2001/511/EC: Council Decision of 27 June 2001 on further exceptional financial assistance to Kosovo
Date: 2001-06-27
Institutions: Council of the European Union
Subjects: EU aid, Kosovo, economic aid, financial aid, public finance

L 183/42

EN

Official Journal of the European Communities

6.7.2001

COUNCIL DECISION

of 27 June 2001

on further exceptional financial assistance to Kosovo

(2001/511/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 from the Commission,

Having regard to the opinion of the European Parliament (1),

Whereas:

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

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

The Security Council of the United Nations adopted
Resolution 1244(1999) on 10 June 1999 aiming to
promote the establishment, pending a final settlement,
of substantial autonomy and self-government in Kosovo
within the Federal Republic of Yugoslavia.

The international community, basing itself upon Resolu-
tion 1244(1999), has set up an international security
presence (KFOR) and an interim civil administration —
the United Nations Interim Mission in Kosovo (UNMIK).

UNMIK consists of four components (Pillars) and the
European Union has taken the lead role (2) for the fourth
Pillar responsible for economic reconstruction.

UNMIK has taken steps to involve the main political
parties and ethnic communities of Kosovo in its activi-
ties and is continuing to do so.

UNMIK, and particularly Pillar IV thereof, has achieved
substantial progress in setting up an institutional, legal
and policy framework conducive to the creation of a
sound economy based on market principles.
It has
provided for a functioning banking and payments
system and promoted the development of the private
sector. UNMIK has also made progress in developing the
revenue base and keeping expenditure under control.

UNMIK established a Central Fiscal Authority providing
for transparent and accountable procedures to manage
the Kosovo budget.

On the basis of estimates from UNMIK presented in
agreement with the International Monetary Fund (IMF),
Kosovo requires external support to further progress in

(1) Opinion delivered on 14 June 2001 (not yet published in the Offi-

cial Journal)

(2) International civil presence in Kosovo: Report of

the Secretary-
General pursuant to paragraph 10 of Security Council Resolution
1244(1999), S/1999/672, 12 June 1999, II.5.

establishing a sound market economy and a civil admin-
istration. It is estimated that exceptional external finan-
cial assistance of some EUR 90 million would be needed
until the end of 2001.

UNMIK has presented a request for exceptional financial
assistance. The international community considers that
the provision of external budgetary support,
fairly
shared among donors,
is essential to help cover the
financing needs identified under the budget
residual
prepared for Kosovo by UNMIK.

Kosovo is not in a position to borrow either domesti-
cally or on the international financial market and it is
not eligible for membership of the international financial
institutions and may therefore not benefit from financial
assistance associated with their programmes.

(9)

(10)

(11) Although economic activity has resumed with consider-
able speed after the conflict, Kosovo is at a low level of
economic development and its GDP per capita is esti-
mated to be one of the lowest in the region and in
Europe.

(12)

(13)

Kosovo's current low level of economic development is
the result of long-term neglect as well as conflict-related
damages which cannot be overcome quickly but require
reliable support over a significant period of time so as to
establish sustainable institutions and to achieve durable
economic growth.

The Community has found it an appropriate measure to
help ease Kosovo's financial constraints in the exception-
ally difficult circumstances and has already, under
Council Decision 2000/140/EC (3) provided for financial
assistance in the form of straight grants in 2000
amounting to EUR 35 million.

(14)

Financial assistance from the Community, in liaison with
other donors, in the form of straight grants to be made
available to UNMIK in support of the Kosovo people
continues to be the appropriate measure.

(15) Without prejudice to the powers of

the budgetary
authority, the financial assistance will be part of the
envelope of aid envisaged for Kosovo, and therefore
subject
to the funds being available in the general
budget.

(3) OJ L 47, 19.2.2000, p. 28.

6.7.2001

EN

Official Journal of the European Communities

L 183/43

(16)

(17)

The exceptional financial assistance should be managed
by the Commission in consultation with the Economic
and Financial Committee.

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

HAS DECIDED AS FOLLOWS:

Article 1

In addition to the financial assistance already decided
1.
in its Decision 2000/140/EC on 14
upon by the Council
the Community shall make available to
February 2000,
in conjunction with the contributions of the other
UNMIK,
donors, exceptional financial assistance in the form of straight
grants of up to EUR 30 million, with a view to alleviating the
financial situation in Kosovo, facilitating the establishment and
continuation
and
supporting the development of a sound economic framework.

administrative

functions

essential

of

2.
This assistance shall be managed by the Commission in
close consultation with the Economic and Financial Committee
and in a manner consistent with agreements or understandings
reached between the IMF and UNMIK or any other internation-
ally recognised authorities of Kosovo.

Article 2

The Commission is empowered to agree with UNMIK,
1.
after consultation with the Economic and Financial Committee,
the economic conditions attached to this assistance. These
conditions shall be consistent with any agreement referred to in
Article 1(2).

The Commission shall verify at

2.
in
consultation with the Economic and Financial Committee and
in liaison with the IMF and the World Bank, that economic

intervals,

regular

policies in Kosovo respect the objectives and economic policy
conditions of this assistance.

Article 3

The assistance shall be made available to UNMIK in at
1.
least two instalments. Subject to the provisions of Article 2, the
first instalment shall be released on the basis of a Memor-
andum of Understanding between UNMIK and the Community.

Subject to the provisions of Article 2, the second and any
2.
possible further instalment shall be released on the basis of a
successful completion of the economic conditions referred to
in Article 2(1) and not before three months after the release of
the previous instalment.

3.
The funds shall be made available to UNMIK through the
Central Fiscal Authority exclusively in support of Kosovo's
budgetary needs.

Article 4

All related costs incurred by the Community in concluding and
carrying out the operation under this Decision shall be borne
by UNMIK if appropriate.

Article 5

The Commission shall address to the European Parliament and
to the Council an annual report, which will include an evalu-
ation on the implementation of this Decision.

Done at Luxembourg, 27 June 2001.

For the Council

The President

B. ROSENGREN