14 Macro-financial assistance for Bosnia
and Herzegovina and Serbia-Montenegro
| (a)
(25989)
12885/04
COM(04) 604
(b)
(25991)
12886/04
COM(04) 605
|
Draft Decision amending Decision 2002/882/EC providing further macro-financial assistance to Bosnia and Herzegovina
Draft Decision amending Decision 2002/883/EC providing further macro-financial assistance to Serbia-Montenegro
|
| Legal base | Article 308 EC; consultation; unanimity
|
| Documents originated | 21 September 2004
|
| Deposited in Parliament | (a) 5 October 2004
(b) 6 October 2004
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| Department | HM Treasury |
| Basis of consideration | EM of 18 October 2004
|
| Previous Committee Report | None
|
| To be discussed in Council | Not known
|
| Committee's assessment | Legally important
|
| Committee's decision | Not cleared; further information requested.
|
Background
14.1 Macro-financial assistance (MFA) is a form of exceptional
balance of payments support the Community provides to countries
in the "near neighbourhood" that have IMF programmes.
Financing is made available as loans and/or grants, subject to
evidence that the necessary domestic economic reforms are being
implemented.
14.2 In November 2002 MFA was agreed for Bosnia and
Herzegovina, with €60 million (loan facility €20 million
and grant facility €40 million) to be phased in three payments,
and for Serbia and Montenegro, with €130 million to be phased
in three grant payments. An additional €70 million facility
was agreed subsequently for Serbia-Montenegro.
The documents
14.3 Because of a slowing down in the pace and implementation
of economic reforms in the two countries, release of the third
payment for each country has been delayed, and has consequently
crossed the threshold date originally agreed — November
2004. Given that the pace of reforms has now accelerated again,
it is necessary to extend the expiry date for each MFA so that
the funding may be released. That is the purpose of these two
draft Decisions.
The Government's view
14.4 The Financial Secretary to the Treasury (Mr
Stephen Timms) tells us that there are no direct policy implications
or new financial implications arising from these documents. The
Minister says the legal base for the draft Decisions
"is based on Article 308 of the Treaty establishing
the European Community. This article is necessary to allow for
financial assistance to third countries for the purpose of macroeconomic
stabilisation. Given the wide remit and benefits of MFA, no other
legal basis provides sufficient powers. The current development
articles for disbursing funds to third countries are not deemed
to cover MFA."
Conclusion
14.5 The substance of this proposal is straightforward
and normally we would not draw it specifically to the attention
of the House. However we are concerned about the supposed justification
given by the Minister for the use of Article 308 EC as the legal
base for the draft Decision. It seems to us that Article 181a
EC is sufficient for this purpose.
14.6 As we have said before, Article 308 EC is
sometimes used without proper justification. We should like the
Minister to explain why use of Article 181a is not more appropriate
in this case. Indeed, given that there is outstanding a similar
request from us in relation to a document on loan guarantees,[37]
we are surprised and disappointed that the Minister's Explanatory
Memorandum does not mention consideration of Article 181a.
14.7 Meanwhile we do not clear the document.
37 See (25705) 9886/04: HC 42-xxv (2003-04), para 5
(30 June 2004). Back
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