Opinion of the European Central Bank of 12 March 2010 on Austria’s contribution to the Poverty Reduction and Growth Trust of the IMF (CON/2010/22)
Date: 2010-03-12
Institutions: European Central Bank
Subjects: Austria, International Monetary Fund, development policy, national law, payment, poverty

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 12 March 2010 

on Austria’s contribution to the Poverty Reduction and Growth Trust of the IMF 

(CON/2010/22) 

Introduction and legal basis 

On 9 February 2010, the European Central Bank (ECB) received a request from the Austrian Ministry of 

Finance  for  an  opinion  on  a  draft  Federal  law  on  Austria’s  participation  in  financing  International 

Monetary Fund loans to the poorest developing countries (hereinafter the ‘draft law’). 

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning  of  the  European  Union  (TFEU)  and  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  relates  to  the  Oesterreichische 

Nationalbank (OeNB). 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. 

1. 

Purpose of the draft law 

1.1  On 23 July 2009, the Executive Board of the International Monetary Fund (IMF) approved wide-

ranging modifications to upgrade its concessional financial facilities for low-income countries. The 

decision adopted by the IMF’s Executive Board establishes a Poverty Reduction and Growth Trust 

(PRGT),  replacing  and  expanding  the  former  Poverty  Reduction  and  Growth  Facility-Exogenous 

Shocks Facility. The PRGT includes new financially improved credit lines that are considered to be 

more adapted to low-income  countries’ needs. According to the explanatory memorandum to the 
draft  law,  a  total  of  SDR2  400  million  as  additional  bilateral  contributions  is  needed.  Given  the 

Austrian share of the total quota of donor countries, the Austrian contribution to the IMF’s subsidy 

accounts is SDR 3.9 million (approximately EUR 4.4 million). 

1.2  The  draft  law  authorises  the  OeNB  to  contribute,  on  behalf  of  Austria,  SDR  3.9  million,  in  the 

reform  of  IMF  loans  to  the  poorest  developing  countries  (i.e.  low-income  countries).  The  OeNB 

will provide funds that will help replenish the IMF’s subsidy accounts. From a legal and economic 

point  of  view,  the  OeNB’s  contribution  is  regarded  as  a  donation.  Thus,  the  OeNB  has  no 

repayment claims vis-à-vis the IMF or third parties. The explanatory memorandum to the draft law 

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2  

OJ L 189, 3.7.1998, p. 42. 
A  special  drawing  right  (SDR) is  an  international  reserve asset,  created  by  the IMF  in  1969  to supplement  its member 
countries’  official  reserves.  Its  value  is  based  on  a  basket  of  four  key  international  currencies,  and  SDRs  can  be 
exchanged for freely usable currencies. 

 
 
 
 
                                                            
states  that  the  contribution  to  the  IMF’s  subsidy  accounts  will  reduce  the  OeNB’s  revenue  and 

consequently,  the  OeNB’s  transfer  of  profit  to  the  Ministry  of  Finance  will  be  reduced 

correspondingly.  

2.  General observations 

2.1  A  national  central  bank’s  (NCB’s)  involvement  in  financing  the  IMF’s  initiative  is  in  principle 

government expenditure on development aid. The NCB effects this by making a direct transfer of 

funds to the IMF in lieu of to the government. In the present case, the explanatory memorandum to 

the  draft  law  states  that  the  contribution  provided  for  by  the  draft  law  in  respect  of  the  poorest 

developing countries would increase the level of Austria’s development aid.  

2.2 

In  view  of  the  OeNB’s  involvement  in  this  development  assistance,  it  is  necessary  to  assess 

whether  the  draft  law  complies  with  the  prohibition  of  monetary  financing  under  Articles  123 

TFEU whereby overdraft facilities or any other type of credit facility with the NCBs in favour of 

central governments are prohibited. This prohibition is subject to certain exemptions contained in 

Article 123(2) TFEU and in 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  [now  Articles  123  and  125(1)  TFEU]3.  In  particular,  Article  7  of  Regulation  (EC) 

No 3603/93 provides that the financing by NCBs of obligations falling upon the public sector vis-à-

vis the IMF is not regarded as a credit facility within the meaning of Article 123 TFEU. The draft 
law  is  similar  to  that  addressed  in  Opinion  CON/2008/414,  where  the  ECB  considered  that  the 

OeNB’s financing of an Austrian contribution to the Heavily Indebted Poor Countries initiative fell 

within the exemption of Article 7 of Regulation (EC) No 3603/93. Similarly, the OeNB’s PRGT 

financing under the draft law should also be considered as falling under the exemption of Article 7 

of  Regulation  (EC)  No  3603/93  and  therefore  should  not  be  regarded  as  a  form  of  monetary 

financing prohibited by the TFEU.  

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

Done at Frankfurt am Main, 12 March 2010. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

3  
4  

OJ L 332, 31.12.1993, p. 1. 
All ECB opinions are published on the ECB’s website at www.ecb.europa.eu.  

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