CELEX: 51980PC0672
Language: en
Date: 1980-10-30
Title: PROPOSAL FOR A COUNCIL REGULATION ADJUSTING THE COMMUNITY LOAN MECHANISM DESIGNED TO SUPPORT THE BALANCES OF PAYMENTS OF COMMUNITY MEMBER STATES (presented by the Commission to the Council)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (80) 672
Vol. 1980/0216
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                         COM ( 80 ) 672 final
                                         Brussels , 30th October 1980
                     PROPOSAL FOR A COUNCIL REGULATION
        ADJUSTING THE COMMUNITY LOAN MECHANISM DESIGNED TO SUPPORT
             THE BALANCES OF PAYMENTS OF COMMUNITY MEMBER STATES
               (presented by the Commission to the Council )
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  COM ( 80 ) 672 final
 ---pagebreak---                       EXPLANATORY MEMORANDUM
Subj ect : Proposal for a Council Regulation
           Adjusting the Community loan mechanism designed to support the
           balances of payments of Community Member States .              ;     /    ,
1.        As was stressed by the conclusions of the Presidency of the European
Council of 27 and 28 April 1980, the balance of payments desequi I ibri a
consequent on the heavy ar.d repeated increases in prices of petroleum
products and the dangers inherent in this situation for the stability of
the international economic and financial system , mean that international
and Community action on recycling must be intensified .                 .
2.        The Commission , in cooperation with the Monetary Committee , has
devoted itself to examining the initiatives which could be taken by the
Community to contribute to the harmonious development of the recycling
process , more particularly as far as its members are concerned . From this
examination it emerges that the Community . must first and above all make
the most of the existing instruments , adapting their size and their terms
when necessary to improve their effectiveness .
3.        To this end, the adjustment of the Community loan mechanism
instituted by Regulations ( EEC) N° 397 /75 and ( EEC) N° 398 /75 was the
subject on 10 October 1980 of a Monetary Committee report to the Council
and the Commission . The Commission has endorsed        the Committee 's conclusions .
It considers in particular that the funds which can be. raised under this
instrument must be increased, that the implementation procedures must be simpl
fied and that the mechanism must - be brought into use fairly promptly in order
to prevent , £y an appropriate adjustment , the occurrence of acute balance
of payments crises .                            :
          It was considered        - jssary to renew the specific mechanism
for possible refinancing by           Member States , earlier experience having
shown that the token budget entry of . the liabilities was a sufficient
guarantee for lenders .                      '
4.        The borrowing and '.'Tiding operations in hand and carried cut " rider
Regulations ( EEC ) N° 397 /75 and ( EEC ) N° 395 / 75 would still be governed b ; the
provisions of the said Regulations .
5.        In accordance with the Council 's request at the end of its meeting of
                                                                            /
20 October 19S0 , the Commission submits the attached proposal for a Regulation
for the Counci I ' s approval ..
 ---pagebreak---                PROPOSAL FOR A COUNCIL REGULATION ,
  adjusting the Community' Loan mechanism designed to support
      the balances of payments of Community Member States '
 THE COUNCIL OF THE EUROPEAN COMMUNITIES
 Having regard ^to the Treaty establishing the European Economic Community
 and in- particular Article 235 thereof;
 Having regard to . proposal from the Commission,
 Having regard to the opinion of the European Parliament ;
 * whereas the Community loan mechanism instituted by Regulations ( EEC )
   N° 397 /75 and ( EEC) N° 398 /75 still , in its general design, meets the
   needs of the present situation which is marked by balance of payments
   disequi libria in the Community;
 * whereas , in the light of experience and in accordance with the conclusions
   reached by the Monetary Committee in its report of 10 October 1980, it
 - is advisable to adjust the operating techniques of Community loans in
   order to increase their effectiveness and simplify the procedures for
   implementing them;
 ♦ whereas the operation of lending to a Member State must take place fairly
   promptly in order to encourage that State to adopt measures likely to
   prevent the occurrence of an acute balance of payments crisis; whereas
   the economic policy conditions linked to the granting of the loan to a ,
   Member State must be adapted to the gravity of the balance of payments
   situation in that State and to the way in which it develops;
                                               *
 * whereas it follows from the foregoing that these operations are necessary
   to attain the objectives of the Community , as defined in the Treaty
   and in particular the harmonious development of economic activities
   throughout the Community;      .
;* whereas the Treaty, has not provided for the powers of action required for
   this purpose .
 ---pagebreak---                                                                          2.~
 HAS ADOPTED THIS R£3ULA   *. ON :                    .
                               Artide   1
      T n accordance with the decision adopted by the Council pursuant to
 Article 2 and qfter consulting the Monetary Committee , the Commission '
 shall be empowered to contract loans , on behalf of the European Economic
 Community , either directly from third countries and financial institutions ,
or on the capital markets , wich the sole aim of • re-lending the funds
 raised to one or more Member States in balance of payments difficulties
directly or indirectly related to an increase in prices of petroleum
products .
                              Article 2
     On the initiative of the Member State seeking a Community loan, the
 Council , after examining the situation of that State and the adjustment
programme which it undertakes to implement , shall decide, as a rule
during the same meeeting :
- whether to grant the loan,
                                          y
- the amount of the loan ,
- the economic policy conditions attaching to the loan,
- the techniques for disbursing the loan which may be paid in one amount
• or in several instalments ; in the latter case , the payment of successive
   instalments may be subject to compliance with economic policy conditions .
     At the request of the Member State seeking the loan, the loan may carry
the option of early repayment at any time; this would imply the use of the
appropriate borrowing fr.rmni.3e .
                                                                      ./
 ---pagebreak---                                                                            3 .-
                                 Article 3
       Where a Member State receives a loan , the Commission , in consultation
 with the Monetary Committee , shall take the necessary measures to verify ,
 at regular intervals , that the economic policy of this State accords with the
 conditions laid down by the Council pursuant to Article 2 and , where
 appropriate , shall pay the successive instalments on the basis of the devel­
opment of the adjustment programme .      To this end , the Member State shall
place all the necessary information at the disposal of the Commission .         The
 Council shall decide on the adjustments to be made to the initial economic
policy conditions .
            ■                                               \    , •                (
  • Where a Member State receives a loan carrying an early repayment clause ,
that State shall be able to use this option only with the agreement of the
                   /
Commission, which shall consult the Monetary Committee on the matter .
                                  Article 4
       The operations of borrowing and lending ^ referred to in Article 1 , shall
be expressed in the same currencies and carried out on the same terms with
respect to repayment of the principal and payment of interest .      The costs
incurred by the Community in concluding and carryingout each operation shall
be borne ,by the beneficiary Member State .
        When the borrowings are expressed, payable or repayable in the currency
of a Member State ^ they may be concluded only with the agreement of the •
competent     authorities of that State .
                                   Article 5
        The funds shall be paid only into central banks and shall be used only
for the purposes indicated in Article 1 .
     .                             Article 6
                            •          ,
        The outstanding amount of the borrowings authorized by this Regulation
shall be limited to 7000 million ECUs in principal .       For the application of
this, veiling , the o;   3tions of borrowing and repayment shall be recorded ,
where appropriate , ?.?. the exchange, rate of the day on which -they take place .
 ---pagebreak---                                  Article 7
      No Later than five years after the adoption of this Regulation , the
 Council shall examine , on the basis of a, report from the Commission , whether
the mechanism established in its principle , its arrangements and its ceiling
still meets the needs which led to its creation .
                                 Article 8
     Articles 1 , 2 and 5 of Regulation ( EEC ) No 397 / 75 shall be repealed .
                                 Article 9
   ' The Council shall adopt the decisions referred to in Articles 2 and 3
by a qualified majority , acting on a proposal from the Commission which shall
consult the Monetary Committee on the matter .
This regulation shall be binding in its entirety, and directly applicable
in all Member States .