Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision 2011/344/EU on granting Union financial assistance to Portugal
Date: 2011-09-14
Institutions: European Commission
Subjects: Community loan, Portugal, deadline for payment, financial intervention, interest

EUROPEAN COMMISSION 

Brussels, 14.9.2011 
COM(2011) 574 final 

2011/0246 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

amending Implementing Decision 2011/344/EU on granting Union financial assistance to 
Portugal 

 
 
  
 
EXPLANATORY MEMORANDUM 

In  order  to  strengthen  the  sustainability  profile  and  ease  liquidity  needs  of  the  economic 
programme to Portugal and in line with the statement of the Heads of State and Government 
of  the  euro  area  and  EU  institutions  of  21.7.2011,  Council  Implementing  Decision 
2011/344/EU  on  granting  financial  assistance  to  Portugal  should  be  amended.  The 
amendments concern in particular: 

i) the reduction of the interest margin to zero, in order to bring it in line with the Balance of 
Payments facility, and 

ii) the extension of the average maturity of the overall facility from “up to 7.5 years” to “up to 
12.5  years”  by  extending  the  maturities  of  the  individual  disbursements  so  that  drawings 
under the EFSM programme can take place with a maximum maturity of 30 years. 

The  reduction  in  margin  will  apply  to  all  disbursements  (i.e.  those  already  made  as  well  as 
future drawdowns), and the extension in the average maturity will be achieved by disbursing 
the future amounts on the basis of longer maturities. No extension of maturities is possible for 
already  disbursed  amounts,  given  the  back-to-back  nature  of  the  EU  lending.  The 
Commission  will  make  sure  that  the  maturity  at  which  the  future  disbursements  are  made 
caters for the proper management of the EU Budget margin.  

Currently, the EFSM loan to Portugal carries a margin of 215 bps and allows for a maximum 
average  maturity  of  the  overall  facility  of  7.5  years  with  individual  disbursements  having 
maturities  between  2  and  15  years.  Within  such  terms,  Portugal  has  so  far  received  two 
disbursements maturing in 2021 (coupon of 3.5%) and 2016 (coupon of 2.75%). The average 
maturity of the EFSM disbursements made up to now to Portugal is 6.35 years. 

It should be noted that the saving expected from the amendments will enhance sustainability 
and  improve  the  liquidity  outlook  of  the  programme.  Moreover,  there  are  also  indirect 
confidence  effects  thanks  to  the  enhanced  credibility  of  programme  implementation.  This 
results in improved borrowing conditions for the sovereign as well as spill-over effects to the 
private sector. These indirect effects are beneficial for both creditor and debtor countries. 

Taking  into  account  the  above  explanations,  the  Commission  considers  that  the  changes 
consisting  in  the  reduction  in  the  margin  and  the  extension  of  the  average  maturity  of  the 
EFSM loan to Portugal are beneficial to secure the programme's objectives.  

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2011/0246 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

amending Implementing Decision 2011/344/EU on granting Union financial assistance to 
Portugal 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union,  

Having  regard  to  Council  Regulation  (EU)  No  407/2010  of  11  May  2010  establishing  a  European 
financial stabilisation mechanism1, and in particular Article 3(2) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

Upon a request by Portugal, the Council granted financial assistance to Portugal (Implementing 
Decision  2011/344/EU2)  in  support  of  a  strong  economic  and  reform  programme  aiming  at 
restoring  confidence,  enabling  the  return  of  the  economy  to  sustainable  growth,  and 
safeguarding financial stability in Portugal, the euro area and the Union. 

An  extension  of  maturities  and  a  reduction  in  the  interest  rate  margin  would  be  beneficial  to 
secure  the  programme's  objectives,  in  line  with  the  conclusions  of  the  Heads  of  State  or 
Government of the euro area and EU institutions of 21 July 2011. 

In order to enhance liquidity and sustainability objectives, this Decision should also apply to the 
tranches that have already been disbursed. 

(4) 

In light of these developments, Implementing Decision 2011/344/EU should be amended, 

HAS ADOPTED THIS DECISION:  

Article 1 

Article 1 of Implementing Decision 2011/344/EU is amended as follows:  

(1) Paragraph 1 is replaced by the following:  

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2 

OJ L 118, 12.5.2010, p. 1. 
OJ L 159, 17.6.2011, p. 88. 

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"1. 
The Union shall make available to Portugal a loan amounting to a maximum of EUR 26 billion, 
with a maximum average maturity of 12.5 years. The maturity of individual tranches of the loan may 
be of up to 30 years." 

(2) Paragraph 5 is replaced by the following: 

"5. 

Portugal shall pay the cost of funding of the Union for each tranche." 

Article 1(1), first sentence and Article 1(2) shall also apply to the tranches of the loan that have been 
disbursed before the entry into force of this Decision. 

Article 2 

This Decision is addressed to the Portuguese Republic.  

Article 3 

Article 4 

This Decision shall be published in the Official Journal of the European Union.  

Done at Brussels,  

For the Council 
The President 

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