Report from the Commission to the European Parliament and the Council on the implementation of macro-financial assistance to third countries in 2013

Macro-financial assistance, or MFA, as part of the EU’s external assistance framework, is an instrument designed to address exceptional external financing needs of countries that are geographically, economically and politically close to the EU. Its objective is to strengthen macroeconomic and financial stability in candidate and potential candidate countries, and in countries in the European neighbourhood, while encouraging the implementation of appropriate structural reforms. It complements and is conditional on the existence of an adjustment and reform programme agreed with the International Monetary Fund (IMF). Macro-financial assistance is a balance of payments support instrument. It takes the form of either loans, for which the Commission borrows the necessary funds in capital markets and lends them to the beneficiary country, or, in specific circumstances, grants financed by the EU budget.

The year 2013 was characterised by the unblocking of pending legislative files on MFA. This came after more than two years of disagreement between the European Parliament and the Council on the procedure to be used for the adoption of the Memorandum of Understanding (MoU), which lays down the economic policy measures to be undertaken by the country benefiting from the MFA. This enabled the adoption by the co-legislators of three MFA legislative decisions. Those for Georgia and the Kyrgyz Republic had been proposed by the Commission in 2011 and that for Jordan in 2013. The Commission’s 2013 proposal for Tunisia is expected to be approved in 2014.

In light of political developments in early 2014 and the acute vulnerability of Ukraine’s economy and its balance of payments situation, the Commission prepared a new MFA operation for Ukraine, for up to €1 billion in loans. On 14 April 2014, the Council adopted the decision on this in an accelerated procedure under Article 213 of the Treaty on the Functioning of the European Union (TFEU).

This report is prepared in accordance with the various Council and joint European Parliament and Council decisions regarding MFA operations. It follows the reports presented in previous years. It is accompanied by a Commission Staff Working document providing more detailed information on, and analysis of, the macroeconomic context and implementation of individual MFA operations.

• Primary Source

ESO: Background information: Report from the Commission on the implementation of macro-financial assistance to third countries in 2012 http://www.europeansources.info/record/report-from-the-commission-on-the-implementation-of-macro-financial-assistance-to-third-countries-in-2012/

EUR-Lex: COM(2014)372: Follow the progress of this report through the decision-making procedure http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2014:372:FIN

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