CELEX: 51992PC0401
Language: en
Date: 1992-10-23
Title: Proposal for a COUNCIL DECISION extending a Community guarantee to the European Investment Bank in case of losses on loans in Estonia, Latvia and Lithuania

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                          C0M(92) 401 final
                                                          Brussels, , 23 October 1992
                                    COMMIS* In N COMMIT|r,^T^M_
                                    Extending EIB operations
                                to Estonia, Latvia and Lithuania
                                         Proposal for a
                                        COUNCIL DECISION
                                extending a Community guarantee
                                to the European Investment Bank
                  in case of losses on loans in Estonia, Latvia and Lithuania
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 ---pagebreak---                                        - 2 -
      The Central and East European countries are in the process of
      transition from centrally-planned economies to ones based on
      market    forces. In addition,         this   is being    accompanied   by
      political     reforms    tending    towards   the creation    of   genuine
      pluraI ist societ ies.
       In October 1989 the Council decided that the European Investment
      Bank should help this process by making loans in Poland and
      Hungary^ 1 ), and on 14 May 1991 the Council extended these loans
       to   the   Czech    and    Slovak    Federal   Republic,   Bulgaria   and
      Rumania^ 2 ).
      At their meeting on 11 November 1991 Ministers of the Group of 24
      countries welcomed the fact that since their last meeting, Albania
      and the newly independent Baltic countries, Estonia, Latvia and
      Lithuania, have also committed themselves to respect human rights
      and to undertake democratic and market-oriented reform. They
      confirmed the extension of G-24 coordinated economic assistance to
      these countries and agreed on a common approach to supporting
      their reform programmes.
      Given the decisions of the G-24 and the signature on 11 May 1992
      by the Community of cooperation agreements with the Baltic States,
       it would be appropriate for the Council to invite the Board of
      Governors of the EIB to extend loans to Estonia, Latvia and
      L i thuania.
      These countries will be eligible for EIB finance on a similar
      basis to other Central and Eastern European countries. The loans
      should benefit from Community budget guarantees. Furthermore,
      these guarantees should be treated in accordance with what will be
      agreed as to the future treatment of Community guarantees. The
       loans should be destined,          in particular, for      infrastructure
      projects      and   will     be   coordinated    with   other    financial
       institutions. Following the same criteria used for Central and
      Eastern European countries, loans of up to 200 MECU provided over
      a three-year period seem appropriate.
   I. The Commission therefore requests the Council to :
      1. decide that, subject to the approval of the ElB's Board of
          Governors, EIB loans of up to 200 MECU should be made available
          to Estonia, Latvia and Lithuania, to be guaranteed by the
          Commun i ty budget ;
      2. adopt the attached Decision;
      3. invite the EIB to extend its lending operations to projects in
          Estonia, Latvia and Lithuania;
      4. note that the Commission will, within the framework of the
          budgetary procedure, propose the appropriate budgetary cover.
(1) Taken on 3.10.1989 as regards an invitation to the EIB to make
     finance available       for projects       in these countries, and on
     12.2.1990 (90/62/EEC) regarding a Community budgetary guarantee for
     such loans.
(2) Council Decision 91/252/EEC of 14 May 1991.
 ---pagebreak---                                                             II/337/92-EN
                             Proposal for a
                            COUNCIL DECISION
     granting a Community guarantee to the European Investment Bank
               against losses under loans for projects in
                      Estonia, Latvia and Lithuania
TNE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to the Treaty establishing the           European   Economic
Community, and In particular Article 235 thereof,
Having regard to the proposal from the CommunIty* 1 ),
Having regard to the opinion of the European Parliament*2),
Whereas the peoples of Estonia, Latvia and Lithuania (hereinafter
referred to as "the three countries") have close historic relationships
with the peoples of the Community; whereas these relations have been
strengthened by the recent trade and cooperation agreements; whereas
these three countries are undertaking major political and social
reforms;
Whereas the three countries have embarked upon a fundamental economic
reform; and whereas the ministers of the Group of 24 welcomed this at
their meeting of 11 November        1991 and decided to extend G-24
coordinated economic assistance to them;
Whereas these economic reforms will significantly contribute to a
strong development of mutually beneficial economic and commercial
relationships between the three countries and the Community;
Whereas there is a great need for capital investment in the three
countries; whereas this capital investment requires external finance-,
whereas the Community has agreed to cooperate with a view to aiding the
three countries-, whereas the European Investment Bank (hereinafter
called "the Bank") could make an important contribution;
Whereas the Council has invited the Bank, and the Bank has agreed, to
make loans for capital investment projects carried out in the three
countries under the guarantee provided in this Decision;
Whereas the Bank and the Commission should fix the terms on which this
guarantee is to be given,
(1) OJ No
(2) OJ No
 ---pagebreak--- HAS DECIDED AS FOLLOWS
                              Sole Art icle
The Community shall fully guarantee the European Investment Bank in
case the Bank does not receive the payments due under any loan granted
in accordance with its usual criteria in Estonia, Latvia and Lithuania.
An overall limit of ECU 200 million shall be set for a three-year
per iod.
To this end, the Bank and the Commission shall    fix the terms on which
the guarantee shall be given.
Done at Brussels,
                                  For the CounciI
                                   The President
 ---pagebreak--- FINANCIAL RECORD
 1• Budget   line concerned
    Article 0-212:
    Guarantee of the European Economic Comunity to the European
     Investment Bank for loans In third countries in Central and Eastern
    Europe.
2. Reference (legal base)
    To be extended by the proposed         decision,  on  the  basis  of
    Article 235 of the Treaty.
3.  Classification of the expenditure
    Obi igator y
4.  Description and justification for the action
    The budget entry is intended to provide a budgetary support for
    guarantees offered by the European Community to the European
     Investment Bank to cover loans which the Bank has been asked to
    extend to finance projects in Latvia, Estonia and Lithuania.
5.  Nature of the expenditure and method of calculation
    a)   Nature of the expenditure
         A guarantee to the European Investment Bank.
    b)   Method of calculât ion
         A token entry is proposed, given that the amount and timing of
         any call on this budget line cannot be calculated in advance
         and furthermore it is to be hoped that this entry will not be
         caI led on.
6.  Effect of the action on intervention credits
    Only in case of a call upon the guarantee
 ---pagebreak--- 7. Financing of intervention   expenditure
       In case of need the article will be endowed with funds by
       transfers,    by réutilisation of     amounts reimbursed  (under
       Article 27 para. 3 of the Financial Regulation) or by a
       supplementary and/or amending budget.
        In order to meet its obligations, the Commission may undertake
       debt service provisionally by drawing on its liquid assets. In
       this case Article 12 of Council Regulation        (EEC, Euratom)
       n" 1552/89 of 29.5.1989 is applicable.
8. Financial   Impact on staff cost and operations
   Not appl icable.
 ---pagebreak---                                                  1-
                                                                     ISSN 0254-1475
                                                              COM(92) 401 final
                                                      DOCUMENTS
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                                 Catalogue number : CB-CO-92-421-EN-C
                                                             ISBN 92-77-47681-8
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