2002/639/EC: Council Decision of 12 July 2002 providing supplementary macro-financial assistance to Ukraine
Date: 2002-07-12
Institutions: Council of the European Union
Subjects: Community loan, EU aid, International Monetary Fund, Ukraine, aid system, macroeconomics

L 209/22

EN

Official Journal of the European Communities

6.8.2002

II

(Acts whose publication is not obligatory)

COUNCIL

COUNCIL DECISION

of 12 July 2002

providing supplementary macro-financial assistance to Ukraine

(2002/639/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Commu-
nity, 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:

(1)

(2)

(3)

(4)

(5)

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

is undertaking

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

fundamental political

Ukraine, of the one part, and the European Community
and its Member States, of the other part, have concluded
a Partnership and Cooperation Agreement which will
help the development of a full cooperation relationship.

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 Under-
standing signed on 21 December 1995.

approximately USD 2,3 billion,

In September 1998, the International Monetary Fund
for
(IMF) approved an ‘extended fund facility’
Ukraine of
later
increased to approximately USD 2,6 billion, in support
of an economic programme for the period July 1998 to
June 2001. In December 2000, the IMF extended the
duration of this financial arrangement to August 2002.

(EFF)

Since 1998 the World Bank has provided substantial
support for Ukraine’s reform efforts, including through
the approval in September 1998 of a USD 300 million
Financial Sector Adjustment Loan (FSAL). The World
Bank is expected to continue providing substantial finan-
cial assistance to Ukraine in the coming years, including
through the approval of a number of adjustment loans.

In July 2001 the Members of the Paris Club agreed on a
rescheduling of Ukraine’s debts.

By Decisions 94/940/EC (3), 95/442/EC (4) and 98/592/
EC (5) the Council approved macro-financial assistance
for Ukraine of up to a total amount of EUR 435 million
to support previous macroeconomic programmes.

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

However, additional official support from the Commu-
nity is required in the context of the present programme
the balance of payments, consolidate the
to support
reserve position and facilitate the necessary structural
adjustment of the country.

(6)

(7)

(8)

(9)

(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,

(1) OJ C 103 E, 30.4.2002, p. 366.
(2) Opinion delivered on 15 May 2002 (not yet published in the Offi-

cial Journal).

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

6.8.2002

EN

Official Journal of the European Communities

L 209/23

HAS DECIDED AS FOLLOWS:

Article 4

Article 1

The Community shall make available to Ukraine a long-
1.
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, strength-
ening the country’s reserve position and facilitating the imple-
mentation 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

The Commission shall be empowered to agree with the
1.
Ukrainian authorities, after consulting the Economic and Finan-
cial Committee, the economic policy conditions attached to the
loan. These conditions shall be consistent with the agreements
referred to in Article 1(3).

2.
The Commission shall verify at regular intervals, in colla-
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

The loan shall be made available to Ukraine in at least
1.
two instalments. Subject to Article 2, the first instalment shall
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.

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.

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.

2.
The Commission shall take the necessary steps, if Ukraine
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 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. Refinan-
cing or restructuring operations shall be carried out in accor-
dance 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

4.
in
concluding and carrying out the operation under this Decision
shall be borne by Ukraine.

incurred by the Community

5.
The Economic and Financial Committee shall be kept
informed of developments in the operations referred to in para-
graphs 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.

Decision 98/592/EC is hereby repealed.

Article 6

Article 7

This Decision shall take effect on the day of its publication in
the Official Journal of the European Communities.

Done at Brussels, 12 July 2002.

For the Council

The President

T. PEDERSEN