Tuesday, 14 May - Dealing with the granting of medium-term loan facilities of 290m ECU, 180m ECU and 375m ECU respectively for Bulgaria, Hungary and Romania, John Tomlinson (Birmingham West, Soc) explained that these were for a maximum average duration of seven years to help with balance of payments difficulties and to strengthen the reserve positions of the countries concerned.

For each proposal there was an identical amendment, he said, which called for the creation of a 'reserve for loan guarantees' because of the growing risk for the EC budget linked to the problems of guarantees on borrowing and lending operations. The provision of substantial help to central and eastern Europe over the past two years now meant that the liability to the EC was 4.29bn ECU. As a result he urged the Commission to act by presenting a proposal for a reserve for loans in order to confront the growing danger to the Community budget. While the Council had failed to accept such an amendment in the past, he warned that the budgets committee's patience was wearing thin and wanted clarification of the budgetary coverage of the growing financial risks for the Community.

As far as Maria Cassanmagnago Cerretti (I, EPP), speaking for the political affairs committee, was concerned, it was important to see that aid to Africa and the Kurds reached the people concerned while the package for the Soviet Union was coontingent on the consolidation of democracy. But she took the view that it was imperative to reach an agreement on the revision of the ceilings on the financial perspective before a formal first reading of the 1992 budget so that extra assistance could be earmarked for Eastern Europe and the Kurds.

For Council, Jean-Claude Junker felt the atmosphere between Parliament and Council was much calmer than on previous occasions when there were disputes between the institutions. He looked forward to a positive settlement of the differences and personally said he could accept both Mr Tomlinson's point over guarantees for loans to Eastern Europe and the need for a reserve of adequate proportions to deal with unforeseen circumstances. The problem was in reaching an agreement in Council where there had to be unanim-ity.

He could not, however, accept the idea of allowing Parliament to table amendm-ents to the revenue side of the budget.

Budget Commissioner Peter Schmidhüber welcomed the 2nd May agreement on the revision of the financial perspective to allow for aid to the Soviet Union, Israel, the Kurds and the famines in Africa in 1991 but regretted that an agreement would not be reached to cover 1992, because of differences over the reserve.

But he warned the Commission could not guarantee to implement the budget properly without extra staff and he added, the situation could become worse next year with the need to find new office accommodation in vview of the need to move out of the Berlaymont building.

As to points of detail, technicalities regarding the 400m ECU for the Soviet Union had now been resolved and this would soon be committed, he said. It had also been decided to finance the 160m ECU for Israel through the medium of loans with the Community budget acting as a guarantor while assistance to the Occupied Territories would take the form of a direct grant of 27.5m ECU as would the 60m ECU to help Palestinian refugees. The 100m ECU assistance for the Kurds, originally financed by borrowing from other sectors of the budget, could now be returned to the original headings. Some 140m ECU would be allocated to the famine in Africa, a sum sufficient for the delivery of 400,000 tonnes of cereals to which would be added a further 150,000 to 250,000 tonnes from the member states.