CELEX: 51992SC1081
Language: en
Date: 1992-06-03
Title: Proposal for a COUNCIL DECISION providing further medium-term financial assistance for Bulgaria

No C 164 / 32                           Official Journal of the European Communities                                    1 . 7 . 92
increasing the amount, expressed at the current exchange            5 . The Monetary Committee shall be kept informed
rate, of capital outstanding at the date of the refinancing         of developments in the operations referred to in para­
or restructuring.                                                   graphs 2 and 3 at least once a year.
                                                                                              Article 5
                                                                    At least once a year the Commission shall address to the
4. All related costs incurred by the Community in                   European Parliament and to the Council a report, which
concluding and carrying out the operation under this                will include an evaluation on the implementation of this
Decision shall be borne by Romania.                                 Decision .
              Proposal for a Council Decision providing further medium-term financial assistance for Bulgaria
                                                         (92 / C 164/ 15)
                                                      SEC(92) 1081 final
                                        (Submitted by the Commission on 3 June 1992)
THE COUNCIL OF THE EUROPEAN COMMUNITIES,                            Whereas, however, despite the Bulgaria government's
                                                                    courageous implementation of adjustment measures and
Having regard to the Treaty establishing the European               structural reforms, the stabilization phase of the
Economic Community, and in particular Article 235                   Bulgarian economy is still under way and whereas
thereof,                                                            additional official support is required in order to ensure
                                                                    the sustainability of the balance of payments and the
                                                                    strengthening of the reserve position ;
Having regard to the proposal of the Commission
submitted following consultation with the Monetary                  Whereas the Bulgarian authorities have requested
Committee,                                                          financial assistance from the International Monetary
                                                                    Fund (IMF), the Group of 24 industrial countries and
Having regard to the opinion of the European                        the European Community, and whereas, over and above
Parliament,                                                         the estimated financing which could be provided by the
                                                                    IMF and the World Bank and the carryover of financial
                                                                    assistance provided by the Group of 24 industrial
Whereas Bulgaria is undertaking fundamental political               countries for 1991 , a residual financial gap of some US$
and economic reforms and has decided to adopt a                     240 million remains to be covered in 1992 , in order to
market economy model ;                                              strengthen Bulgaria's   reserve position and to avoid an
                                                                    additional degree of    import compression which could
Whereas the said reforms are under implementation with              seriously w jeopardize  the achievement of the policy
financial support from the Community and whereas the                objectives underlying  the government's reform effort ;
reform process needs to be consolidated and broadened ;
                                                                    Whereas the success of the reform process in Bulgaria
Whereas the financial support of the reforms from the               will depend crucially on the solution of the acute debt
Community will strengthen mutual confidence and bring               problem which the country is facing and whereas the
Bulgaria closer to the Community;                                   Community's financial assistance should be conditional
                                                                    upon decisive progress towards a comprehensive
                                                                    medium-term restructuring arrangement between
Whereas Bulgaria and the Community have entered into                Bulgaria and its commercial bank creditors ;
negotiations for the conclusion of European agreements
establishing a relationship of association ;                        Whereas the Commission as coordinator of assistance
                                                                    from the Group of 24 industrial countries has invited
Whereas, by Decision 91 /31 1 /EEC (*), the Council                 them to provide medium-term financial assistance to
decided to grant Bulgaria medium-term financial                     Bulgaria ;
assistance of a maximum amount, of ECU 290 million,
with a view to ensuring a sustainable balance of                    Whereas the grant by the Community of a medium-term
payments situation in that country;                                 loan to Bulgaria is an appropriate measure to support the
                                                                    balance of payments and to strengthen the country's
(') OJ No L 174, 3 . 7 . 1991 , p. 36 .                             reserve position ;
 ---pagebreak---   1 . 7 . 92                             Official Journal of the European Communities.                           No C 164 / 33
 Whereas the question of the risks associated with                  — the Bulgarian authorities have taken the necessary
 guarantees from the general budget of the European                     steps to allow the disbursements of the amounts
 Communities will be examined in the context of the                     committed by non          Community/Group      of 24
 renewal in 1992 of the Interinstitutional Agreement on                 industrial countries in the context of the        1991
 budgetary discipline and improvement of the budgetary                  balance-of-payments financing package,
 procedure ;
                                                                   — an agreement in principle has been reached between
                                                                        Bulgaria and its commercial bank creditors on a set
 Whereas the Community loan should be managed by the                    of orientations regarding a future debt restructuring
 Commission ;                                                           package .
Whereas the Treaty does not provide, for the adoption               2.    Subject to the provisions of Article 2 (2), the
 of this Decision, powers other than those of Article 235,          second instalment shall be released in view of decisive
                                                                   progress towards a comprehensive medium-term debt
                                                                   restructuring agreement between Bulgaria and its
 HAS DECIDED AS FOLLOWS :
                                                                   commercial bank creditors and not before the fourth
                                                                   quarter of 1992 .
                             Article 1
                                                                    3 . The funds shall be paid to the National Bank of
 1 . The Community shall grant to Bulgaria a                       Bulgaria.
medium-term loan facility of a maximum amount of
ECU 110 million in principal, with a maximum duration                                         Article 4
of seven years, with a view to ensuring a sustainable
balance-of-payments situation and strengthening the                 1 . The borrowing and lending operations referred to
reserve position.                                                  in Article 1 shall be carried out using the same value date
                                                                   and must not involve the Community in the trans­
2. To this end the Commission is empowered to                      formation of maturities, in any exchange or interest-rate
borrow, on behalf of the European Economic                         risk, or in any other commercial risk.
Community, the necessary resources that will be placed
at the disposal of Bulgaria in the form of a loan.                 2 . The Commission shall take the necessary steps, if
                                                                   Bulgaria so decides, to include in the loan conditions ,
                                                                   and also to exercise, an early repayment clause.
3 . This loan will be managed by the Commission in
full consultation with the Monetary Committee and in a             3 . At the request of Bulgaria, and where circum­
manner consistent with any agreement reached between               stances permit an improvement in the interest rate on the
the IMF and Bulgaria.                                              loans, the Commission may refinance all or part of its
                                                                   initial borrowings or restructure the corresponding
                             Article 2                             financial conditions. Refinancing or restructuring oper­
                                                                   ations shall be carried out in accordance with the
 1 . The Commission is empowered to negotiate with                 conditions set out in paragraph 1 and shall not have the
the Bulgarian authorities, after consultation with the             effect of extending the average duration of the
Monetary Committee, the economic policy conditions                 borrowing concerned or increasing the amount,
attached to the loan . These conditions shall be consistent        expressed at the current exchange rate, of capital
with the agreements referred to in the third paragraph of          outstanding at the date of the refinancing or restruc­
Article 1 and with arrangements made by the Group of               turing.
24 industrial countries .
                                                                   4. All related costs incurred by the Community in
                                                                   concluding and carrying out the operation under this
2 . The Commission shall verify at regular intervals, in           Decision shall be borne by Bulgaria.
collaboration with the Monetary Committee and in close
coordination with the group of 24 industrial countries             5 . The Monetary Committee shall be kept informed
and the IMF, that the economic policy in Bulgaria is in            of developments in the operations referred to in para­
accordance with the objectives of this loan and that its           graphs 2 and 3 at least once a year.
conditions are being fulfilled .
                                                                                             Article 5
                            Article 3
                                                                   At least once a year the Commission shall address to the
1.        The loan shall be made available to Bulgaria in two      European Parliament and to the Council a report, which
instalments . The first instalment shall be released as soon       will include an evaluation, on the implementation of this
as :                                                               Decision .