Proposal for a Council Decision providing supplementary macro-financial assistance to Romania
Date: 1999-07-28
Institutions: European Commission
Subjects: Romania, aid policy, financial aid, financial cooperation

C 307 E/40

EN

Official Journal of the European Communities

26.10.1999

Proposal for a Council Decision providing supplementary macro-financial assistance to Romania

(1999/C 307 E/09)

COM(1999) 405 final (cid:151) 1999/0167(CNS)

(Submitted by the Commission on 29 July 1999)

THE COUNCIL OF THE EUROPEAN UNION,

objectives
programme;

attached

to

the

government’s

reform

Having regard to the Treaty establishing the European
Community, and in particular Article 308 thereof,

Having regard to the proposal of the Commission,

(8) Whereas a Community long-term loan to Romania is an
appropriate measure to help ease the country’s external
financial constraints, supporting the balance of payments
and strengthening the reserve position;

Having regard to the opinion of the European Parliament,

(9) Whereas the Community loan should be managed by the

Commission;

(1) Whereas the Commission consulted the Economic and
Financial Committee before submitting its proposal;

(10) Whereas the Treaty does not provide, for the adoption of
this Decision, powers other than those of Article 308,

(2) Whereas Romania is undertaking fundamental economic
reforms and is making substantial efforts to establish a
well-functioning market economy;

HAS DECIDED AS FOLLOWS:

(3) Whereas Romania and the European Union have signed
on a Europe Agreement establishing a relationship of
association;

(4) Whereas

the European Council

its meeting in
Luxembourg in December 1997 decided to launch an
accession process comprising Romania along with the
other Central and East European applicant countries and
Cyprus;

at

(5) Whereas Romania has reached an agreement with the
stand-by
authorities’

International Monetary
(SBA)
arrangement
adjustment and reform programme;

Fund (IMF) on a

in support of

the

(6) Whereas the World Bank has approved a new Private
substantial
Sector Adjustment Loan, which envisages
adjustment and investment
financing in support of
Romania’s reform efforts in the enterprise and financial
sectors;

(7) Whereas

the authorities of Romania have requested
financial assistance from the international financial insti-
the Community and other bilateral donors;
tutions,
whereas, over and above the estimated financing which
could be provided by the IMF and the World Bank, an
important residual financing gap remains to be covered
during the programme period in order to strengthen the
the policy
reserve position and support
country’s

Article 1

1.
The Community shall make available to Romania a
long-term loan facility of a maximum principal amount of
EUR 200 million with a maximum maturity of
ten years,
with a view to ensuring a sustainable balance of payments
situation and comforting the implementation of the necessary
structural reforms.

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

3.
The loan referred to in paragraph 2 shall 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 Romania.

Article 2

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

2.
The Commission shall verify at regular intervals, in colla-
boration with the Economic and Financial Committee and in
the economic policy in
co-ordination with the IMF,
Romania is in accordance with the objectives of
this loan
and that its conditions are being fulfilled.

that

26.10.1999

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Official Journal of the European Communities

C 307 E/41

Article 3

1.
The loan shall be made available to Romania in two
instalments. Subject to Article 2, the first instalment is to be
released on the basis of a satisfactory track record of Romania’s
macroeconomic programme in the context of the SBA agreed
with the IMF.

Subject

to Article 2,

2.
the second instalment shall be
released on the basis of a satisfactory continuation of
Romania’s adjustment and reform programme and not before
one quarter after the release of the first instalment.

3.

The funds shall be paid to the National Bank of Romania.

Article 4

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

The Commission shall

2.
Romania so requests,

take the necessary steps,

if
to ensure that an early repayment

clause is included in the loan terms and conditions and that it
may be exercised.

At

3.
the request of Romania, 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. Refi-
nancing 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 average maturity of
the borrowing concerned or increasing the amount, expressed
at the current exchange rate, of capital outstanding at the date
of the refinancing or restructuring.

All

related costs

4.
concluding and carrying out
Decision shall be borne by Romania.

incurred by

the Community

the operation under

in
this

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.

Article 5

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

C 307 E/42

EN

Official Journal of the European Communities

26.10.1999

BUDGETARY RESOURCES NECESSARY FOR THE PROVISIONING OF THE GUARANTEE FUND IN 1999
AND MARGIN UNDER THE RESERVE FOR LOANS AND LOAN GUARANTEES IN FAVOUR OF THIRD
COUNTRIES

ANNEX

(EUR million)

Operations

Basis of the
calculation (1)

Provisioning of the
Fund (2)

Reserve Margin

Operations decided

EIB/New mandates (4)

(cid:151) CEEC

(cid:151) ALA

(cid:151) South Africa

(cid:151) MED

(cid:151) FYROM

(cid:151) Bosnia

EIB/Old protocols (4)

(cid:151) Syria

Macro-financial assistance

(cid:151) Albania III

(cid:151) Bosnia I

Operations proposed

(cid:151) EIB/Turkey (5)

(cid:151) EIB/Croatia (6)

Macro-financial assistance

(cid:151) Bulgaria IV (7)

(cid:151) Romania IV (7)

872,9

218,1

143,5

351,4

38,5

42,0

(cid:150) 30

20

20

105

35

100

200

122,2

30,5

20,1

49,2

5,4

5,9

(cid:150) 4,2

2,8

2,8

14,7

4,9

14,0

28,0

346,0 (3)

223,8

193,3

173,2

124,0

118,6

112,7

116,9

114,1

111,3

96,6

91,7

77,7

49,7

(1) The provisioning basis is calculated by applying the relevant guarantee cover rate, namely 70 % (EIB loans new mandates), 75 % (EIB

loans old protocols) or 100 % (macro-financial assistance loan).

(2) In accordance with the provisioning rules in Council Regulation (EC, Euratom) No 2728/94 of 31 October 1994, the Fund having

reached its target amount on 31 December 1997, the provisioning rate has been reduced to 14 %.

(3) Amount of the Reserve for loans and loan guarantees in favour of third countries for 1999 under the financial perspective.
(4) Annual amounts of loans scheduled to be signed in 1999 and correction of amounts already provisioned in the Fund to take account

of actual signings at the end of 1998: Transfer 5/99 to the Guarantee Fund.

(5) Proposal for a Council Regulation on a special financial cooperation measure for Turkey (COM(95) 389/3).
(6) EC/Croatia cooperation agreement (SEC(95) 180/final).
(7) Commission proposal.