Proposal for a COUNCIL REGULATION establishing a facility for providing financial assistance for Member States whose currency is not the euro
Date: 2012-06-22
Institutions: European Commission
Subjects: EU Member State, EU aid, balance-of-payments deficit, financial aid, non-participating country (euro area), terms for aid

EUROPEAN COMMISSION 

Brussels, 22.6.2012  
COM(2012) 336 final 

2012/0164 (APP) 

Proposal for a 

COUNCIL REGULATION 

establishing a facility for providing financial assistance for Member States whose 
currency is not the euro 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

On  18  February  2002,  Regulation  (EC)  No  332/2002  was  adopted  establishing  a  facility 
providing  Union  financial  assistance.  The  Regulation  aims  at  easing  the  external  financing 
constraint of Member States that are experiencing or are seriously threatened by difficulties in 
their  balance  of  payment.  It  applies  only  to  Member  States  whose  currency  is  not  the  euro. 
The  unprecedented  global  crisis  that  has  hit  the  world  over  the  last  years  has  seriously 
damaged  economic  growth  and  financial  stability  and  provoked  a  deterioration  in  the 
government  deficit,  balance  of  payment  and  debt  position  of  the  Member  States,  leading  a 
number of them to seek financial assistance.  

In  the  context  of  the  economic  and  financial  crisis,  new  assistance  tools  have  been  created 
with  the  establishment  of  the  European  Financial  Stability  Facility  (EFSF),  the  European 
Financial  Stability  Mechanism  (EFSM)  and  in  the  near  future  also  the  European  Stability 
Mechanism  (ESM).  However,  the  existing  Regulation  has  not  kept  pace  with  these 
developments.  In  particular,  these  financial  stability  mechanisms  have  established  new 
precautionary instruments to provide financial assistance to the euro area Member States. The 
revision  of  the  existing  regulation  will  allow  non-euro  Member  States  to  have  similar 
financial  instruments  at  their  disposal.  Furthermore,  it  will  allow  updating  the  existing 
Regulation in the light of the recent reinforcement of economic governance and strengthening 
of economic and budgetary coordination with a view to ensuring a larger level playing field 
between  euro  area  and  non  euro  area  Member  States.  Finally,  it  should  also  increase  the 
efficiency of decision-making by simplifying the procedure for activating the regulation with 
only one procedural step instead of two. 

2. 

LEGAL ELEMENTS OF THE PROPOSAL 

This Regulation sets up a facility for Union financial assistance that may be granted to a non 
euro area Member State which is experiencing or is seriously threatened with difficulties in its 
balance of payments (Article 1).The financial assistance can take the form of a loan, or of a 
credit line with a total outstanding amount limited to EUR 50 billion in principle (Article 2). 
The credit line can take the form of a precautionary conditioned credit line (PCCL), which is a 
credit  line  based  on  eligibility  conditions,  or  an  enhanced  conditions  credit  line  (ECCL), 
which  is  a  credit  line  based  on  the  combination  of  eligibility  conditions  and  new  policy 
measures (Article 4).  

The Council may decide to grant a loan on a recommendation from the Commission (Article 
3).  The  granting  of  a  loan  is  made  conditional  upon  the  Member  State  adopting  a  macro-
economic adjustment programme aimed at re-establishing a sustainable balance of payments 
positions  and  at  restoring  its  capacity  to  finance  itself  fully  on  the  financial  markets.  The 
Commission,  in  liaison  with  the  ECB  and  wherever  relevant  the  IMF,  shall  monitor  the 
progress  made  in  the  implementation  of  the  macro-economic  adjustment  programme  via 
regular review missions.  

The  revised  regulation  contains  new  provisions  in  order  to  enhance  the  dialogue  on  the 
implementation  of  financial  assistance  with  the  aim  of  ensuring  greater  transparency  and 
accountability.  More  specifically,  the  relevant  Committee  of  the  European  Parliament  may 

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offer the opportunity to the Member State concerned to participate to an exchange of views on 
the progress made in the implementation of the adjustment programme. Representatives of the 
Commission may be invited by the Parliament of the Member State concerned to participate 
in an exchange of views on the progress made in the implementation of the macro-economic 
adjustment programme.  

The  Council  shall  decide  to  grant  a  PCCL  or  an  ECCL  on  a  recommendation  from  the 
European  Commission  (Article  5).  Access  to  a  PCCL  shall  be  limited  to  Member  States 
whose  economic  and  financial  situation  is  still  fundamentally  sound  and  which  fulfil  an 
agreed set of eligibility criteria. Access to an ECCL shall be open to Member States which do 
not  comply  with  some  of  the  eligibility  criteria  required  for  accessing  a  PCCL  but  whose 
general  economic  and  financial  situation  remains  sound.  In  addition,  the  Member  State 
concerned  shall  adopt  corrective  measures.  They  should  aim  at  addressing  the  eligibility 
criteria  that  are  considered  as  not  met  and  at  ensuring  a  sustainable  balance  of  payments 
position while ensuring a continuous respect of the eligibility criteria which were considered 
met when the credit line was granted.  

A Member State will be subject to enhanced surveillance when it is receiving a precautionary 
financial  assistance,  with  a  view  to  ensuring  its  swift  return  to  a  normal  situation  and  to 
protecting  the  other  Member  States  against  possible  negative  spill  over  effects  (Article  6). 
This  enhanced  surveillance  should  include  a  wider  access  for  the  Commission  to  the 
information  needed  for a  close monitoring  of the economic, fiscal and  financial  situation of 
the  Member  State  concerned  and  a  regular  reporting  by  the  Commission.  A  Member  State 
under enhanced surveillance shall adopt measures aimed at addressing the sources of potential 
sources of economic difficulties. 

An  attempt  is  also  undertaken  in  the  new  Regulation  to  align  a  number  of  important 
procedural steps with the new upcoming Article 136 Regulation aimed at Member States in a 
delicate  financial  situation.  The  aim  is  to  ensure  the  largest  possible  level  playing  field 
between all the EU programme countries disregarding whether they belong to the euro area or 
not.  The  revised  regulation  provides  for  replacing  a  number  of  monitoring  steps  under  the 
Excessive  Deficit  Procedure  (EDP)  and  the  European  semester  by  the  macro-economic 
adjustment programme and its monitoring (Articles 7 and 9). Because of the comprehensive 
nature  of  the  macro-economic  adjustment  programme,  it  can  replace  some  processes  of 
economic and fiscal surveillance for the duration of the adjustment programme with a view to 
avoiding a duplication of reporting obligations. In the same way, the revised regulation also 
ensures the suspension of the Macro-economic Imbalances Procedure (MIP) when a Member 
State  is  subject  to  a  macro-economic  adjustment  programme  (Article  8)  and  requires  the 
establishment of post-assistance surveillance for Member States having reimbursed less than 
75% of the financial assistance received (Article15).  

Finally,  the  borrowing  and  lending  operations  are  made  slightly  more  flexible  for  the 
European  Commission  so  as  to  limit  possible  difficulties  to  raise  funds  in  case  of  difficult 
financial market conditions (Article 12). 

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2012/0164 (APP) 

Proposal for a 

COUNCIL REGULATION 

establishing a facility for providing financial assistance for Member States whose 
currency is not the euro 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  on  the  functioning  of  the  European  Union  and  in  particular, 
Article 352 thereof, 

Having regard to the proposal from the Commission,  

After transmission of the draft legislative acts to the national Parliaments, 

Having regard to the consent of the European Parliament, 

Having regard to the opinion of the European Central Bank, 

Acting in accordance with a special legislative procedure, 

Whereas: 

(1) 

(2) 

(3) 

In accordance with Article 143 of the Treaty, the Council, acting on a recommendation 
from  the  Commission  made  after  consulting  the  Economic  and  Financial  Committee 
(EFC)  may  grant  a  mutual  assistance  to  a  Member  State  in  difficulties  or  seriously 
threatened  with  difficulties  as  regards  its  balance  of  payments.  It  applies  only  to 
Member States whose currency is not the euro (hereafter 'the non-euro area Member 
States'). However, this provision does not define the instrument to be used for granting 
the envisaged mutual assistance envisaged. 

The  unprecedented  global  crisis  that  has  hit  the  world  over  the  last  three  years  has 
seriously  damaged  economic  growth  and  financial  stability  and  provoked  a  strong 
deterioration  in  the  government  deficit  and  debt  position  of  the  Member  States, 
leading a number of them to seek financial assistance. 

The  rules  for  granting  and  monitoring  financial  assistance  to  non-euro  area  Member 
States should be consistent with the ones applicable to Member States whose currency 
is  the  euro,  in  particular  with  those  provided  for  in  the  'Regulation  of  the  European 
Parliament  and  of  the  Council  on  the  strengthening  of  economic  and  budgetary 
surveillance of Member States experiencing or threatened with serious difficulties with 
respect  to  their  financial  stability  in  the  euro  area',  with  some  necessary  adjustments 
aimed at taking into account the differences in the Treaty rules applicable to Member 
States  whose  currency  is  not  the  euro  and  the  more  limited  economic  and  financial 
inter-connectedness.  The  Commission  should  for  instance  not  have  the  possibility  to 

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(4) 

(5) 

(6) 

(7) 

(8) 

make a Member State subject to enhanced surveillance if the Member State concerned 
does not receive a financial assistance. 

The  granting  of  financial  assistance  should  be  linked  to  economic  and  fiscal 
surveillance of the Member State concerned. The intensity of this surveillance should 
be  commensurate  to  the  severity  of  the  financial  difficulties  encountered  and  should 
take due account of the nature of the financial assistance received, which may range 
from a mere precautionary support based on eligibility conditions up to a full macro-
economic adjustment programme involving strict policy conditionality. 

A  Member  State  should  be  subject  to  enhanced  surveillance  when  it  is  receiving  a 
precautionary financial assistance, with a view to ensuring its swift return to a normal 
situation and to protecting the other Member States against possible negative spill over 
effects. This enhanced surveillance should include a wider access for the Commission 
to the information needed for a close monitoring of the economic, fiscal and financial 
situation of the Member State concerned and a regular reporting to the EFC. 

The surveillance of the economic and fiscal situation should be even more reinforced 
for Member States benefitting from a loan. It should include the setting up of a macro-
economic  adjustment  programme.  Because  of  the  comprehensive  nature  of  such  a 
programme,  the  other  processes  of  economic  and  fiscal  surveillance  should  be 
suspended  for  its  duration,  with  a  view  to  avoiding  a  duplication  of  reporting 
obligations.  

Rules should be provided in order to enhance the dialogue on the implementation of 
this  financial  assistance  between  the  Union  institutions,  in  particular  the  European 
Parliament, the Council and the Commission, and to ensure greater transparency and 
accountability. 

A decision regarding the non-compliance of a Member State with its macro-economic 
adjustment  programme  should  also  entail  a  suspension  of  payments  or  commitments 
of  Union  funds  as  provided  for  in  Article 21(6) of Regulation  (EU) No XXX laying 
down common provisions on the European Regional Development Fund, the European 
Social  Fund,  the  Cohesion  Fund,  the  European  Agricultural  Fund  for  Rural 
Development and the European Maritime and Fisheries Fund covered by the common 
strategic  framework  and  laying  down  general  provisions  on  the  European  Regional 
Development  Fund,  the  European  Social  Fund  and  the  Cohesion  Fund  and  repealing 
Regulation (EC) No 1083/2006. 

(9) 

The power to adopt individual decisions for the application of this Regulation should 
be exercised by the Council as provided for by Article 143(2) of the Treaty. 

(10)  The scope of activity of the European Supervisory Authorities founded by Regulations 
(EC) No 1093/2010, (EC) No 1094/2010 and (EC) No 1095/2010 should stay within 
the limits set in Article 1 of each of these Regulations. 

(11)  For the adoption  of this  Regulation, which provides  a framework for the granting of 
Union  financial  assistance  for  non-euro  area  Member  States,  the  Treaty  provides  no 
powers other than those of Article 352, 

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HAS ADOPTED THIS REGULATION: 

Article 1 
Subject matter and scope 

1. 

This Regulation sets up a facility for Union financial assistance that may be granted 
in  accordance  with  Article  143  of  the  Treaty  to  a  Member  State  which  is 
experiencing or is seriously threatened with difficulties in its balance of payments. 

2. 

This Regulation shall apply to Member States whose currency is not the euro. 

Article 2 
Union financial assistance 

1. 

Union financial assistance shall be provided via: 

(a) 

a loan; 

(b) 

(c) 

a precautionary conditioned credit line (PCCL), which is a credit line based on 
eligibility conditions; or 

an enhanced conditions credit line (ECCL), which is a credit line based on the 
combination of eligibility conditions and new policy measures.  

To this end, the Commission shall be empowered on behalf of the European Union to 
contract borrowings on the capital markets or with financial institutions. 

The outstanding amount of loans or credit lines to be granted to Member States under 
this Regulation shall be limited to EUR 50 billion in principal. 

Where financial assistance outside the Union subject to economic policy conditions 
is  envisaged,  the  Member  State  concerned  shall  first  consult  the  Commission.  The 
Commission  shall  examine  the  possibilities  available  under  the  Union  financial 
assistance facility and the compatibility of the envisaged economic policy conditions 
with the measures adopted on the basis of Articles 121 and 126 of the Treaty and on 
the basis of any legislation adopted on the basis of the said Articles. The Commission 
shall inform the EFC of its findings. 

Article 3 
Conditions and procedure for granting loans 

The Member State seeking a loan shall notify thereof the Commission, the European 
Central Bank (ECB) and the EFC. 

The  Commission  shall  assess,  in  liaison  with  the  ECB  and  wherever  possible,  the 
IMF, the sustainability of the general Government debt and the current or potential 
financial  needs  of  the  Member  State  concerned  and  forward  this  assessment  to  the 
EFC. 

2. 

3. 

4. 

1. 

2. 

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3. 

4. 

5. 

6. 

7. 

8. 

9. 

The  Member  State  concerned  shall  prepare  in  agreement  with  the  Commission, 
acting  in  liaison  with  the  ECB  and  wherever  possible,  the  IMF,  a  draft  macro-
economic  adjustment  programme  containing  policy  requirements  and  aimed  at  re-
establishing a sustainable balance of payments position and at restoring its capacity 
to finance itself fully on the financial markets. The draft macro-economic adjustment 
programme shall take due account of the recommendations addressed to the Member 
State  concerned  under  Articles  121,  126  and  148  of  the  Treaty  and  its  actions  to 
comply  with  them,  while  aiming  at  broadening,  strengthening  and  deepening  the 
required policy measures. 

The  Council,  acting  by  a  qualified  majority  on  a  recommendation  from  the 
Commission  may  decide  to  grant  a  loan  to  the  Member  State  concerned  and,  if  so, 
shall approve the macro-economic adjustment programme linked to that loan.  

The  decision  to  grant  a  loan  shall  contain  the  amount,  the  maximum  average 
maturity, the pricing, the maximum number of instalments, the availability period of 
the loan, the main economic policy conditions and the other detailed rules needed for 
the implementation of the assistance. 

The Commission and the Member State concerned shall conclude a Memorandum of 
Understanding  (hereafter  'the  MoU')  detailing  the  macro-economic  adjustment 
programme.  The  Commission  shall  communicate  the  MoU  to  the  European 
Parliament and to the Council. 

The  Commission,  in  liaison  with  the  ECB  and  wherever  relevant  the  IMF,  shall 
monitor the progress made in the implementation of the macro-economic adjustment 
programme via regular review missions. It shall inform the EFC on a quarterly basis. 
The  Member  State  concerned  shall  cooperate  fully  with  the  Commission  and  the 
ECB.  It  shall  in  particular  provide  to  the  Commission  and  the  ECB  all  the 
information  that  they  deem  necessary  for  the  monitoring  of  the  programme.  The 
Member State concerned shall also have obligations laid down in Article 6(2). 

The  Commission  -  in  liaison  with  the  ECB  and  wherever  possible  the  IMF  -  shall 
examine  with  the  Member  State  concerned  the  changes  that  may  be  needed  to  its 
macro-economic adjustment programme. The Council, acting by a qualified majority 
on a recommendation from the Commission, shall approve any change to be made to 
that programme. 

Where the monitoring referred to in paragraph 7 reveals significant deviations from 
the  macro-economic  adjustment  programme,  the  Council,  acting  by  qualified 
majority  on  a  proposal  from  the  Commission,  may  decide  that  the  Member  State 
concerned  does  not  comply  with  the  agreed  terms  of  the  financial  assistance. 
Disbursements  of  Union  financial  assistance  under  this  Regulation  shall  be 
suspended. 

10. 

At  the  latest  within  six  months  following the decision  provided  for  in paragraph 9, 
the Council, acting by qualified majority on a proposal from the Commission, may 
decide to resume the disbursements if it considers that the Member State concerned 
complies with the agreed terms of the financial assistance. Where such decision has 
not  been  adopted  within  this  deadline,  no  further  disbursements  of  Union  financial 
assistance under this Regulation shall be made. 

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11. 

12. 

13. 

1. 

Where the Member State concerned experiences insufficient administrative capacity 
or  significant  problems  in  the  implementation  of  its  programme,  it  shall  seek 
technical  assistance  from  the  Commission  which  may  constitute  for  this  purpose 
groups  of  experts  with  Member  States  and  other  European  and/or  relevant 
international  institutions.  Technical  assistance  may  include  the  establishment  of  a 
resident  representative  and  support  staff  to  advise  authorities  on  the  adjustment 
programme implementation. 

The relevant Committee of the European Parliament may offer the opportunity to the 
Member State concerned to participate to an exchange of views on the progress made 
in the implementation of the adjustment programme. 

Representatives of the Commission may be invited by the Parliament of the Member 
State concerned to participate to an exchange of views on the progress made in the 
implementation of the macro-economic adjustment programme. 

Article 4  
Conditions for granting credit lines 

Access to a PCCL shall be limited to Member States whose economic and financial 
situation is still fundamentally sound. A global assessment shall be made on whether 
a  Member  State  qualifies  for  a  PCCL,  using  as  a  basis  the  following  eligibility 
criteria:  

(a)  The respect of the Council recommendations and Council decisions adopted on 
the basis of Articles 121 and 126 of the Treaty. Member States under excessive 
deficit  procedure  may  still  access  a  PCCL,  provided  they  fully  abide  by  the 
Council recommendations under Article 126(7) of the Treaty.  

(b)  A sustainable general Government debt.  

(c)  The  respect  of  their  commitments  under  the  excessive  imbalance  procedure 
(EIP). Countries under EIP could still access PCCL it is established that they 
are committed to addressing the imbalances identified by the Council.  

(d)  A track record of access to capital markets on reasonable terms.  

(e)  A sustainable external position.  

(f)  The absence of bank solvency problems that would pose systemic threats to the 

banking system stability.  

2. 

Access to an ECCL shall be open to Member States which do not comply with some 
of the eligibility criteria required for accessing a PCCL but whose general economic 
and  financial  situation  remains  sound.  The  Member  State  concerned  shall,  after 
consultation of the Commission and of the ECB, prepare corrective measures aimed 
at: 

(a) 

addressing the eligibility criteria set out in paragraph 1 considered as not met, 
and  

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(b) 

ensuring  a  continuous  respect  of  the  other  eligibility  criteria  set  out  in 
paragraph 1. 

Article 5  
Procedure for granting credit lines 

The  Member  State  seeking  a  credit  line  shall  notify  thereof  the  Commission,  the 
ECB and the EFC. 

The  Commission  shall  assess,  in  liaison  with  the  ECB  and  wherever  possible,  the 
IMF, the sustainability of the general Government debt and the current or potential 
financial  needs  of  the  Member  State  concerned  and  forward  this  assessment  to  the 
EFC. 

The  Commission  shall  assess,  in  liaison  with  the  ECB,  whether  the  Member  State 
concerned meets the conditions set in Article 4 for accessing a PCCL or an ECCL. 

The  Council,  acting  by  a  qualified  majority  on  a  recommendation  from  the 
Commission shall decide to grant a PCCL or an ECCL for an initial duration of one 
year.  The  decision  to  grant  a  credit  line  shall  contain  the  amount,  the  fee  for  the 
availability  of  the  credit  line,  the  pricing  applicable  for  the  release  of  funds,  the 
availability period, the maximum average maturity for the loan to be drawn and the 
other  provisions  needed  for  the  implementation  of  the  assistance.  The  decision  to 
grant  an  ECCL  shall  also  include  a  description  of  the  corrective  measures  to  be 
adopted in accordance with Article 4(2). 

The  Commission  and  the  Member  State  concerned  shall  conclude  a  MoU  detailing 
the conditions attached to the credit line. 

On  a  request  from  the  Member  State  concerned,  the  Commission  may  decide  to 
renew the credit line twice, for six months each time, after having informed the EFC 
of its evaluation of the respect of the eligibility conditions. 

Where a credit line is granted, the Commission shall monitor the continuous respect 
of the eligibility criteria and inform every three months the EFC of its findings. The 
Commission shall reassess the adequacy of the credit line if it is drawn. Where this 
assessment  leads  the  Commission  to  conclude  that  the  credit  line  is  no  longer 
appropriate  for  addressing  the  difficulties  of  the  Member  State  concerned,  the 
Council, acting on a recommendation from the Commission, may decide to terminate 
the availability of the credit line it and to recommend to the Member State concerned 
to submit a request for a loan following the procedure established in Article 3. 

Where an ECCL is granted or a PCCL drawn, the Member State shall be subject to 
enhanced surveillance in accordance with Article 6 for the availability period of the 
credit line. 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

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1. 

2. 

Article 6 
Enhanced Surveillance 

A Member State under enhanced surveillance shall, in consultation and cooperation 
with  the  Commission,  acting  in  liaison  with  the  ECB,  the  European  Supervisory 
Authorities  (ESA)  and  the  European  Systemic  Risk  Board  (ESRB)  and  where 
appropriate  the  IMF,  adopt  measures  aimed  at  ensuring  a  sustainable  balance  of 
payments position and avoiding any future problems with access to market financing. 

Upon request from the Commission, the Member State under enhanced surveillance 
shall: 

(a) 

(b) 

communicate  to  the  Commission,  the  ECB,  and  the  relevant  ESA(s)  at  the 
requested frequency disaggregated information on developments in its financial 
system.  The  Commission,  the  ECB,  the  relevant  ESA(s)  shall  preserve  the 
confidentiality of the disaggregated data received; 

carry out, under the supervision of the relevant ESA(s), stress test exercises or 
sensitivity analyses as necessary to assess the resilience of the financial sector 
to  various  macroeconomic  and  financial  shocks,  as  specified  by  the 
Commission  and  the  ECB  in liaison with the relevant ESA(s) and the ESRB, 
and share the detailed results with them; 

(c)  be subject to regular assessments of its supervisory capacities over the banking 
sector  in  the  framework  of  a  specific  peer  review  carried  out  by  the  relevant 
ESA(s); 

(d) 

(e) 

communicate any information needed for the monitoring of macro-imbalances 
established by Regulation No 1176/2011 of the European Parliament and of the 
Council on the prevention and correction of macroeconomic imbalances; 

carry out and report on a comprehensive independent audit of the accounts of 
the general government conducted in coordination with national supreme audit 
institutions,  aiming  at  assessing  the  reliability,  completeness  and  accuracy  of 
these  public  accounts  for  the  purposes  of  the  excessive  deficit  procedure.  In 
this context, the Commission (Eurostat) shall assess the quality of data reported 
by  the  Member  State  concerned  in  accordance  with  Regulation  (EC)  No 
679/2010; 

(f) 

provide  additional  information  for  the  purposes  of  monitoring  the  progress 
towards  the  correction  of  its  excessive  deficit  if  it  is  subject  to  a  Council 
decision under Article 126(6) of the Treaty. 

3. 

The Member State under enhanced surveillance shall: 

(a) 

carry  out  without  delay  a  comprehensive  assessment  of  in-year  budgetary 
execution  for  the  general  government  and  its  sub-sectors.  The  financial  risks 
associated  to  government  owned  entities  and  government  contracts  shall  also 
be  covered  by  the  assessment  to  the  extent  that  they  may  contribute  to  the 
existence  of  an  excessive  deficit.  The  result  of  this  assessment  shall  be 
transmitted to the Commission and EFC; 

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4. 

5. 

(b) 

report regularly to the Commission and to the EFC for the general government 
and  its  sub-sectors,  the  in-year  budgetary  execution,  the  budgetary  impact  of 
discretionary  measures  taken  on  both  the  expenditure  and  the  revenue  side, 
targets for the government expenditure and revenues, as well as information on 
the measures adopted and the nature of those envisaged to achieve the targets. 
The report shall be made public. 

The  Commission  shall  conduct,  in  liaison  with  the  ECB  and  the  ESA(s)  as  needed 
and when appropriate the IMF, regular review missions in the Member State under 
surveillance  to  verify  the  progresses  made  in  the  implementation  of  the  measures 
mentioned  in  paragraph  1,  2  and  3.  It  shall  communicate  every  three  months  its 
findings to the EFC and assess notably whether further measures are needed. These 
review missions shall replace the onsite monitoring provided for in Article 10a(2) of 
Council Regulation (EC) No 1467/97. 

Where  on  the  basis  of  the  assessment  foreseen  in  paragraph  4,  it  is  concluded  that 
further  measures  are  needed  and  the  financial  situation  of  the  Member  State 
concerned has significant adverse effects on the financial stability of the Union, the 
Council,  acting  by  a  qualified  majority  on  a  proposal  from  the  Commission,  may 
recommend to the Member State concerned to submit a request for a loan following 
the  procedure  established  in  Article  3.  The  recommendation  and  the  preparatory 
work done in the run-up to its adoption shall be considered as confidential, unless the 
Council decides to make it public. 

6. 

Where a recommendation adopted in accordance with paragraph 5 is made public: 

(a) 

(b) 

the relevant Committee of the European Parliament may offer the opportunity 
to the Member State concerned to participate to an exchange of views; 

representatives  of  the  Commission  may  be  invited  by  the  parliament  of  the 
Member State concerned to participate to an exchange of views. 

Article 7 
Consistency with the excessive deficit procedure 

1. 

2. 

The macro-economic adjustment programme and the changes thereto provided for by 
Article 3(4) and (8) of this Regulation shall be deemed to replace the submission of 
convergence programmes provided for by Article 8 of Council Regulation (EC) No 
1466/97. 

If  the  Member  State  concerned  is  the  subject  of  a  recommendation  under  Article 
126(7) of the Treaty for the correction of an excessive deficit: 

(a) 

(b) 

the  macro-economic  adjustment  programme  provided  for  by  Article  3(4)  and 
(8) of this Regulation shall also be deemed to replace as appropriate the reports 
provided for by Article 3(4a) of Council Regulation (EC) No 1467/97; 

the  annual  budgetary  targets  in  the  macro-economic  adjustment  programme 
provided  for  by  Article  3  of  this  Regulation  shall  be  deemed  to  replace  the 
annual  budgetary  targets  established  in  accordance  with  Article  3(4)  of 

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Regulation (EC) No 1467/97 in the recommendation made in accordance with 
Article 126(7) of the Treaty; 

(c) 

the monitoring provided for by Article 3(7) of this Regulation shall be deemed 
to  replace  the  monitoring  provided  for  by  Article  10(1)  and  Article  10a  of 
Council  Regulation  (EC)  No  1467/97  and  the  monitoring  underlying  any 
decision provided for by Article 4(2) of Regulation (EC) No 1467/97. 

Article 8 
Consistency with the macro-economic imbalances procedure 

The  implementation  of  Regulation  (EU)  No  1176/2011  shall  be  suspended  for  the  Member 
States  subject  to  a  macro-economic  adjustment  programme  approved  by  the  Council  in 
accordance  with  Article  3  of  this  Regulation.  This  suspension  shall  be  applicable  for  the 
duration of the macro-economic adjustment programme.  

Article 9 
Consistency with the European Semester for economic policy coordination 

The  monitoring  provided  for  by  Article  3  of  this  Regulation  shall  be  deemed  to  replace  the 
monitoring  and  assessment  of  the  European  Semester  for  economic  policy  coordination 
provided  for  by  Article  2a  of  Regulation  (EC)  No  1466/97  on  the  strengthening  of  the 
surveillance of budgetary positions and coordination of economic policies. 

Article 10 
Disbursement of a loan 

The loan shall, as a rule, be disbursed in instalments. 

Without  prejudice  to  Article  3(9)  the  Commission  shall  decide  on  the  release  of 
instalments on the basis of the monitoring established in Article 3(7).  

Article 11 
Release of funds under a credit line 

The  Member  State  concerned  shall  inform  the  Commission  in  advance  of  its 
intention  to  draw  down  funds  from  its  credit  line  at  least  45  calendar  days  in 
advance. Detailed rules shall be laid down in the decision referred to in Article 5(5). 

On the basis of the monitoring established in Articles 5(7) and 6(4), the Commission 
shall decide on the release of the funds. 

Article 12 
Borrowing and lending operations 

The borrowing and lending operations referred to in Article 2 shall be carried out in 
euro. 

1. 

2. 

1. 

2. 

1. 

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2. 

3. 

4. 

5. 

6. 

The  characteristics  of  the  successive  instalments  released  by  the  Union  under  the 
financial assistance facility shall be negotiated between the Member State concerned 
and the Commission. 

Once the decision on a loan has been made by the Council, the Commission shall be 
authorised to borrow on the capital markets or from financial institutions at the most 
appropriate  time  in  between  planned  disbursements  so  as  to  optimise  the  cost  of 
funding and preserve its reputation as the Union's issuer in the markets. Funds raised 
but not yet disbursed shall be kept at all times on dedicated cash or securities account 
which  are  handled  in  accordance  with  rules  applying  to  off-budget  operations  and 
cannot  be  used  for  any  other  goal  than  to  provide  financial  assistance  to  Member 
States under the present mechanism. 

Where  a  Member  State  receives  a  loan  carrying  an  early  repayment  clause  and 
decides to exercise this option, the Commission shall take the necessary steps. 

At  the  request  of  the  Member  State  concerned  and  where  circumstances  and 
borrowing  contracts  permit  an  improvement  in  the  interest  rate  on  the  loan,  the 
Commission  may  refinance  all  or  part  of  its  initial  borrowing  or  restructure  the 
corresponding financial conditions. 

The  EFC  shall  be  kept  informed  by  the  Commission  of  the  developments  in  the 
operations referred to in paragraph 5. 

Article 13 
Costs 

The costs incurred by the Union in concluding and carrying out each operation shall be borne 
by the Member State concerned. 

Article 14 
Administration of the loans 

1. 

2. 

3. 

The Commission shall establish the necessary arrangements for the administration of 
the loans with the ECB. 

The Member State concerned shall open a special account with its National Central 
Bank  for  the  management  of  the  Union  financial  assistance  received.  It  shall  also 
transfer the principal and the interest due under the loan to an account with the ECB 
fourteen TARGET2 business days prior to the corresponding due date. 

Without  prejudice  to  Article  27  of  the  Statute  of  the  European  System  of  Central 
Banks and of the European Central Bank, the European Court of Auditors shall have 
the right to carry out in the Member State concerned any financial controls or audits 
that  it  considers  necessary  in  relation  to  the  management  of  that  assistance.  The 
Commission,  including the European Anti-Fraud office, shall in particular have the 
right  to  send  its  officials  or  duly  authorised  representatives  to  carry  out  in  the 
Member State concerned any technical or financial controls or audits that it considers 
necessary in relation to that assistance. 

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Article 15 
Post-assistance surveillance 

1. 

2. 

3. 

4. 

A Member State which has received Union financial assistance under this Regulation 
shall  be  under  post-assistance  surveillance  as  long  as  a  minimum  of  75%  of  the 
principal  of  the  financial  assistance  has  not  been  repaid.  The  Council,  acting  on  a 
qualified majority on a proposal from the  Commission, may extend the  duration of 
the post assistance surveillance. 

The Member State under post-assistance surveillance shall also have obligations laid 
down in Article 6(2). 

The Commission shall conduct, in liaison with the ECB, regular review missions in 
the  Member  State  under  post  assistance  surveillance  to  assess  its  economic,  fiscal 
and financial situation. It shall communicate every semester its findings to the EFC 
and assess notably whether corrective measures are needed. 

The Council, acting by qualified majority on a proposal from the Commission, may 
recommend  to  the  Member  State  under  post  assistance  surveillance  to  adopt 
corrective measures. 

Article 16 
Repeal 

Regulation  (EC)  No  332/2002  is  hereby  repealed.  Assistance  granted  on  the  basis  of  that 
Regulation  remain  subject  to  it  as  long  as  the  availability  period  is  not  exhausted  and  any 
amounts are outstanding. 

Article 17 
Transitional provision 

Article 15 shall not apply to Member States already under post-programme surveillance after 
having  received  a  financial  assistance  under  Regulation  (EC)  No  332/2002  at  the  date  of 
entering into force of this Regulation. 

Article 18 
Entry into force 

This Regulation shall enter into force on the twentieth day following that of its publication in 
the Official Journal of the European Union. 

This Regulation shall be binding in its entirety and directly applicable in all Member States. 

Done at Brussels,  

EN 

For the Council 
The President 

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