RSS
Alphabetical index
This page is available in 15 languages
New languages available:  CS - HU - PL - RO

We are migrating the content of this website during the first semester of 2014 into the new EUR-Lex web-portal. We apologise if some content is out of date before the migration. We will publish all updates and corrections in the new version of the portal.

Do you have any questions? Contact us.


Facility providing financial assistance for balances of payments

The Regulation provides medium-term financial assistance for Member States that have not adopted the euro. Such Member States may enjoy financial support if they are experiencing difficulties in their balance of payments on current or capital accounts. The limit on such support is €12 billion.

ACT

Council Regulation (EC) No 332/2002 of 18 February 2002 establishing a facility providing medium-term financial assistance for Member States' balances of payments [See amending acts].

SUMMARY

The support facility provides medium-term financial assistance is established, enabling loans to be granted to Member States experiencing difficulties in their balance of payments on current or capital account. Only those Member States that have not adopted the euro may benefit from this European facility.

This Regulation defines the application procedure and arrangements for granting loans to Member States benefiting from this facility.

Procedure

The facility may be implemented by the Council on the initiative of either the Commission, in agreement with the Member State concerned, or a Member State experiencing difficulties.

To obtain financial support in the medium term, the Member State will carry out a needs assessment with the European Commission and present to the Commission and the Economic and Financial Committee an adjustment programme. After examining the situation in the Member State seeking assistance, the Council decides:

  • whether to grant a loan or appropriate financing facility, its amount and its average duration;
  • the economic policy conditions attached to the medium-term financial assistance with a view to re-establishing a sustainable balance of payments situation;
  • the techniques for disbursing the loan or financing facility, the release or drawings of which are, as a rule, by successive instalments.

The Commission and the Member State concerned will then conclude a Memorandum of Understanding which details the conditions set by the Council. The Memorandum is then sent to the European Parliament and the European Council.

At regular intervals, the Commission, in conjunction with the Economic and Financial Committee, verifies that the economic policy of the Member State receiving assistance accords with the commitments laid down in the adjustment programme or any other conditions. The Member State will make all the necessary information available to the Commission and cooperate fully with them. The release of further instalments depends on the findings of such verification.

Loan arrangements

The borrowing and lending operations are carried out in euros. They use the same value date and must not involve the EU in the transformation of maturities, in any exchange or interest-rate risk or in any other commercial risk.

At the request of the beneficiary Member State, loans may carry the option of early repayment.

At the request of the debtor Member State and where circumstances permit an improvement in the interest rate on the loans, the Commission may refinance all or some of its initial borrowings or restructure the corresponding financial conditions. These operations may not have the effect of extending the average duration of the borrowing concerned or increasing the amount of capital outstanding. The costs incurred in concluding and carrying out each operation are borne by the beneficiary Member State. The Economic and Financial Committee must be kept informed of these operations.

Moreover, the outstanding amount of loans which can be granted to Member States under this financial assistance facility for balances of payments is limited to EUR 50 billion. To this end, the Commission shall be empowered on behalf of the EU to contract borrowings on the capital markets or with financial institutions.

The ECB makes the necessary arrangements for the administration of the loans.

The beneficiary State shall open a special account with its central bank for the management of the financial assistance. It is also required to transfer the payments due to an account with the ECB seven working days prior to the corresponding due date.

The European Court of Auditors has the right to carry out any necessary financial controls or audits. The European Commission and the European Anti-Fraud Office can also send officials to the Member State receiving financial support in order to carry out controls.

Compatibility with other financial assistance facilities

Loans granted as medium-term financial assistance may be granted in addition to short-term monetary support granted by the European Central Bank (ECB) under the very short-term financing facility.

The financial assistance facility for balances of payments is also compatible with the European financial stabilisation facility. This stabilisation facility offers financial assistance to Member States in financial difficulties.

Lastly, where a Member State which has not adopted the euro proposes to call upon sources of financing outside the EU, it shall first consult the Commission and the other Member States. Such consultations shall be held within the Economic and Financial Committee. Their aim is to examine, in the first instance, the options offered by the financial assistance facility for balances of payments.

REFERENCES

Act Entry into force Deadline for transposition in the Member States Official Journal

Regulation (EC) No 332/2002

24.2.2002

-

OJ L 053 of 23.2.2002

Amending act(s) Entry into force Deadline for transposition in the Member States Official Journal

Regulation (EC) No 1360/2008

1.1.2009

-

OJ L 352 of 31.12.2008

Regulation (EC) No 431/2009

28.5.2009

-

OJ L 128 of 27.5.2009

RELATED ACTS

Decision ECB/2003/14 of the European Central Bank of 7 November 2003 concerning the administration of the borrowing-and-lending operations concluded by the European Community under the medium-term financial assistance facility [Official Journal L 297 of 15.11.2003].
The regulation of the ECB implements Article 9 of Regulation (EC) 332/2002 and ensures the administration of loans granted under the regulation.

Last updated: 15.09.2011
Legal notice | About this site | Search | Contact | Top