Amended proposal for a Council Decision concerning exceptional assistance for the heavily indebted ACP countries
Date: 1998-04-07
Institutions: European Commission
Subjects: ACP countries, Community loan, EU initiative, debt reduction, fourth Lomé Convention

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 07.04.1998 
COM(1998) 210 final 

98/0132 (CNS) 

Amended proposal for a 

COUNCIL DECISION 

concerning Exceptional Assistance for the Heavily Indebted ACP countries 

(presented by the Commission pursuant to Article 189 a (2) 
of the EC-Treaty) 

Explanatory memorendum 

1.  A  draft  Decision  was  annexed  to  the  Commission  Communication  concerning 
structural  adjustment  support  and  debt  relief  in  heavily  indebted  ACP  countries 
(COM(97)  129).  In  the  light  of  the  Council  discussions,  it  was  considered 
appropriate to propose a new one. 

2. 

In  this  regard,  the  Council,  on  12 February  1998,  adopted  the  conclusions  of  the 
report  to  COREPER  of  18 December  1997 with  regard  to the said  initiative.  These 
conclusions  confirm  the  Community's  participation  in  the  HIPC  initiative  and 
provide, in particular,  for the priority use of the interest on EDF funds  to finance the 
Community's  contribution  in the HIPC initiative.  The aim of the attached  proposal 
is to provide the legal basis for this contribution and to lay down conditions. 

AMENDED PROPOSAL FOR A COUNCIL DECISION 
of 

ECn° 

1998 

concerning Exceptional Assistance for the Heavily Indebted ACP countries 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Internal  Agreement  on  the  financing  and  administration  of 
Community  aid  within  the  framework  of  the  Fourth  ACP-EEC  Convention,  signed  on 
16 July  1990,  hereinafter  referred  to  as  "the  Internal  Agreement",  and  in  particular  its 
Article 9, 

Having regard to the proposal  from the Commission, 

Having regard to the opinion of the European Parliament, 

Whereas  the  Council  on  12 February  1998  adopted  the conclusions  of  the report  to the 
COREPER of  18 December  1997 on the European Community's contribution to the debt 
initiative for the Heavily Indebted Poor Countries, 

Whereas a debt initiative  for the Heavily  Indebted  Poor Countries (hereinafter  referred  to 
as  the  'HIPC  Initiative'),  was  presented  by  the  International  Monetary  Fund  and  the 
World Bank at their April  1996 Meetings  and  subsequently  endorsed  by the Interim and 
Development  Committees  at  the  Autumn  1996  Annual  Meetings  of  the  International 
Monetary Fund and the World Bank, 

Whereas the Community  and  its Member  States are firmly  committed  to participating in 
the HIPC initiative by providing exceptional assistance to the countries which  implement 
economic reform programmes and qualify  for this initiative, 

Whereas, all the countries, to which there is Community exposure eligible for HIPC debt 
relief, are ACP States, 

Whereas  the  implementation  of  this  decision  shall  be  in  accordance  with  the  Financial 
Regulation  of  29 July  1991  applicable  to  cooperation  for  the  financing  of  development 
according to the Fourth ACP-Lomé Convention. 

HAS DECIDED AS FOLLOWS: 

Article  1 

The  European  Community  shall  fully  participate  in the  HIPC  initiative  by  assisting  the 
countries  which  will  qualify  for this initiative, with  a view to helping them  reducing the 
net present  value of their external  financial  obligations  towards the Community.  For this 
purpose,  the  Community  shall  make  available  grant  resources  to  be  utilised  by  the 
eligible  countries  to  meet  outstanding  debt  and  debt  service  obligations  towards  ihc 
Community.  This  assistance,  together  with  resources  provided  by  other  creditors,  shall 
allow  the  eligible  countries  to  achieve  their  country-specific  debt  sustainability  target 
agreed within the framework  of the HIPC initiative. 

Article 2 

The assistance referred to in Article  1 shall primarily be used by the beneficiary  countries 
to  prepay  outstanding  special  loans  on  a  net  present  value  basis.  If  such  action  is  not 
sufficient  to  attain  the  agreed  level  of  net  present  value  debt  reduction,  the  beneficiary 
country  shall  use  the  allocated  grant  to  meet  any  outstanding  risk  capital  obligations 
towards the Community. 

Article 3 

The  Commission  shall  take,  on  a  case-by-case  basis,  specific  decisions  providing 
assistance to each eligible ACP country, in accordance with the rules and procedures laid 
down  in  Chapter  IV  of  the  Internal  Agreement.  The  Commission's  decision  on  the 
amount of assistance to be provided  in each case shall allow  for the necessary  reduction 
in  the  net  present  value  of  that  country's  outstanding  external  financial  obligations 
toward  the  Community  and  be  consistent  with  the  HIPC  initiative  methodology.  The 
country  specific  decisions  shall  also  take  into  account  the  structure  of  the  country's 
exposure  towards  the  Community,  the  desire  for  administrative  simplicity  in  the  case-
specific  proposals chosen and the need to ensure an equitable and fair treatment between 
the eligible countries. Each country decision shall make explicit the modalities, terms and 
conditions for the implementation of this decision. 

Article 4 

The  grant  assistance  referred  to  in  Article  1  shall  be  financed  from  interest 
1. 
accrued  on  the  funds  deposited  with  the  paying  agents  in  Europe  referred  to  in  Article 
319(4)  of the  Convention,  to  the  extent  such  revenue  is available  and  after  due  account 
has been  taken  of the need  to reserve  such  revenue  for  the purposes  foreseen  in  Article 
9(2)  of  the  Internal  Agreement.  An  initial  amount  of 40 million  ECU  shall  be  reserved 
from  this interest  for the purpose  of financing  this assistance, primarily  for the countries 
which reach their decision points in  1997 and  1998. This amount can be supplemented by 
further  allocations  from  interest,  following  approval  of  the  EDF  Committee  in 
accordance with Article 9 of the Internal Agreement. 

To the extent that such revenue is not sufficient  to cover the decisions referred  to 
2. 
in  Article  3,  and  awaiting  possible  further  resources  made  available  under  future 
agreements  with  the  ACP  States,  the  Member  States  shall  examine  whether  resources 
could  be  provided  from  the  payments  made  to  the  accounts  held  in  the  name  of  the 
Member  States  at  the  European  Investment  Bank  in  respect  of  special  loans  and  risk 
capital  operations.  The  allocation  of  such  payments  for  the  purpose  of  financing  this 
exceptional  assistance  shall,  on  the  basis  of  a  Commission  proposal,  be  subject  to  an 
unanimous  decision  by  the  Council,  in  accordance  with  Article  9(1)  of  the  Internal 
Agreement. 

Article 5 

1. 
In the course of  1998, the Commission  shall  present,  in due time, a report  to the 
Council  and  to  the  Parliament  containing  a  review  of  the  remaining  financing  needs 
arising  from  the Community's  participation  in this initiative. On the basis of this  report, 
the Council  shall take a decision regarding  the Community's  further  participation  in the 
HIPC Initiative. 

The Commission shall report regularly to the Council and to the Parliament on the 

2. 
implementation of the present decision. 

The  Monetary  Committee  will  be  kept  informed  on  the  implementation  of  this 

3. 
decision. 

This decision will enter into force on the day of its adoption. 

Article 6 

Done at Brussels, 

For the Council, 

The President, 

b 

ISSN 0254-1475 

COM(98) 210 final 

DOCUMENTS 

EN 

11  09  01 

Catalogue  number  :  CB-CO-98-225-EN-C 

ISBN 92-78-33030-2 

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