengthen mutual confidence and bring 
Hungary closer to the Community; 
Whereas the granting of the medium term loan is an appropriate measure 
to facilitate the adjustment of the Hungarian economy In order to reap 
the full benefits of an economy based on market principles; whereas the 
conditions and terms of the loan should emphasise necessary structural 
adjustment, with due regard for social stability, as well as being 
consistent with the terms and conditions put forward by the IMF; 
whereas an agreement with the IMF on a stabilisation programme is 
necessary and should be concluded quickly; whereas assurances should be 
sought that Hungary has negotiated satisfactory terms with Its private 
creditors to ensure their continued participation; 
Whereas the economic reforms will contribute to mutually beneficial 
economic and commercial relationships between Hungary and the 
Community; and whereas these relations will promote throughout the 
Community a harmonious development of economic activities; 
Whereas examination by the Commission, In collaboration with the 
Monetary Committee, has shown a marked deterioration of the economic 
situation of Hungary; 
Whereas the Hungarian Government has applied for a medium-term loan to 
the Community; 
È » - 2 -
Whereas the Community should take the appropriate measures to cover 
Itself against losses due to any failure on Hungary's part to fulfill 
the payments to the loan; 
Whereas the authority required to set up this loan is not embodied In 
the treaty; 
HAS ADOPTED THIS DECISION : 
Article 1 
The Commission is empowered to conclude, on behalf of the Community, a 
borrowing programme of a maximum of ecu one thousand million with a 
duration of up to 5 years and to subscribe and execute all appropriate 
documents In that connection for the purpose Indicated in article 2. 
Article 2 
The Commission is authorized to lend the proceeds to Hungary In order 
to overcome structural adjustment problems. The Commission is empowered 
to negotiate and monitor Implementation over time of a structural 
adjustment programme with the Hungarian authorities so as to facilitate 
the evolution of Hungary's economy towards a market oriented system In 
a stable macroeconomic and social environment. 
Article 3 
The loan shall be made available to the National Bank of Hungary in 
instalments released in the light of the examination by the Commission 
of the evolution of the economic situation and of the results obtained 
in the execution of the adjustment programme. 
Article 4 
The Commission shall verify at regular intervals in collaboration with 
the Monetary Committee, that the economic policy In Hungary accords 
with the adjustment programme. The Commission, after the Monetary 
Committee has delivered an opinion, shall decide on the release of the 
Instalments. 
Article 5 
1. The borrowing and lending operations referred to In Articles 1 and 
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 risk, or In any other commercial risk. 
The Commission shall take the necessary steps, If Hungary so 
decides, to include In the loan conditions, and also to exercise, 
an early repayment clause. 
- 3 -
2. At the request of Hungary and where circumstances permit an 
improvement in the interest rate on the loans, the Commission may 
refinance all or part of Its initial borrowings or restructure the 
corresponding financial conditions. 
3. All related costs incurred by the Community in concluding and 
carrying out the operation under this decision shall be borne by 
Hungary. 
Article 6 
The Commission shall address a report at least once a year to the 
Council and to the European Parliament on implementation of this 
Decision. 
Article 7 
The Community provides for appropriate budgetary cover to guarantee its 
payments related to the borrowing operations under article 1 up to a 
limit to be determined by the budgetary authority. 
In the event of the guarantee having to be invoked, the necessary 
financial means shall be provided by an amending or supplementary 
budget. 
Done In Brussels, 1989 
For the Councl 
The President 

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