Proposal for a Council Decision providing further macro-financial assistance to the Federal Republic of Yugoslavia
Date: 2002-07-30
Institutions: European Commission
Subjects: Community loan, EU aid, Serbia and Montenegro, donation, economic stabilisation, financial aid, macroeconomics

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Proposal for a Council Decision providing further macro-financial assistance to the Federal
Republic of Yugoslavia

(2002/C 291 E/19)

COM(2002) 436 final — 2002/0192(CNS)

(Submitted by the Commission on 30 July 2002)

EXPLANATORY MEMORANDUM

1. Introduction

Following the political and democratic changes in the Federal Republic of Yugoslavia (FRY) in October
2000, the FRY authorities made considerable progress in (re-)establishing links with international organi-
sations and in particular in normalising the country’s financial relations with multilateral and official
bilateral creditors. The resumption of IMF membership occurred in December 2000. In the first half of
2001, the FRY became a member of the EBRD and succeeded to the membership of the former Socialist
Federal Republic of Yugoslavia in the World Bank. In October 2001, the FRY cleared all its outstanding
arrears towards the European Investment Bank (EIB) and thus paved the way for the inclusion of the FRY
in the guarantee mandate for external action of the EIB and the subsequent start of first lending operations
for investment projects. In November 2001, the FRY concluded an agreement with Paris Club creditors
which details a two-phased 66 % reduction in the net present value of outstanding obligations to Paris
Club creditors (some USD 4 500 million at end-2001). The first phase (51 %) became effective in early
May 2002, when the IMF Board approved a three-year Extended Arrangement to support the FRY’s
economic programme in 2002-2005. The second phase will become effective upon completion of the
IMF programme (expected in March 2005). Negotiations are continuing with London Club creditors to
settle FRY’s outstanding financial obligations towards commercial creditors (some USD 2 800 million at
end-2001).

framework for

Political developments play a major role with regard to the development of the economic framework. The
Belgrade Agreement on the restructuring of relations between Serbia and Montenegro was signed in
mid-March 2002 by President Kostunica as well as by authorities from both republics. It sets out a
relations between Serbia and Montenegro and has
general
meanwhile been endorsed by the federal and the republican Parliaments. The full implementation of the
Belgrade Agreement is of utmost importance for the FRY to make progress in the EU Stabilisation and
Association Process. A new Constitutional Charter which still needs to be adopted should clarify the
institutional structure of the state. On this basis, political
leaders in the country need to live up to
their commitment to harmonise their policies and to achieve an internal market and a common trade
and customs policy which is essential for further rapprochement with the Union.

the restructuring of

Since October 2000, the FRY authorities have accomplished substantial progress toward restoring macro-
economic stability, liberalising the exchange, price and trade regimes and improving market confidence.
Important legal and regulatory steps have been taken to foster the restructuring of the economy, namely a
sound and transparent privatisation framework and new banking legislation has been put in place. Good
progress has also been made toward enhancing public expenditure control and tax policies were geared at
lower tariffs and a broader tax base, resulting in improved revenue collection.

Apart from general Community support provided under the CARDS program (EUR 434 million in 2000
and 2001, with EUR 195 million expected for 2002), the Community has supported the process of
economic reforms in the FRY through macro-financial assistance of EUR 345 million that was provided
in the context of the IMF stand-by programme adopted in June 2001. On 16 July 2001, the Council
decided to provide to the FRY a Community macro-financial assistance of up to EUR 300 million (1). On
10 December 2001, the Council revised this Decision by increasing the grant element from EUR 75
million to up to EUR 120 million, thereby augmenting the overall amount of this assistance to up to
EUR 345 million (2). Following up-front clearance of all arrears of
the FRY towards the European

(1) Decision 2001/549/EC (OJ L 197, 21.7.2001, p. 36).
(2) Decision 2001/901/EC (OJ L 334, 18.12.2001, p. 30).

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Investment Bank and the European Community (totalling EUR 232 million), the first tranche of the
assistance amounting to EUR 260 million (comprising EUR 225 million loan and EUR 35 million
grant) was released in October 2001. The second (grant) tranche of EUR 40 million was disbursed in
January 2002, following a satisfactory review of conditionality and the signature of a Supplemental
Memorandum of Understanding (SMoU), which specified the economic and structural policy conditions
for the payment of the third (grant) tranche of EUR 45 million. In April 2002, the Commission services
reviewed recent economic and structural developments, and in particular progress made by the FRY
authorities with respect
to the conditions specified in the SMoU. The mission found that a large
number of the conditions had been fulfilled and agreed with the authorities on a number of further
actions to be taken before the third and final tranche could be released. In the meantime, the SMoU
conditionality has been satisfactorily met and the release of the final tranche has been launched in early
July.

Despite impressive achievements in stabilisation and reform since late 2000, important economic chal-
lenges lie ahead that the FRY authorities intend to address in the context of the new IMF programme.
Indeed, economic conditions remain difficult with a GDP level still at historically low levels and a weak
performance of industry. Reforms need to be continued vigorously to lay the foundation for sustained
growth and employment creation. They will have to address in particular the restructuring of a largely
insolvent, de-capitalised and over-staffed public enterprise sector. Further action is needed to modernise an
under-performing and weak banking sector. New and large investments are essential to upgrade dilapidated
infrastructure that has lacked proper maintenance for many years.

The external sustainability of the FRY economy also remains a major challenge even after substantial debt
relief agreed by the Paris Club, and despite IFIs providing substantial financial assistance. Hence, important
remaining financing requirements will continue to put a heavy strain on the balance of payments.
According to IMF projections, the FRY economy will continue to rely on official financing as private
funding, although on an upward trend, will by far not reach sufficient levels to match the financing
requirements over the medium term.

In these circumstance, and following the consultation of the Economic and Financial Committee, the
Commission is now proposing to the Council to adopt a Decision providing further macro-financial
assistance to the FRY.

2. Recent Economic Performance

Real GDP in the FRY grew by an estimated 5,5 % in 2001 (incl. 3,5 % in Montenegro), somewhat faster
than projected, and was mainly driven by agricultural output recovery (20-25 %) and increased activity in
services. Industrial production has been performing poorly throughout 2001 and in the first two months,
industrial output was 4,7 % lower than in the same period of the previous year.

In Serbia, end-year inflation has come down considerably (from 115 % at end-2000 to 39 % at end-2001)
despite increases in electricity prices and indirect taxes; core inflation is estimated at 15 %. In the first three
months of 2002, monthly inflation averaged at 0,8 % pointing to an annualised rate of some 10 %,
considerably lower than the targeted rate of 20 %. Montenegro recorded an end-2001 inflation of some
24 %, higher than the target of 15 % but lower than in Serbia. Real wage freezes in the public sector have
clearly supported the process of dis-inflation and the FRY authorities agreed with the IMF to keep the state
sector wage bill in 2002 constant in relation to GDP.

The consolidated general government accounts in the FRY recorded a cash deficit before grants of some
1,3 % of GDP in 2001 (around USD 140 million), compared with a revised programme target of 4,0 %.
This includes a Montenegrin fiscal deficit (before grants) of around 5 % of GDP of that republic. The
considerably lower than programmed cash deficit was in part due to improved revenue performance as a
result of tax policies implemented in the first half of 2001 (turnover taxes, excises and gross income tax).
But it mainly reflects the action taken to severely compress expenditures as delays occurred in receiving

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revenues from privatisation and foreign financial assistance. The deficit was financed through domestic
borrowing (0,6 % of GDP as planned) and foreign financing (0,8 % of GDP as compared to a programmed
2,1 %). In line with a sustainable level of expenditure, the consolidated FRY budget deficit for 2002 is
expected to be in the order of 5,6 % of GDP, to be financed through domestic borrowing (0,6 % of GDP),
privatisation receipts (1,4 %) and foreign assistance (3,6 %).

The value of the Dinar remained broadly stable at around YUD 59 per EUR, reflecting tight monetary and
fiscal policies in Serbia throughout 2001 and quite favourable balance of payments developments. The
current account deficit (before grants) was considerably lower than originally projected (10,9 % instead of
14,6 %), although imports grew more than expected (by 30 % instead of 21 %) and exports were slightly
below the projected amount. This improvement was due to higher than expected inflows of remittances
from abroad. Gross reserves of the National Bank of Yugoslavia reached around USD 1 200 million by
end-2001 (compared to USD 605 million at the beginning of the year), equivalent to 2,4 months of
imports, and rose by a further USD 160 million in the first two months of 2002. However, the external
viability of the FRY economy will remain a major challenge. Important financing requirements, mainly
resulting from debt service obligations and the need to further strengthen foreign exchange reserves, will
continue to put a heavy strain on the balance of payments.

3. Medium Term Economic Policy Framework

3.1. Outline of the main policy objectives for 2002-2005

The framework for medium-term economic policies in the FRY is set
in the three-year Extended
Arrangement with the IMF that was adopted by the Board on 13 May 2002. The authorities are
expecting annual real growth to increase to about 5 % in 2003-2005 after 4 % in 2002.
Inflation
(end-year) is targeted to be reduced to 8 % by end-2004 in Serbia (after 20 % in 2002 and 12 % in
2003) and to 12 % by end-2002 in Montenegro to be followed by further dis-inflation in 2003 and 2004.
The current account deficit is expected to increase in 2002 from 10,9 % to 12,9 % of GDP and to improve
steadily in relation to GDP in the years 2003 to 2005, mostly due to export recovery. However, the
authorities are projecting average annual inflows of foreign assistance in the order of USD 840 million per
year to finance a major share of the current account deficits. Foreign exchange reserves are targeted to
increase to 4,3 months of imports from the end-2001 level of 2,4 months.

3.2. Macro-economic policies

The FRY authorities intend to reach these objectives through a continuation of prudent macro-economic
policies over the medium term. Fiscal policies are projected to further contain public spending,
in
particular through a reduction of subsidies, a reform of
the civil service and public sector wage
policies, as well as reforms in the area of pension and health care. The expenditure/GDP ratio is
expected to decline by 3 % of GDP by 2005 from a relatively high level of around 49 % in 2002. On
the revenue side, the authorities aim to further widen the tax base through improved tax administration
and enhanced tax collection. However, as in other transition economies, the fiscal deficit is projected to
remain relatively high during the period, mainly due to the need for investment spending to address the
obsolete infrastructure, and to external debt service requirements. Also, social spending for the most
vulnerable parts of the population is considered essential to maintain public support for reforms. The
public debt/GDP ratio is projected to be halved from around 130 % at end-2001 to 65 % at end-2005.

The overarching goal of monetary policies will continue to be lowering inflation. As in 2001, base money
creation will primarily be driven by increases in net foreign assets, while increases in net domestic assets
will continue to be strictly limited. To this end, domestic lending from the banking system to the
government will remain below 0,5-1,0 % of GDP over the medium term. Prudent wage policies in the
state sector are considered essential to support further dis-inflation. The policy of a managed float will be
continued although the authorities will closely monitor the appropriateness of exchange rate policies
taking also into account external competitiveness and export performance. Exchange rate policies might
also be reconsidered in view of the recently adopted new law on foreign exchange transactions. Also, the
elimination of all current account restrictions and a substantial liberalisation of capital account transactions
are foreseen over the medium term.

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3.3. Structural Reforms

The authorities envisage the continuation of structural reforms over the medium term, in particular in the
fiscal, banking and enterprise sector, as an essential complement to continuous macro-economic stabili-
sation. This will be accompanied by a further liberalisation of prices, in particular an adjustment of energy
prices to cost-recovery levels by mid-2004. In the area of trade, the abolishment of remaining trade
barriers,
i.e. quantitative restrictions except those for health, environmental and security reasons are
envisaged during the period of the Extended Arrangement.

In the fiscal area, the implementation of a fully fledged expenditure control system in Serbia and a
strengthening of tax administration are considered as priorities in the area of institutional strengthening.
As regards expenditure policies, a major re-orientation of public spending is envisaged to increase the
quality and effectiveness of public services. Specifically, a better targeting of social transfers and benefits
including a comprehensive reform of the pension system, as well as an overhaul of state subsidies should
contribute to a further rationalisation of public spending. In Serbia, the main reform in the area of tax
policy will be the introduction of VAT, which is scheduled for early 2004.

In the banking sector, emphasis is placed on improving banking supervision on the basis of stricter
prudential regulations in line with international standards in order to strengthen the financial position
of banks. Further progress is envisaged with regard to the rehabilitation and possible restructuring of those
banks that are under enhanced supervision of the National Bank of Yugoslavia or placed in the Bank
Rehabilitation Agency. Finally, the authorities plan to accelerate the privatisation of financial institutions.
In Montenegro, short-term decisions are needed on whether a number of banks should be re-licensed or
closed.

The process of restructuring and privatisation of large state-owned enterprises will gain momentum over
the medium term. A number of around 150 enterprises have been chosen for tender privatisation; for
some 70 companies procedures are well advanced, 28 companies are expected to be sold by end-2002 and
the remaining enterprises in the following years. A number of 150-200 companies are currently in the
pipeline for privatisation through auctions and are expected to be sold by end-2002. For the majority of
some 4 000 state-owned firms, the process of privatisation is envisaged to gain momentum over the
medium term and to be completed by mid-2005. The authorities also intend to restructure some 40 large
conglomerates prior to possible privatisation.

4. External Financing Requirements of the FRY in 2002 and 2003

Even if the FRY continues with macro-economic stabilisation and sustains a good track record in structural
reforms as envisaged under the Extended Arrangement, it can be expected — in line with IMF assessment
and projections in a recent staff report (EBS/02/73 of 26 April 2002) — that the country will remain
heavily dependent on external
including macro-financial
assistance. Important financing needs result particularly from external debt service obligations and the
need to strengthen foreign exchange reserves, as well as from costs associated with the upgrading of public
infrastructure and with enterprise and bank restructuring.

financial support over the medium term,

According to IMF balance of payments projections, gross financing requirements in 2002 and 2003
amount to about USD 8 450 million, mainly comprising remaining external arrears (some USD 4 000
million) and projected current account deficits before grants (some USD 3 370 million) as well as a
planned increase of gross foreign exchange reserves by around USD 900 million by end-2003 to a
level of 3,5 months of projected imports that is deemed appropriate in the context of further foreign
exchange liberalisation.

The gross financing requirements are expected to be reduced by some net private capital
inflows
(USD 1 670 million), by expected debt relief (USD 4 231 million), mainly from the London Club on
terms equivalent to those agreed by the Paris Club, and by firmly committed bilateral official loans and
grants (USD 421 million), which leads to a remaining gap of USD 2 131 million.

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Taking into account firm commitments by IFIs so far in 2002 (USD 350 million) as well as expected IMF
financing in 2002 and 2003 (USD 562 million), this would reduce the gap to around USD 1 220 million,
for which additional financing assurances from IFIs and bilateral donors are still needed and expected
(USD 300 million in 2002 and USD 920 million in 2003). As the IMF expects financing from IFIs (excl.
IMF) in 2003 in the amount of USD 360 million, a residual financing gap of around USD 860 million
would have to be financed through bilateral financial contributions in 2002 and 2003.

According to information provided by the IMF, a part of this residual financing gap in 2002/2003, namely
some USD 280 million, represents a macro-financing gap (some USD 100 million in 2002 and some
USD 180 million in 2003). This does not, however, include balance of payments support provided by the
Paris Club of bilateral official creditors, i.e; the cash relief through the capitalisation of moratorium interest
estimated at some USD 100-120 million for the period 2002/2003.

The IMF indicated that in order to meet a substantial part of this macro-financing gap, further Community
macro-financial assistance would be needed, starting already in 2002.

5. Possible Further Community Macro-Financial Assistance and main Characteristics of This

Assistance

The Commission is proposing that the Community will make available to the FRY a further macro-
financial assistance in the amount of up to EUR 130 million. The proposed amount appears to be
the financing gap for macro-financial support and the funding
consistent with IMF projections of
requirements.

A further Community macro-financial assistance would contribute to bolstering the country’s economic,
social and political stability, as well as enhancing its important role as a factor of stability in the region. In
particular, it is considered an appropriate measure to help ease the country’s external financial constraints,
support the balance of payments and strengthen the reserve position. A further Community macro-
financial assistance would complement resources being made available by International Financial Insti-
tutions and bilateral donors. There is a risk that if sufficient official financing is not forthcoming, there
would be adverse consequences for a continuation of economic policies envisaged under the IMF Extended
Arrangement and thus for overall growth prospects, the level of employment and the standard of living.

The proposed assistance is intended to accompany the first half of the IMF Extended Arrangement in 2002
and 2003. The assistance would be disbursed in at least two tranches and would be subject to appropriate
macroeconomic and structural conditionality in line with the main elements of the new IMF programme.

Given that the FRY’s borrowing capacity remains weak even after action taken by the Members of the Paris
Club, the proposed Community macro-financial assistance foresees a substantial grant element of up to
EUR 75 million. The budgetary funds are already foreseen on the budget line B7-548 for 2002 and 2003.
The loan element of up to EUR 55 million of this assistance would have a maturity of up to 15 years,
comparable to recent macro-financial assistance packages to other Western Balkan countries. The
Community would provide the funds through market borrowing with a guarantee by the general
budget. The FRY would subsequently borrow from the Community. The borrowing and lending operations
would be perfectly matched and would be without any commercial risk for the Community. In accordance
with the Guarantee Fund mechanism, the budgetary implications of a decision to make available a loan of
up to EUR 55 million to the FRY would imply a EUR 4,95 million provisioning of the Guarantee Fund
for which sufficient margins exist under the reserve for guarantees.

The Council is therefore requested to adopt the attached draft Decision providing further macro-financial
assistance to the FRY.

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THE COUNCIL OF THE EUROPEAN UNION,

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

(8) the Members of the Paris Club agreed in November 2001
on a substantial debt relief
the Federal
Republic of Yugoslavia, already alleviating the balance of
payments situation;

in favour of

Having regard to the proposal of the Commission,

Having regard to the opinion of the European Parliament,

(9) the authorities of the Federal Republic of Yugoslavia have
requested financial assistance
international
financial institutions, the Community, and other bilateral
donors;

from the

Whereas:

(1) the Commission consulted the Economic and Financial

Committee before submitting its proposal;

(2) the FRY authorities re-established links with international
organisations and in particular made progress towards
normalising the country’s financial relations with multi-
lateral creditors, including the European Investment Bank,
and with official bilateral creditors;

(3) since October 2000, the Federal Republic of Yugoslavia
has achieved substantial progress in economic stabili-
sation and reform and has made
steps
towards a well-functioning market economy;

important

the
(4) within the Stabilisation and Association process,
is
framework for EU relations with the region,
to sustain political and
desirable to support efforts
economic
Federal Republic of
Yugoslavia, with a view to evolving towards the devel-
opment of a full co-operation relationship with the
Community;

stabilisation in the

it

(5) financial assistance from the Community shall be instru-
in bringing the Federal Republic of Yugoslavia
the Community already
to the Community;
of
of

2001 macro-financial
Federal
the

mental
closer
provided
EUR 345 million
Yugoslavia (1);

assistance
Republic

to

in

(6) the International Monetary Fund (IMF) approved in May
2002 a three-year ‘Extended Arrangement’ for the Federal
Republic of Yugoslavia of about USD 829 million to
support
in
2002-2005;

programme

authorities’

economic

the

(7) the World Bank decided in May 2001 to make available
to the Federal Republic of Yugoslavia on a temporary
loans of USD 540
basis a package of concessional
million over a three year period; so far two structural
adjustment credits of USD 70 million and of USD 85
million have been approved in January and May 2002,
respectively, to support reforms in public finance as well
as in the energy and social sector and to foster private
sector development;

(1) Decision 2001/549/EC (OJ L 197, 21.7.2001, p. 36), Decision

2001/901/EC (OJ L 334, 18.12.2001, p. 30).

(10) over and above the estimated financing which could be
provided by the IMF and the World Bank, an important
residual financing gap remains to be covered to support
the policy objectives attached to the authorities’ reform
efforts;

(11) Community macro-financial assistance to the Federal
Republic of Yugoslavia is an appropriate measure to
help ease the country’s external
financial constraints,
supporting the balance of payments and strengthening
the reserve position;

(12) financial assistance from the Community in the form of a
combination of a long-term loan and a straight grant is an
appropriate measure to support the sustainability of the
Federal Republic of Yugoslavia’s
financial
external
position, given its limited borrowing capacity;

(13) the inclusion of a grant component in this assistance is
the budgetary

to the powers of

without prejudice
authority;

(14) this assistance should be managed by the Commission in
consultation with the Economic and Financial Committee;

(15) 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 the Federal
Republic of Yugoslavia further macro-financial assistance in
the form of a long-term loan and a straight grant with a
view to ensuring a sustainable balance-of-payments situation
and strengthening the country’s reserve position.

The loan component of this assistance shall amount to a
2.
maximum principal of EUR 55 million with a maximum
maturity of 15 years. 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
the Federal Republic of Yugoslavia in the form of a loan.

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The grant component of this assistance shall amount to a

3.
maximum of EUR 75 million.

This Community financial assistance shall be managed by
4.
the Commission in close consultation with the Economic and
Financial Committee and in a manner consistent with the
agreements
Federal
Republic of Yugoslavia.

reached between the

and the

IMF

Article 2

1.
The Commission is empowered to agree with the auth-
orities of the Federal Republic of Yugoslavia, after consultation
with the Economic and Financial Committee, the economic
policy conditions attached to further Community macro-
financial assistance. These conditions shall be consistent with
the agreements referred to in Article 1(4).

2.
The Commission shall verify at regular intervals, in colla-
boration with the Economic and Financial Committee and in
that economic policies in the
co-ordination with the IMF,
Federal Republic of Yugoslavia are in accordance with the
objectives of
its
conditions are being fulfilled.

this macro-financial assistance and that

Article 3

1.
The loan and grant components of this assistance shall be
made available to the Federal Republic of Yugoslavia in at least
two instalments. Subject to the provisions of Article 2, the first
instalment is to be released on the basis of a satisfactory track
the Federal
the macro-economic programme of
record of
Republic
Extended
Yugoslavia
of
Arrangement with the IMF.

present

under

the

2.
The second and any further instalments shall be released
on the basis of a satisfactory continuation of economic policies
referred to in Article 2, and not before one quarter after the
release of the previous instalment.

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 risks, or in any
maturities,
other commercial risk.

2.
if the
The Commission shall take the necessary steps,
Federal Republic of Yugoslavia so requests, to ensure that an
early repayment clause is included in the loan terms and
conditions and that it may be exercised.

its initial borrowings or

At the request of the Federal Republic of Yugoslavia, and
3.
where circumstances permit an improvement in the interest
rate of the loan, the Commission may refinance all or part
of
restructure the corresponding
financial conditions. Refinancing or restructuring operations
shall be carried out in accordance with the conditions set
out
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.

in paragraph 1 and shall not have

the

All

related costs

the Community in
4.
concluding and carrying out
this
Decision shall be borne by the Federal Republic of Yugoslavia,
if appropriate.

the operation under

incurred by

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

Article 5

At least once a year, and before September, the Commission
shall address to the European Parliament and to the Council a
report, which will include an evaluation on the implementation
of this Decision in the previous year.

Article 6

The funds shall be paid to the National Bank of the

3.
Federal Republic of Yugoslavia.

This Decision shall take effect on the day of its publication in
the Official Journal of the European Communities. It shall expire
two years after the date of its publication.

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BUDGETARY RESOURCES NECESSARY FOR THE PROVISIONING OF THE GUARANTEE FUND IN 2002
AND MARGIN UNDER THE RESERVE FOR LOANS AND LOAN GUARANTEES IN FAVOUR OF THIRD
COUNTRIES

ANNEX

Operations

Basis of the
calculation (1)

Provisioning of the
Fund (2)

Reserve Margin

(in euro million)

Decided for project related assistance

EIB

Mediterranean Basin 1997-2000

2000-2007 general lending mandate

Special Turkey Reconstruction Facility (Terra)

Baltic Sea/Russia special action

Corrections

EIB

35,00 (a)

2 747,70 (b)

225,00 (b)

25,00 (c)

2,36

160,74

13,17

2,25

213,00 (3)

210,64

49,90

36,73

34,48

Cancellation of the 2001 provisioning for Baltic
Sea/Russia (4)

(100) (c)

– 9,00

43,48

Macrofinancial assistance (d)

Suspended operation

Albania: estimated carry over

(20) (e)

– 2,80

46,28

Decided operations

Ukraine Supplementary macro-financial assistance

(92) (e) + 110,00

– 2,98

49,26

Proposed operations

Bosnia and Herzegovina further macro-financial
assistance

FRY further macro-financial assistance

Residual Lending and Guarantee capacity (5)

20,00

55,00

1,80

4,95

47,46

42,51

472,33

(1) The basis of calculation represents 75 % (a), 65 % (b) or 100 % (c) of the nominal amount of the EIB loans and 100 % (d) of the

macro-financial assistance loans.

(2) According to the provisioning rules provided in the Council regulation (EC, Euratom) No 2728/94 of 31 October 1994. Since 2000,
the provisioning rate has been fixed to 9 %. Operations which were decided before 2000 (e) have been provisioned at a rate of 14 %
and reprovisioned at a rate of 9 %.

(3) Reserve amount in 2002 under the financial perspective.
(4) Instead of 100 in 2001, the new schedule for disbursement is 25 in 2002, 40 in 2003 and 35 in 2004.
(5) For 100 % guarantee loans.