WRITTEN QUESTION P-1534/03 by Anne Van Lancker (PSE) to the Commission. Implications of the cancellation of the debts of third world countries for the excessive deficit procedure.
Date: 2003-04-30
Institutions: European Parliament, Provisional data
Subjects: EU Member State, European accounting system, capital transfer, cooperation policy, debt reduction, developing countries, development aid, national accounts, swap arrangement

26.2.2004

EN

Official Journal of the European Union

C 51 E/105

Can the Council (not least in view of the fact that Italy is soon to assume the Council Presidency) take
steps in order to ensure that the Italian and German Governments tackle this issue, so that ‘European
political asylum’ can be granted in such cases of extreme human rights abuse, thereby enabling Oriel de
Armas Peraza and his family to secure a renewal of their residence permit?

Reply

(29 September 2003)

The Council cannot intervene in individual asylum cases in the Member States.

(2004/C 51 E/117)

WRITTEN QUESTION P-1534/03

by Anne Van Lancker (PSE) to the Commission

(30 April 2003)

Subject: Implications of the cancellation of the debts of third world countries for the excessive deficit

procedure

The cancellation by Member States of the debts of developing countries represents an important means of
achieving the Community’s development cooperation policy objectives, in particular the fostering of the
sustainable economic and social development of the developing countries, the harmonious integration of
those countries into the world economy and the fight against poverty.

However, in accordance with ESA 95, debt cancellations are entered in Member State budgets as capital
transfers, which have an impact on the balance of claims outstanding against other countries. In other
words, the budget balance suffers, with possible adverse implications for the Member States concerned
under the excessive deficit procedure. This procedure (Article 104 of the EC Treaty), as now implemented,
thus acts as a serious deterrent to those Member States wishing to carry out such debt cancellation
operations.

The EC Treaty also stipulates that, when implementing policies which may have implications for
developing countries, the Community must take account of development policy objectives. Although this
is not a policy area which has direct implications for the developing countries, the indirect impact is clear.
Community policy on excessive deficits should therefore take account of this objective, for example by
amending Regulation (EC) No 2223/96 (1) on the European system of national and regional accounts in the
Community, by analogy with the steps taken in 2001 by means of Regulation (EC) No 2558/2001 (2) as
regards streams of payments under swaps arrangements. Is the Commission prepared to take action on this
matter?

(1) OJ L 310, 30.11.1996, p. 1.
(2) OJ L 344, 28.12.2001, p. 1.

Answer given by Mr Solbes Mira on behalf of the Commission

(26 May 2003)

The Commission considers that addressing developing countries’ debt problems indeed represents an
important means of achieving the Community’s development co-operation policy objectives. In the context
of the heavily indebted poor country (HIPC)
it also actively participates in it, with some
initiative,
EUR 1,3 billion pledged so far for the poorest and most highly indebted countries.

C 51 E/106

Official Journal of the European Union

EN

26.2.2004

As regards the accounting of Member States’ debt cancellations, the methodological reference for national
accounts in the Community is the European System of National and Regional Accounts (ESA95). It was
adopted by Council Regulation (EC) No 2223/96 of 25 June 1996. According to the ESA95 rules, debt
cancellations are recorded as capital
transfers are a component of government
expenditure which contribute to the government deficit. Paragraph 4 165 (f) of ESA95 specifically quotes
‘the cancellation by the government of a debt owed to it by a foreign country’ as an example of a capital
transfer. Other accounting systems, such as the worldwide System of National Accounts of 1993 (SNA93)
of the United Nations or the International Monetary Fund’s (IMF’s) Government Finance Statistics Manual
of 2001 also provide for similar accounting recordings.

transfers. Capital

The Commission considers that the aim of government deficit and debt accounting should be to give a
picture as faithful as possible of economic reality. To remain credible and useful for economic analysis and
policy-making, the government deficit and debt must be compiled on the basis of scientific and technical
criteria irrespective of the merit of the government expenditure categories or of any ethical consideration,
e. g. the cancellation of the debts of the highly indebted poor countries. Debt cancellation is not without
cost for the creditor countries. It is, therefore, appropriate that the act of debt cancellation implies a higher
fiscal deficit.

The analogy between the debt cancellations and the recording of swap-related flows does not seem to be
warranted. The specific accounting treatment of swap-related flows for the excessive deficit procedure
established by Regulation (EC) No 2558/2001 of the Parliament and of the council of 3 December 2001
amending Council Regulation (EC) No 2223/96 as regards the reclassification of settlements under swaps
arrangements and under forward rate agreements, was not for any consideration about the merit of swaps
but exclusively for technical reasons. On this latter issue, the Honourable Member is referred to the
explanatory memoranda of the Commission proposal (1) that led to Regulation (EC) No 2558/2001 and of
the respective Parliamentary Report (A5-0071/2001 Kauppi).

(1) OJ C 116 E, 26.4.2000.

(2004/C 51 E/118)

WRITTEN QUESTION E-1536/03

by Rodi Kratsa-Tsagaropoulou (PPE-DE) to the Council

(6 May 2003)

Subject: Granting of loans by the European Investment Bank (EIB) to Greece and Turkey

On 2 April 2003 the EIB decided to grant EUR 350 million to Turkey to support the private sector and for
the reconstruction of the areas hit by the 1999 earthquake.

Does the Council have any information from the EIB (tables or studies) regarding which specific projects
the Turkish administration will fund with these loans? Is there an evaluation of the use made of the first
tranche of EUR 150 million in loans to Turkey, granted for the same purpose?

In 1999 Greece was granted a loan of EUR 300 million for the same purpose. Does the Council have
details on the use made of these loans and the take-up rate? The first envelope which the EIB approved
made provision for the granting of EUR 900 million. What reasons can the Council give for the delay in
continuing with the granting of these loans, and what plans are there for payment of the remaining
amount?

Reply

(2 October 2003)

Council decision 1999/786 EC granting a Community guarantee to the EIB against losses under loans for
projects for the reconstruction of the earthquake-stricken areas of Turkey, provides in its Article 3 that the
Commission shall inform each year both the European Parliament and the Council of the loan operations
carried out under this Decision and shall submit at the same time an implementation assessment.