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Commission proposes changes to facility providing financial assistance for Member States' balances of payments

European Commission - MEMO/01/67   07/03/2001

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MEMO/01/67

Brussels, 7 March 2001

Commission proposes changes to facility providing financial assistance for Member States' balances of payments

The Commission today unveiled a proposal for a Regulation on the medium-term financial assistance which can be granted by the European Community to Member States experiencing difficulties in their balance of payments on current or capital account. The Regulation, intended in due course to replace the current Regulation (EEC) No 1969/88, will incorporate the changes made necessary by the introduction of the single currency and will constitute an appropriate financial instrument for dealing with balance-of-payment problems in an enlarged Community.

An earlier Commission report(1) on the facility for providing financial assistance for Member States' balances of payments had already stressed the need to update the current Regulation in the light of the changes brought about by the start of the third stage of economic and monetary union.

The report served as a basis for the review of the facility by the Council, which, in its conclusions of December 2000, confirmed the need to retain the facility, particularly in view of the forthcoming enlargement of the Community. The Council also set out guidelines for amending the facility's legislative framework and asked the Commission to present in due course a proposal amending Regulation (EEC) 1969/88 accordingly.

The proposed new Regulation introduces the following main changes:

  • since the start of the third stage of economic and monetary union, the Treaty stipulates that only those Member States which have not adopted the euro may still benefit from the facility;

  • whereas the current Regulation provides for the possibility of financing assistance granted under the facility by direct recourse to loans from the Member States, it is proposed in future to resort exclusively to the financial markets, which are considered capable of meeting the facility's financing needs in all circumstances;

  • the present loan ceiling will be lowered slightly, from €16 billion to €12 billion, in view of the significant reduction in the number of Member States entitled to apply for the facility and the prospect of future enlargement of the European Union.

With this proposal for a new Regulation, the Commission is not only responding to the Council's wish that the current legislative framework be amended to take account of the changes resulting from the introduction of the euro, but is also aiming to provide the Community with an efficient financial support facility capable of responding as effectively as possible to any balance-of-payment problems. In particular, the new Regulation will be an efficient financial instrument at the disposal of new Member States joining the Community, until such time as they adopt the euro.

(1) Report from the Commission to the Council and the European Parliament - Review of the single facility providing medium-term financial assistance for Member States' balances of payments - Council Regulation (EEC) No 1969/88 (COM(1999)628 final of 26 November 1999).


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