1999/733/EC: Council Decision of 8 November 1999 providing supplementary macro-financial assistance to the former Yugoslav Republic of Macedonia
Date: 1999-11-08
Institutions: Council of the European Union
Subjects: Community loan, EU aid, International Monetary Fund, North Macedonia, financial aid, macroeconomics

16. 11. 1999

EN

Official Journal of the European Communities

L 294/31

COUNCIL DECISION

of 8 November 1999

providing supplementary macro-financial assistance to the former Yugoslav Republic of Macedonia

(1999/733/EC)

THE COUNCIL OF THE EUROPEAN UNION,

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

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

Having regard to the opinion of the European Parliament (2),

Whereas:

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

The Commission consulted the Economic and Financial
Committee before submitting its proposal;

The former Yugoslav Republic of Macedonia is under-
taking fundamental economic reforms and is making
substantial efforts to establish a well-functioning market
economy with a view to increasing employment and
living standards;

The
former Yugoslav Republic of Macedonia has
suffered very large economic costs as a direct con-
sequence of
in Kosovo and has made,
despite severe social and economic strains, exceptional
efforts to host a high number of refugees;

the conflict

The former Yugoslav Republic of Macedonia and the
European Community have signed a Cooperation Agree-
ment (3) which entered into force on 1 January 1998;

The Council, on 26 April 1999, has welcomed the
prospect of a feasibility study towards upgrading the
contractual relations between the European Community
and the former Yugoslav Republic of Macedonia;

The former Yugoslav Republic of Macedonia has reached
a preliminary agreement with the International Monetary
Fund (IMF) on an arrangement under the Compensatory
and Contingency Financing Facility and discussions are
well advanced between the two parties on a stand-by
arrangement (SBA) in support of the authorities' adjust-
ment and reform programme;

The World Bank is preparing a new Financial and Enter-
prise Structural Adjustment Loan, which envisages
substantial adjustment and investment
financing in
support of the former Yugoslav Republic of Macedonia's
reform efforts in the enterprise and financial sectors;

The authorities of
the former Yugoslav Republic of
Macedonia have requested financial assistance from the
international financial institutions, the Community and
other bilateral donors; over and above the estimated
financing which could be provided by the IMF and the

(1) OJ C 307E, 26.10.1999, p. 43.
(2) Opinion delivered on 6 October 1999 (not yet published in the

Official Journal).

(3) OJ L 348, 18.12.1997, p. 2.

residual

financing gap
World Bank, an important
remains to be covered in 1999 and 2000 in order to
strengthen the country's reserve position and support
the policy objectives attached to the government's
reform programme;

(9)

(10)

(11)

Financial assistance from the Community in the form of
a combination of a long-term loan and a straight grant
to the former Yugoslav Republic of Macedonia is an
appropriate measure to support the balance of payments
and help ease the country's external financial constraints
in the current exceptionally difficult circumstances,
comforting the implementation of structural reforms
and helping to alleviate the social consequences of the
economic disruptions caused by the conflict in Kosovo;

The inclusion of a grant component in this assistance is
without prejudice to the powers of
the budgetary
authority;

This assistance should be managed by the Commission
in accordance with the principles of sound financial
management;

(12)

The Treaty does not provide, for the adoption of this
Decision, powers other than those of Article 308,

HAS DECIDED AS FOLLOWS:

Article 1

1.
The Community shall make available to the former Yugo-
slav Republic of Macedonia financial assistance in the form of a
long-term loan facility and straight grants, with a view to
ensuring a sustainable balance of payments situation.

2.
The loan component of this assistance shall amount to a
maximum principal of EUR 50 million, with a grace period of
10 years and a maximum maturity of 15 years. To this end, the
Commission is empowered to borrow, on behalf of the Euro-
pean Community, the necessary resources that will be placed at
the disposal of the former Yugoslav Republic of Macedonia in
the form of a loan.

3.
The grant component of this assistance shall amount to a
maximum of EUR 30 million for the 1999 to 2000 period.

4.
The Community financial assistance 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 the former Yugoslav
Republic of Macedonia.

L 294/32

EN

Official Journal of the European Communities

16. 11. 1999

Article 2

The Commission is empowered to agree with the authori-
1.
ties of
the former Yugoslav Republic of Macedonia, after
consultation of the Economic and Financial Committee, the
economic policy conditions attached to this assistance. These
conditions shall be consistent with the agreements referred to
in Article 1(4).

The Commission shall verify at

2.
in
collaboration with the Economic and Financial Committee and
in coordination with the IMF, that the economic policy in the
former Yugoslav Republic of Macedonia is in accordance with
the objectives of this assistance and that its conditions are
being fulfilled.

intervals,

regular

Article 3

1.
The loan and grant components of this assistance shall be
made available to the former Yugoslav Republic of Macedonia
in at least two instalments. Subject to the provisions of Article
2, the first instalment is to be released on the basis of an
agreement between the former Yugoslav Republic of Mace-
donia and the IMF on a macroeconomic programme that is
supported by an upper credit tranche arrangement.

2.
Subject to the provisions of Article 2, the second and any
further instalments shall be released on the basis of a satis-
factory track record in the former Yugoslav Republic of Mace-
donia's adjustment and reform programme and not before
three months after the release of the first instalment.

The funds shall be paid to the National Bank of the

3.
former Yugoslav Republic of Macedonia.

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 risk, or in any other
commercial risk.

2.
if the
The Commission shall take the necessary steps,
former Yugoslav Republic of Macedonia so requests, to ensure
that an early repayment clause is included in the loan terms
and conditions and that it may be exercised.

3.
At the request of the former Yugoslav Republic of Mace-
donia, and where circumstances permit an improvement in the
interest rate of 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
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.
incurred by the Community in
concluding and carrying out the operation under this Decision
shall be borne by the former Yugoslav Republic of Macedonia.

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, as a rule by 15 September, the Commis-
sion shall address to the European Parliament and to the
Council a report, which will
the
implementation of this Decision.

include an evaluation of

Done at Brussels, 8 November 1999.

For the Council

The President

S. NIINISTÖ