CELEX: 51988PC0661
Language: en
Date: 1988-11-30
Title: PROPOSAL FOR A COUNCIL DECISION EMPOWERING THE COMMISSION TO BORROW UNDER THE NEW COMMUNITY INSTRUMENT TO STABILIZE THE LEVEL OF DEBT OUTSTANDING FOR THE PURPOSE OF PROMOTING INVESTMENT WITHIN THE COMMUNITY

No C 335/8                              Official Journal of the European Communities                                30. 12. 88
              Proposal for a Council Decision empowering the Commission to borrow under the New
              Community Instrument to stabilize the level of debt outstanding for the purpose of promoting
                                               investment within the Community
                                                       COM(88) 661 final
                                     (Submitted by the Commission on 2 December 1988)
                                                         (88/C 335/05)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,                           Whereas special financing arrangements should conse-
                                                                   quently be provided for to deal with such problems, in
Having regard to the Treaty establishing the European              particular by extending the financing base and by
Economic Community, and in particular Article 235                  encouraging the supply of equity funding;
thereof,
Having regard to the proposal from the Commission,                 Whereas the European Investment Bank (hereinafter
                                                                   referred to as the 'Bank') has stated that it is willing to
Having regard      to   the   opinion    of   the   European       contribute to the implementation of this measure, and to
Parliament,                                                        take responsibility for managing the cash holdings for
                                                                   carrying out the lending operations, it being understood
Having regard to the opinion of the Economic and                   that the discharge and audit procedures shall be those
Social Committee                                                   provided for in the Bank's Statute in respect of all its
                                                                   operations;
Whereas the Community's investment financing facilities
should continue to operate, with a view to correcting
structural shortcomings in the production system so as to          Whereas the Treaty establishing the European Economic
increase investment and thereby stabilize employment;              Community has not provided the necessary powers for a
                                                                   Community action in this field needed to attain, in the
                                                                   course of the operation of the common market, one of
Whereas loan applications already approved by the
                                                                   the objectives of the Community,
Commission account for over 87 % of the borrowing
authorized by the Council in Decision 87/182/EEC (')
and over 97 % of the cumulative total of all authoriz-
ations to date;                                                    HAS DECIDED AS FOLLOWS:
Whereas the Commission              should therefore       be
empowered to borrow amounts enabling it to maintain
                                                                                            Article 1
the level of debt outstanding under the New Community
Instrument at its present level of ECU 5 865 million;              The Commission shall be empowered to borrow, on
                                                                   behalf of the European Economic Community under the
Whereas action under the New Community Instrument,                 New Community Instrument, amounts enabling it to
as last defined by Decision 87/182/EEC, should for the             maintain the level of debt outstanding under this facility
next three years continue to be concentrated in favour of          at ECU 5 865 million in principal, having regard to the
small and medium-sized enterprises;                                flow of repayments of principal on existing borrowings.
Whereas such action will help to achieve the
Community's objectives regarding the reversal of the                                        Article 2
exodus from rural areas and concerning the development
of these areas;                                                    The proceeds of the borrowings referred to in Article 1
                                                                   shall be on-lent to finance investment projects that
Whereas it is vital in order to strengthen the                     contribute to the structural adjustment and the competi-
Community's technological base and industrial competi-             tiveness of the Community; for a period of three years
tiveness to encourage the innovative capacity of under-            following the entry into force of the present decision,
takings;                                                           such projects shall be directed towards the application of
                                                                   new technologies and innovation or the stabilization of
                                                                   employment in rural areas; thereafter the Commission
Whereas investment by small and medium-sized under-
                                                                   shall determine the priorities to be applied.
takings involving the application of new technologies and
innovation has features which raise special financing
problems;
                                                                   These projects, to be carried out in Community territory,
                                                                   must, where appropriate, be such that they serve the
                                                                   Community's priority objectives relating to the financing
(') OJ No L 71, 14. 3. 1987, p. 34.                                of investment by small and medium-sized undertakings.
 ---pagebreak--- 30. 12. 88                                Official Journal of the European Communities                             No C 335/9
                           Article 3                                                           Article 6
The Commission shall decide whether or not projects are              The terms of borrowings shall be negociated by the
eligible in accordance with the following priorities and             Commission in the best interests of the Community,
guidelines:                                                          having regard to the conditions on capital markets and in
                                                                     accordance with the constraints imposed by the duration
                                                                     and other financial aspects of the loans to be granted.
— the investment projects of small and medium-sized                  The borrowed funds shall be entrusted to the Bank,
    enterprises in industry and other productive sectors,            which shall manage them in the manner agreed with the
    in particular with a view to the application of new              Commission under the terms of the existing cooperation
    technologies and innovation (including renewable                 agreement.
    sources of energy) shall be eligible; the projects of
    small enterprises shall have priority;                           Borrowing and lending operations shall be expressed in
                                                                     the same monetary units, and to ensure adequate
                                                                     coverage the Commission may carry out 'swap' oper-
— the investment projects of small and medium-sized                  ations provided that there is no resultant exchange or
    enterprises in rural areas, aimed at safeguarding the            interest rate risk for the Community.
    environment or stabilizing employment likely to be
    lost in agricultural activities, shall be eligible;
                                                                     Where borrowings are expressed, payable or reim-
                                                                     bursable in the currency of a Member State, they may be
                                                                     concluded only with the agreement of the competent
— projects and their implementation shall comply with                authorities of that State.
    the provisions of the Treaty and of secondary legis-
    lation, in particular provisions relating to compe-
    tition, and with the rules and requirements of the                                         Article 7
    relevant Community policies.
                                                                     A mandate shall be given to the Bank to grant and
                                                                     administer loans in pursuance of this Decision. The Bank
                                                                     shall carry out transactions under this mandate on behalf
                           Article 4                                 of the Community, whilst exercising the same diligence
                                                                     as for the operations carried out with its own resources.
Loans shall for the first three years generally be granted
through the agency of financial intermediaries. In certain
limited cases, however, they may be made directly to the             The Commission shall decide, in accordance with Article
recipients.                                                          3, whether projects are eligible. Where the Commission
                                                                     gives a favourable decision, the Bank shall decide
                                                                     whether and on what terms to grant the loans, in
Whatever the procedure for granting loans, capital and               accordance with its usual criteria and with the
interest payments may be deferred. Loans may also be                 procedures laid down in its Statute and in the
used to finance intangible assets such as patents, licences,         cooperation agreement.
know-how, and research and development expenditure
directly linked to the investment concerned.                         Loan procedure as provided for in this Decision shall be
                                                                     as follows:
Where they are granted through the agency of a
financial intermediary, that intermediary may, with the              — loan applications shall be transmitted simultaneously
agreement of the Bank, pass the loan on to undertakings                  to the Commission and to the Bank by the primary
either in the form of a loan or in the form of equity                    borrower,
capital. In both cases, the intermediary shall be
responsible for the service of the loan and associated               — the Commission and the Bank shall sign the loan
risk.                                                                    contracts with the primary borrower, viz the financial
                                                                         intermediary in the case of a global loan, or the
                                                                         beneficiary in the case of a direct loan,
                           Article 5
                                                                     — the Bank shall inform the Commission of the allo-
Lending terms as regards the reimbursements of the                       cation of the loans.
principal and the rate and payment of interest shall be
those applied by the Bank, in accordance with its Statute
in respect of loans from its own resources, and shall be                                       Article 8
fixed in such a way that, overall, they cover the costs
and expenses incurred in concluding and performing                   The Commission shall annually inform the European
both the borrowing and the lending side of the trans-                Parliament and the Council of capital receipts and
actions.                                                             payments resulting from borrowing and lending trans-
 ---pagebreak--- No C 335/10                        Official Journal of the European Communities                              30. 12. 88
actions. T o this end the Bank shall forward to the                                  Article 10
Commission any data required for the European
Parliament and the Council to be fully informed.              The financial control and audit of the Commission's
                                                              accounts shall be carried out in accordance with the
                                                              Financial Regulation applicable to the general budget of
                       Article 9                              the European Communities and with Article 206 of the
Three years after the entry into force of the present         Treaty instituting the European Economic Community.
decision the Council shall examine, on the basis of a
report by the Commission and after consulting the             The lending transactions and management of cash
European Parliament, whether the objectives and               holdings shall be covered by the discharge and audit
priorities of the New Community Instrument should be          procedures provided for in the Bank's Statute in respect
changed.                                                      of all its operations.