EU aid to non-euro area countries with trade deficit problems

SUMMARY OF:

Regulation (EC) No 332/2002 — EU aid to non-euro area countries with trade deficit problems

SUMMARY

WHAT DOES THIS REGULATION DO?

It provides for financial aid to EU countries which have not adopted the euro and which are experiencing trade deficit* problems.

KEY POINTS

The regulation lays out the requirements for medium-term loans of up to €50 billion to non-euro area countries experiencing difficulties in their balance of payments.

The procedure for granting the loan includes:

• initiation of the loan provision by the European Commission or relevant non-euro EU country;
• discussion by the EU country with the Commission of its financial needs and submission of a draft adjustment programme;
• on the basis of the adjustment programme, decision by Council of Ministers on whether to grant loan, the amount and duration;
• the drafting of a Memorandum of Understanding by the Commission and EU country setting out the terms decided by the Council.

The characteristics of the loan include borrowing and lending in euro and at minimum risk for Commission. The European Central Bank (ECB) manages the loan on behalf of the EU. Costs of the loan are to be borne by the debtor EU country and the latter is required to open a special account with its national central bank for the management of the loan.

The European Court of Auditors has the right to carry out a financial audit in the EU country if it considers this necessary for the proper management of the loan facility.

Every 3 years, the Council, on the basis of report by the Commission, is required to examine whether the loan still meets the need which led to its creation.

WHEN DOES THE REGULATION APPLY?

It entered into force on 24 February 2002.

KEY TERM

* Trade deficit: this arises when the value of a country's imports is greater than that of its exports.

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 (OJ L 53, 23.2.2002, pp. 1-3)

The successive amendments to Regulation (EC) No 332/2002 have been incorporated into the original text. This consolidated version is of documentary value only.

RELATED ACTS

Decision 2003/797/EC 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 (ECB/2003/14) (OJ L 297, 15.11.2003, pp. 35-36). See consolidated version.

last update 27.01.2016