1999/732/EC: Council Decision of 8 November 1999 providing supplementary macro-financial assistance to Romania
Date: 1999-11-08
Institutions: Council of the European Union
Subjects: Community loan, EU aid, International Monetary Fund, Romania, financial aid, macroeconomics

16. 11. 1999

EN

Official Journal of the European Communities

L 294/29

COUNCIL DECISION

of 8 November 1999

providing supplementary macro-financial assistance to Romania

(1999/732/EC)

THE COUNCIL OF THE EUROPEAN UNION,

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

(9)

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

strengthening the reserve positions and comforting the
implementation of the necessary structural reforms;

The Community loan should be managed by the
Commission in accordance with the principles of sound
financial management;

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

(10)

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

Whereas:

(1)

(2)

(3)

(4)

(5)

(6)

(7)

The Commission has consulted the Economic and Finan-
cial Committee before submitting its proposal;

HAS DECIDED AS FOLLOWS:

Romania is undertaking fundamental economic reforms
and is making substantial efforts to establish a well-func-
tioning market economy with a view to increasing
employment and living standards;

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

The European Council at 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;

Romania reached an agreement with the International
Monetary Fund (IMF) on a stand-by arrangement (SBA)
in support of the authorities' adjustment and reform
programme;

The World Bank has approved a new Private Sector
Adjustment Loan, which envisages substantial adjust-
ment and investment financing in support of Romania's
reform efforts in the enterprise and financial sectors;

The authorities of Romania 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 World Bank, an important residual
financing gap remains
to be covered during the
programme period in order to strengthen the country's
the policy objectives
reserve position and support
attached to the government's reform programme;

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 10 years, with a view to
ensuring a sustainable balance of payments situation.

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

This loan referred to in paragraph 2 shall be managed by
3.
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 is empowered to agree with the author-
ities of Romania, after consultation with the Economic and
Financial Committee, the economic policy conditions attached
to the loan. These conditions shall be consistent with the
agreements referred to in Article 1(3).

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
Romania is in accordance with the objectives of this loan and
that its conditions are being fulfilled.

intervals,

regular

(8)

A Community long-term loan to Romania is an appro-
priate measure to help ease the country's external finan-
cial constraints, supporting the balance of payments and

(1) OJ C 307 E, 26.10.1999, p. 40.
(2) Opinion delivered on 6 October 1999 (not yet published in the

Official Journal).

(3) OJ L 357, 31.12.1994, p. 2.

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.

L 294/30

EN

Official Journal of the European Communities

16. 11. 1999

Subject

to Article 2,

the second instalment shall be
2.
released on the basis of a satisfactory continuation of Ro-
mania's adjustment and reform programme and not before
three months after the release of the first instalment.

3.

The fund 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 risk, or in any other
commercial risk.

The Commission shall

2.
if
Romania so requests, to ensure that an early repayment clause
is included in the loan terms and conditions and that it may be
exercised.

take the necessary steps,

3.
At 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
conditions.
corresponding
Refinancing or restructuring operations shall be carried out in
accordance with the conditions set out in paragaraph 1 and
shall not have the effect of extending the average maturity of

restructure

financial

the

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 Romania.

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