EN 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 9 September 2008 
at the request of the Austrian Federal Ministry of Finance  
on a draft Federal law providing for an Austrian contribution to the HIPC-Trust Fund for 
Liberia’s debt relief  
(CON/2008/41) 
 
Introduction and legal basis  
On 28 July 2008, the European Ce ntral Bank (ECB) received a request from the Austrian Ministry of 
Finance for an opinion on a draft Federal law providin g for an Austrian contribution to the HIPC-Trust 
Fund for Liberia’s debt relief (hereinafter the ‘draft law’). 
The ECB’s competence to deliver an opinion is based on Article 105(4) of the Treaty establishing the 
European Community and the third indent of Article 2(1) of Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft legislative provisions
1, as the draft law contains provisions concerning a national central bank (NCB). 
In accordance with the firs t sentence of Article 17.5 of the Rules of Procedure of the European Central 
Bank, the Governing Council has adopted this opinion.  
 1. Purpose of the draft law  
1.1 Pursuant to Article 1 of the draft law, the Oesterreichische Nationalbank (OeNB) is authorised
2 in 
the process of debt clearance for Liberia to tran sfer 4.8 million Special Drawing Rights (SDRs) 
as an Austrian contribution to the trust funds of the International Monetary Fund (IMF) initiative for Heavily Indebted Poor Countries (HIPC). 
1.2 The explanatory memorandum accompanying the dr aft law states that the IMF has lifted the 
suspension of Liberia’s membership, which had be en imposed due to arrears of payments. As a 
precondition for lifting the suspension, and since the IMF was not in a position to advance the loan directly, IMF member countries agreed to  provide a temporary IMF loan to Liberia to 
enable it to pay off its old IMF loans an d thereby resume full IMF membership. By 
11 March 2008, 102 IMF member countries had pr omised contributions totalling 547.2 million 
SDRs. It is understood that, from a procedural point of view, the next step will be actually to grant Liberia the debt relief provided that it satisfies certain conditions.  
                                                
 
1  OJ L 189, 3.7.1998, p. 42. 
2  In the context of this opinion, the question of the legal quality of the term ‘authorise’ (i.e. whether the OeNB has 
discretion in deciding whether and/or how many SDRs it would transfer or whether it could also decide not to transfer 
any SDRs) is not considered any further. 
 
2 1.3 The ECB understands from the explanatory memorandum to the draft law that the OeNB, after the 
proportionate transfer of the relevant Special Contingent Account – 1 (SCA-1) funds and the 
proportionate transfer of outstanding charges, is authorised to retransfer these to the Liberia 
Administered Account established for Liberian debt clearance or the Poverty Reduction and 
Growth Facility (PRGF)-HIPC trust fund. The SC A-1 is a sub-account of the General Resources 
Account, which is remunerated by creditors and recipient countries in the context of the Burden 
Sharing Mechanism. The SCA-1 resources are repaya ble funds which can be repaid to the member 
countries following a resolution of the IMF (as has happened in this case), or following cancellation of all arrears due to the IMF. This is intended to ensure that in the event of a debtor 
country becoming unable to pay, the IMF is in a position to settle the claims of donor countries. 
The outstanding deferred charges we re borne proportionally by creditor and debtor countries in the 
course of a burden sharing mechanism. After repaym ent of the debts and accrued charges, they are 
repaid automatically to the countries participating in this process. 
1.4 From the explanatory memorandum the ECB also unde rstands that, thereafter, a transfer to the 
Liberia administered account or the HIPC-Trust Fu nd takes place on the basis of the proposal made 
by the G-8 countries and accepted by the IMF relevant  decision-making bodies, to the effect that all 
member countries which regularly appear in the financ ial transactions plan should participate in the 
debt clearance. The financial transactions plan is  an integral part of IMF lending. The IMF makes 
its loans either directly in the form of SDRs or in foreign currency. In the second case, the quota position of the donor countries decreases and their claim against the IMF rises. 
1.5 The explanatory memorandum states that Austria ag reed to make a contribution of 4.8 million 
SDRs (EUR 5.025 million) to the financing pack age. It also states that the cancellation of 
Liberia’s IMF debts will reduce the OeNB’s income and that, as a result, lower funds will be transferred to the Ministry of Finance. 
 2. Specific observations  2.1 The ECB is of the view that an NCB’s involveme nt in financing the IMF’s PRGF and PRGF-HIPC 
Trusts reduces what is in principle government e xpenditure on development aid, and that the NCB 
effects this reduction by performing an immediate transfer of funds in lieu of the government. In 
the present case, the explanatory memorandum states that the participation envisaged by the draft 
law in respect of Liberia would increase the leve l of Austria’s multilateral official development 
assistance payments. In view of the involvement of the OeNB in this development assistance, the ECB notes that it is necessary to ascertain whethe r the draft law complies with the prohibition on 
monetary financing laid down in Article 101 of the Treaty
3 and Council Regulation (EC) 
                                                 
3  Article 101 of the Treaty prohibits overdraft facilities or any ot her type of credit facility with the ECB or the NCBs of 
Member States in favour of Community institutions or bodi es, central governments, regional, local or other public 
authorities, other bodies governed by public  law, or public undertakings of Member  States and the purchase directly from 
these public sector entities by the ECB or NCBs of debt instruments. 
 
3 No 3603/93 of 13 December 1993 specifying defin itions for the application of the prohibitions 
referred to in Articles 104 and 104b(1) of the Treaty4. 
2.2 The draft law covers a situation which is in substa nce similar to that covered by the Federal Law on 
the payment of a contribution by Austria to th e trust fund administered by the International 
Monetary Fund for low income developing countri es affected by natural disasters, on which the 
Ministry of Finance consulted the ECB in 2005. In its Opinion5, the ECB took the view that the 
OeNB’s financing of the relevant IMF-admini stered initiative fell within the scope of the 
exemption provided for in Article 7 of Council Regulation (EC) No 3603/93. This exemption 
relates to the financing by NCBs of obligations  falling upon the public sector vis-à-vis the IMF, 
which are not to be regarded as credit fac ilities prohibited by Article 101 of the Treaty. 
Consequently, in this case the ECB considers that the OeNB’s financing of the Austrian 
contribution to the HIPC-Trust Fund for Liberia’s de bt relief, as provided for in the draft law, falls 
within the scope of the same exemption and should not  therefore be regarded as a form of monetary 
financing prohibited by the Treaty. 
 This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 9 September 2008. 
 
[signed] 
 
The President of the ECB 
Jean-Claude TRICHET 
                                                
 
4  OJ L 332, 31.12.1993, p. 1. Recital 9 to Council Regulation (EC) No 3603/93 provides that, notwithstanding the role 
assigned to the Commission pursuant to Article 169 of the Tr eaty, it is for the ECB, pursuant to Article 109f(9) (now 
Article 117(9)) and Article 180 (now Article 237) of the Treaty , to ensure that NCBs honour the obligations laid down in 
the Treaty. 
5  ECB Opinion CON/2005/29 of 11 August 2005 at the request of th e Austrian Federal Ministry of Finance concerning a 
draft Federal law on the payment of a contribution by Aust ria to the trust fund administered by the International 
Monetary Fund for low income developing countries affected by natural disasters.