CELEX: 51980PC0670
Language: en
Date: 1980-10-30
Title: PROPOSAL FOR A COUNCIL DECISION empowering the Commission to contract loans for the purpose of promoting investment with the Community (Presented by the Commission to the Council)

ARCHIVES HISTORIQUES
DE LA COMMISSION
COLLECTION RELIEE DES
DOCUMENTS "COM"
COM (80) 670
Vol. 1980/0214
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 ---pagebreak--- COMMISSION OF THE EUROPEAN COMMUNITIES
                                                    COM(80)670 final
                       Brussels, 30th October 1980
                  PROPOSAL FOR A COUNCIL DECISION -
         empowering the Commission to contract loans for
         the purpose of promoting investment with the
                           Community
         ( Presented by the Commission to the Council )
    C0M(80 ) 670 final
 ---pagebreak--- Introduction                             .
1.   The origin of the NC *
2.   The operations carried out
                                  S
3.   The experience gained        .         _
       >                    -   >
4.   The outlook
                              \
Proposai
Table 1 :   Borrowings
Table 2 :   Breakdown of lending contracts signed
 Annex : Draft decision
 ---pagebreak---                               SUMMARY
     Article 6 of the Council decision establishing the New Community
Instrument ( NCI ) provided for a report by the Commission to the Council
and to the Parliament on the experience gained during its operation .
     This report fulfills this requirement by describing the loans raised
and made, up until 1.10,80 .
     Seventeen months' experience are then summarised and achievements
highlighted - the diversification of Community borrowers the significant
financial support given energy and infrastructure investment - together
with the difficulties encountered . In the light of this information, it
is proposed to continue the NCI operations by maintaining the tranche ,
system and lifting the overall ceiling .
     The attached draft Council decision incoporates the duly amended
original decision ( 78/ 870/ CEE ).
 ---pagebreak--- Introduction
       As required under Article 6 of the Council Decision establishing the
                                       (1 )
New Community Instrument ( NCI )            , the Commission hereby presents a report
to the Council and to the Parliament on the experience gained during the
operation of that Decision .
                                                           !
       The report is accompanied by a proposal that the scheme should be renewed .
1 . The origin of the NCI         -                                              .
       The Commission proposed l-h June 1977 that the New Community Instrument
for borrowing and lending be established as a means of backing up Community
measures attacking unemployment , the low level of investment and the lack of
convergence in Member States' economic performances.               .
       The new mechanism was based on the idea that it is in the interests of the
European Economic Community to use its creditworthiness on the international
markets to raise capital , in addition to that provided from other Community
sources of financing , for investment in certain key areas .
       The Commission 's proposal was endorsed by Parliament and the Economic and
Social Committee , and the Council approved the principle of the New Community
Instrument by empowering the Commission to borrow the equivalent of up to 1,000
million EUA in principle on behalf of the EEC .           The loans were to be activated/
tranche by tranche and were to be used to finance investment projects which
would serve the Community 's priority objectives in the energy, industry and
infrastructure sectors .                                     *
        On 14 May 1979, the Council authorized a first tranche of borrowings for
an amount not exceeding the equivalent of a capital sum of 500 million EUA to
be used for investment projects in the infrastructure and energy sectors
 ( 1 ) Decisión 78 / 870 / EEC , 16 October 1978 .
 ( 2 ) Council Decision 79 / 486 / EEC .
 ---pagebreak---                        /                    ,
                                              - 2 -
             Infrastructure investment was to cover transport telecommunications ,
     agricultural improvements, water supply works and environmental protection .
             Energy investment was to contribute to greater self-sufficiency, security
     and diversification of Community energy supplies , with particular attention
   - being paid to energy conservation and to the development of alternative energy
     sources .
                                                                                        (1 )
             The Balance of 500M'of ECU was authorized by the Counci l on 22.7.80
     which has now also decided that it should be used for the same sectors and-
     according to the same guidelines as for the first tranche but that exceptionally
     among certain infrastructure projects certain "projects which concern housing
     and advance factories in priority regions can be considered for up to 20 X of \
     the tranche .                                   .                   \
•    2.      The operations carried out - situation at 1 October 1980
             Since the Council Decision of 14 May 1979, the NCI has been in operation
     for 17 months . During this period, despite the delays in approving the second
     tranche, which interrupted the course of operations, contracts for the granting
     of loans totalling 391.9 million EUA have been signed and projects involving
     an additional total of 336,1 million EUA are at an advanced stage of preparation .
     The operations carried out in 1979 (a total of 277 million EUA in contracts
     signed ) are described in an annual - report presented to the Council and Parliament
                  (2 )
  v in April'          . Tables 1 , and 2 appended hereto show all these operations together
     with those carried out between 1 January 1980 and 30 September 1980, giving a
     total of 391.9 million EUA in lending contracts signed . The sectors are shown
     below. '                 .    ■ *                          •    ■           -
                                                                           • • • /» • •
     ( 1 ) Council Decision 80 / 739/ EEC .
     ( 2 ) " First report on the borrowing and lending activities of the New Community
           Instrument (NCI ) - financial year 1979", which the Commission transmitted
           to the Council and to Parliament on 16 April 1980 (Doc . C0M(80 ) 192 final ,
           16 April 1980).
 ---pagebreak---                                            Number of        «       '   .
                                               loans        Amount
Energy :
  Alternative sources                            6            163,9
  Transportation                            -2                 58,8
  Exploitation of Community hydrocarb .          1           _16,7
  TOTAL                                          9            239,4
Infrastructure :
  Water                                          3             90,2
  Roads                                          1             19,4
  Telephones                                     2             30,4   '
                                         ■   '   1             12,5
  TOTAL                              •           7            152,5
             The geographical breakdown is as follows :
                                           Development '    ft .
                                               regions           er
Ireland                      101,1             101,1             0
Italy                        185,5             106,3           79,2
United Kingdom               105,3 "           105,3             0
The financing was provided out of borrowings amounting to a total of '
399,7 million EUA .
 ---pagebreak--- 3.  The experience gained                          ,
     Experience of the operation of the NCI is obviously brief :   but perhaps
it is not too early to see what can be learnt from it .
The NCI on capital markets
     Firstly, the introduction of the NCI as another means by which the
Community raises money on the capital markets has proved a success . Community
loans floated under the NCI label have been well received, notably by institu­
tions required under their own regulations to observe ceilings on investments      ,
for each category of borrower . Thus , despite tension and rising interest rates
on the national market in US dollars during the last quarter of last year , the
first loan in that currency was placed on relatively favourable terms . The DM
and HFL loans and the following US dollar loans were placed without any parti­
cular difficulty .
     The placings of NCI loans has not impeded issues under other Community
borrowing machinery.  The volume and frequency, of their issues , notably those
of the ECSC and of the EIB have continued to increase rapidly .
                                                     Ι
     In 1979, the various instruments borrowing in the name of the Community
accounted for 12 % of the international capital market . Clearly, such borrowings ,
reinforced by placings, play an important role in recycling as a whole . The
growth of the oil-producing countries' surpluses ( which may be estimated at
US2 115,000 million for 1980) and the efforts to adjust bur energy and industrial
structures underline the usefulness of all the financial mechanisms which can
contribute to the orderly use of the capital available .
The NCI lendings                                                    A
     As regards loans granted, the effective or probable commitment of almost
three quarters of the total in only 17 months is in itself sufficient indication
that real demand exists .                                                        /
 ---pagebreak---        In practice , such demand has been met through the cofinancing by the NCI
 of projects already covered by the EIB .    This reflects the fact that the fields
 covered by the NCI deliberately coincide with those covered by the EIB .     In
 other words , by supporting a category of projects given priority status for the
 purposes of adjustment and employment within the framework of EIB activities ,
 the NCI has increased the Community 's contribution to such projects .    This
 additional support may be quantified .    The EIB financed an average of some 38 '%
 of the total costs of all the projects which it assisted in 1979 .     The amount
 of financing which it provided for projects that were cofinanced slightly exceeds
this average and amounted to 39 % .    The NCI provided an additional 14 % : in
other words , the Community 's support represents 53 % of the tota.l cost .   In the
 case of individual projects , Community assistance may amount to as much as some
70 % .
       This additional stimulus was particularly marked in the case of 'investment
projects in Ireland and , in sectoral terms , in the case of loans granted in the
energy sector .   Thus , the NCI increased the flow of Community capital to countries
regions and sectors whose growth and development represent priority Community
objectives .                       ,             ,  ,
Geographical breakdown
       A total of 26 % of NCI financing went to six projects in Ireland , a large
share in view of the size of the country .     In the United Kingdom , a similar
volume of financing was provided through two loans , one of which ( for the hydro­
electric power station at Dinorwic ) alone accounted for 20% of all NCI ' loans so
far granted .   The remaihder of the financing went to the loans allocated to      .
projects in Italy, which account for 47 % of the total .     Since Italy and Ireland
have beeh designated as less prosperous member countries effectively and fully
participating in the European Honetary System, all but two of the loans granted
to these countries carry a 3 % interest subsidy financed out of the General
Budget of the Community .    These subsidies have turned out to have such a-stimu-
lating effect , notably in Ireland , that the programme of work and the conclusion
of the contracts have been speeded up .
 ---pagebreak---   Sectoral breakdown
                                                        -      · V
         Assistance in the energy sector has been particularly conspicuous ,
  accounting for 61 % of the total#, and has thus been in line with the priority
  which the Community attaches to the objective of achieving greater self-
  sufficiency, security and diversification of energy supplies . Assistance in
  financing power stations fired by fuels other than oil , the exploitation of
  indigenous primary sources of energy such as peat and geothermal energy, diver­
  sification of external supply by both type and origin - all these involve
  investment that is essential if the present dependence on imported energy of
  most of the Community countries is to be overcome . After only a few months, the
  New Community Instrument has shown the impetus it can give to investment activity
  in a top priority area such as the energy sector . It is to be hoped and indeed
( expected that the momentum will continue in the future .
         Since priority has so far been given to the infrastructure and energy
  sectors , no loans have yet gone to industry, although it is included in the
  basic Decision .
         The Commission considers that it would be desirable to extend the scheme
  to . include industry, so as to facilitate the structural adjustments at present
  demanded of industry and in view of the scope for permanent job creation offered
  by such investment ."
  Consequences on employment
       : Assistance in financing infrastructure and energy investment has an effect
  on employment that is significant but hard to quantify . The capital goods and
  the construction works create jobs over relatively long periods of between five
  and eight years . The short-run employment impact of the investment projects which
  the NCI and the EIB helped to finance in 1979 may be estimated at some 30,000
  jobs' during the first two years of the projects, decreasing thereafter .
 ---pagebreak---  Administering the NIC                   ' •
       Experience so far has also revealed some lack of flexibility in administering
 the NCI , a failing which could be serious in the financing of industrial sector
 operations but . is already damaging for a significant number of infrastructure and
 energy projects . The present practice – followed as a means of avoiding
 operational ^deficits or surpluses - is to provide finance either in the form of
 "back-to-back" operations fcr large scale projects or in grouping together
 several projects which are too small to be financed individually . In the second
 case the loan contracts are concluded before the funds are borrowed, the loan
 contracts fixing, within certain limits , the currencies , and basic conditions , -
 including interest rates . Themarkets are then approached on the basis of these
 terms . This means that when the contract for the loan to be granted is signed,
 the borrower can be given no assurance as to the exact terms of the loans he
 will receive ( although he does know the upper limits ), or indeed as to whether
 he will be actually able to obtain the loans .
        1                                                      <
      This operational problem has nothing to do with the basic Decision setting
up the NCI , since the Decision does not rule out the possibility of borrowing
the funds before inclusion -of the contracts relating to the Loans to be granted .
The departments of the Commission and of the Bank are at present examining
technical procedures for. a solution that would operate more smoothly        while
remaining consistent with the basic Decision .          N
      The loans
              -V
                  have been
                        '
                            granted under the-
                                               mandate given to the European
                                                                      '
Investment Bank pursuant to Article 5 of the basic Decision . In accordance
with this mandate, the Bank carries out transactions on behalf of , for and -
at the : risk of the Community . Loan applications are addressed to the Bank
either directly or through the Commission or a Member State . After a Commission
decision on the eligibility of each project^'the Bank, in accordance with the
procedures laid down in its Statute and its usual criteria , examines these
applications , decides whether and on what terms to grant'the loans arid administers
them . The financial operations are verified both by -the financial control bodies
under the General Budget and by the auditing bodies of the EI8 in their own fields
      The division of tasks has stood the test of experience and has not impaired
the Commission 's capacity to exercise its responsibilities in the policy guidance
of the NCI .                                      -
 ---pagebreak---                                     â -
4o     The ontlooic
       The NCI was set up to provide additional Community support fc-r efforts
being carried out to combat unemployment and raise the level of investment ™
The description of its operations given above shows how favourably this
initiative has been received ^
       Unfortunately , the economic outlook in the short term and in the medium
term suggests that investment , which is an essential driving force in resto­
ring the hes-lih of the economy , must be enccuragedo The process of adjusting
to the new energy situation has begun , but needs to be pushed further and
fastero
       The Community cannot take upon itself the principal role in the task of
carrying out the necessary investment , That is the responsibility of the private
sector and of the national authorities , though in a number of areas the Commu­
nity can contribute by acting as a coordinat ing agent or even by providing
budgetary assistance o
       However , the Community can and must mobilise its borrowing capacity to
help in the financing of essential investment 0 The Community is able to obtain
funds on extremely favourable terms and to pass these terms on to the final
borrower , who thereby usually gains a considerable net advantages While certain
organisations within the Community are able to borrow on excellent terms , inter­
vention by Community authorities often improves the overall balance of their
financing plans#
       Such action by the Community in fact serves two of its current priority
objectives :
- through an appropriate geographical distribution of the funds raised it can
   facilitate the convergence of the economic performances of the member states ,
   and in particular help new members to comply with Community requirements .
 ---pagebreak--- - through a judicious borrowing policy it oan enable the Community to participate
    in recycling the oil-exporting countries * surpluses . In this context , the
    examination in particular of the possibility of denominating Community loans
    in ECUs , according to the proposals of the monetary committee which were approved
   "by the Council , should be pursued#
        These considerations demonstrate the need for the NCI action to be continued ..
It should nevertheless retain one of its main characteristics : the concentration
on a relatively limited number of projects having a high economic priority. This
is already exemplified by the concentration of NCI action in priority sectors ,
in accordance with the Decisions applying the first and second tranches . While
it would be desirable for the NCI to have a role in the industrial sector too ,
where investment problems are considerable , this should not entail reducing
its assistance to' the sectors initially chosen ( energy and infrastructure ),
notably by increasing its support for the Community 's structural policies .
For this purpose , the tranche mechanism should be strengthened by assigning
a given volume of NCI activity more specifically to clearly defined functional
objectives . If the precise field of intervention remains to be determined in
the course of the discussions on each tranche , it would be appropriate also to
lay down in the basic decision the possibility of opening simultaneous and sue-
                                                     m
cessive tranches .,
        It is necessary , by means of an annual report , to continue to provide the
Parliament and the Council with regular and full information on the activity
and the financial management of the instrument . Furthermore , the NCI is obviously
one of the borrowing/lending instruments fully covered by the Commission 's pro­
posals that such activities should be included in the Budget .           ' <
         In any case , its activities are subject to the usual financial control
 of the budgetary authority and of the Court of Auditors , not to mention the
 separate audits carried ou on EIB operations .
         In the light of experience and given the outlook regarding the New
 Community Instrument , the Commission proposes that the basio Decision of
 ---pagebreak---                                    - is -
1 6 October 1978 be renewed, in accordance with the draft Council Decision
annexed to this report® As drafted , the Decision would ensure that the
action already initiated is pursued , expanded and given greater operational
flexibility ,, This is the object of the draft Decision attached.;,
        It is based on the initial Decision , with the following significant
changes :
( a ) there is no longer any overall ceiling on the loans which the Commission
      is empowered to raises
( b ) the system of borrowing in tranches is made slightly more flexible so as
      to allow eventxially simultaneous t ranches o
 ---pagebreak---                                           NCI - Tranche I : BORROWINGS
                                            ( situation, at 30.9*80 )
     >T      tn x         ht x       Maturi-   Nominal
                                                                                               Millions EUA                        I
     No      Date         Nature      ,         . ,
                                     ty         xnterest      Issue            Currency  of which         of which     of which
                                     (years ) rat e %        price               (mio .) ' USD
                                                                                             ■
                                                                                                             DM          HPL
  M * I 22.10.79     | public issue     15   I 7 7/8 {       DM 225           I 90,4                          90-4
   2-     15.11.79   I public issue     20      11,60     |  USS125               89 / 4     89 / 4
   M       6.2.80    I private issue    15       8 / 30      DM   41              16/ 2                       16.2
   4.
   5.
          20.2.80
          21.2.80
          21.4.80
                       private issue
                       public issue
                       public issue
                                        15
                                        15
                                        10
                                                10 3 / 8
                                                11 / 75
                                                             Hfl 40
                                                             USS 20           1 14/4
                                                                                  15 / 4     15 / 4
                                                                                                                          14 / 4
                                                 9 / 45      DM 27,9              11 /-                       11 .-
   M                                                                                                                 ....
                                                                                                        '
          14.5.80 "    public issue             11 / 00      US2 75               57 / 6     57 / 6
   8-   | 15.5.80      private issue    10      14 / 00      USS   8               6/1         6/ 1
   9.      3.6.80      private issue    15      11 7 /8      Hfl 40               14 / 4                                  14 / 4
  10 .  ! 22.7.80'    publio issue      15      11 / 0       US2 70              48 / 9      48-9   •
  11 .    15.9.80     private issue     10       8/ 3 / 8    DM 22                 8,7                          8,7
          15.9.80     private issue     15       8,3/ 8    ; DM 33                13 ,-    .
                                                                                                              13 ,-
  13 .    18.9.80     private issue     15      13,00        US2 20               14,2       14,2
                                                           !_        i_ . •                           i
                                                                                                                                 i
  TOTAL             |                                                           399,7     231,6              139,3  ]■ 28,8 , I
I                                                                           I   100 %        57,9             34,8         7,3'
 ---pagebreak---                                                                         ■                   2·
                                               NCI - Tranche I : Breakdown of lending contracts signed
                                                                     ( situation at 3U .?. Bo )
                                                                          Loans signed         Er.:s      Breakdown by country
                                          Date of     Cost of
                                                                                               inte­
                                                                                                                                      Contribution to cost in % |
                                                                I
                 Project                  contract    Project                                                       United                                  NCI +
                                                      Million   j national           million rest        Italy
                                                                                                                   Kingdom
                                                                                                                              Ireland  " NCI      EIB
                                                                                                                                                            EIB
                                                                    currency         EUA       sub­
                                                      EUA
                                                                                               sidy
    1 . Aqueduct , Pertusillo III        17,9.79       266         Lit 45 000          39.6     X          39,6                         15       42           57
       (.CASSA )                     |                                            I
    2 » Lothian V/ater                   17.9.79        116        Ë        16,3       25,9                         25,9                22        44          66
    3 . Dublin V/ater          1         17.9.79         99        Elr 16,5            24.7                                    2^,7     25       45           70
    4 * Irish Telephones                 17.9.79         67        Elr 12 ,-           17,9     X                              17,9     27       41           68
    5 . Irish Roads                      17.9.79                   Elr 13 ,-           19.4                                             19
                                                        100                                     X                              19,4              49           68
    6 « Industrial estate , Syracuse
         IV ( CASSA )                    18.7.80         61        Lit 15 000          12.5     X          12,5                         21       29           50
    7« SIP , Apulia                      19.9.80        175
                                                                  Lit .15 OOCj         12,5            ,   12,5                         ,7       49           56
 I A. Infrastructure                 |             I   884                            152,5          !     64,6 Ii 25,9       62,0 |          r–ir~i
    8. Dinorwio hydroelectric        I
        power station ( CEGB )       ! 17.9.79         669        6         50 ,-      79.4                         79,4                12       27           39
   9« Aghada power station(ESB )
                                       ! 17.9.79       100         Elr 16,5            24,7                                   24,7      25       45          70
  10. Alto Gesso hydroelectric         I
        power station (ENEL)             14.12.79                 Lit 40 000
  11 * Geothermal power stations
                                                       336                             34,9     x         34,9                          10       41          51
        (EHEL )                          14.12.79                 Lit 12 000
  12* Peat product ion(B0RD                              58                            10.5     x         10,5                          18       50           68
                                                                                                                                                         i
        NA MONA I )                      28.4.80         71
  13 . Peat briquettes (BORD                                      :EIr       3,7        5,5     x                               5,5      8       27          35
        KA KONA II )                     28.4.80
  14* System for monitoring the
                                                         28        Elr       6 ,-       8,9     x                               8,9     32       32          64
        production and transmis­
        sion of electricity(ENEL)      '29.4.80        149                             17,1
  15« Algeria-Italy gas pipe­
                                                                  Lit 20 000                    X         17,1                          11       46           57
        line , Sicily and Calabria       18.7.80       445                                                                                       ™      1|
        seotion ( ENl )                                           Lit 50 000           41,7     X         41 ,7                          9       38          47
                                                                                                                                                         I
  16 . AOIP Hydrocarbons
                                         19.9.80         90       Lit 20 000           16,7     X         16,7                          19       50        , 69
| B. Energy                                          1.946    |                       239,4              120,9      79J4      39,1                                1
   Totals A + B                        |             2.830                         j 391,9               185,5     105,3 . | 101,1     14       39           53
 ---pagebreak---                                    Propose! for a
                                   UQUTiCIL EECISÏON
            empowering the Commission "to contract .^ cans for the purpose
                    of promoting investment with the Community
THE COUNCIL OP THE EUROPEAN COfMJKITIBS , •
Having regard to the Treaty establishing              financial impact far "beyond its appa­
the European Economic Community , and in              rent size , thus promoting the convert
particular Article 235 thereof ,                      gence of member countries' economic
                                                      trends ;
                                                      Whereas plentiful finance can "be found
Having regard to the proposal from the
                                                      on the capital markets which could "be
Commission ,
                                                      tapped to finance investments within
Having regard to the Opinion of the European
                                                      the Community }           .  "
Parliament^ ,
                                                      Whereas the Community has a credi-
Having regard to the Opinion of- the Economic
                       2                              worthiness in its own right which must
and Social Committee
                                                      be used to best advantage --to reinforce
Whereas economic activity , employment , and         European support for the said invest­
investment in the Community are unevenly             ments and to support policies decided
distributed and are all too lowj                      on at Community level 5                 •
Whereas , in order to stimulate economic              Whereas the European Investment Bank
activity and support common policies ,                has sta-ted that it is willing to
the financing 'scheme set up under Council            contribute to the implementation of
Decision 78/870/EEC with a view to making,           this scheme ,
an additional contribution to investment
promotion in the Community should "be                HAS DECIDED AS FOLLOWS ' ?
pursued and strengthened , alongside existing
Community financial institutions and bodies ,
xtfhose scope whould "be widened ;                                    Article 1
Whereas Community action to this end would          The Commission is hereby empowered
have a real spill-over impact and
2
 ---pagebreak---                                             2
   to contract p on "behalf of the European    A single borrowing may be used to
  Sconoiaic Coieavuniiy, loans whose proceeds   finance loans for different objectives .
   shall "be lent to finance investment
  projects which contribute to the                            Articl e 3
  greater convergence and integration
   of the economic policies of the Member      Connected borrowing and lending trans­
  StateSr,                                     actions shall   be den.oniins.ted in the
                                               currencies of the borrowing transact ionsr
  These projects shall be such that they
  serve the Community 's priority objec­       Lending terms as .regards the reimburse­
  tives in the energy , industry and in­       ment of the principal and the rate and
frastructure sectors , taking account          payment of interest sha.ll be so fixed
   inter alia of the regional impact           as to cover the. costs and expenses
  of the projects and the need to              incurred in concluding and performing
  combat unemployments                         both the borrowing and lending side of
                                               the transact ions o
 This mechanism may be used on its own
 or in conjunction with other Comiaunity ■                    Article 4
  f inancing inst rum ent s o
                                              The terms of loans to be raised shall
                Article 2                     be negotiated by the Commission in the
 .■-roans shall "be activated in tranches
                                              best interests of the Community having
                                              regard to the conditions on capital
                                              markets and in accordance with the re­
The Council ^ acting by qualified majority
                                              quirements as to duration and'- other
on a proposal from the Commi ssi onf and af­
                                              financial aspects set out in the loans
ter consulting European Parliament ^ shall
 lay down the guidelines for the glial ™      applications for loans to be grant edo
foility of projects .
                                              Funds borrowed shall be deposited with
                                              the European Investment Bank to be in­
The Commission shall decide whether or- not
                                              vested on a temporary basis if necessary-
projects are eligible in accordance "with,
the guidelines thus laid down0
The Commission shall borrow on the capital
markets within '',be limits of the
t ranches authovipedr,
                                                                      <1 <?> « / 0 O o
 ---pagebreak---                                        - 3 -
          Article 5                                     Article 7
A mandate shall be given to the Bank to      The financial control and audit of
grant loans in pursuance of thi& I>eoiabn«   the Commission 's accounts shall be
The Bank shall carry out transactions        carried out in accordance with the
under this mandate on "behalf of , for and   Financial Regulation applicable to
at the risk of the - Community. Loan         the General Budget of the European
requests shall be forwarded to the Bank      Communities .
either directly or through the Commission -
or a Member State# After a Commission
decision on the eligibility of each pro­
ject pursuant to Article 2 the Bank shall ,  Done at
in accordance with the procedures laid down
in its Statute and its usual criteria,
examine these requests , decide whether
and on what terms to grant the loans ,                     For the Council
and administer them. ,
                                                           The President
The mandate given to the Bank shall be
embodied in a cooperation agreement
between the Commission and the Bank-
          Article 6
The Commission shall annually inform the
Council and Parliament of receipts and
expenses resulting from borrowing ajid
lending transactions .
In the light of this information , the
Council may carry out an assessment of
the general operation of the mechanism
set up "by this Decision©