1999/731/EC: Council Decision of 8 November 1999 providing supplementary macro-financial assistance to Bulgaria
Date: 1999-11-08
Institutions: Council of the European Union
Subjects: Bulgaria, Community loan, EU aid, International Monetary Fund, financial aid, macroeconomics

16. 11. 1999

EN

Official Journal of the European Communities

L 294/27

II

(Acts whose publication is not obligatory)

COUNCIL

COUNCIL DECISION

of 8 November 1999

providing supplementary macro-financial assistance to Bulgaria

(1999/731/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)

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

Bulgaria 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;

Bulgaria 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 Bulgaria along with the other Central and
East European applicant countries and Cyprus;

Bulgaria reached an agreement with the International
Monetary Fund (IMF) in September 1998 on an arrange-
ment under the Extended Fund Facility (EFF) in support
of the authorities' adjustment and reform programme;

The World Bank adopted a three-year Country As-
sistance Strategy for Bulgaria in April 1998, which
investment
envisages

adjustment

substantial

and

financing in support of Bulgaria's reform efforts in
priority areas;

The authorities of Bulgaria have requested financial as-
sistance 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
to be covered during the
financing gap remains
programme period in order to strengthen the country's
reserve position and support
the policy objectives
attached to the government's reform programme;

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

(7)

(8)

(9)

(10)

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) OJ C 307 E, 26.10.1999, p. 46.
(2) Opinion delivered on 6 October 1999 (not yet published in the

Official Journal).

(3) OJ L 358, 31.12.1994, p. 3.

1.
The Community shall make available to Bulgaria a long-
term loan facility of a maximum principal amount of EUR 100
million with a maximum maturity of 10 years, with a view to
ensuring a sustainable balance of payments situation.

L 294/28

EN

Official Journal of the European Communities

16. 11. 1999

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 Bulgaria in the form of a
loan.

This loan will be managed by the Commission in close
3.
consultation with the Economic and Financial Committee and
in a manner consistent with any agreement reached between
the IMF and Bulgaria.

Article 2

1.
The Commission is empowered to agree with the author-
ities of Bulgaria, 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
Bulgaria is in accordance with the objectives of this loan and
that its conditions are being fulfilled.

intervals,

regular

maturities, in any exchange or interest rate risk, or in any other
commercial risk.

The Commission shall take the necessary steps, if Bulgaria
2.
so requests,
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 Bulgaria, and where circumstances
permit an improvement in the interest rate on the loans, the
Commission may refinance all or part of its initial borrowings
or
restructure the corresponding financial conditions. Re-
financing 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
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 Bulgaria.

Article 3

The loan shall be made available to Bulgaria in two
1.
instalments. Subject to Article 2, the first instalment is to be
released on the basis of a satisfactory track record of Bulgaria's
macro-economic programme in the context of the present EFF
arrangement agreed with the IMF.

Subject

to Article 2,

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

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

3.

The fund shall be paid to the Bulgarian National Bank.

Done at Brussels, 8 November 1999.

Article 4

The borrowing and lending operations referred to in
1.
Article 1 shall be carried out using the same value date and
must not involve the Community in the transformation of

For the Council

The President

S. NIINISTÖ