“ The balance-of-payment loans provide vital support by the EU for those among its members severely affected by the financial crisis and major imbalances. They underline the EU commitment to help overcome the crisis which, among other measures, is also visible in the increased advance payments through the European structural funds,” said European Economic and Financial Affairs Joaquín Almunia, adding: “ I am happy that the EU has now been able to raise at very favourable terms the €2.7 billion necessary to assist Latvia and Romania which takes to €9.2 billion the amount raised in the markets for medium-term financial assistance purposes since December 2008 .”

Today the European Commission paid €1.2 billion to the Latvian authorities (see IP/09/1194 for further details). This is the second instalment of a loan of €3.1 billion agreed by the EU in January 2009. The first tranche of €1 billion was paid in February. Another €0.5 billion is due, if the conditions are met, in the last quarter of 2009 and the reminder between 2010 and the first quarter of 2011.

In the case of Romania, the €1.5 billion paid also on Monday was the first instalment of a €5 billion loan agreed by the EU in May. Another €1 billion is expected in last quarter of this year, also if the conditions are met, and the reminder in three instalments in 2010 and the first quarter of 2011 (see IP/09/611 and Memorandum of Understanding ).

The medium-term financial assistance is designed to help an EU country, which has not adopted the euro, cope with liquidity problems or pressures. It is conditional upon the implementation by the countries concerned of an economic adjustment programme and increases in competitiveness to improve the soundness and sustainability of the economy. It is generally provided in conjunction with the International Monetary Fund and other institutions (World Bank, European Investment Bank, European Bank for Reconstruction and Development) and, sometimes, also individual countries.

The Commission has proposed and the Council agreed a total of €14.6 billion in BoP loans since the end of last year, including €6.5 billion to Hungary. With today's operations, a total of €9.6 billion has been disbursed since December. The Council last May agreed to increase the overall ceiling in the BoP financial assistance instrument to €50 billion.

The European Community bonds issued on 15 July to finance the two instalments to Latvia and Romania bear a coupon of 3.125% and mature in 2015. The operation is called a back-to-back loan because it is given under exactly the same terms (interest rate and maturity) as obtained by the EC.