Proposal for a Council Decision providing supplementary macro-financial assistance to Ukraine
Date: 2002-01-17
Institutions: European Commission
Subjects: Community loan, EU aid, International Monetary Fund, Ukraine, financial aid, macroeconomics

C 103 E/366

EN

Official Journal of the European Communities

30.4.2002

Proposal for a Council Decision providing supplementary macro-financial assistance to Ukraine

(2002/C 103 E/28)

COM(2002) 12 final — 2002/0018(CNS)

(Submitted by the Commission on 17 January 2002)

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,

Whereas:

(1) The Commission has

consulted the Economic
Financial Committee before submitting its proposal.

and

(2) Ukraine

is

undertaking

and
economic reforms and is making substantial efforts to
implement a market economy model.

fundamental

political

(3) Ukraine

and the European Communities

and their
Member States have concluded a Partnership and Coop-
eration Agreement which will help the development of a
full cooperation relationship.

(4) The Chernobyl nuclear power plant was closed down in
December 2000,
in line with what was agreed by the
Ukrainian authorities, the Group of Seven countries and
the European Union in a Memorandum of Understanding
signed on 21 December 1995.

of

(EFF)

billion,

(5) The International Monetary Fund (IMF) approved in
for
September 1998 an ‘Extended Fund Facility’
Ukraine
later
approximately US$ 2,3
augmented to approximately US$ 2.6 billion, in support
of an economic programme for the period July 1998 to
in December 2000, the IMF extended the
June 2001;
duration of this financial arrangement
through August
the World Bank since 1998 has provided
2002;
substantial
reform efforts,
including through the approval in September 1998 of a
US$ 300 million Financial Sector Adjustment Loan
expected to continue
(FSAL);
financial assistance to Ukraine in
providing substantial
the coming years,
including through the approval of a
number of adjustment loans.

the World Bank is

for Ukraine's

support

(6) The Members of the Paris Club agreed in July 2001 on a

rescheduling of Ukraine's debts.

(7) By

Decisions

95/442/EC (2)
and
98/592/EC (3)
approved macro-financial
assistance for Ukraine of up to a total amount of

94/940/EC (1),

the Council

(1) OJ L 366, 31.12.1994, p. 32.
(2) OJ L 258, 28.10.1995, p. 63.
(3) OJ L 284, 22.10.1998, p. 45.

EUR 435 million to support previous macroeconomic
programmes.

(8) The circumstances that justified the provision of macro-
to Decision
financial assistance to Ukraine pursuant
including
98/592/EC have changed and this decision,
any undisbursed amounts of assistance, should now be
replaced.

(9) However, additional official support from the Community
is required in the context of the present programme to
support the balance of payments, consolidate the reserve
position and facilitate the necessary structural adjustment
of the country.

(10) The Community loan should be managed by the

Commission.

(11) 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 Ukraine a
long-term loan facility of a maximum principal amount of
EUR 110 million with a maximum maturity of 15 years,
with a view to ensuring a sustainable balance-of-payments
situation, strengthening the country's reserve position and
comforting the implementation of
the necessary structural
reforms.

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 Ukraine 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 Ukraine.

Article 2

1.
The Commission is empowered to agree with the
Ukrainian authorities, after consulting 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).

30.4.2002

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Official Journal of the European Communities

C 103 E/367

The Commission shall verify at regular intervals, in colla-
2.
boration with the Economic and Financial Committee and in
close coordination with the IMF, that the economic policy in
Ukraine is in accordance with the objectives of this loan and
that its conditions are being fulfilled.

Article 3

1.
The loan shall be made available to Ukraine in at least
two instalments. Subject to Article 2, the first instalment is to
be released on the basis of a satisfactory track record of
Ukraine's macroeconomic programme agreed with the IMF in
the context of the present EFF or of a successor upper credit
tranche arrangement.

included in the loan terms and conditions and that it may be
exercised.

At

3.
the request of Ukraine, 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. 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.

Subject

the later

to Article 2,

instalment(s) shall be
2.
released on the basis of a satisfactory continuation of
the
arrangements referred to in paragraph 1 and not before a
period of three months has elapsed after the release of the
previous instalment.

3.

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

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

2.
so requests,

The Commission shall take the necessary steps, if Ukraine
to ensure that an early repayment clause is

All

related costs

4.
concluding and carrying out
Decision shall be borne by Ukraine.

incurred by

the Community in
this

the operation under

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 the Commission shall address to the
European Parliament and to the Council a report, which will
include an evaluation of the implementation of this Decision.

Article 6

Council Decision 98/592/EC is hereby repealed.