1999/325/EC: Council Decision of 10 May 1999 providing macro-financial assistance to Bosnia and Herzegovina

COUNCIL DECISION
of 10 May 1999
providing macro-financial assistance to Bosnia and Herzegovina
(1999/325/EC)
THE COUNCIL OF THE EUROPEAN UNION
,
Having regard to the Treaty establishing the European Community, and in particular Article 308 thereof,
Having regard to the proposal of the Commission(1),
Having regard to the opinion of the European Parliament(2),
(1) Whereas the Commission consulted the Monetary Committee before submitting its proposal;
(2) Whereas Bosnia and Herzegovina is undertaking fundamental institutional and political reforms to establish common institutions and policies; whereas Bosnia and Herzegovina is making substantial efforts to promote economic reform and establish an open market economy, which is essential order to create jobs, improve living conditions for the people and allow the return of refugees and displaced persons;
(3) Whereas within the Regional Approach defined by the Council, it is desirable to support efforts made to ensure a stable political and economic environment in Bosnia and Herzegovina, with a view to evolving towards the development of a relationship of full cooperation with the Community;
(4) Whereas financial assistance of an exceptional nature from the Community should be instrumental in supporting the implementation of common institutions and policies in Bosnia and Herzegovina consistent with the Dayton peace agreement, while strengthening mutual confidence and bringing Bosnia and Herzegovina closer to the Community;
(5) Whereas Bosnia and Herzegovina has agreed with the International Monetary Fund (IMF) on a comprehensive set of economic and institutional policy reform measures to be supported by a 12-month upper credit tranche Stand-By Arrangement (SBA); whereas the SBA will be followed or replaced by an Enhanced Structural Adjustment Facility (ESAF);
(6) Whereas Bosnia and Herzegovina has agreed with the World Bank on a set of structural adjustment measures to be backed by two highly concessional structural adjustment loans and credits in the areas of public finance reform, and enterprise and banking privatisation;
(7) Whereas the authorities of Bosnia and Herzegovina have requested financial assistance from the international financial institutions, the Community, and other bilateral donors; whereas, over and above the estimated financing which could be provided by the IMF and the World Bank, an important residual financing gap remains to be covered in the coming months in order to strengthen the country's reserve position and support the policy objectives attached to the authorities' reform effort;
(8) Whereas an the fourth Donors' Pledging Conference on Bosnia and Herzegovina on 7 and 8 May 1998, the international community welcomed the agreements reached with the Bretton Woods institutions and decided to support strongly the economic reform and reconstruction programmes of Bosnia and Herzegovina in the form of firm financial pledges;
(9) Whereas the authorities of Bosnia and Herzegovina have committed themselves to discharge fully all outstanding financial obligations of all public entities of Bosnia and Herzegovina towards the European Community and the European Investment Bank, and to accept the responsibility by way of guarantee of those obligations that are not yet due;
(10) Whereas the present exceptional Community macro-financial assistance to Bosnia and Herzegovina aims to help ease the country's external financial constraints, supporting the balance of payments and strengthening the reserve position;
(11) Whereas Bosnia and Herzegovina being a low-income country eligible for highly concessional loans and facilities from the World Bank and the IMF, this macro-financial assistance requires substantial elements of concessionality;
(12) Whereas the strengthening of Bosnia and Herzegovina's common institutions and the reform of its economic system are two of the priorities identified by the Peace Implementation Conference held in Madrid in December 1998;
(13) Whereas the statement by the European Union on Bosnia and Herzegovina of 8 June 1998 recognises that the future of the country lies with Europe;
(14) Whereas the inclusion of a grant component in this assistance is without prejudice to the powers of the budgetary authority;
(15) Whereas this assistance should be managed by the Commission;
(16) Whereas the Treaty does not provide, for the adoption of this Decision, powers other than those of Article 308,