CELEX: 51987PC0550(03)
Language: en
Date: 1987-11-04
Title: PROPOSAL FOR A COUNCIL REGULATION ESTABLISHING A SINGLE FACILITY PROVIDING MEDIUM-TERM FINANCIAL SUPPORT FOR MEMBER STATES BALANCES OF PAYMENTS

1. 2. 88                                 Official Journal of the European Communities                                No C 26/13
    Article 3                                                           operation, in the event of short-term capital flows to or
                                                                        from third countries leading to serious disturbances in
    1. The Member States shall forthwith adopt the                      the domestic monetary situation and in the stability of
    necessary measures to comply with this Directive. They              exchange rate relationships in the European Monetary
    shall forthwith inform the Commission thereof.                      System.
    2. Each Member State shall, where necessary, and                    3. When the instruments mentioned in Article 2 are
    taking account of the interests of the other Member                 applied, the Commission shall ensure close coordi-
    States, apply all or some of the instruments mentioned              nation between the authorities of the Member States.
    in Article 2.
                                                                        Article 4
    When these instruments apply to movements of capital
                                                                        In exercising the powers which are conferred upon it by
    occuring between residents of the Member States of the
                                                                        this Directive, the Commission shall act in consultation
    Community, they may be put into operation only on the
                                                                        with the Monetary Committee and the Committee of
    conditions and according to the procedures laid down in
                                                                        Governors of Central Banks.
    the provisions of the Treaty relating to the use of a
    safeguard clause or in the provisions of Article 2 and 3 of         Article 5
    Directive .../.../EEC for the implementation of Article
    67 of the Treaty.                                                   This Directive is addressed to the Member States.'
    Without prejudice to these provisions, the Commission                                     Article 2
    may recommend to the Member States that all or some
    of the instruments mentioned in Article 2 be put into           This Directive is addressed to the Member States.
               Proposal for a Council Regulation (EEC) establishing a single facility providing medium-term
                                  financial support for Member States' balances of payments
                                                        COM(87) 550 final
                             (Submitted by the Commission to the Council on 4 November          1987)
                                                           (88/C 26/03)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,                            encourage that Member State to adopt, in good time,
                                                                    measures likely to prevent the occurence of an acute
Having regard to the Treaty establishing the European
                                                                    balance-of-payments crisis;
Economic Community, and in particular Articles 108 and
235 thereof,
                                                                    Whereas a financing facility, in the form of a credit line or a
Having regard to the proposal from the Commission,                  loan commitment to a Member State undertaking to
which consulted the Monetary Committee for this purpose,            implement a capital liberalization programme despite a
Having regard to the opinion of the European Parliament,            fragile balance-of-payments situation, should provide
                                                                    back-up for such a programme in orderly exchange-rate
Whereas Article 108 of the Treaty provides for the granting         conditions;
of mutual assistance, to be decided by the Council on a
proposal from the Commission, to a Member State in                  Whereas each loan to a Member State must be linked to the
difficulties or seriously threatened with difficulties as           adoption by that Member State of economic policy
regards its balance of payments; whereas the resolution of          measures designed to re-establish or to ensure a sustainable
the European Council of 5 December 1978 on the                      balance-of-payments situation and adapted to the gravity
establishment of the European Monetary System (EMS)                 of the balance-of-payments situation in that State and to
and related matters confirmed the need for a Community              the way in which it develops;
facility for medium-term financial assistance of balances of
payments;                                                           Whereas appropriate procedures and instruments should
Whereas it should be possible for the operation of lending          be provided for in advance to enable the Community and
to a Member State to take place soon enough in order to             Member States to ensure that, if required, medium-term
 ---pagebreak--- No C 26/14                               Official Journal of the European Communities                                                         1. 2. 88
financial support is provided quickly, especially where             irrespective of the conditions prevailing o n international
circumstances call for immediate action;                            capital m a r k e t s ; w h e r e a s t h e present procedures for
                                                                    exempting a M e m b e r State from contributing or for
                                                                    mobilizing M e m b e r States' claims should, nevertheless, be
Whereas, in order to finance the support granted, the               simplified;
Community needs to be able to use its creditworthiness to
borrow resources that will be placed at the disposal of the
Member States concerned in the form of loans; whereas               W h e r e a s it is a p p r o p r i a t e t o merge m e d i u m - t e r m financial
operations of this kind are necessary to the achievement of         assistance a n d t h e C o m m u n i t y loan mechanism into a
the objectives of the Community as defined in the Treaty,           single facility for m e d i u m - t e r m financial s u p p o r t , while
especially the harmonious development of economic                   retaining their specific m e t h o d s of financing;
activities in the Community as a whole; whereas the Treaty
makes no provisions for the specific powers of action
required for this purpose;
Whereas by Decision 71/143/EEC (J), as amended by                   HAS ADOPTED THIS REGULATION:
Decision 86/656/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                                                      Article 1
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
                                                                    1. In accordance with the decision adopted by the
medium-term loans, within certain limits, to one or more
                                                                    Council pursuant to Article 3 or 4 and after consulting the
Member States experiencing balance-of-payments dif-
                                                                    Monetary Committee, the Commission shall be em-
ficulties ;
                                                                    powered to contract loans on the capital markets on behalf
                                                                    of the European Economic Community, with the aim of
Whereas by Regulation (EEC) No 682/81 (3), as amended               lending the proceeds to one or more Member States which
by Regulation (EEC) No 1131/85 (4), the Council set up a            are experiencing or seriously threatened with balance-of-
Community loan mechanism designed to support the                    payments difficulties or which have undertaken to
balances of payments of the Member States; whereas this             implement a programme of capital liberalization despite a
mechanism provides for the Community to contract loans,             fragile balance-of-payments situation.
according to needs and within the limits set on outstanding
borrowing, in order to on-lend the proceeds to one or more
                                                                    2. The outstanding amount of loans to be granted to
Member States experiencing balance-of-payments dif-
                                                                    Member States pursuant to paragraph 1 shall be limited
ficulties ;
                                                                    to ... million ECU in principal.
Whereas the Community loan mechanism has dem-
onstrated its effectiveness; whereas its general design and
the arrangements for implementing it still meet the needs of                                                 Article 2
the Community; whereas, in view of the Community's
borrowing capacity and of the conditions available to it for
borrowing from financial institutions or on capital                 Where a Member State proposes to call upon sources of
markets, the mechanism could constitute the main form of            conditional financing outside the Community, it shall first
mutual assistance provided for under Article 108 of the             consult the Commission and the other Member States in
Treaty; whereas it could also constitute, under certain             order to examine, among other things, the possibilities
conditions and in an appropriate form, an instrument to             available under the Community facility for medium-term
provide back-up for a programme of capital liberalization;          financial support. Such consultations shall be held within
whereas the ceiling on amounts outstanding under the                the Monetary Committee.
mechanism should be adjusted accordingly;
Whereas, however, it is appropriate that the obligation on
Member States to finance mutual assistance under the                                                         Article 3
machinery for medium-term financial assistance stay in
force until the final stage of the European Monetary System
so as to ensure that System's cohesion and stability,               1. On the initiative of the Commission acting pursuant to
                                                                    Article 108 of the Treaty or of the Member State
                                                                    experiencing balance-of-payments difficulties and seeking
(!) OJ No L 73, 27. 3. 1971, p. 15.                                 a Community loan, the Council, after examining the
(2) OJ No L 382, 31. 12. 1986, p. 28.                               situation in that Member State and the adjustment
(3) O J N o L 7 3 , 19.3. 1981, p. 1.                               programme that it has undertaken to implement, shall
(4) O J N o L 118, 1.5. 1985, p. 59.                                decide, as a rule during the same meeting:
 ---pagebreak---  1. 2. 88                               Official Journal of the European Communities                               No C 26/15
— whether to grant the loan, and the amount of the loan,           Member State in receipt of a Community loan accords with
                                                                   the adjustment or back-up programme and with any other
— the average duration of, and the techniques for                  conditions laid down by the Council pursuant to Article 3
    disbursing the loan, which may be paid in one amount           or 4. To this end, the Member State shall place all the
    or in several instalments,                                     necessary information at the disposal of the Commission.
                                                                   On the basis of the findings of such verification, the
— the economic policy conditions attaching to the loan,            Commission and, where appropriate, the Member States
    with a view to re-establishing a sustainable balance-of-       holding claims under the facility shall release further
    payments situation.                                            instalments. The Council shall decide on any adjustment to
                                                                   be made to the initial economic policy conditions.
2. If the amount available under the ceiling referred to in
Article 1, paragraph 2 is insufficient, or if the conditions
available on international capital markets are unsatisfac-
tory, Community loans to Member States experiencing
                                                                                              Article 6
balance-of-payments difficulties shall be financed in full or
in part by the other Member States, whose contributions in
principal may not exceed the ceilings specified in the
Annex.                                                             1. Loans granted as medium-term financial support shall
                                                                   have a term of one year or more. They may be granted as
In such cases, the Council, in addition to taking the              consolidation of short-term monetary support made
decisions referred to in paragraph 1, shall decide on the size     available by the central banks of the Member States.
of the Member States' contributions to the financing of the
loan and on the financial conditions attaching to the credits
they make available in that connection. The Council may            2. At the request of the beneficiary Member State, such
exempt from contributing any Member State which                    loans may carry the option of early repayment.
maintains that difficulties exist or can be foreseen as
regards its balance of payments.                                   3. Normally, no Member State may draw on this facility
                                                                   to the extent of more than 50 % of the ceiling referred to in
                                                                   Article 1, paragraph 2.
                           Article 4
1. On the initiative of a Member State undertaking to
implement a capital liberalization programme despite a
                                                                                              Article 7
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 application, shall
decide, as a rule during the same meeting:                         1. The borrowing and lending operations referred to in
                                                                   Article 1 shall be carried out using the same value date and
— whether to grant a financing facility, in the form of a          shall not involve the Community in the transformation of
    credit line or an undertaking to grant a loan, which may       maturities or in any exchange or interest-rate risk.
    be activated at the request of the beneficiary Member
    State as and when the need arises and for a period that
                                                                  When the borrowings are expressed, payable or repayable
    may not normally exceed one year,
                                                                   in the currency of a Member State, they may be concluded
— the overall amount of resources allocated,                       only after consultation with the competent authorities of
                                                                   that Member State.
— the back-up measures accompanying the liberalization
    of capital movements with a view to ensuring a                Where a Member State receives a loan carrying an early
    sustainable balance-of-payments situation.                     repayment clause and decides to invoke this option, the
                                                                   Commission shall take the necessary steps after consulting
2. Loans drawn under the financing facility and granted
                                                                   the Monetary Committee.
pursuant to paragraph 1 shall, as a rule, have a term of one
year renewable for a further one-year period.
                                                                   2. At the request of the debtor Member State and where
3. In cases where restrictions on capital movements are            circumstances permit an improvement in the interest rate
introduced or re-introduced during the term of the loan, the       on the loans, the Commission may, after consulting the
latter may be consolidated only within the framework of a          Monetary Committee, refinance all or part of its initial
longer-term loan granted as mutual assistance pursuant to          borrowings or restructure the corresponding financial
Article 108 of the Treaty.                                         conditions.
                           Article 5                               Refinancing or restructuring shall not have the effect of
                                                                   extending the average duration of the borrowings con-
The Commission shall take the necessary measures to                cerned or increasing the amount, expressed at the current
verify at regular intervals, in collaboration with the             exchange rate, of capital outstanding at the date of the
Monetary Committee, that the economic policy of the                refinancing or restructuring.
 ---pagebreak--- No C 26/16                                Official Journal of the European Communities                                          1. 2. 88
3. The costs incurred by the Community in concluding                 The funds shall be paid only to central banks and shall be
and carrying out each operation shall be borne by the                used only for the purposes indicated in Article 1.
beneficiary Member State.
                                                                                                  Article 12
                           Article 8
1. If one or more Member States that are creditors under             No later than five years after the adoption of this
this facility experience difficulties as regards their balance-      Regulation, the Council shall examine, on the basis of a
of-payments and/or a sudden decline in their foreign                 report from the Commission, after delivery of an opinion
currency reserves, they may request mobilization of their            by the Monetary Committee and following consultation
claims. The Council, having due regard to the circum-                with the European Parliament, whether the facility
stances, shall decide to mobilize such claims, in particular         established still meets, in its principle, its arrangements and
in accordance with one of the following procedures, or a             its ceiling, the needs which led to its creation.
combination thereof:
                                                                                                  Article 13
— by refinancing from Community borrowings from
    financial institutions or on capital markets,
                                                                     1. Regulation (EEC) No 682/81 and Decision 71/143/
— by a transfer of the claim to other creditor Member                EEC are hereby repealed.
    States,
                                                                     2. Amounts not yet repaid under outstanding Com-
— by early repayment in full or in part by the debtor                munity loan operations concluded pursuant to Regulation
    Member State or States.                                          (EEC) No 682/81 before the date of entry into force of this
                                                                     Regulation shall count against the ceiling referred to in
2. Where refinancing takes place in accordance with
                                                                     Article 1, paragraph 2 at their initial value in ECU.
paragraph 1, the debtor Member State shall agree that its
debt, originally denominated in one currency, shall be               3. References to the instruments repealed by virtue of
replaced by a debt denominated in the currency used for the          paragraph 1 shall be deemed to be references to this
refinancing. Where applicable, the debtor Member State               Regulation.
shall bear any additional cost resulting from an alteration
in the interest rate and the costs incurred by the                   This Regulation shall be binding in its entirety and directly
Community in concluding and carrying out the operation.              applicable in all Member States.
3. Any creditor Member State may arrange with one or
more other Member States for the partial or total transfer
of its claims. The Member States concerned shall notify the
Commission and the other Member States of the transfer.
4. Any Member State that is a creditor in respect of a loan
carrying an early repayment clause shall take the requisite                                        ANNEX
steps where the debtor Member State decides to invoke this           The ceilings for credits provided for in Article 3, paragraph 2 shall
option. The Member States concerned shall notify the                 be as follows:
Commission and the other Member States of the operation.
                                                                                    Member State                  Millions       % of
                           Article 9                                                                                ECU          total
For the application of the ceilings referred to in Article 1,
paragraph 2 and Article 3, paragraph 2, the loan operations          Belgium                                           875         6,28
shall be recorded at the exchange rate of the day on which           Denmark                                           407         2,92
they are concluded. The repayment operations shall be                Germany                                         2 715        19,50
recorded at the exchange rate of the day on which the                Greece                                            235         1,69
corresponding loan was concluded.
                                                                     Spain                                           1 132         8,13
                                                                     France                                          2 715        19,50
                          Article 10
                                                                     Ireland                                           158         1,13
The Council shall adopt the decisions referred to in Articles        Italy                                           1810         13,00
3, 4, 5 and 8, acting by qualified majority on a proposal            Luxembourg                                          31        0,22
from the Commission, made after consulting the Monetary
                                                                     Netherlands                                       905         6,50
Committee on the matter.
                                                                     Portugal                                          227         1,63
                           Article 11                                United Kingdom                                  2 715        19,50
The European Monetary Cooperation Fund shall make the                                                  Total        13 925       100,00
necessary arrangements for the administration of the loans.