2007/860/EC: Council Decision of 10 December 2007 providing Community macro-financial assistance to Lebanon
Date: 2007-12-10
Institutions: Council of the European Union
Subjects: EU aid, Lebanon, economic stabilisation, financial aid, macroeconomics

21.12.2007

EN

Official Journal of the European Union

L 337/111

COUNCIL DECISION

of 10 December 2007

providing Community macro-financial assistance to Lebanon

(2007/860/EC)

THE COUNCIL OF THE EUROPEAN UNION,

July-August 2006 military conflict and a projected dete-
rioration of the balance of payments in 2007.

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

establishing the European

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

After consulting the Economic and Financial Committee,

Whereas:

(1)

(2)

(3)

(4)

On 4 January 2007 the authorities of Lebanon adopted a
comprehensive programme of socio-economic reforms,
structural and
which simultaneously embraces
for
social measures,
government action.

setting medium-term priorities

fiscal,

European
Lebanon, on the one hand,
Community and its Member States on the other hand,
have signed an Association Agreement (1), which entered
into force on 1 April 2006.

and

the

The authorities of Lebanon are committed to economic
stabilisation and structural reforms, supported by the
through
International Monetary
a
Post-Conflict
programme
Arrangement (EPCA) which was approved on 9 April
2007.

(IMF)
Emergency

under

Fund

the

Relations between Lebanon and the European Union are
developing within the framework of the European Neigh-
bourhood Policy, which is expected to lead to deeper
economic
integration. The EU and Lebanon have
agreed on a European Neighbourhood Policy Action
Plan identifying medium-term priorities in EU-Lebanon
relations and related policies.

(5)

Lebanon faces substantial financing needs arising from
the mounting financial constraints of the public sector,
including a high level of public debt, aggravated by the

(1) OJ L 143, 30.5.2006, p. 2.

(6)

(7)

(8)

Lebanese

requested

authorities have

The
financial
assistance on a concessional basis from the International
Financial Institutions, the Community and other bilateral
donors. Over and above the financing from the IMF and
the World Bank, a substantial residual
financing gap
remains to be covered to relieve the country’s balance
of payments, public finances and public debt and support
the policy objectives attached to the authorities’ reform
efforts.

Lebanon is one of the most indebted countries in the
world facing a heavy debt overhang. In these circum-
stances, the Community assistance to Lebanon should
be made available in the form of a combination of a
grant and loan, as an appropriate measure to help the
beneficiary country at this critical juncture.

of

to

order

efficient

the
protection
ensure
In
Community’s financial
interests linked to the present
financial assistance, it is necessary to provide for appro-
priate measures by Lebanon related to the prevention of,
and to the fight against, fraud, corruption and any other
irregularities linked to this assistance, as well as for
controls by the Commission and audits by the Court
of Auditors.

(9)

The release of
without prejudice to the powers of
authority.

the Community financial assistance is
the budgetary

(10)

This assistance should be managed by the Commission in
consultation with
Financial
Committee,

Economic

and

the

HAS DECIDED AS FOLLOWS:

Article 1

The Community shall make available to Lebanon financial
1.
assistance amounting to a maximum of EUR 80 million, with a
view to supporting Lebanon’s domestic efforts of post-war
reconstruction and sustainable economic recovery, and in this
way, alleviating the financial constraints on the implementation
of the government’s economic programme.

L 337/112

EN

Official Journal of the European Union

21.12.2007

Given Lebanon’s high level of
indebtedness the Community
financial assistance shall consist of EUR 50 million in loans
and up to EUR 30 million in grants.

The Community financial assistance shall be managed by
2.
the Commission in consultation with the Economic and
Financial Committee and in a manner consistent with the
agreements or understandings reached between the IMF and
Lebanon.

assistance

The Community financial

3.
shall be made
available for two years starting from the first day after the
date on which this Decision takes effect. However, if circum-
stances so require, the Commission, after consultation of the
Economic and Financial Committee, may decide to extend the
availability period by a maximum of one year.

Article 2

the

1.
The Commission is hereby empowered to agree with the
authorities of Lebanon, after consulting the Economic and
Financial Committee,
economic policy and financial
conditions attached to the Community financial assistance, to
be laid down in a Memorandum of Understanding and a Grant
and a Loan Agreements. These conditions shall be consistent
with the agreements or understandings referred to in Article
1(2).

During the implementation of the Community financial
2.
assistance,
the Commission shall monitor the soundness of
Lebanon’s financial arrangements, administrative procedures,
internal and external control mechanisms which are relevant
to such assistance.

regular

The Commission shall verify at

intervals that
3.
economic policy in Lebanon is
in accordance with the
objectives of the Community financial assistance and that the
agreed economic policy and financial conditions are being satis-
factorily fulfilled. In doing so, the Commission shall coordinate
closely with the Bretton Woods
Institutions, and, when
required, with the Economic and Financial Committee.

Article 3

The Community financial

1.
shall be made
available by the Commission to Lebanon in a maximum of
three instalments.

assistance

In addition, the second and third instalments shall be
3.
released on the basis of a satisfactory implementation of the
economic programme supported by the IMF and of the EU-
Lebanon European Neighbourhood Policy Action Plan and
any other measures agreed with the Commission as set out in
Article 2(1), and not before one quarter after the release of the
previous instalment.

The funds shall be paid to the Banque du Liban exclusively

4.
in support of Lebanon’s financing needs.

Article 4

rules.

and its

implementing

The Community financial assistance shall be implemented in
accordance with the provisions of Regulation (EC, Euratom)
No 1605/2002 of 25 June 2002 on the Financial Regulation
the European Commu-
applicable to the general budget of
nities (1)
the
In particular,
the Grant/Loan
Memorandum of Understanding
Agreements with the authorities of Lebanon shall provide for
appropriate measures by Lebanon related to the prevention of,
and the fight against, fraud, corruption and other irregularities
affecting the assistance. They shall also provide for controls by
including the European Anti-Fraud Office,
the Commission,
with the right to perform on-the-spot checks and inspections,
and for audits by the Court of Auditors, where appropriate, to
be carried out on the spot.

and

Article 5

the implementation of

By 31 August of each year the Commission shall submit to the
European Parliament and to the Council a report, including an
this Decision in the
evaluation of
indicate the connection
preceding year. The report
between the policy conditions
in Article 2(1),
Lebanon’s ongoing economic and fiscal performance, and the
Commission’s decision to release
the
assistance.

instalments of

set out

shall

the

Article 6

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

Done at Brussels, 10 December 2007.

The disbursement of each instalment shall be released on
the economic

2.
the basis of a satisfactory implementation of
programme supported by the IMF.

For the Council
The President

L. AMADO

(1) OJ L 248, 16.9.2002, p. 1. Regulation as amended by Regulation

(EC, Euratom) No 1995/2006 (OJ L 390, 30.12.2006, p. 1).