2000/452/EC: Council Decision of 10 July 2000 providing supplementary macrofinancial assistance to Moldova
Date: 2000-07-10
Institutions: Council of the European Union
Subjects: International Monetary Fund, Moldova, financial aid, loan

20.7.2000

EN

Official Journal of the European Communities

L 181/77

COUNCIL DECISION

of 10 July 2000

providing supplementary macrofinancial assistance to Moldova

(2000/452/EC)

THE COUNCIL OF THE EUROPEAN UNION,

HAS DECIDED AS FOLLOWS:

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

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

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

Whereas:

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

Moldova is undertaking fundamental political and
economic reforms and is making substantial efforts to
establish a market economy.

Moldova, on the one hand, and the European Communi-
ties and their Member States on the other hand, have
signed a Partnership and Cooperation Agreement, which
entered into force on 1 July 1998.

The authorities of Moldova have agreed with the IMF on
a macroeconomic programme supported by a three-year
extended fund facility, approved in May 1996 and have
expressed their intention to continue this programme
subsequently in the context of a new fund facility.

The Moldovan authorities have requested financial assis-
tance from the international financial
institutions, the
Community and other bilateral donors. Over and above
the extended financing by the IMF and the World Bank,
a substantial
financing gap remains to be
covered in the coming months to strengthen the coun-
try's reserve position and support the policy objectives
attached to the authorities' reform efforts.

residual

Moldova has been particularly affected by the Russian
financial crisis and is presently facing particularly diffi-
cult economic and social circumstances.

Article 1

1.
The Community shall make available to Moldova a long-
term loan facility of a maximum amount of EUR 15 million
with a grace period of five years and a maximum maturity of
10 years, with a view to ensuring a sustainable balance of
payments situation.

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 Moldova in the form of a
loan.

3.
This loan 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 Moldova.

Article 2

1.
The Commission is empowered to agree with the
Moldovan authorities, after consulting the Economic and
Financial Committee, the economic policy conditions attached
to the loan. These conditions shall be consistent with the
agreement 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 economic policy in Moldova
is in accordance with the objectives of this loan and that its
conditions are being fulfilled.

intervals,

regular

Article 3

Financial assistance from the Community in the form of
a long-term loan with a substantial grace period 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.

1.
The loan shall be made available to Moldova in two
instalments. Subject to Article 2, the first instalment is to be
released on the basis of a satisfactory track record on the
implementation of an upper credit tranche arrangement agreed
with the IMF.

This assistance should be managed by the Commission.

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

Subject

to Article 2,

2.
the second instalment shall be
released on the basis of a satisfactory continuation of Moldo-
va's adjustment and implementation of the macroeconomic
programme and not before three months after the release of
the first instalment.

(1) OJ C 376 E, 28.12.1999, p. 38.
(2) Opinion delivered on 4 May 2000 (not yet published in the Official

Journal).

3.

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

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

L 181/78

EN

Official Journal of the European Communities

20.7.2000

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 any other
commercial risk.

The Commission shall

2.
if
Moldova so requests, to ensure that an early repayment clause
is included in the loan terms and conditions.

take the necessary steps,

At

3.
the request of Moldova, and when circumstances
permit an improvement in the interest rate of the loans, 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

incurred by the Community in
4.
concluding and carrying out the operation shall be borne by
Moldova.

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

Article 5

At least once a year, in principle not later than 15 September,
the Commission shall address a report to the European Parlia-
ment and to the Council which will include an evaluation of
the implementation of this Decision.

Done at Brussels, 10 July 2000.

For the Council

The President

H. VÉDRINE