2004/580/EC: Council Decision of 29 April 2004 providing macro-financial assistance to Albania and repealing Decision 1999/282/EC
Date: 2004-04-29
Institutions: Council of the European Union
Subjects: Albania, EU aid, financial aid

L 261/116

EN

Official Journal of the European Union

6.8.2004

COUNCIL DECISION

of 29 April 2004

providing macro-financial assistance to Albania and repealing Decision 1999/282/EC

(2004/580/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Com-
munity, and in particular Article 308 thereof,

Having regard to the proposal of the Commission,

Having regard to the opinion of the European Parliament (1),

Whereas:

(1)

(2)

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

The Council, by Decision 1999/282/EC (2), approved, in
the aftermath of the Kosovo crisis, macro-financial assis-
tance for Albania of up to EUR 20 million in the form
of a long-term loan facility. In the light of a better-than-
expected balance of payments situation, the Albanian
authorities did not request the release of this assistance;
therefore, the Commission deprogrammed it in 2001.

(3) Within the Stabilisation and Association process,

the
framework for EU relations with the region, it is desir-
able to support efforts to sustain political and economic
stabilisation in Albania, with a view to evolving towards
the development of a full cooperation relationship with
the Community; this is also the aim of the Stabilisation
and Association Agreement which is currently under
negotiation between Albania and the EU.

(4)

(5)

The International Monetary Fund (IMF) approved on 21
June 2002 in favour of Albania a three-year programme
supported by a Poverty Reduction and Growth Facility
(PRGF) for an amount of about USD 36 million, to
support the authorities' economic programme over the
period from June 2002 to June 2005; out of
this
amount, USD 11 million are projected to be disbursed
in 2004.

In the framework of the new three-year Country Assis-
tance Strategy (CAS) adopted by the World Bank Board
on 20 June 2002, USD 8 million are projected to be
disbursed in 2004 under the Poverty Reduction Support
Credit.

(6)

Over and above these estimated financial
supports
projected to be provided by the International Monetary

(7)

(8)

(9)

(10)

(11)

Fund and the World Bank, a significant residual finan-
cing gap remains in 2004, to be covered to support the
policy objectives attached to the authorities'
reform
efforts.

The Community already provided macro-financial assis-
the authorities of Albania have
tance to Albania;
requested further financial assistance from the interna-
tional financial institutions, the Community, and other
bilateral donors.

Community macro-financial assistance to Albania is an
appropriate measure to help the country meet
its
external financing needs, including through a reinforce-
ment of its reserves and budget support.

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 Albania's external financial position, given the coun-
try's relatively low level of development.

This financial support,
in particular the grant compo-
nent, should be provided after verifying whether the
financial and economic conditions lay down can be
fulfilled.

In order to ensure efficient protection of the Communi-
ty's financial interests linked to the present macro-finan-
cial assistance, it is necessary to provide for appropriate
measures by Albania related to the prevention of fraud
and other irregularities linked to this assistance, as well
as for controls by the Commission and audits by the
Court of Auditors.

(12)

The inclusion of a grant component in this assistance is
without prejudice to the powers of
the budgetary
authority.

(13)

This assistance should be managed by the Commission
in consultation with the Economic
and Financial
Committee.

(1) Opinion issued on 31 March 2004 (not yet published in the Offi-

cial Journal).

(2) OJ L 110, 28.4.1999, p. 13.

(14)

The Treaty does not provide, for the adoption of this
Decision, powers other than those of Article 308,

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HAS DECIDED AS FOLLOWS:

Article 1

1.
The Community shall make available to Albania a macro-
financial assistance in the form of a long-term loan and a
straight grant with a view to helping the country meet its
external financing needs, including through a reinforcement of
its reserves and budget support.

2.
The loan component of this assistance shall amount to a
maximum principal of EUR 9 million with a maximum
maturity of 15 years. To this end, the Commission is empow-
ered to borrow, on behalf of the Community, the necessary
resources that will be placed at the disposal of Albania in the
form of a loan.

The grant component of this assistance shall amount to a

3.
maximum of EUR 16 million.

4.
This Community financial assistance shall be managed by
the Commission in close consultation with the Economic and
Financial Committee and in a manner consistent with the
agreements reached between the IMF and Albania.

5.
The Community financial assistance shall be made avail-
able for two years starting from the first day after the entry
if circumstances so
into force of
require, the Commission, after consultation of the Economic
and Financial Committee, may decide to extend the availability
period by a maximum of one year.

this decision. However,

Article 2

The Commission is empowered to agree with the authori-
1.
ties of Albania, after consultation with the Economic and
Financial Committee the economic policy and financial condi-
tions attached to this assistance to be laid down in a Memor-
andum of Understanding. These conditions shall be consistent
with the agreements referred to in Article 1(4).

2.
Before proceeding with the actual implementation of the
Community assistance, the Commission shall check the relia-
bility of Albania's financial circuits, administrative procedures,
internal and external control mechanisms which are relevant
for this Community macro-financial assistance.

The Commission shall verify at regular intervals, in colla-
3.
boration with the Economic and Financial Committee and in
coordination with the IMF, that economic policies in Albania
are in accordance with the objectives of this assistance and that
its economic policy and financial conditions are being fulfilled.

Article 3

1.
The loan and grant components of this assistance shall be
made available by the Commission to Albania in at least two
instalments. Subject to the provisions of Article 2 and a satis-

factory assessment in accordance with Article 2(2), the first
instalment shall be released on the basis of a satisfactory track
record of the macro-economic programme of Albania under
the present Poverty Reduction and Growth Facility with the
IMF.

Subject to the provisions of Article 2, the second and any
2.
further instalments shall be released on the basis of a satisfac-
tory implementation of the abovementioned programme, and
not before one quarter after the release of the previous instal-
ment.

3.
The funds shall be paid to the Central Bank of Albania.
The final recipient of the funds will be the Central Bank of
Albania, to the extent that the assistance is intended to rein-
force the country's reserves, or the Ministry of Finance if it is
intended for budgetary support purposes.

Article 4

this assistance shall

take place in
The implementation of
accordance with the provisions of the Financial Regulation
applicable to the General Budget of the European Communities
and its implementing rules. In particular, the memorandum of
understanding to be agreed with the authorities of Albania
shall provide for appropriate measures by Albania related to
the prevention of fraud and other irregularities linked to this
assistance. It will also provide for controls by the Commission,
including the European Anti-Fraud Office (OLAF), with the
right to perform on-the-spot checks and inspections and for
to be
audits by the Court of Auditors, where appropriate,
carried out on the spot.

Article 5

The borrowing and lending operations referred to in
1.
Article 1(2) 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 risks, or in any
other commercial risk.

The Commission shall take the necessary steps, if Albania
2.
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 Albania, and where circumstances
permit an improvement in the interest rate of the loan, 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 accord-
ance with the conditions set out in paragraph 1 and shall not
the
have the effect of extending the average maturity of
borrowing concerned or increasing the amount, expressed at
the current exchange rate, of capital outstanding at the date of
the refinancing or restructuring.

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4.
All costs incurred by the Community which are directly
related to the borrowing and lending operations under this
Decision shall be borne by Albania.

5.
The Economic and Financial Committee shall be kept
informed of developments in the operations referred to in para-
graphs 2 and 3.

Article 6

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.

Council Decision 1999/282/EC is hereby repealed.

Article 7

Article 8

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

Done at Luxembourg, 29 April 2004.

For the Council

The President

M. McDOWELL