10.6.2009 EN Official Journal of the European Union L 145/1 COUNCIL REGULATION (EC) No 479/2009 of 25 May 2009 on the application of the Protocol on the excessive deficit procedure annexed to the Treaty establishing the European Community (Codified version) THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, and in particular the third subparagraph of Article 104(14) thereof, Having regard to the proposal from the Commission, Having regard to the Opinion of the European Parliament (1), Having regard to the opinion of the European Central Bank (2), Whereas: (1) Council Regulation (EC) No 3605/93 of 22 November 1993 on the application of the Protocol on the excessive deficit procedure annexed to the Treaty establishing the European Community (3) has been substantially amended several times (4). In the interests of clarity and rationality the said Regulation should be codified. (2) The definitions of ‘government’, ‘deficit’ and ‘investment’ are laid down in the Protocol on the excessive deficit procedure by reference to the European System of Integrated Economic Accounts (ESA), replaced by the European system of national and regional accounts in the Community (adopted by Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community and hereinafter referred to as ‘ESA 95’) (5). Precise definitions referring to the classification codes of ESA 95 are required. Those definitions may be subject to revision in the context of the necessary harmonisation of national statistics or for other reasons. Any revision of ESA will be decided by the Council in accordance with the rules on competence and procedure laid down in the Treaty. (3) Under ESA 95, interest flows under swap contracts and forward rate agreements (FRAs) are to be classified in the financial account and require specific treatment for the data transmitted under the excessive deficit procedure. (4) The definition of ‘debt’ laid down in the Protocol on the excessive deficit procedure needs to be amplified by a reference to the classification codes of ESA 95. (5) In the case of financial derivatives, as defined in ESA 95, there is no nominal value identical to that for other debt instruments. Therefore, it is necessary that financial derivatives are not included with the liabilities making up government debt for the purposes of the Protocol on the excessive deficit procedure. For liabilities which are subject to agreements fixing the exchange rate, this rate should be taken into account in the conversion into national currency. (6) ESA 95 provides a detailed definition of gross domestic product at current market prices, which is appropriate for the calculation of the ratios of government deficit to gross domestic product and of government debt to gross domestic product referred to in Article 104 of the Treaty. (7) Consolidated government interest expenditure is an important indicator for monitoring the budgetary situation in the Member States. Interest expenditure is intrinsically linked to government debt. Government debt to be reported to the Commission by the Member States has to be consolidated within the government sector. The levels of government debt and of interest expenditure should be made mutually consistent. The methodology of ESA 95 (point 1.58) recognises that, for certain kinds of analysis, consolidated aggregates are more significant than overall gross figures. (8) Pursuant to the terms of the Protocol on the excessive deficit procedure, the Commission is required to provide the statistical data to be used in that procedure. (9) The role of the Commission, as statistical authority, in that context is specifically exercised by Eurostat, on behalf of the Commission. As the Commission department responsible for carrying out the tasks devolving on the Commission as regards the production of Community statistics, Eurostat is required to execute its tasks in accordance with the principles of impartiality, reliability, relevance, cost-effectiveness, statistical confidentiality and transparency, as laid down in Commission Decision 97/281/EC of 21 April 1997 on the role of Eurostat as regards the production of Community statistics (6). The implementation by the national and Community statistical authorities of the Recommendation of the Commission of 25 May 2005 on the independence, integrity and accountability of the national and Community authorities should enhance the principle of professional independence, adequacy of resources and quality of statistical data. (10) Eurostat is responsible, on behalf of the Commission, for assessing the quality of the data and for providing the data to be used within the context of the excessive deficit procedure, in accordance with Commission Decision 97/281/EC. (11) A permanent dialogue should be established between the Commission and the Member States’ statistical authorities in order to ensure the quality both of the data reported by Member States and of the underlying government sector accounts compiled in accordance with ESA 95. (12) Detailed rules are required to organise prompt and regular reporting by the Member States to the Commission (Eurostat) of their planned and actual deficits and of the levels of their debt. (13) Pursuant to Article 104c(2) and (3) of the Treaty, the Commission is to monitor the development of the budgetary situation and of the stock of government debt in the Member States and to examine compliance with budgetary discipline on the basis of criteria relating to government deficit and government debt. If a Member State does not fulfil the requirements under one or both criteria, it is necessary for the Commission to take into account all relevant factors. The Commission has to examine whether there is a risk of an excessive deficit in a Member State, HAS ADOPTED THIS REGULATION: CHAPTER I DEFINITIONS Article 1 1. For the purposes of the Protocol on the excessive deficit procedure and of this Regulation, the terms given in paragraphs 2 to 6 are defined according to the European system of national and regional accounts in the Community (hereinafter referred to as ESA 95), adopted by Regulation (EC) No 2223/96. The codes in brackets refer to ESA 95. 2. ‘Government’ means the sector of ‘general government’ (S.13), that is ‘central government’ (S.1311), ‘state government’ (S.1312), ‘local government’ (S.1313) and ‘social security funds’ (S.1314), to the exclusion of commercial operations, as defined in ESA 95. The exclusion of commercial operations means that the sector of ‘general government’ (S.13) comprises only institutional units producing non-market services as their main activity. 3. ‘Government deficit (surplus)’ means the net borrowing (net lending) (EDP B.9) of the sector of ‘general government’ (S.13), as defined in ESA 95. The interest comprised in the government deficit is the interest (EDP D.41), as defined in ESA 95. 4. ‘Government investment’ means the gross fixed capital formation (P.51) of the sector of ‘general government’ (S.13), as defined in ESA 95. 5. ‘Government debt’ means the total gross debt at nominal value outstanding at the end of the year of the sector of ‘general government’ (S.13), with the exception of those liabilities the corresponding financial assets of which are held by the sector of ‘general government’ (S.13). Government debt is constituted by the liabilities of general government in the following categories: currency and deposits (AF.2); securities other than shares, excluding financial derivatives (AF.33) and loans (AF.4), as defined in ESA 95. The nominal value of a liability outstanding at the end of the year is the face value. The nominal value of an index-linked liability corresponds to its face value adjusted by the index-related change in the value of the principal accrued to the end of the year. Liabilities denominated in a foreign currency, or exchanged from one foreign currency through contractual agreements to one or more other foreign currencies shall be converted into the other foreign currencies at the rate agreed on in those contracts and shall be converted into the national currency on the basis of the representative market exchange rate prevailing on the last working day of each year. Liabilities denominated in the national currency and exchanged through contractual agreements to a foreign currency shall be converted into the foreign currency at the rate agreed on in those contracts and shall be converted into the national currency on the basis of the representative market exchange rate prevailing on the last working day of each year. Liabilities denominated in a foreign currency and exchanged through contractual agreements to the national currency shall be converted into the national currency at the rate agreed on in those contracts. 6. ‘Gross domestic product’ means gross domestic product at current market prices (GDP mp) (B.1*g), as defined in ESA 95. Article 2 1. ‘Planned government deficit and government debt level figures’ means the figures established for the current year by the Member States. They shall be the most recent official forecasts, taking into account the most recent budgetary decisions and economic developments and prospects. They should be produced in as short a time as possible before the reporting deadline. 2. ‘Actual government deficit and government debt level figures’ means estimated, provisional, half-finalised or final results for a past year. The planned data together with the actual data shall form a consistent time series as far as the definitions and concepts are concerned. CHAPTER II RULES AND COVERAGE OF REPORTING Article 3 1. Member States shall report to the Commission (Eurostat) their planned and actual government deficits and levels of government debt twice a year, the first time before 1 April of the current year (year n) and the second time before 1 October of year n. Member States shall inform the Commission (Eurostat) which national authorities are responsible for the excessive deficit procedure reporting. 2. Before 1 April of year n, Member States shall: (a) report to the Commission (Eurostat) their planned government deficit for year n, an up-to-date estimate of their actual government deficit for year n-1 and their actual government deficits for years n-2, n-3 and n-4; (b) simultaneously provide the Commission (Eurostat) with their planned data for year n and the actual data for years n-1, n-2, n-3 and n-4 of their corresponding public accounts budget deficits in accordance with the definition which is given most prominence nationally and with the figures which explain the transition between the public accounts budget deficit and their government deficit for the sub-sector S.1311; (c) simultaneously provide the Commission (Eurostat) with their actual data for years n-1, n-2, n-3 and n-4 of their corresponding working balances and with the figures which explain the transition between the working balances of each government sub-sector and their government deficit for the sub-sectors S.1312, S.1313 and S.1314; (d) report to the Commission (Eurostat) their planned level of government debt at the end of year n and their levels of actual government debt at the end of years n-1, n-2, n-3 and n-4; (e) simultaneously provide the Commission (Eurostat), for years n-1, n-2, n-3 and n-4, with the figures which explain the contribution of the government deficit and other factors relevant to the variation in the level of their government debt by sub-sector. 3. Before 1 October of year n, Member States shall report to the Commission (Eurostat) their: (a) updated planned government deficit for year n and their actual government deficits for years n-1, n-2, n-3 and n-4 and shall comply with the requirements of points (b) and (c) of paragraph 2; (b) updated planned level of government debt at the end of year n and their levels of actual government debt at the end of years n-1, n-2, n-3 and n-4, and shall comply with the requirements of paragraph 2(e). 4. The figures for the planned government deficit reported to the Commission (Eurostat) in accordance with paragraphs 2 and 3 shall be expressed in national currency and in budget years. The figures for actual government deficit and actual government debt level reported to the Commission (Eurostat) in accordance with paragraphs 2 and 3 shall be expressed in national currency and in calendar years, with the exception of the up-to-date estimates for year n-1, which may be expressed in budget years. Where the budget year differs from the calendar year, Member States shall also report to the Commission (Eurostat) their figures for actual government deficit and actual government debt level in budget years for the two budget years preceding the current budget year. Article 4 Member States shall, in accordance with the procedure laid down in Article 3(1), (2) and (3), provide the Commission (Eurostat) with the figures for their government investment expenditure and interest expenditure (consolidated). Article 5 Member States shall provide the Commission (Eurostat) with a forecast of their gross domestic product for year n and the actual amount of their gross domestic product for years n-1, n-2, n-3 and n-4, under the same timing conditions as those indicated in Article 3(1). Article 6 1. Member States shall inform the Commission (Eurostat), as soon as it becomes available, of any major revision in their actual and planned government deficit and debt figures already reported. 2. Major revisions in the actual deficit and debt figures already reported shall be properly documented. In any case, revisions which result in the reference values as specified in the Protocol on the excessive deficit procedure being exceeded, or revisions which mean that a Member State’s data no longer exceed the reference values, shall be reported and properly documented. Article 7 Member States shall make public the actual deficit and debt data and other data for past years reported to the Commission (Eurostat) in accordance with Articles 3 to 6. CHAPTER III QUALITY OF DATA Article 8 1. The Commission (Eurostat) shall regularly assess the quality both of actual data reported by Member States and of the underlying government sector accounts compiled according to ESA 95 (hereinafter referred to as government accounts). Quality of actual data means compliance with accounting rules, completeness, reliability, timeliness, and consistency of the statistical data. The assessment will focus on areas specified in the inventories of Member States such as the delimitation of the government sector, the classification of government transactions and liabilities, and the time of recording. 2. Member States shall provide the Commission (Eurostat), as promptly as possible, with the relevant statistical information requested for the needs of the data quality assessment, without prejudice to the provisions relating to statistical confidentiality of Council Regulation (EC) No 322/97 of 17 February 1997 on Community Statistics (7). ‘Statistical information’ referred to in the first subparagraph shall be limited to the information strictly necessary to check the compliance to ESA rules. In particular, statistical information means: (a) data from national accounts; (b) inventories; (c) EDP notification tables; (d) additional questionnaires and clarification related to the notifications. The format of the questionnaires shall be defined by the Commission (Eurostat) after consultation of the Committee on Monetary, Financial and Balance of Payments Statistics (hereinafter referred to as CMFB). 3. The Commission (Eurostat) shall report regularly to the European Parliament and to the Council on the quality of the actual data reported by Member States. The report shall address the overall assessment of the actual data reported by Member States as regards to the compliance with accounting rules, completeness, reliability, timeliness, and consistency of the data. Article 9 1. Member States shall provide the Commission (Eurostat) with a detailed inventory of the methods, procedures and sources used to compile actual deficit and debt data and the underlying government accounts. 2. The inventories shall be prepared in accordance with guidelines adopted by the Commission (Eurostat) after consultation of CMFB. 3. The inventories shall be updated following revisions in the methods, procedures and sources adopted by Member States to compile their statistical data. 4. Member States shall make their inventories public. 5. The issues referred to in paragraphs 1, 2 and 3 may be addressed in the visits mentioned in Article 11. Article 10 1. In the event of a doubt regarding the correct implementation of the ESA 95 accounting rules, the Member State concerned shall request clarification from the Commission (Eurostat). The Commission (Eurostat) shall promptly examine the issue and communicate its clarification to the Member State concerned and, when appropriate, to the CMFB. 2. For cases which are either complex or of general interest in the view of the Commission or the Member State concerned, the Commission (Eurostat) shall take a decision after consultation of the CMFB. The Commission (Eurostat) shall make decisions public, together with the opinion of the CMFB, without prejudice to the provisions relating to statistical confidentiality of Regulation (EC) No 322/97. Article 11 1. The Commission (Eurostat) shall ensure a permanent dialogue with Member States’ statistical authorities. To this end, the Commission (Eurostat) shall carry out in all Member States regular dialogue visits, as well as possible methodological visits. 2. The dialogue visits are designed to review reported data, to examine methodological issues, to discuss statistical processes and sources described in the inventories, and to assess compliance with the accounting rules. The dialogue visits shall be used to identify risks or potential problems about the quality of the reported data. 3. The methodological visits shall not go beyond the purely statistical domain. This shall be reflected in the composition of the delegations referred to in Article 12. The methodological visits are designed to monitor the processes and the government accounts which justify the reported actual data and to draw detailed conclusions as to the quality of reported data, as defined in Article 8(1). The methodological visits shall only be undertaken in cases where substantial risks or potential problems with the quality of the data are identified, especially as they relate to the methods, concepts and classification applied to the data, which Member States are obliged to report. 4. When organising dialogue and methodological visits, the Commission (Eurostat) shall transmit its provisional findings to the Member States concerned for comments. Article 12 1. When carrying out methodological visits in Member States, the Commission (Eurostat) may request the assistance of national accounts experts, proposed by other Member States on a voluntary basis, and of officials from other Commission departments. The list of national accounts experts from whom the Commission (Eurostat) may request assistance, shall be constituted on the basis of proposals sent to the Commission (Eurostat) by the national authorities responsible for the excessive deficit reporting. 2. Member States shall take all necessary measures to facilitate the methodological visits. Those visits should be confined to the national authorities involved in the excessive deficit procedure reporting. Member States shall, however, ensure that their services which are directly or indirectly involved in the production of government accounts and debt, and where necessary their national authorities which have a functional responsibility for the control of the public accounts, provide the Commission officials or other experts referred to in paragraph 1 with the assistance necessary to carry out their duties, including making documents available to justify the reported actual deficit and debt data and the underlying government accounts. Confidential records of the national statistical system shall only be provided to the Commission (Eurostat). Without prejudice to the general obligation of the Member States to take all measures required to facilitate the methodological visits, the interlocutors of the Commission (Eurostat) for the methodological visits referred to in the first subparagraph are, in each Member State, the services responsible for the excessive deficit procedure reporting. 3. The Commission (Eurostat) shall ensure that officials and experts participating in these visits meet every guarantee as regards technical competence, professional independence and observance of confidentiality. Article 13 The Commission (Eurostat) shall report to the Economic and Financial Committee on the findings of dialogue and methodological visits, including any comments on these findings made by the Member State concerned. Those reports, along with any comments made by the Member State concerned, after having been transmitted to the Economic and Financial Committee, shall be made public, without prejudice to the provisions concerning statistical confidentiality in Regulation (EC) No 322/97. CHAPTER IV PROVISION OF DATA BY THE COMMISSION (EUROSTAT) Article 14 1. The Commission (Eurostat) shall provide the actual government deficit and debt data for the application of the Protocol on the excessive deficit procedure, within three weeks after the reporting deadlines referred to in Article 3(1) or after revisions as referred to in Article 6(1). That provision of data shall be effected through publication. 2. The Commission (Eurostat) shall not delay the provision of the actual government deficit and debt data of Member States where a Member State has not reported its own data. Article 15 1. The Commission (Eurostat) may express a reservation on the quality of the actual data reported by the Member States. No later than three working days before the planned publication date, the Commission (Eurostat) shall communicate to the Member State concerned and to the President of the Economic and Financial Committee the reservation it intends to express and make public. Where the issue is resolved after publication of the data and the reservation, withdrawal of the reservation shall be made public immediately thereafter. 2. The Commission (Eurostat) may amend actual data reported by Member States and provide the amended data and a justification of the amendment where there is evidence that actual data reported by Member States do not comply with the requirements of Article 8(1). No later than three working days before the planned publication date, the Commission (Eurostat) shall communicate to the Member State concerned and to the President of the Economic and Financial Committee the amended data and the justification for the amendment. CHAPTER V GENERAL PROVISIONS Article 16 1. Member States shall ensure that the actual data reported to the Commission (Eurostat) are provided in accordance with the principles established by Article 10 of Regulation (EC) No 322/97. In this regard, the responsibility of the national statistical authorities is to ensure the compliance of reported data with Article 1 of this Regulation and the underlying ESA 95 accounting rules. 2. Member States shall take all appropriate measures to ensure that officials responsible for the reporting of the actual data to the Commission (Eurostat) and of the underlying government accounts act in accordance with the principles established by Article 10 of Regulation (EC) No 322/97. Article 17 In the event of a revision of ESA 95 or of an amendment to its methodology decided on by the European Parliament and the Council or the Commission in accordance with the rules of competence and procedure laid down in the Treaty and in Regulation (EC) No 2223/96, the Commission shall introduce the new references to ESA 95 into Articles 1 and 3 of this Regulation. Article 18 Regulation (EC) No 3605/93 is repealed. References to the repealed Regulation shall be construed as references to this Regulation and be read in accordance with the correlation table set out in Annex II. Article 19 This Regulation shall enter into force on the 20th day following its publication in the Official Journal of the European Union. This Regulation shall be binding in its entirety and directly applicable in all Member States. Done at Brussels, 25 May 2009. For the Council The President J. ŠEBESTA (1) Opinion of 21 October 2008 (not yet published in the Official Journal). (2) OJ C 88, 9.4.2008, p. 1. (3) OJ L 332, 31.12.1993, p. 7. (4) See Annex I. (5) OJ L 310, 30.11.1996, p. 1. (6) OJ L 112, 29.4.1997, p. 56. (7) OJ L 52, 22.2.1997, p. 1. ANNEX I Repealed Regulation with list of its successive amendments Council Regulation (EC) No 3605/93 (OJ L 332, 31.12.1993, p. 7). Council Regulation (EC) No 475/2000 (OJ L 58, 3.3.2000, p. 1). Commission Regulation (EC) No 351/2002 (OJ L 55, 26.2.2002, p. 23). Council Regulation (EC) No 2103/2005 (OJ L 337, 22.12.2005, p. 1). ANNEX II CORRELATION TABLE Regulation (EC) No 3605/93 This Regulation Section 1 Chapter I Article 1(1) to (5) Article 1(1) to (5) Article 2 Article 1(6) Article 3 Article 2 Section 2 Chapter II Article 4(1) Article 3(1) Article 4(2), first to fifth indents Article 3(2), points (a) to (e) Article 4(3), first and second indents Article 3(3), points (a) and (b) Article 4(4) Article 3(4) Article 5 Article 4 Article 6 Article 5 Article 7 Article 6 Article 8 Article 7 Section 2a Chapter III Article 8a(1) Article 8(1) Article 8a(2), first subparagraph Article 8(2), first subparagraph Article 8a(2), second subparagraph, first to fourth indents Article 8(2), second subparagraph, points (a) to (d) Article 8a(2), third subparagraph Article 8(2), third subparagraph Article 8a(3) Article 8(3) Article 8b Article 9 Article 8c Article 10 Article 8d, first paragraph, first and second sentences Article 11(1) Article 8d, first paragraph, third sentence Article 11(3), third subparagraph Article 8d, second paragraph, first and second sentences Article 11(2) Article 8d, second paragraph, third sentence Article 11(3), second subparagraph Article 8d, second paragraph, fourth and fifth sentences Article 11(3), first subparagraph Article 8d, third paragraph Article 11(4) Article 8e Article 12 Article 8f Article 13 Section 2b Chapter IV Article 8g Article 14 Article 8h Article 15 Section 2c Chapter V Article 8i Article 16 Article 8j Article 17 — Article 18 — Article 19 — Annex I — Annex II

Summary: Reporting of EU countries' actual and planned deficits Reporting of EU countries' actual and planned deficits SUMMARY OF: Council Regulation (EC) No 479/2009 on the application of the Protocol on the excessive deficit procedure WHAT IS THE AIM OF THIS REGULATION? It sets out the procedures under which EU governments* provide the European Commission with information on their national deficit* and debt*. KEY POINTS EU countries report to Eurostat, the Commission’s statistical department, their actual* and planned* government deficits and debts twice a year. By 1 April of the current year (known as ‘year n’), the data include: an up-to-date estimate for the previous year (n-1), actual deficits for the 3 earlier years (n-2, n-3, n-4) and planned government deficit for the current year actual debt for the 4 previous years (n-1, n-2, n-3, n-4) and planned government debt at the end of the current year. By 1 October, the data include: actual deficits for the 4 previous years (n-1, n-2, -3, n-4) and updated planned government deficit and debt for the current year. EU countries also provide Eurostat with: data from national accounts; data on their investment* expenditure; actual GDP for the 4 previous years and expected GDP for the current year; additional questionnaires and clarification related to the notifications of deficit and debt that they have reported; a detailed inventory of the methods, procedures and sources used to compile actual deficit and debt data and the underlying government accounts; assistance of national experts, if requested. Where a budget year differs from a calendar year, EU countries provide data for the 2 budget years preceding the current year. Eurostat: regularly assesses the quality of the national data and the underlying government sector accounts; reports regularly to the European Parliament and the Council on the quality of the national data; has permanent contacts with national statistical authorities; conducts regular dialogue and methodological visits to EU countries to review data, monitor procedures and verify accounts; provides actual national deficit and debt data within 3 weeks of the April and October deadlines in the form of press releases. In 2014, Commission Regulation (EU) No 220/2014 amended Regulation (EC) No 479/2009 replacing the earlier European system of national and regional accounts (ESA 95) with ESA 2010. FROM WHEN DOES THE REGULATION APPLY? It applies from 30 June 2009. BACKGROUND For more information, see: ‘The corrective arm’ on the European Commission’s website ‘Excessive deficit procedure’ on Eurostat’s website KEY TERMS * Government: in this context, refers to general, central, state and local government and social security funds. * Government deficit (surplus): central government’s net borrowing (net lending). * Government debt: general government’s total gross debt at the end of the year. * Actual government deficit and debt: estimated, provisional, half-finalised or final results for the past year. * Planned government deficit and debt: most recent official forecasts, taking account of budgetary decisions and economic developments and prospects. * Government investment: general government’s gross fixed capital formation. ACT Council Regulation (EC) No 479/2009 of 25 May 2009 on the application of the Protocol on the excessive deficit procedure annexed to the Treaty establishing the European Community (Codified version) (OJ L 145, 10.6.2009, pp. 1-9) Successive amendments to Council Regulation (EC) No 479/2009 have been incorporated into the original text. This consolidated version is of documentary value only. last update 04.07.2016


25.3.2009 EN Official Journal of the European Union L 79/39 COUNCIL DECISION of 20 January 2009 providing Community medium-term financial assistance for Latvia (2009/290/EC) THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty establishing the European Community, Having regard to Council Regulation (EC) No 332/2002 of 18 February 2002 establishing a facility providing medium-term financial assistance for Member States’ balance of payments (1) and in particular Article 3(2) thereof, Having regard to the proposal from the Commission made after consulting the Economic and Financial Committee (EFC), Whereas: (1) By Decision 2009/289/EC (2), the Council decided to grant mutual assistance for Latvia. (2) Against a background of very high external financing needs, Latvian capital and financial markets have recently come under pressure, reflecting a general deterioration in market sentiment, and increasing concerns about the health of the Latvian economy given its large imbalances in terms of wide external deficit, weakening public finances and high rates of cost and price inflation. The Latvian banking sector has experienced serious liquidity and confidence problems. The level of foreign currency reserves has decreased as the central bank intervened to preserve the currency peg. (3) Latvia’s total external financing needs up to the first quarter of 2011 are estimated at EUR 7,5 billion. (4) It is appropriate to provide Community support to Latvia of up to EUR 3,1 billion under the Facility providing medium-term financial assistance for Member States’ balance of payments established by Regulation (EC) No 332/2002. That assistance should be provided in conjunction with a loan from the International Monetary Fund (IMF) of SDR 1,5 billion (1 200 % of Latvia’s IMF quota, around EUR 1,7 billion) under an IMF Stand-by arrangement approved on 23 December 2008. The Nordic countries (Sweden, Denmark, Finland, Estonia and Norway) are to contribute EUR 1,9 billion together, the World Bank — EUR 0,4 billion, the European Bank of Reconstruction and Development, the Czech Republic and Poland — a total of EUR 0,4 billion, bringing the total to EUR 7,5 billion over the period up to the first quarter of 2011. (5) The Community assistance should be managed by the Commission. The specific economic policy conditions agreed with the authorities of Latvia after consultation of the EFC should be laid down in a Memorandum of Understanding. They should include, inter alia, measures intended to stem immediate liquidity pressures, to restore long-term stability by strengthening the banking sector, to correct fiscal imbalances and to adopt domestic policies that will improve competitiveness. The measures should include an immediate and sustained fiscal consolidation, a comprehensive bank resolution strategy, a strengthened crisis management capacity of regulatory authorities, comprehensive structural reforms, as well as other important measures. The detailed financial terms should be laid down by the Commission in the Loan Agreement. (6) The assistance should be provided with a view to stemming immediate liquidity pressures and conditional on policies to restore long-term stability by strengthening the banking sector, correcting fiscal imbalances and adopting domestic policies that will improve competitiveness, while maintaining the narrow-band exchange rate at its existing central rate, HAS ADOPTED THIS DECISION: Article 1 1. The Community shall make available to Latvia a medium-term loan amounting to a maximum of EUR 3,1 billion, with a maximum average maturity of seven years. 2. The Community financial assistance shall be made available during a period of three years starting from the first day after the entry into force of this Decision. Article 2 1. The assistance shall be managed by the Commission in a manner consistent with Latvia’s undertakings and recommendations by the Council. Those conditions shall be laid down in a Memorandum of Understanding. The detailed financial terms shall be laid down by the Commission in the Loan Agreement. 2. The Commission shall, in collaboration with the EFC, verify at regular intervals that the economic policy conditions attached to the assistance are fulfilled. The Commission shall keep the EFC informed of possible refinancing of the borrowings or restructuring of the financial conditions. 3. Latvia shall be ready to adopt and implement additional consolidation measures to stabilise the economy, in case such measures will be necessary during the assistance programme. The Latvian authorities shall consult the Commission in advance of the adoption of any such additional measures. Article 3 1. The Community financial assistance shall be made available by the Commission to Latvia in a maximum of six instalments, the size of which will be laid down in the Memorandum of Understanding. 2. The first instalment shall be released subject to the entry into force of the Loan Agreement and Memorandum of Understanding. 3. If required in order to finance the loan, the prudent use of interest rate swaps with counterparties of highest credit quality shall be permitted. 4. The Commission shall decide on the release of further instalments after having obtained the opinion of the EFC. 5. The disbursement of each further instalment shall be made on the basis of a satisfactory implementation of the new economic programme (Economic Stabilisation and Growth Revival Programme) of the Latvian Government, included in the convergence programme, and, more particularly, of the specific economic policy conditions laid down in the Memorandum of Understanding. These shall include, inter alia: (a) adoption of a clearly-set medium-term fiscal programme designed to lower by 2011 the general government deficit to not more than the Treaty reference level of 3 % of GDP; (b) execution of the budget for 2009 as amended by the supplementary budget adopted 12 December 2008 (and to be submitted in detail by the end of March 2009), targeting a general government cash flow deficit of no higher than 5 % of GDP or 5,3 % in ESA 95 terms; (c) reduction of average public sector remuneration in nominal terms in 2009 by at least 15 % relative to the original 14 November 2008 budget and a further 2 % in 2010-11; (d) continuing measures started in 2008 to reduce employment in central government ensuring at least a 5 % reduction by the end of 2008 and total reduction of 10 % by 30 June 2009; (e) strengthening the design and implementation of budgetary procedures by the adoption of a fiscal framework and budgetary reform through an amendment to the current Budget and Financial Management law; (f) introduction of a clear and transparent wage payment system for direct public administration employees and establishment of a single human resource planning and management system for public administration institutions; (g) mechanisms to ensure wider banking sector stability in the medium to longer term, including a wide range of supervisory, prudential and monetary policy measures. These should limit credit growth to sustainable levels and avoid heavy reliance on unsecured foreign funding. Targeted examinations shall be conducted in the banking system to ensure that all banks are solvent and sufficiently capitalised; (h) appropriate measures regarding private sector debt restructuring. The appropriate legal basis for maturity and currency restructuring of existing debt shall be strengthened. Facilitating insolvency procedures and quick implementation of rehabilitation plans shall also be made a priority; (i) ensuring that the remaining minority shareholders of Parex Bank do not benefit from the resolution of the bank and measures to enhance financial stability, by means of fully nationalising Parex Bank; (j) structural reform measures supported in the context of the Lisbon strategy and implemented in Latvia’s National Reform Programme, including active labour market and lifelong learning policies, greater involvement of private sector actors in R & D and innovation activities, export promotion measures and removal of administrative burdens for businesses; (k) implementation of EU-funded projects at the planned level to help improve the contribution of the tradeable sector to economic growth; (l) measures to improve access to financing for companies and entrepreneurs, whose applications for Structural Funds have been approved, or who may be planning to apply for Structural Funds. Article 4 This Decision is addressed to the Republic of Latvia. Article 5 This Decision shall be published in the Official Journal of the European Union. Done at Brussels, 20 January 2009. For the Council The President M. KALOUSEK (1) OJ L 53, 23.2.2002, p. 1. (2) See page 37 of this Official Journal.

Summary: Financial assistance to Latvia Financial assistance to Latvia SUMMARY OF: Decision 2009/289/EC — mutual assistance for Latvia Decision 2009/290/EC — medium-term financial assistance for Latvia WHAT IS THE AIM OF THESE DECISIONS? The European Union (EU) and various international organisations provided financial assistance to Latvia between December 2008 and the end of 2011. The basis for this is Regulation (EC) No 332/2002 which allows the EU to provide medium-term financial assistance to EU countries not in the euro area that have difficulties in their balance of payments. KEY POINTS In January 2009, multilateral financial assistance for Latvia of €7.5 billion was agreed for the period 2009-2011. The funding comprised: EU: €3.1 billion under its balance of payments assistance programme; International Monetary Fund (IMF) : around €1.7 billion; Nordic countries (Sweden, Denmark, Finland, Norway) and Estonia: €1.9 billion; World Bank : €0.4 billion; European Bank for Reconstruction and Development , the Czech Republic and Poland: €0.4 billion. In exchange for the loans, Latvia agreed to: restore financial stability by strengthening the banking sector; correct fiscal imbalances (i.e. in public finances); adopt domestic policies to improve competitiveness; improve the crisis management capacity of regulatory authorities; implement comprehensive structural reforms. €4.5 billion were eventually paid out by the time the assistance programme ended on 19 January 2012. From 20 January 2012, the European Commission began its post-programme surveillance, organising six review missions to the country. The surveillance ended in January 2015 after Latvia had repaid 75% of the EU loan. FROM WHEN DO THE DECISIONS APPLY? Decisions 2009/289/EC and 2009/290/EC took effect on 23 January 2009. BACKGROUND In February 2002, the Council of the European Union gave the EU the power to grant loans to EU countries experiencing, or threatened with, difficulties in their balance of payments or capital movements. This financial assistance is only available to countries which do not use the euro. Latvia first applied for the assistance in late 2008 after its capital and financial markets came under heavy pressure and the banking sector suffered serious problems of liquidity and confidence. On 1 January 2014, Latvia joined the euro area. For more information, see: ‘EU balance-of-payments assistance for Latvia: foundations of success’ on the European Commission's website ‘ Post-programme surveillance for Latvia ’ on the European Commission's website. MAIN DOCUMENTS Council Decision 2009/289/EC of 20 January 2009 granting mutual assistance for Latvia (OJ L 79, 25.3.2009, pp. 37–38) Council Decision 2009/290/EC of 20 January 2009 providing Community medium-term financial assistance for Latvia (OJ L 79, 25.3.2009, pp. 39–41) Successive amendments to Decision 2009/290/EC have been incorporated in the original text. This consolidated version is of documentary value only. RELATED DOCUMENTS 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) See consolidated version last update 19.01.2017