Opinion of the European Central Bank of 11 August 2005 at the request of the Austrian Federal Ministry of Finance concerning a draft Federal law on the payment of a contribution by Austria to the trust fund administered by the International Monetary Fund for low income developing countries affected by natural disasters (CON/2005/29)
Date: 2005-08-11
Institutions: European Central Bank
Subjects: Austria, International Monetary Fund, national law, natural disaster, payment, trust company

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 11 August 2005 

at the request of the Austrian Federal Ministry of Finance  

concerning a draft Federal law on the payment of a contribution by Austria to the trust fund 

administered by the International Monetary Fund for low income developing countries affected by 

natural disasters 

(CON/2005/29) 

1. 

On 25 July 2004 the European Central Bank (ECB) received a request from the Austrian Federal 

Ministry  of  Finance  for  an  opinion  on  a  draft  Federal  law  on  the  payment  of  a  contribution  by 

Austria  to  the  trust  fund  administered  by  the  International  Monetary  Fund  for  low  income 

developing countries affected by natural disasters (hereinafter the ‘draft law’).  

2. 

The ECB’s competence to deliver an opinion is based on the third indent of Article 2(1) of Council 

Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national 
authorities regarding draft legislative provisions1, as the draft law contains provisions concerning a 

national central bank (NCB). In addition, the ECB notes that it is necessary to ascertain whether the 

draft  law  complies  with  the  prohibition  on  monetary  financing  laid  down  in  Article  101  of  the 

Treaty  establishing  the  European  Community,  since  ensuring  compliance  with  that  prohibition  is 

part of the ECB’s role under Article 237(d) of the Treaty to ensure that the NCBs fulfil their Treaty 
obligations2. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the 

European Central Bank, the Governing Council has adopted this opinion.  

3. 

The  draft  law  authorises  the  Oesterreichische  Nationalbank  (hereinafter  the  ‘OeNB’)  to  make  a 

deposit on a special  account with the International Monetary Fund (IMF) in the amount of up to 

seven  million  Special  Drawing  Rights  (SDRs),  i.e.  EUR  8.4  million.  In  the  wake  of  the  tsunami 

disaster,  on  21  January  2005  the  IMF’s  Executive  Board  resolved  to  create  a  trust  fund  to  be 

administered by the IMF to aid Poverty Reduction and Growth Facility eligible countries that had 

been affected by natural disasters by granting them ‘soft’ loans at below market rates.  

4. 

It is intended that the loan portfolio which the IMF is aiming to raise of around 45 to 65 million 

SDRs, or approximately EUR 54.4 to 78.6 million, will be raised by capital contributions from IMF 

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2 

OJ L 189, 3.7.1998, p. 42. 
See  also  Recital  9  to  Council  Regulation  (EC)  No  3603/93  of  13  December  1993  specifying  definitions  for  the 
application of the prohibitions referred to in Articles 104 and 104b(1) of the Treaty (OJ L 332, 31.12.1993, p. 1), which 
provides that notwithstanding the role assigned to the Commission pursuant to Article 169 of the Treaty, it is for the ECB 
to ensure that the NCBs honour the obligations laid down by the Treaty.  

 
 
 
                                                      
members.  These  are  the  amounts  calculated  on  the  basis  of  the  demand  from  countries  that  have 

been affected by the tsunami disaster (e.g. the Maldives and Sri Lanka), the debts of countries that 

have been affected by disasters in recent years and from anticipated natural disasters. The OeNB 

will contribute to the subsidies by making a deposit on a special IMF account that will invest the 

funds in the market. The OeNB will in return receive deposit interest of 0.5% per annum and the 

IMF’s Natural Disaster Emergency Assistance subsidy account, which is an extension of the IMF’s 

Emergency Post Conflict Assistance account, will receive any net income from investment of the 

funds. The deposit will have a maximum term of five years. The costs to Austria will be incurred 

indirectly due to a reduction in the OeNB’s profits as a result of depositing funds with the IMF at a 

deposit rate which is below the market rate. 

5. 

As mentioned briefly in paragraph 2, the draft law should be examined to determine its conformity 

with the prohibition on monetary financing contained in Article 101 of the Treaty, which prohibits, 

inter alia, overdraft facilities or any other type of credit facility with the NCBs in favour of central 

governments. This prohibition is subject to certain limited exemptions contained in Article 101(2) 

of  the  Treaty  and  in  Regulation (EC)  No  3603/93.  In  particular,  Article  7  of  Regulation  (EC) 

No 3603/93  provides  that  ‘The  financing  by  the  …  national  central  banks  of  obligations  falling 

upon  the  public  sector  vis-à-vis  the  International  Monetary  Fund  …  shall  not  be  regarded  as  a 

credit  facility  within  the  meaning  of  Article  104  of  the  Treaty’.  Recital  14  to  Regulation  (EC) 

No 3603/93 sets out the rationale behind this exemption, stating that it is appropriate to authorise 

the financing by the central banks of obligations falling upon the public sector vis-à-vis the IMF as 

this financing results in foreign claims which have all the characteristics of reserve assets.  

The ECB considers that the OeNB’s financing of the abovementioned IMF-administered initiative 

falls  within  the  scope  of  this  exemption,  and  should  not  therefore  be  regarded  as  a  form  of 

monetary financing prohibited by the Treaty.  

6. 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 11 August 2005. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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