98/729/EC: Council Decision of 14 December 1998 amending Decision 97/256/EC so as to extend the Community guarantee granted to the European Investment Bank to cover loans for projects in Bosnia and Herzegovina
Date: 1998-12-14
Institutions: Council of the European Union
Subjects: Bosnia and Herzegovina, EIB loan, European Investment Bank, cooperation agreement, credit guarantee, third country

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Official Journal of the European Communities

22. 12. 98

COUNCIL DECISION

of 14 December 1998

amending Decision 97/256/EC so as to extend the Community guarantee granted
to the European Investment Bank to cover loans for projects in Bosnia and
Herzegovina

(98/729/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 235 thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the European Parlia-
ment (2),

Whereas it is necessary to increase efforts to ensure a
stable political environment in Bosnia and Herzegovina;
whereas, within the regional approach defined by the
Council, it is desirable to consider an exceptional action
aimed at rebuilding infrastructure in Bosnia and Herzego-
vina; whereas, in order to finance this action, it is appro-
priate to call on the European Investment Bank, herein-
after referred to as ‘the EIB'; whereas the Council has
invited the Commission to present a proposal concerning
the extension to EIB lending in Bosnia and Herzegovina
of the arrangements laid down by Council Decision 97/
256/EC of 14 April 1997 granting a Community guar-
antee to the European Investment Bank against losses
under loans for projects outside the Community (Central
and Eastern Europe countries, Mediterranean countries,
Latin American and Asian countries, South Africa and the
Former Yugoslav Republic of Macedonia) (3);

the EIB in Bosnia and
Whereas the involvement of
Herzegovina should be consistent with the policy of the
Community in this country; whereas the EIB should
operate within the framework of
the reconstruction
programme agreed at the various donors’ conferences and
to the
should finance projects which are of
Community and to Bosnia and Herzegovina;

interest

Whereas the loans granted by the EIB, from its own
resources under conditions laid down by it in accordance
with its Statute, would need to be combined with a grant
element from the Community budget for the EIB to

(1) OJ C 192, 19. 6. 1998, p. 12.
(2) OJ C 341, 9. 11. 1998.
(3) OJ L 102, 19. 4. 1997, p. 33. Decision as amended by Deci-

sion 98/348/EC (OJ L 155, 29. 5. 1998, p. 53).

intervene effectively; whereas this grant should take the
form of interest-rate subsidies; whereas, in addition, bank
loans could also be combined with outright grants as
project co-financing; whereas it is appropriate that the
subsidy rate should be the same as that already granted
under the protocols on financial cooperation to other
ex-Yugoslav republics;

Whereas Council Regulation (EC) No 1628/96 of 25 July
1996 relating to aid for Bosnia and Herzegovina, Croatia,
the Federal Republic of Yugoslavia and the former Yugo-
slav Republic of Macedonia (4), provides for aid measures;
whereas Article 8 of that Regulation states that operations
referred to in it may cover expenditure relating to
loans granted by the EIB;
interest-rate subsidies for
whereas
the
that Regulation for
financing decisions relating to operations covered by it
should apply to these new arrangements;

the procedures of

Whereas the provision of interest-rate subsidies is of an
exceptional nature and should not set a precedent for
Community financial assistance to Bosnia and Herzego-
vina;

Whereas the capacity of Bosnia and Herzegovina to
service its external financial obligations should be secured
reform
by
implementation of macroeconomic
the
programmes
financial
institutions;

supported by the international

Whereas EIB lending should be conditional upon the
discharge of all due and outstanding financial obligations
of all public entities in Bosnia and Herzegovina towards
the EIB and the Community and upon the acceptance by
Bosnia and Herzegovina of responsibility by way of guar-
antee for such of those obligations as are not yet due;

Whereas Decision 97/256/EC should therefore be
amended accordingly;

(4) OJ L 204, 14. 8. 1996, p. 1. Regulation as last amended by
Regulation (EC) No 851/98 (OJ L 122, 24. 4. 1998, p. 1).

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Whereas, the Treaty does not provide, for the adoption of
this Decision, powers other than those set out in Article
235,

ECU 150 million

— Bosnia and Herzegovina:

ECU 100 million.

HAS DECIDED AS FOLLOWS:

Article 1

Decision 97/256/EC is hereby amended as follows:

1. In the title, ‘. . . Asian countries, South Africa and the
Former Yugoslav Republic of Macedonia' shall be
replaced by ‘. . . Asian countries, South Africa,
the
Former Yugoslav Republic of Macedonia and Bosnia
and Herzegovina'.

That ceiling shall cover a period of three years
beginning on 31 January 1997 for Central and
Eastern Europe, Mediterranean and Latin American
the
and Asian countries, on 1 July 1997 for
Republic of South Africa, and on 1 January 1998
for the Former Yugoslav Republic of Macedonia.
For Bosnia and Herzegovina it shall cover a period
of two years beginning on the date of publication
of this Decision. If, on the expiry of each of these
periods, the loans granted by the EIB have not
attained the overall amounts referred to above, the
relevant period shall be automatically extended by
six months.'

(b) the following seventh indent shall be added to

2. The following recital shall be inserted after recital No

paragraph 2:

9:

‘(9a) Whereas the Community guarantee to the EIB
against losses under loans for projects in Bosnia
and Herzegovina is an exceptional and special
action and does not constitute a precedent for any
future guarantees;'.

3. In Article 1

‘— Bosnia and Herzegovina.'

4. The following Article shall be inserted:

‘Article 1a

(a) paragraph 1 shall be replaced by the following:

This Article shall apply to EIB lending in Bosnia

1.
and Herzegovina.

‘1.
The Community shall grant the European
Investment Bank a global guarantee in respect of
all payments not received by it but due in respect
in accordance with its usual
of credits opened,
criteria for investment projects carried out in the
Central and Eastern Europe countries, in the Med-
iterranean countries, in the Latin American and
Asian countries, in the Republic of South Africa, in
the Former Yugoslav Republic of Macedonia and
in Bosnia and Herzegovina.

This guarantee shall be restricted to 70 % of the
aggregate amount of the credits opened, plus all
related sums. The overall ceiling of
the credits
opened shall be equivalent to ECU 7 355 million,
broken down as follows:

— Central and Eastern Europe countries:

ECU 3 520 million

— Mediterranean countries:

ECU 2 310 million

— Latin American and Asian countries:

ECU 900 million

— Republic of South Africa:

ECU 375 million

— Former Yugoslav Republic of Macedonia:

2.
The Community guarantee shall be conditional
upon clearance in full by Bosnia and Herzegovina of
its outstanding financial obligations towards the EIB
and the Community and upon the acceptance by
Bosnia and Herzegovina of responsibility by way of
guarantee for such of those obligations as are not yet
due.

3.
EIB lending in Bosnia and Herzegovina shall be
consistent with the policy of the Community in this
country. The EIB shall operate within the framework
of the reconstruction programme agreed at the various
finance projects of
donors’ conferences and shall
mutual
including
transport, energy and the environment, with the focus
on the water, waste-water and sanitation projects
designed to speed up the reconstruction process.

infrastructure,

in general

interest

4.
The Commission shall ensure appropriate coordi-
nation and consistency between operations undertaken
pursuant
to this Decision and those undertaken
pursuant to Regulation (EC) No 1628/96 (*).

5. Grants from the Community budget for projects
in Bosnia and Herzegovina under this Decision shall
take the form of
loans
granted by the EIB. The subsidy rate shall be 2 %.

interest-rate subsidies

for

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Financial decisions relating to this Decision shall be
adopted in accordance with the procedures laid down
in the Regulation (EC) No 1628/96.

6. Article 1(3) shall not apply to EIB lending in
Bosnia and Herzegovina.

7.
The Commission and the EIB shall cooperate
whenever appropriate with all international financial
institutions active in fields similar to its own in Bosnia
and Herzegovina.

(*) OJ L 204, 14.8.1996, p. 1. Regulation as last
amended by Regulation (EC) No 851/98 (OJ L 122,
24.4.1998, p. 1).'

5. The following paragraph shall be added to Article 2:

‘The Commission shall submit to the European Parlia-
ment and the Council, at the latest by the end of 1999,
this Decision,
a report on the implementation of

including an assessment of its impact. This report shall
in particular take into account the evolution of the
economic and financial situation in Bosnia and Herze-
govina and the commitment level of EIB loans and
shall make appropriate recommendations. To this end,
the EIB shall transmit to the Commission the appro-
priate information.'

Article 2

This Decision shall take effect on the day of its publica-
tion in the Official Journal of the European Commun-
ities.

Done at Brussels, 14 December 1998.

For the Council

The President

W. MOLTERER