COMMISSION OF THE EUROPEAN COMMUNITIES 
C0MC93) 399 final 
Brussels, 1 September 1993 
Proposal for a 
COUNCIL DECISION 
allowing for separate liability of the Czech Republic and the Slovak 
Republic with regard to the loan facility granted to Czechoslovakia 
pursuant to Council Decision 91/106/EEC 
(presented by the Commission) 
EXPLANATORY MEMORANDUM 
In February of 1991, the EC Council decided to grant a loan of ECU 375 
million to the Czech and Slovak Federal Republic (CSFR). The loan was 
disbursed in two tranches, the first one of ECU 185 million in August 
1991 and the second one of ECU 190 million in February 1992. The aim of 
the loan was to strengthen the balance of payments and reserves 
situation in the former CSFR, thus facilitating the introduction of 
currency convertibility. 
In view of the dissolution of the federation on January 1, 1993, the 
Commission, at the end of last year, took the initiative to propose to 
the authorities of the CSFR and the two successor republics that the 
loan be continued on the understanding that the two republics would be 
jointly and severally responsible for the full amount as regards the 
Community as lender. 
In response to the Commission initiative, the authorities of the Czech 
and Slovak Republics proposed a formal division of the EC loan on the 
basis of a 2:1 ratio, in accordance with the law regarding the division 
of property of the former CSFR adopted on November 13, 1992 by the 
Federal Assembly of the CSFR. This law states that the commitments 
arising from the loans accepted by the former CSFR should be divided 
between the two successor states in the ratio corresponding to the 
population of the individual republics, that is, a ratio of 2 to 1. 
In justifying their position, the new republics emphasized the fact 
that individual responsibility is one of the most important aspects of 
sovereignty, and that economic autonomy was a crucial factor in the 
separation of the Czech and Slovak Republics. They also argued that 
some other important official creditors had already accepted separate 
liability of the successor states. 
The Commission, having considered the views expressed on this issue 
within the G-24, and after proper consultation of the Monetary 
Committee, has decided to accede to the request made by the authorities 
of the successor republics and is proposing that the Community agrees 
to divide the 1991 EC loan according to the 2:1 ratio, with each 
successor republic being individually liable for only its allocated 
part of the loan. Accordingly, the Czech Republic and the Slovak 
Republic will be responsible for, respectively, two thirds and one 
third of the total payments of principal, interest and fees associated 
with the EC loan. 
During the interim period between the date of the effective dissolution 
of the CSFR, that is, December 31, 1992 and the date on which the 
reallocation of the 1991 loan comes into effect the Czech and the 
Slovak Republics will remain jointly responsible for all payments 
falling due, persuant to Declarations made by each to the Community in 
December 1992 on the assumption of liabilities under all agreements 
between the Community and former CSFR. It must be noted in this respect 
that since the partition of the Federation, the authorities of both 
republics are indeed discharging fully and timely their obligations 
fallen due. Payments of ECU 10,5 million have been made to this end on 
the 18th of March and ECU 9,6 million on the 15th of June. 
It is proposed to the Council to authorise the Commission to agree with 
the Czech and the Slovak authorities on the amendment or novation of 
the original Loan Agreement necessary to make effective the separate 
liability of the Czech and the Slovak Republics, whilst transposing, as 
appropriate, the original terms and conditions of the Community loan 
operation. The separate liability of the two Republics would also have 
to be reflected in a new drafting of the remarks accompanying the 
corresponding Budget token entry. 
Proposal for a 
COUNCIL DECISION 
allowing for separate liability of the Czech Republic and the Slovak 
Republic with regard to the loan facility granted to Czechoslovakia 
pursuant to Council Decision 91/106/EEC1). 
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 Commission2) submitted 
following consultation of the Monetary Committee, 
Having regard to the opinion of the European Parliament3), 
Whereas pursuant to Council Decision 91/106/EEC the Community has 
granted to the Czech and Slovak Federal Republic (CSFR) a medium-term 
loan of ECU 375 million in principal, with a view to ensuring a 
sustainable balance-of-payments situation, strengthening its reserves 
and facilitating the introduction of currency convertibility; whereas 
the loan was fully disbursed by the Commission on two instalments of 
respectively ECU 185 million in August 1991 and ECU 190 million in 
February 1992; 
Whereas in accordance with the constitutional act on the dissolution of 
the CSFR adopted by the Federal Assembly of the CSFR on 25 November 
1992, the CSFR ceased to exist as of 31 December 1992 and its successor 
states are the Czech Republic and the Slovak Republic; 
Whereas the constitutional act on the division of property of the CSFR 
between the Czech Republic and the Slovak Republic adopted by the 
Federal Assembly on 13 November 1992 stipulates that the loans accepted 
by the CSFR will be divided between the Czech Republic and the Slovak 
Republic in the ratio of two to one, corresponding to the relative 
proportion of their populations; and whereas the Czech and the Slovak 
authorities have requested the Community to agree accordingly on the 
division of the liability of the CSFR arising from the Community loan 
operation of ECU 375 million granted pursuant to Council Decision 
91/106/EEC; 
Whereas the Czech Republic and the Slovak Republic are jointly 
continuing to discharge fully their debt servicing obligations stemming 
from the Community loan operation of ECU 375 million as these 
obligations fall due; and whereas these Republics have agreed to take 
over respectively two thirds and one third of the payment obligations 
of principal, interest and fees relating to this operation; 
1) OJ N° L56, 2.3.1991, p. 24 
2) 
3) 
Whereas the Commission should be authorised to take the appropriate 
action to ensure that the liabilities arising under the loan granted 
purusant to Decision 91/106/EEC should be divided between the Czech and 
the Slovak Republics in conformity with the act of the Federal Assembly 
of 13 November 1992; 
Whereas the Treaty does not provide, for the adoption of this Decision, 
powers other than those of Article 235, 
HAS DECIDED AS FOLLOWS : 
Sole Article 
1. The Czech Republic and the Slovak Republic may assume separate 
liability for respectively two thirds and one third of all the 
payments of principal, interest and fees associated with the 
service of the Community medium-term loan of ECU 375 million 
granted to the Czech and Slovak Federal Republic (CSFR) pursuant to 
Council Decision 91/106/EEC of 25 February 1991. 
2. To this end, the Commission is authorised to agree with the 
authorities of the Czech and the Slovak Republics, after 
consultation of the Monetary Committee, on the necessary 
adjustments to the original Loan Agreement between the Community 
and the CSFR. 
3. The terms and conditions stipulated in Decision 91/106/EEC shall 
apply mutatis mutandis to the arrangements to be entered into 
pursuant to paragraph 2 and the financial terms of the original 
Loan Agreement will be preserved. 
4. All related costs that may be incurred by the Community in 
concluding and carrying out the arrangements provided for by this 
Decision shall be borne by the Czech Republic and the Slovak 
Republic as to two thirds and one third respectively. 
Done at Brussels, For the Council 
The President 
FINANCIAL RECORD 
1. Budget line concerned 
Article (BO-214) loan guarantee for aid to Czechoslovakia. 
2. References (legal base) 
Article 235 of the Treaty 
3. Classification of the Expenditure 
Obligatory 
4. Description and Justification for the action 
a. Description of the action 
Amendment to the remarks accompanying the existing token entry 
with a view to reflecting the separate liability of the Czech 
and the Slovak Republics with regard to the servicing of the 
Community loan of ECU 375 million granted to Czechoslovakia 
pursuant Council decision 91/106/EEC of 25 February 1991. 
b. Justification for the action 
Czechoslovakia ceased to exist as of 31 December 1992. 
The authorities of the Czech and the Slovak Republics have 
requested the Community to agree on the division of the 
liability of the CSFR arising from the Community loan, 
according to a two to one ratio, consistent with their 
separation agreement. 
5. Effect of the action on intervention credits 
The Czech Republic and the Slovak Republic will be held separately 
liable for respectively two thirds and one third of the payments of 
principal, interest and fees associated with the service of the 
Community loan. 
ISSN 0254-1475 
COM (93) 399 final 
11 01 
Catalogue number : CB-CO-93-431-EN-C 
ISBN 92-77-58731-8 
Office for Official Publications of the European Communities 
L-2985 Luxembourg