1999/282/EC: Council Decision of 22 April 1999 providing macro-financial assistance to Albania
Date: 1999-04-22
Institutions: Council of the European Union
Subjects: Albania, EU aid, International Monetary Fund, financial aid

28. 4. 1999

EN

Official Journal of the European Communities

L 110/13

COUNCIL DECISION

of 22 April 1999

providing macro-financial assistance to Albania

(1999/282/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community,

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

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

(1) Whereas Albania has made substantial progress on
the path to recovery from the effects of
the
economic and social crisis of early 1997; whereas it
an
has
economic
implemented
recovery programme to address
the immediate
effects of the crisis;

successfully

(2) Whereas trade, commercial and economic links
between the Community and Albania are devel-
the Agreement
oping within the framework of
between the European Community
and the
Republic of Albania on trade and commercial and
economic cooperation, signed at Brussels on 11
May 1992;

(3) Whereas Albania, which had been without a consti-
tution since the fall of
the communist regime,
should have greater respect for human rights and
strengthen the foundations of the rule of law as a
result of the adoption of a new constitution on 22
November 1998;

(4) Whereas Albania should not deviate from pursuing
the fundamental political and economic reforms
undertaken to establish the rule of law and a full
and complete democracy and to introduce a market
economy which takes account of
the need for
social justice and environmental protection;

(5) Whereas Albania has agreed with the International
Monetary Fund (IMF) on a comprehensive set of
stabilisation and policy reform measures to be
supported by a loan under the Enhanced Structural
Adjustment Facility (ESAF);

(6) Whereas Albania has agreed with the World Bank
on a set of measures supporting banking reform
and employment promotion, which are backed by

(1) OJ C 302, 1.10.1998, p. 5.
(2) Opinion delivered on 12 February 1999 (not yet published in

the Official Journal).

a highly concessional Rehabilitation Loan; whereas
it is intended that a Structural Adjustment Credit
will support further structural adjustment measures;

(7) Whereas Albania

is undertaking fundamental
reforms to promote economic reform and build
institutions with a strong implementation capacity;
whereas the focus of
reforms will be strongly
centred on institution-building, on public adminis-
tration and judicial reforms, on the development of
public finance structures and financial control
procedures and a strong and performing banking
sector
legislation
by
governing the prudential supervision of credit insti-
tutions, on the establishment of a functioning agri-
land market and accelerating enterprise
cultural
privatisation; whereas the government
is firmly
committed to modernising customs services on the
basis of new codes, to a speedy winding up of the
pyramid scheme companies and to combating
corruption and organised crime which jeopardise
political stability and economic order;

strengthened

detailed

(G-24),

assistance for

the first year of

(8) Whereas the authorities of Albania have requested
financial
the
medium-term programme from the international
financial institutions, the Group of 24 industrial-
ised countries
and the Community;
whereas, over and above the estimated financing
which would be provided by the IMF and the
World Bank, an important residual financing gap
remains to be covered; whereas Paris Club resche-
duling and undisbursed pledges made at
the
Donors’ Conference in October 1997 should help
cover part of the external financing needed during
the first year of the medium-term programme;

(9) Whereas assistance from the Community will be
instrumental in supporting Albania’s institutional
and structural reforms; whereas a Community long-
term loan to Albania is an appropriate measure to
help
financial
country’s
constraints, support the balance of payments and
strengthen the reserve position;

external

ease

the

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Official Journal of the European Communities

28. 4. 1999

(10) Whereas Albania is a low-income country eligible
for highly concessional loans and facilities from the
World Bank and the IMF; whereas the Community
will provide under the first year of the medium-
term programme EUR 19,5 million support to the
budget in the form of grants through the PHARE
special assistance and the Community food security
programme; whereas in these circumstances, the
proposal EUR 20 million loan allows overall
Community macro-financial support under the first
arrangement under the ESAF to reach an appro-
priate degree of concessionality;

(11) Whereas the Community loan should be managed

by the Commission;

(12) Whereas the Treaty does not provide, for the adop-
tion of this Decision, powers other than those of
Article 235,

HAS DECIDED AS FOLLOWS:

Article 1

1.
The Community shall make available to Albania a
long-term loan facility of a maximum principal amount
of up to EUR 20 million with a maximum maturity of 15
years and a grace period of 10 years, with a view to
ensuring a sustainable balance of payments situation and
consolidating the country’s reserve position.

To this end, the Commission shall be empowered to
2.
borrow, on behalf of
the necessary
resources that will be placed at the disposal of Albania in
the form of a loan.

the Community,

3.
The loan referred to in paragraph 2 will be managed
by the Commission in close consultation with the
Economic and Financial Committee and in a manner
consistent with any agreement reached between the IMF
and Albania.

Article 2

1.
The Commission shall be empowered to agree with
the authorities of Albania, after consultation with the
Economic and Financial Committee, the economic and
institutional policy conditions attached to the loan. These
conditions shall be consistent with any of the agreements
referred to in Article 1(3).

ance with the objectives of this macro-financial assistance
and that its conditions are being fulfilled.

Article 3

The macro-financial assistance shall be made avail-

1.
able to Albania in two instalments.

2.
Subject to the provisions of Article 2, the first instal-
ment shall be released on the basis of a successful
completion of the mid-term review of the first year of the
programme supported by a three-year ESAF arrangement
between the IMF and Albania.

Subject to the provisions of Article 2, the second
3.
instalment shall be released on the basis of a satisfactory
track record in the implementation of
the ESAF
programme and not before one quarter after the disburse-
ment of the first instalment.

The funds shall be paid to the Central Bank of

4.
Albania.

Article 4

The borrowing and loan operations referred to in
1.
Article 1 shall be carried out using the same value date
and must not involve the Community in the transforma-
tion of maturities, in any exchange or interest rate risks,
or any other commercial risk.

The Commission shall

2.
take the necessary steps,
should Albania so request, to ensure that an early repay-
ment clause is included in the loan terms and conditions,
and that it may be exercised.

3.
At the request of Albania, and where circumstances
permit an improvement in the interest rate on the loan,
the Commission may refinance all or part of its initial
borrowings or
restructure the corresponding financial
conditions. Refinancing or restructuring operations shall
be carried out in accordance with the conditions set out
in paragraph 1 and shall not have the effect of extending
the borrowing concerned or
the average maturity of
increasing the amount, expressed at the current exchange
rate, of capital outstanding at the date of the refinancing
or restructuring.

4.
All related costs incurred by the Community in
concluding and carrying out the operation pursuant to
this Decision shall be borne by Albania.

The Commission shall verify at regular intervals, in
2.
collaboration with
Financial
the Economic
Committee and in coordination with the IMF, that the
economic and institutional policy in Albania is in accord-

and

5.
The Economic and Financial Committee shall be
kept informed of developments in the operations referred
to in paragraphs 2 and 3 at least once a year.

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At least once a year the Commission shall address to the European Parliament and the
Council a report, which will include an evaluation on the implementation of this Decision.

Article 5

Done at Luxembourg, 22 April 1999.

For the Council

The President

W. M(cid:154)LLER