Proposal for a Council Decision on the position to be adopted by the Community within the ACP-EC Council of Ministers regarding a decision on the reallocation of unallocated resources as well as uncommitted interest subsidies from the eighth European Development Fund
Date: 2002-10-25
Institutions: European Commission
Subjects: ACP-EU Council of Ministers, European Development Fund, financing of aid, use of aid

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Official Journal of the European Union

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Proposal for a Council Decision on the position to be adopted by the Community within the
ACP-EC Council of Ministers regarding a decision on the reallocation of unallocated resources as
well as uncommitted interest subsidies from the eighth European Development Fund

(2003/C 45 E/16)

COM(2002) 582 final

(Submitted by the Commission on 25 October 2002)

EXPLANATORY MEMORANDUM

Decision No 1/2000 of the ACP-EC Council of Ministers of 27 July 2000 (1) laying down transitional
measures for the period from 2 August 2000 until the entry into force of the Cotonou Agreement
provides for advance application of the Agreement and continued application of some of the provisions
of the revised fourth Lomé Convention.

In accordance with the decision on transitional measures, the ACP-EC Council of Ministers took Decisions
Nos 3/2000 of 15 December 2000 (2) and 10/2001 of 20 December 2001 (3) (by delegation of powers to
the Committee of Ambassadors) on the use of unallocated resources from the 8th EDF, in order to ensure
certain activities pending the entry into force of the 9th EDF. Since the 9th EDF did not enter into force in
June 2002, as planned, there are a number of activities that are not covered by these decisions on which
the ACP-EC Council of Ministers must decide.

The enclosed draft decision provides for the allocation of EUR 54,2 million of unallocated resources as
well as EUR 200 million of uncommitted interest subsidies from the eighth EDF to the following
purposes:

1. Resources for internationally agreed debt reduction initiatives

By Decisions Nos 1/1999 of 8 December 1999 (4) and 2/2001 of 20 December 2001, (5) the ACP-EC
Council of Ministers allocated resources to debt alleviation mechanisms in favour of highly indebted ACP
countries for a total amount of EUR 1 060 million. (6) These resources were intended to (i) cover the
overall financing of the initiative in favour of Highly Indebted Poor Countries (HIPC) to the amount of
EUR 680 million and (ii) meet the outstanding debt and debt-servicing obligations to the Community of
ACP countries which qualify under the HIPC initiative for a total amount of EUR 380 million. In order to
allow for the continuation of the support of the Community to the initiative taken in 1999 and supple-
mented in 2001, it is proposed that an amount of at least EUR 125 million be transferred from uncom-
mitted interest subsidies to assistance to ACP countries which qualify under the HIPC initiative (7). These
resources will be used as a priority for outstanding debt and debt-servicing obligations to the Community.

2. Conflict prevention and resolution and peace-building

The Community and the ACP States have agreed to pursue an active, comprehensive and integrated policy
of conflict prevention and resolution and peace-building. Within this framework there is a need to support
countries emerging from cross-border conflicts and help them consolidate their peace efforts. By Decision
No 10/2001 the ACP-EC Committee of Ambassadors allocated EUR 50 million for this purpose. Given
the substantial needs for assistance in this field,
is proposed that a supplementary amount of
EUR 25 million be transferred from uncommitted interest subsidies to support for conflict prevention
and resolution, in accordance with Article 11(2) and (3) of the ACP-EC Partnership Agreement, which was
put into early application by Decision No 1/2000 of the ACP-EC Council of Ministers.

it

(1) OJ L 195, 1.8.2000, p. 46. This decision was extended by Decision No 1/2002 of the ACP-EC Council of Ministers

of 31 May 2002.

(2) OJ L 8, 12.1.2001, p. 38.
(3) OJ L 50, 21.2.2002, p. 62.
(4) OJ L 103, 28.4.2000, p. 73.
(5) OJ L 56, 27.2.2002, p. 19.
(6) The Community gave further contributions to the HIPC initiative from EDF interests (EUR 40 million) and from the

Budget (EUR 54 million, in favour of Latin American and Asian countries).

(7) On entry into force of the ninth EDF, this amount will be supplemented from any uncommitted balances from the

allocations mentioned under headings 3, 4 and 5.

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3. Risk capital operations

By Decision No 2/2000 of 15 December 2000 (1), the ACP-EC Council of Ministers decided to allocate
EUR 300 million from unallocated resources and uncommitted interest
to risk capital
operations, in addition to the initial allocation under the Financial protocol of the revised fourth Lomé
Convention. This decision was taken in order to ensure that sufficient resources are available for operations
of this type, pending the entry into force of the 9th EDF. However, according to forecasts from the
European Investment Bank, which manages risk capital operations, resources currently available for risk
capital operations would not be sufficient to cover the needs until the entry into force of the 9th EDF,
which is not scheduled before early 2003. It is therefore proposed that a supplementary amount of
EUR 50 million be transferred from uncommitted interest subsidies to risk capital operations.

subsidies

The enclosed draft decision provides that, on entry into force of the 9th EDF, any uncommitted balances
from the 8th EDF allocation for risk capital operations will be used for debt reduction.

4. Centre for the development of entreprise (CDE)/centre for the development of agriculture

(CTA)

The Decision mentioned above (No 1/2000) on transitional measures provides for advance application of
the provisions concerning the CDE and CTA in Annex III to the ACP-EC Partnership Agreement. In line
with this decision, Decisions Nos 3/2000 and 10/2001 included allocations for the CDE and CTA for the
financial years 2001 and 2002, from unallocated resources from the 8th EDF, as an advance on the 9th
EDF (in the Financial protocol of the ACP-EC Partnership Agreement, EUR 90 million of the 9th EDF is
earmarked for the CDE and EUR 70 million for the CTA).

Given that the entry into force of the 9th EDF is unlikely to take place before the beginning of 2003, a
new provision should be taken to cover the 2003 financial year for the CDE and the CTA. The total
amount necessary for financing the CDE budget in 2003 is estimated at a maximum of EUR 22 million.
Since EUR 6,8 million is still available under the 8th EDF, in accordance with the reallocation decisions of
December 2000 and December 2001, the CDE would need an additional amount of EUR 15,2 million to
cover
the same financial year are
EUR 14 million. To make these financial resources available, therefore, it is necessary for the ACP-EC
Council of Ministers to authorise the use, in the form of an advance on the 9th EDF, of unallocated
resources from the 8th EDF.

the 2003 financial year. The requirements of

the CTA for

The enclosed draft decision provides that, on entry into force of the 9th EDF, any uncommitted balances
from the special 8th EDF allocations for the CDE and CTA will be used for debt reduction.

5. Regional cooperation

The Financial Protocol attached to the ACP-EC Partnership Agreement earmarks EUR 1,300 million for
regional co-operation. The Decision mentioned above (No 1/2000) on transitional measures specifies that,
pending the entry into force of the 9th EDF, financial co-operation will be financed with resources from
preceding EDFs. Some regions do not have sufficient resources available to implement new projects. It is
therefore proposed that the ACP-EC Council of Ministers authorise the use, in the form of an advance on
the 9th EDF, of a maximum of EUR 25 million of unallocated resources from the 8th EDF.

As for headings 3 and 4, the enclosed draft decision provides that, on entry into force of the 9th EDF, any
uncommitted balances from the special 8th EDF advance allocation for regional co-operation will be used
for debt reduction.

For all these reasons, the Commission is proposing that the Council adopt the attached decision on the
position to be adopted by the Community within the ACP-EC Council of Ministers regarding a decision on
the reallocation of unallocated resources as well as uncommitted interest subsidies from the 8th EDF.

(1) OJ L 17, 19.1.2001, p. 20.

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THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 310 in conjunction
with the second subparagraph of Article 300(2) thereof,

Having regard to the proposal from the Commission,

Whereas:

(1) Decision No 1/2000 of the ACP-EC Council of Ministers of
27 July 2000, as extended by Decision No 1/2002 of 31
May 2002, laid down transitional measures for the period
from 2 August 2000 until the ratification of the Cotonou
Agreement. Article 2 of that decision states that provisions
of
revised by the
Agreement signed in Mauritius on 4 November 1995,
regarding the ACP-EC Council of Ministers' power of
decision on the use of unallocated resources from the
6th, 7th and 8th EDFs, remains applicable.

convention as

fourth Lomé

the

by the latter of a decision on the use of unallocated
resources and uncommitted interest subsidies from the
eighth EDF,

HAS DECIDED AS FOLLOWS:

Article 1

The position taken by the Community within the ACP-EC
Council of Ministers on the
reallocation of unallocated
resources as well as uncommitted interest subsidies from the
8th EDF shall be based on the draft decision of the ACP-EC
Council of Ministers attached as the annex.

Article 2

(2) The position of the Community within the ACP-EC Council
of Ministers should be set out with a view to the adoption

Minor changes to the draft decision may be agreed without any
need for a further decision by the Council.

Draft Decision of the ACP-EC Council of Ministers on the reallocation of unallocated resources as
well as uncommitted interest subsidies from the eighth European Development Fund

THE ACP-EC COUNCIL OF MINISTERS,

Having regard to the Fourth ACP-EC Convention, as amended
by the Agreement signed in Mauritius on 4 November 1995,
and in particular Articles 195(b), 219(2)(d), 245(2), 257 and
282(5) thereof,

Having regard to the ACP-EC Partnership Agreement, signed in
Cotonou on 23 June 2000,

Whereas:

(1) By Decision No 1/2000 of 27 July 2000, the ACP-EC
Council of Ministers adopted transitional measures for the
period from 2 August 2000 until the ratification of the
ACP-EC Partnership Agreement, envisaging the anticipated
application of
the Partnership
certain provisions of
Agreement as well as the continued application of certain
provisions of the fourth Lomé Convention as revised by the
Agreement signed in Mauritius on 4 November 1995.
the
Article 2 of
Lomé Convention,
regarding the ACP-EC Council of
Ministers' power of decision on the use of unallocated
resources
remain
from the 6th, 7th and 8th EDFs,
applicable. This decision was extended by Decision No
1/2002 of the ACP-EC Council of Ministers of 31 May
2002.

that decision states that provisions of

(2) By Decisions Nos 1/1999 of 8 December 1999 and 2/2001
of 20 December 2001, the ACP-EC Council of Ministers

to debt alleviation mechanisms

in
allocated resources
favour of highly indebted ACP countries
for a total
amount of EUR 1,060 million. In order to allow for the
full
the pledge announced by the
Community through the initiative taken in 1999 and
supplemented in 2001,
to allocate
it
supplementary resources to the debt reduction facility.

implementation of

is necessary

(3) To ensure that the Community continues to contribute to
efforts of conflict prevention and resolution and peace-
supplementary
it
building,
resources to this effect.

is appropriate

to allocate

(4) To ensure the continuation of risk capital operations, the
necessary funds should be available to cover the financial
requirements until the entry into force of the 9th EDF.

(5) To ensure the continuation of the activities of the Centre
for the Development of Enterprise (CDE) and the Centre for
the Development of Agriculture (CTA), the necessary funds
should
financial
to cover
requirements for the 2003 financial year.

be made

available

the

(6) To continue the implementation of regional co-operation
in regions that have insufficient resources under the 6th,
7th and 8th EDF, the necessary funds should be made
available to cover
the
entry into force of the 9th EDF,

the financial requirements until

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HAS DECIDED AS FOLLOWS:

Article 1

Debt relief initiatives

An amount of EUR 125 million shall be taken from uncom-
mitted interest subsidies from the 8th EDF for debt alleviation
in favour of highly indebted ACP countries, in accordance with
Article 66 of the ACP-EC Partnership Agreement.

Article 2

Conflict prevention and resolution and peace-building

An amount of EUR 25 million shall be taken from uncom-
mitted interest subsidies from the 8th EDF for actions in the
field of conflict prevention and resolution and peace-building,
in accordance with Article 11(2) and (3) of the ACP-EC Part-
nership Agreement.

Article 3

Risk capital operations

1.
An amount of 50 million shall be taken from uncom-
mitted interest subsidies from the 8th EDF for risk capital
operations.

2.
After entry info force of the Financial Protocol of the
ACP-EC Partnership Agreement, any uncommitted balances
from the allocation for risk capital operations in paragraph 1
shall be transferred to the debt relief allocation created by
Article 1 of the present decision and used for debt alleviation.

3.
Until the date of entry into force of the Financial Protocol
of the ACP-EC Partnership Agreement, repayments of loans
financed from the allocation for risk capital operations in
paragraph 1 as well as repayments of loans financed from
the allocation for risk capital operations created by Decision
No 2/2000 of
the ACP-EC Council of Ministers of 15
December 2000 shall be added to the general reserve (unal-
located resources) of
that date, such
repayments shall be added to the Envelope for long-term devel-
opment as indicated in Article 3(a) of the Financial Protocol.

the 8th EDF. After

Article 4

CDE/CTA

The following shall be taken from unallocated 8th EDF

1.
resources (general reserve), as an advance on the 9th EDF:

— A maximum of EUR 15.2 million to contribute to the

financing of the CDE budget in 2003.

— A maximum of EUR 14 million to finance the CTA budget

in 2003.

2.
After entry into force of the Financial Protocol of the
ACP-EC Partnership Agreement, any uncommitted balances
from the allocations in paragraph 1 shall be transferred to
the debt relief allocation created by Article 1 of the present
decision and used for debt alleviation.

Only the amounts actually committed will be considered

3.
as an advance on the 9th EDF.

Article 5

Regional cooperation and integration

1.
An amount of EUR 25 million shall be taken from unal-
located 8th EDF resources (general reserve), as an advance on
the 9th EDF envelope for regional cooperation and integration,
as specified in Article 3(b) of the Financial Protocol of the
ACP-EC Partnership Agreement.

2.
After entry into force of the Financial Protocol of the
ACP-EC Partnership Agreement, any uncommitted balances
from the allocation for regional cooperation and integration
in paragraph 1 shall be transferred to the debt relief allocation
created by Article 1 of the present decision and used for debt
alleviation.

Only the amounts actually committed will be considered

3.
as an advance on the 9th EDF.

Article 6

The Chief Authorising Officer of the EDF is requested to take
the measures necessary to give effect to this Decision, which
shall enter into force on the day it is adopted.

Done at . . .

For the ACP-EC Council of Ministers

The President

. . .