CELEX: 51988PC0279
Language: en
Date: 1988-05-16
Title: AMENDED PROPOSAL FOR A COUNCIL REGULATION ESTABLISHING A SINGLE FACILITY PROVIDING MEDIUM-TERM FINANCIAL SUPPORT FOR MEMBER STATES' BALANCES OF PAYMENTS

13. 7. 88                               Official Journal of the European Communities                            N o C 183/11
                                                                II
                                                        (Preparatory Acts)
                                                   COMMISSION
               Amended proposal for a Council Regulation establishing a single facility providing medium-term
                                financial support for Member States' balances of payments (')
                                                       COM(88) 279 final
               (Submitted by the Commission pursuant to Article 149 (3) of the EEC Treaty on 20 May 1988)
                                                         (88/C 183/06)
               O OJ No C 26, 1. 2. 1988, p. 13.
                      ORIGINAL PROPOSAL                                                 AMENDED PROPOSAL
                                                         I. CITATIONS
Having regard to the Treaty establishing the European               Unchanged
Economic Community, and in particular Articles 108 and
235 thereof,
Having regard to the proposal from the Commission,
which consulted the Monetary Committee for this
purpose,
Having regard       to   the  opinion    of   the   European
Parliament ('),
                                                          II. RECITALS
First recital                                                       Unchanged
"Whereas Article 108 of the Treaty provides for the
granting of mutual assistance, to be decided by the
Council on a proposal from the Commission, to a
Member State in difficulties or seriously threatened with
difficulties as regards its balance of payments; whereas
the resolution of the European Council of 5 December
1978 on the establishment of the European Monetary
System (EMS) and related matters confirmed the need
for a Community facility for medium-term financial
assistance of balances of payments;
Second recital                                                      Second recital
Whereas it should be possible for the operation of                 Whereas it should be possible for the operation of
lending to a Member State to take place soon enough in              lending to a Member State to take place soon enough in
order to encourage that Member State to adopt, in good              order to encourage that Member State to adopt, in good
time, measures likely to prevent the occurence of an                time and in a situation where orderly exchange rate
acute balance-of-payments crisis;                                   conditions prevail, economic policy measures likely to
                                                                    prevent the occurence of an acute balance-of-payments
                                                                    crisis and to support its efforts towards convergence;
 ---pagebreak--- No C 183/12                             Official Journal of the European Communities                 13. 7. 88
                       ORIGINAL PROPOSAL                                            AMENDED PROPOSAL
 Third recital                                                     Deleted
Whereas a financing facility in the form of a credit line
or a loan commitment to a Member State undertaking to
implement a capital liberalization programme despite a
fragile balance-of-payments situation, should provide
back-up for such a programme in orderly exchange-rate
conditions;
Fourth recital                                                     Unchanged
Whereas each loan to a Member State must be linked to
the adoption by that Member State of economic policy
measures designed to re-establish or to ensure a
sustainable balance-of-payments situation and adapted to
the gravity of the balance-of-payments situation in that
State and to the way in which it develops;
Fifth recital                                                      Unchanged
Whereas appropriate procedures and instruments should
be provided for in advance to enable the Community and
Member States to ensure that, if required, medium-term
financial support is provided quickly, especially where
circumstances call for immediate action;
 Sixth recital                                                     Unchanged
 Whereas, in order to finance the support granted, the
 Community needs to be able to use its credit worthiness
 to borrow resources that will be placed at the disposal of
 the Member States concerned in the form of loans;
 whereas operations of this kind are necessary to the
 achievement of the objectives of the Community as
 defined in the Treaty, especially the harmonious devel-
 opment of economic activities in the Community as a
 whole; whereas the Treaty makes no provision for the
 specific powers of action required for this purpose;
  Seventh recital                                                  Unchanged
 Whereas by Decision 71/143/EEC ('), as amended by
  Decision 85/656/EEC (2), the Council set up machinery
  for providing medium-term financial assistance that was
  initially valid for a period of four years from 1 January
  1972; whereas this machinery has since been renewed
  and extended, on the last occasion for two years until 31
  December 1988 by Decision 86/656/EEC; whereas this
  machinery provides for the Member States to grant
  medium-term loans, within certain limits, to one or more
  Member States experiencing balance-of-payments diffi-
  culties;
 ---pagebreak---  13. 7. 88                             Official Journal of the European Communities                            No C 183/13
                      ORIGINAL PROPOSAL                                                AMENDED PROPOSAL
 Eighth recital                                                   Unchanged
Whereas by Regulation (EEC) No 682/81 ('), as
amended by Regulation '(EEC) No 1131/85 (2), the
Council set up a Community loan mechanism designed
to support the balances of payments of the Member
States; whereas this mechanism provides for the
Community to contract loans, according to needs and
within the limits set on outstanding borrowing, in order
to onlend the proceeds to one or more Member States
experiencing balance-of-payments difficulties;
Ninth recital                                                     Ninth recital
Whereas the Community loan mechanism has demon-                  Whereas the Community loan mechanism has demon-
strated its effectiveness; whereas its general design and        strated its effectiveness; whereas its general design and
the arrangements for implementing it still meet the needs        the arrangements for implementing it still meet the needs
of the Community; whereas, in view of the Community's            of the Community; whereas, in view of the Community's
borrowing capacity and of the conditions available to it         borrowing capacity and of the conditions available to it
for borrowing from financial institutions or on capital          for borrowing from financial institutions or on capital
markets, the mechanism could constitute the main form            markets, the mechanism could constitute the main form
of mutual assistance provided for under Article 108 of           of mutual assistance provided for under Article 108 of
the Treaty; whereas it could also constitute, under              the Treaty; (part of text deleted); whereas the ceiling on
certain conditions and in an appropriate form, an                amounts outstanding under the mechanism should be
instrument to provide back-up for a programme of                 adjusted accordingly;
capital liberalization; whereas the ceiling on amounts
outstanding under the mechanism should be adjusted
accordingly;
10th recital                                                      10th recital
Whereas, however, it is appropriate that the financing           Whereas, however, it is appropriate that the financing
obligations on Member States to finance mutual                   obligations on Member States (part of text deleted)
assistance under the machinery for medium-term                   under the machinery for medium-term financial
financial assistance stay in force until the final stage of      assistance stay in force until the final stage of the
the European Monetary System so as to ensure that                European Monetary System so as to ensure that system's
system's cohesion and stability, irrespective of the             cohesion and stability, irrespective of the conditions
conditions prevailing on international capital markets;          prevailing on international capital markets; whereas the
whereas the present procedures for exempting a Member            present procedures for exempting a Member State from
State from contributing or for mobilizing Member                 contributing or for mobilizing Member States' claims
States' claims should, nevertheless, be simplifield;             should, nevertheless, be simplified;
 11th recital                                                     11th recital
Whereas it is appropriate to merge medium-term                   Whereas it is appropriate to merge medium-term
financial assistance and the Community loan mechanism            financial assistance and the Community loan mechanism
into a single facility for medium-term financial support,        into a single facility for medium-term financial support;
while retaining their specific methods of financing;             (part of text deleted)
                                                   III. ENACTING TERMS
                          Article 1                                                        Article 1
1. In accordance with the decision adopted by the                 1. In accordance with the decision adopted by the
Council pursuant to Articles 3 or 4 and after consulting         Council pursuant to Article 3 (part of text deleted) and
the Monetary Committee, the Commission shall be                  after consulting the Monetary Committee, the
empowered to contract loans on the capital markets on            Commission shall be empowered to contract loans on the
behalf of the European Economic Community, with the              capital markets or with financial institutions on behalf of
aim of lending the proceeds to one or more Member                the European Economic Community, with the aim of
States which are experiencing or seriously threatened            lending the proceeds to one or more Member States
with balance-of-payments difficulties or which have              which are experiencing or threatened with balance-of
undertaken to implement a programme of capital                   payments difficulties.
liberalization despite a fragile balance-of-payments
situation.
 ---pagebreak--- No C 183/14                            Official Journal of the European Communities                                   13. 7. 88
                      ORIGINAL PROPOSAL                                                  AMENDED PROPOSAL
                                                                  The outstanding amount of loans so granted to Member
                                                                  States shall be limited to 14 000 million ECU in principal.
2. The outstanding amount of loans to be granted to               2. If conditions available on capital markets or with
Member States pursuant to paragraph 1 shall be limited            financial institutions are unsatisfactory or if the amount
to . . . million ECU in principal.                                available under the ceiling referred to in paragraph 1 is
                                                                  insufficient, Community loans shall be financed in full or
                                                                  in part by the other Member States whose contibutions in
                                                                  principal may not exceed the ceilings specified in the
                                                                  Annex.
                                                                  3. The outstanding amount of loans to be granted to
                                                                  Member States pursuant to the present regulation, shall
                                                                  be limited to 16 000 million ECU in principal.
                           Article 2                              Unchanged
Where a Member State proposes to call upon sources of
conditional financing outside the Community, it shall
first consult the Commission and the other Member
States in order to examine, among other things, the
possibilities available under the Community for medium-
term financial support. Such consultations shall be held
within the Monetary Committee.
                           Article 3                                                          Article 3
1. On the initiative of the Commission acting pursuant             1. The medium-term financial support facility can be
to Article 108 of the Treaty or of the Member State               implemented by the Council on the initiative:
experiencing balance-of-payments          difficulties  and
                                                                  — of the Commission acting pursuant to Article 108 of
seeking a Community loan, the Council, after examining
                                                                      the Treaty in agreement with the Member State
the situation in that Member State and the adjustment
                                                                      seeking Community financing;
programme that it has undertaken to implement, shall
decide, as a rule during the same meeting:                        — of a Member State experiencing or threatened with
                                                                      difficulties on its current or capital account of the
— whether to grant the loan, and the amount of the
                                                                      balance of payments.
     loan;
— the average duration of, and the techniques for
     disbursing the loan, which may be paid in one
     amount or in several instalments;
— the economic policy conditions attaching to the loan,
     with a view to re-establishing a sustainable balance-
     of-payments situation.
2. If the amount available under the ceiling referred to           2. The Council, after examining the situation in the
in Article 1 (2) is insufficient, or if the conditions             Member State seeking medium-term financial assistance
available on international capital markets are unsatis-            and the recovery or back-up programme presented in
factory, Community loans to Member States experi-                  support of its application, shall decide, as a rule during
encing balance-of-payments difficulties shall be financed          the same meeting:
 in full or in part by the other Member States, whose
                                                                   — whether to grant a loan or appropriate financing
contributions in principal may not exceed the ceilings
                                                                       facility, its amount and its average duration,
 specified in the Annex.
                                                                   — the techniques for disbursing the loan or financing
 In such cases, the Council, in addition to taking the                 facility the release or drawings of which shall as a rule
 decisions referred to in paragraph 1, shall decide on the
                                                                       be by successive instalments,
 size of the Member States' contributions to the financing
 of the loan and on the financial conditions attaching to          — the economic policy conditions attached to the
 the credits they make available in that connection. The               medium-term financial assistance with a view to re-
 Council may exempt from contributing any Member                       establishing or ensuring a sustainable balance-of-
 State which maintains that difficulties exist or can be               payments situation.
 foreseen as regards its balance of payments.
 ---pagebreak---  13. 7. 88                            Official Journal of the European Communities                            No C 183/15
                     ORIGINAL PROPOSAL                                               AMENDED PROPOSAL
                                                                 3. Where medium-term financial assistance is financed
                                                                in part or in full by recourse to the Member States, the
                                                                 Council, in addition to taking the decisions referred to in
                                                                paragraph 2, shall decide on the size of the contributions
                                                                of these States*and on the financial conditions attaching
                                                                to the credits they make available in that connection. The
                                                                Council may exempt from contributing any Member
                                                                State which maintains that difficulties exist or can be
                                                                foreseen as regards its balance of payments.
                          Article 4                                                       Article 4
 1. On the initiative of a Member State undertaking to          (part of text deleted)
implement a capital liberalization programme despite a
fragile balance-of-payments situation, the Council, after
examining the situation in that Member State and the
back-up programme presented in support of its appli-
cation, shall decide, as a rule during the same meeting:
— whether to grant a financing facility, in the form of a
    credit line or an undertaking to grant a loan, which
    may be activated at the request of the benficiary
    Member State as and when the need arises and for a
    period that may not normally exceed one year,
— the overall amount of resources allocated,
— the back-up measures accompanying the liberali-
    zation of capital movements with a view to ensuring
    a sustainable balance-of-payments situation.
2. Loans drawn under the financing facility and                 (part of text deleted)
granted pursuant to paragraph 1 shall, as a rule, have a
term of one year renewable for a further one-year
period.
3. In cases where restrictions on capital movements             In cases where restrictions on capital movements         are
are introduced or re-introduced during the term of the          introduced or re-introduced during the term of          the
loan, the latter may be consolidated only within the            medium-term financial assistance, its conditions        and
framework of a longer-term loan granted as mutual               arrangements shall be reexamined pursuant to Article    108
assistance pursuant to Article 108 of the Treaty.               of the Treaty.
                          Article 5                                                       Article 5
The Commission shall take the necessary measures to             The Commission shall take the necessary measures to
verify at regular intervals, in collaboration with the          verify at regular intervals, in collaboration with the
Monetary Committee, that the economic policy of the             Monetary Committee, that the economic policy of the
Member State in receipt of a Community loan accords             Member State in receipt of a Community loan accords
with the adjustment or back-up programme and with any           with the adjustment or back-up programme and with any
other conditions laid down by the Council pursuant to           other conditions laid down by the Council pursuant to
Articles 3 or 4. To this end, the Member State shall place      Article 3 (part of text deleted). To this end, the Member
all the necessary information at the disposal of the            State shall place all the necessary information at the
Commission. On the basis of the findings of such verifi-        disposal of the Commission. On the basis of the findings
cation, the Commission and, where appropriate, the              of such verification, the Commission, after delivery of an
Member States holding claims under the facility shall           opinion by the Monetary Committee, shall decide on the
release further instalments. The Council shall decide on        release of further instalments. The Council shall decide
any adjustment to be made to the initial economic policy        on any adjustment to be made to the initial economic
conditions.                                                     policy conditions.
 ---pagebreak--- No C 183/16                            Official Journal of the European Communities                                   13. 7. 88
                      ORIGINAL PROPOSAL                                                 AMENDED PROPOSAL
                           Article 6                                                         Article 6
 1. Loans granted as medium-term financial support                1. Loans granted as medium-term financial support
shall have a term of one year or more. They may be                (part of text deleted) may be granted as consolidation of
granted as consolidation of short-term monetary support           short-term monetary support made available by the
made available by the central banks of the Member                 central banks of the Member States.
States.
2. At the request of the beneficiary Member State,                2. At the request of the beneficiary Member State,
such loans may carry the option of early repayment.               such loans may carry the option of early repayment.
3. Normally, no Member State may draw on this                     (part of text deleted)
facility to the extent of more than 50 % of the ceiling
referred to in Article 1 (2).
                           Article 7                                                         Article 7
1. The borrowing and lending operations referred to               1. The borrowing and lending operations referred to
in Article 1 shall be carried out using the same value date       in Article 1 shall be carried out using the same value date
and shall not involve the Community in the transfor-              and shall not involve the Community in the transfor-
mation of maturities or in any exchange or interest-rate          mation of maturities or in any exchange or interest-rate
risk.                                                             risk.
When the borrowings are expressed, payable or                    When the borrowings are expressed, payable or
repayable in the currency of a Member State, they may             repayable in the currency of a Member State, they may
be concluded only after consultation with the competent          be concluded only after consultation with the competent
authorities of that Member State.                                 authorities of that Member State.
Where a Member State receives a loan carrying an early           Where a Member State receives a loan carrying an early
repayment clause and decides to invoke this option, the           repayment clause and decides to invoke this option, the
Commission shall take the necessary steps after                   Commission shall take the necessary steps, (part of text
consulting the Monetary Committee.                                deleted).
2. At the request of the debtor Member State and                  2. At the request of the debtor Member State and
where circumstances permit an improvement in the                 where circumstances permit an improvement in the
interest rate on the loans, the Commission may, after             interest rate on the loans, the Commission may (part of
consulting the Monetary Committee, refinance all or              text deleted) refinance all or part of its initial borrowings
part of its initial borrowings or restructure the corre-          or restructure the corresponding financial conditions.
sponding financial conditions.
Refinancing or restructuring shall not have the effect of         Refinancing or restructuring operations shall be carried
extending the average duration of the borrowing                   out in accordance with the conditions set out in
concerned or increasing the amount, expressed at the             paragraph 1 and shall not have the effect of extending
current exchange rate, of capital outstanding at the date         the average duration of the borrowing concerned or
of the refinancing or restructuring.                              increasing the amount, expressed at the current exchange
                                                                  rate, of capital outstanding at the date of the refinancing
                                                                  or restructuring.
3. The costs incurred by the Community in                         Unchanged
concluding and carrying out each operation shall be
borne by the beneficiary Member State.
                                                                  4. The Monetary Committee shall be kept informed of
                                                                  developments in operations referred to in the third sub-
                                                                  paragraph of paragraph 1 and the second sub-paragraph
                                                                  of paragraph 2.
 ---pagebreak---   13. 7. 88                               Official Journal of the European Communities                            No C 183/17
                        ORIGINAL PROPOSAL                                                 AMENDED PROPOSAL
                            Article 8                                                          Article 8
 1. If one or more Member States that are creditors                  Unchanged
 under this facility experience difficulties as regards their
 balance-of-payments and/or a sudden decline in their
 foreign currency reserves, they may request mobilization
 of their claims. The Council, having due regard to the
 circumstances, shall decide to mobilize such claims, in
 particular in accordance with one of the following
 procedures, or a combination thereof:
— by refinancing from Community borrowings from
     financial institutions or on capital markets;
— by a transfer of the claim to other creditor Member
     States;
— by early repayment in full or in part by the debtor
     Member State or States.
2. Where refinancing takes place in accordance with                 Unchanged
paragraph i, the debtor Member State shall agree that its
debt, originally denominated in one currency, shall be
replaced by a debt denominated in the currency used for
the refinancing. Where applicable, the debtor Member
State shall bear any additional cost resulting from an
alteration in the interest rate and the costs incurred by
the Community in concluding and carrying out the
operation.
3. Any creditor Member State may arrange with one                   3. Any creditor Member State may arrange with one
or more other Member States for the partial or total                or more other Member States for the partial or total
transfer of its claims. The Member States concerned shall           transfer of its claims. The Member States concerned shall
notify the Commission and the other Member States of                notify the Commission and the Monetary Committee of
the transfer.                                                       the transfer.
4. Any Member State that is a creditor in respect of a              4. Any Member State that is a creditor in respect of a
loan carrying an early repayment clause shall take the              loan carrying an early repayment clause shall take the
requisite steps where the debtor Member State decides to            requisite steps where the debtor Member State decides to
invoke this option. The Member States concerned shall               invoke this option. The Member States concerned shall
notify the Commission and the other Member States of                notify the Commission and the Monetary Committee of
the operation.                                                      the operation.
                            Article 9                                                         Article 9
For the application of the ceilings referred to in Articles         For the application of the ceilings referred to in Article 1
1 (2) and 3 (2), the loan operations shall be recorded at           (part of text deleted), the loan operations shall be
the exchange rate of the day on which they are                      recorded at the exchange rate of the day on which they
concluded. The repayment operations shall be recorded               are concluded. The repayment operations shall be
at the exchange rate of the day on which the corre-                 recorded at the exchange rate of the day on which the
sponding loan was concluded.                                        corresponding loan was concluded.
                           Article 10                                                        Article 10
The Council shall adopt the decisions referred to in                The Council shall adopt the decisions referred to in
Articles 3, 4, 5 and 8, acting by qualified majority on a           Articles 3, 5 and 8, acting by qualified majority on a
proposal from the Commission, made after consulting                 proposal from the Commission, made after consulting
the Monetary Committee on the matter.                               the Monetary Committee on the matter.
 ---pagebreak--- N o C 183/18                                Official Journal of the European Communities                                      13.7. 88
                       ORIGINAL PROPOSAL                                                     AMENDED PROPOSAL
                            Article 11                                 Unchanged
The European Monetary Cooperation Fund shall make
the necessary arrangements for the administration of the
loans.
The funds shall be paid only to central banks and shall
be used only for the purposes indicated in Article 1.
                            Article 12                                                            Article 12
No later than five years after the adoption of this Regu-              Before 31 December 1992, the Council shall examine, on
lation, the Council shall examine, on the basis of a                   the basis of a report from the Commission after delivery
report from the Commission, after delivery of an opinion               of an opinion by the Monetary Committee and following
by the Monetary Committee and following consultation                   consultation with the European Parliament, whether the
with the European Parliament, whether the facility estab-              facility established still meets, in its principle, its
lished still meets, in its principle, its arrangements and its         arrangements and its ceiling, the need which led to its
ceiling, the need which led to its creation.                           creation.
                            Article 13                                                            Article 13
1. Regulation (EEC) No 682/81                     and    Decision      Unchanged
71/143/EEC are hereby repealed.
2. Amounts not yet repaid under outstanding                            2. Amounts not yet repaid under outstanding
Community loan operations concluded pursuant to                        Community loan operations concluded pursuant to
Regulation (EEC) No 682/81 before the date of entry                    Regulation (EEC) No 682/81 before the date of entry
into force of this Regulation shall count against the                  into force of this Regulation shall count against the
ceiling referred to in Article 1 (2) at their initial value in         ceiling referred to in Article 1 (1) at their initial value in
ECUs.                                                                  ECUs.
3. References to the instruments repealed by virtue of                 Unchanged
paragraph 1 shall be deemed to be references to this
Regulation.
The ceilings for credits provided for in Article 3 (2) shall be as     The ceilings for credits provided for in Article 1 (2) shall be as
follows:                                                               follows:
             Member State              Million ECU      °/o total                  Member State             Million ECU      % total
  Belgium                                     875           6,28       Belgium                                     875          6,28
  Denmark                                     407           2,92       Denmark                                     407          2,92
  Germany                                  2 715          19,50        Germany                                  2 715          19,50
  Greece                                      235           1,69       Greece                                      235          1,69
  Spain                                     1 132           8,13       Spain                                     1 132          8,13
  France                                   2 715          19,50        France                                   2 715          19,50
  Ireland                                     158           1,13       Ireland                                     158          1,13
  Italy                                     1 810          13,00       Italy                                     1 810         13,00
  Luxembourg                                   31           0,22       Luxembourg                                   31          0,22
  Netherlands                                 905           6,50       Netherlands                                 905          6,50
  Portugal                                    227           1,63       Portugal                                    227          1,63
  United Kingdom                            2 715          19,50       United Kingdom                            2 715         19,50
                             Total        13 925         100,00                                     Total      13 925         100,00